Last year's catastrophic peat harvest cost Bord na Móna over €20m, the head of the company has revealed.

Speaking this morning ahead of the company's annual general meeting, chief executive Gabriel D'Arcy said exceptional costs of €23.5m were incurred in labour and other costs as a result of the poor harvest.

The company was also fined by the ESB for the delivery of poor quality peat because of the bad weather.

Mr D'Arcy said the situation would have been worse but for job cuts and pay reductions.

However, the 2013 harvest has been exceptional so far and the company has recovered well.

The Bord na Móna chief executive also revealed the company has a strategic interest in running two midlands-based peat burning power stations with biomass fuel by 2019.

He said both power stations would come to the end of their present lifelines at that stage and the company's plan would be to fire the two power stations presently owned by ESB in Offaly and Longford with imported and nationally produced bio energy.

The company is also ready to go for planning with a new water reservoir on a 1,200-acre site near Portarlington in Co Laois.

A three-month supply of rain water will be stored there to meet domestic demands in the eastern region and ease concern over drought.

Mr D'Arcy said the issue was being discussed at Cabinet level.

There is a need to proceed as soon as possible, he said, because Bord na Móna is ready and able to provide millions of litres of water to counties where there are already shortages this summer.

He said most of the necessary environmental studies had been completed for the tracks of land owned by Bord na Móna on the site of the reservoir and water park at Garryhinch, Portarlington, and Bord na Móna is ready to go with its critical part in the project.

Mr D'Arcy said there is a solid concept behind the development, saying the water would be extracted during the winter months when there is plenty as the River Shannon is flooded.