ZURICH, Sept 30 (Reuters) - ABB will sell back to Hitachi its remaining 19.9% stake, worth $1.679 billion, in the Hitachi Energy joint venture, the Swiss engineering group said on Friday.

Hitachi exercised its option to buy the stake in the venture formed from ABB's Power Grids business in 2020.

"ABB does not expect to record any significant gain or loss as a result of the sale. ABB expects net positive cash inflows of approximately $1.425 billion upon closing of the sale," which is set to close before the end of the year, pending regulatory approvals, it said in a statement.

"We are delighted to have agreed on the final part of the transaction earlier than expected and on favorable terms. This will further strengthen our balance sheet and give us additional flexibility in our capital allocation decisions," ABB finance chief Timo Ihamuotila said.

In a separate statement, ABB said it was setting aside a provision of around $325 million to cover costs related to investigations surrounding the Kusile power plant in South Africa.

ABB agreed in 2020 to pay 1.56 billion rand (then worth $104 million) to South African state power utility Eskom to settle an investigation into improper payments and compliance issues related to the project.

"ABB is progressing discussions with relevant authorities regarding the remaining matters related to the legacy Kusile project in South Africa awarded in 2015," it said.

"Consequently, ABB will make a non-operational provision of approximately $325 million which will be reflected in Income from operations in the third quarter 2022 results, with a similar cash flow impact expected in subsequent quarters."

ABB said it did not believe it would need to take any material additional provisions relating to these matters. It was cooperating with the authorities and hoped to reach a final settlement with them in the near term. (Reporting by Michael Shields Editing by Mark Potter)