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By Wendell Roelf

CAPE TOWN (Reuters) - South African ministers ceded to mounting political pressure by dismissing an ally of President Jacob Zuma on Wednesday, in an effort to mend deep rifts in the ruling African National Congress ahead of a party leadership contest.

State power utility Eskom was told to remove chief executive Brian Molefe "for the best interests" of the country after members of the ANC criticised his reinstatement just two weeks ago, given he resigned last year amid allegations of graft.

Zuma has come under increasing calls to resign, including from within the ANC, following a series of corruption scandals, and analysts say Molefe's removal will placate the top echelons of the ANC who want unity.

Zuma wants to avoid the public reprimand he received from top ANC officials when he fired respected finance minister Pravin Gordhan in March, a decision unpopular with markets and swathes of the ANC.

Molefe's reinstatement had opened up an increasingly bitter divide within the ANC ahead of a conference in December when a successor to Zuma as party president will be chosen. Zuma can remain as head of state until an election in 2019.

Parliament is also expected to hold a no confidence vote in Zuma this year, although he has survived two similar attempts.

Molefe resigned in November after a report by the Public Protector, a constitutionally mandated corruption watchdog, raised questions over Eskom coal contracts awarded to a company owned by the Gupta family, wealthy friends of Zuma.

Zuma's opponents said Molefe's return was a new attempt to access contracts worth hundreds of millions of dollars. Government ministers have said the Guptas have offered to secure them promotions in return for tenders.

Zuma and the Gupta family deny wrongdoing. Molefe also denies any wrongdoing and said he resigned in the first place in the interest of good governance and stability.


"The U-turn on Molefe's Eskom appointment demonstrates that Zuma is capable of listening to dissent from within the party," said Augustine Booth-Clibborn, analyst at Africa Risk Consulting.

"However, it may also inspire a greater push against him as his enemies within and outside the ANC sense the president's hand can be forced."

Zuma survived calls for him to step down at a party meeting last week but he needs to keep the majority of senior ANC colleagues onside if he is to ensure his preferred successor is chosen at the party conference in December.

Zuma's camp is expected to back his ex-wife and former African Union Chairwoman Nkosazana Dlamini-Zuma, while another ANC faction will support Deputy President Cyril Ramaphosa.

If an opponent takes over the ANC, they may revisit hundreds of corruption charges against Zuma that have been set aside.

Zuma said on Wednesday he was open to an inquiry into undue influence on government officials, known locally as "state capture", although it is not clear what shape any investigation would take and if it could be completed before he leaves office.

Opposition parties say Zuma is using delaying tactics and have called for a parliamentary investigation into the Gupta family's alleged influence in institutions such as Eskom.

"The announcement today that Brian Molefe’s return to Eskom must be rescinded shows that governance at Eskom has crumbled," said Natasha Mazzone, the Democratic Alliance's shadow public enterprises minister.

"Only a full-scale parliamentary inquiry has the capacity to get to the bottom of the rot."

(Additional reporting by Ed Stoddard; Writing by Joe Brock; Editing by Alison Williams)

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