Josefsson is set to be replaced before next summer by Norwegian Øystein Løseth, who currently heads the Dutch company Nuon Energy, half of which is owned by Vattenfall.
Løseth is 51-years-old and has been at Nuon since 2003. He has also served on the management team of Norwegian energy company Statkraft.
He has also worked for Naturkraft, Alliance Gas and Statoil, according to a statement.
Løseth was appointed as first senior executive vice president in Vattenfall AB and deputy CEO for the Group by Vattenfall’s board during an extra board meeting on Sunday.
The company said he will work in parallel with Josefsson for a “period of time” before taking over as CEO sometime before the summer of 2010.
“This will be a good transfer process, one which takes into account the complexity of Vattenfall’s operations and the assets Vattenfall owns and manages,” said Vattenfall board chair Lars Westerberg in a statement.
Øystein called Vattenfall “Europe’s most exciting energy company” and said that he is “honoured” to take over the company.
“I see this as a fantastic opportunity to further build on our strengths – but also to take on the challenges that Vattenfall faces,” Løseth said in a statement.
Josefsson is due to retire when he turns 60 in 2010, but has come under increasingly heavy fire in the Swedish media in recent few weeks.
The controversy around his management of the state-owned power giant was such that Swedish Enterprise Minister Maud Olofsson said on Friday that she hoped for the early appointment of a new chief.
“I hope there will be an announcement about a new CEO as soon as possible,” she said.
A Vattenfall spokesman told AFP last week that the company would name Josefsson’s replacement “in due time,” and insisted the appointment had nothing to do with the controversy around Josefsson.
“There is no connection between what is happening now and the process to find a new CEO because it has been going on for a long time,” spokesman Mark Vadasz said.