BORD NA Móna is proceeding with plans to build a €450m power station in Co Offaly despite recently informing its staff it would be unable to pay their pensions.

In recent weeks, the company has submitted a planning application for a 600-megawatt power station at Derrygreenagh, which is the largest station currently being developed in the country. The development would be Bord Na Móna's first-ever gas-fired plant, reflecting the company's determination to shift away from peat.

It is understood it may consider following Bord Gáis into the electricity market upon completion of the plant in 2014.

Details of the plan have emerged as Bord Na Móna remains locked in talks with its unions over its €52m pension deficit, which its chief executive Gabriel D'Arcy claims threatens the company's viability.

A company spokesman, however, said it would be unfair to draw any parallels between its €1.4bn capital investment programme and its pension crisis.

"The power station will be project-financed and the money will not be drawn exclusively from Bord na Móna resources," he said.

He added the company was unable to divert some of its capital expenditure into its pensions because its investment plans were crucial for its future prospects.

"Any business is in business to grow and prosper and achieve shareholder value.

"The more successful the company becomes, the stronger it will be when looking at employee entitlements in the future," he said.