Bord na Móna has said it is ready to apply for planning permission for a new water reservoir on a 1,200-acre site near Portarlington in Co Laois.
Chief Executive Gabriel D'Arcy said the reservoir could store a three-month supply of rain water to meet domestic demands in the eastern region and ease concern over drought.
Speaking before the company's annual general meeting in Dublin, he said the issue was being discussed at Cabinet level.
He said there is a need to proceed as soon as possible.
Bord na Móna is ready and able to provide millions of litres of water to counties where there are already shortages this summer, he added.
Most of the necessary environmental studies have been completed for the tracks of land owned by Bord na Móna on the site of the reservoir and water park at Garryhinch, Portarlington, he said.
He also dismissed claims that the reservoir could have a negative environmental impact on the river Shannon.
Speaking on RTÉ's News at One Mr D'Arcy said that the project, which is ready to go to planning, would extract water in times of excess supply, such as in the winter months when the Shannon is regularly in flood.
He said that such a reservoir would incentivise the location of water dependent industries, such as food, information and computer technologies and biopharmaceuticals, to locate in the midlands.
Poor peat harvest in 2012 cost €23.5m
Meanwhile, last year's catastrophic peat harvest cost Bord na Móna over €20m, Mr D'Arcy has revealed.
He 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.
He 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.
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