The Democratic Alliance (DA) said on Friday that the decision by Rio Tinto to scrap its plans to build a multi-million Rand aluminium smelter at Coega, because Eskom's electricity supply is unreliable and its proposed tariff hikes unreasonable, is a largely self-inflicted economic blow of staggering proportions.

"Our economy at large and the creation of new jobs in particular will both suffer dramatically. If Rio Tinto's decision becomes some sort of precedent or yardstick, against which other potential international investors gauge the economic climate in South Africa, there could be further consequences for other projects involving direct foreign investment," the DA said.

The DA said that years of poor investment in our infrastructure produced a tipping point, with country wide blackouts and load shedding — not only Eskom's electricity infrastructure, but roads, railways, water and other elements of South Africa economic mainframe.

"Everyday Eskom still hovers on the red line as a result. That shortcoming — the result of neglect and poor planning — resulted in a series of massive loans to Eskom, money which although now essentially spent in this regard, only served to keep the parastatal hovering on the edge of the abyss, as opposed to falling over.

"Needing more money still, it has been forced to hike its tariffs, to a degree that far exceeds what can reasonably be expected from a public who have had to watch on helplessly as the administration they invested their faith in flounders and obfuscates — almost every day, a new component to Eskom's mismanagement surfaces," the DA said

This has all resulted in one of the largest companies in the world declaring that South Africa is no longer a destination in which it can, in good faith, invest money, because the services it provides are unreliable and the prices it charges, unaffordable.

"South Africa has become an enemy of foreign direct investment," the DA said

"Coupled with the cost of the R64-billion loaned to Eskom to keep it afloat, the direct and resultant costs of Rio Tinto's decision mean the mismanagement of Eskom has cost South Africa a breathtaking amount of money. Our entire budget deficit is in the region of R200 billion, no doubt it could be halved had Eskom been properly managed.

"It is an indictment and the impact will be felt by ordinary South Africans, especially those in Port Elizabeth and surrounds, who would have been looking to the smelter for new jobs," the DA said.