South Africa's state-owned utility Eskom announced on Monday that a much-needed mega power station will not come online until late 2014, spelling further problems for the energy-hungry nation.

Eskom said the first phase of the Medupi coal-fired power plant will not come online in late 2013 as planned, and the entire project will be delayed until 2017, two years late.

The news is a blow to South Africa's economy. Heavy industries have been hit by forced blackouts due to lack of power production capacity.

The blackouts crippled production in the key mining and production industries.

When completed, the Medupi project would increase South Africa's electricity production by about 10 percent.

Eskom blamed labour unrest and slow performance by contractors, issues that have plagued construction since the project began in 2007.

Government has previously blamed delays on the project on main contractors Alstom and Hitachi.

In 2008, South African was hit by rolling power outages as Eskom battled to meet the demand -- fuelled by a decade of economic growth.

"We have done everything in our power to meet the December target date," said Eskom chief executive Brian Dames.

"However it is now clear that the boiler and control and instrumentation issues cannot be resolved in time for the first unit of Medupi to deliver first power to the grid by 2013," he said.

According to Dames, the second half of 2014 was a "more realistic target."

According to Eskom, the revised schedule depends on the success of interventions to ensure critical timelines on the "boiler and control and instrumentation contracts... as well as the stability of the labour force."

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