THE Government will appoint independent consultants to run the competition to build, own and operate the new peat burning power station planned for the midlands. The decision, taken by the Cabinet earlier this week, will allow the ESB to enter the competition, even though it will be the ultimate purchaser of the power from the station, according to the Minister for Energy, Mr Lowry.

Bord na Mona, which will supply the peat to the station, will not be allowed to enter the competition ore join any of the competing consortiums.

EU competition legislation does not allow Bord na Mona to enter "because of the monopoly it enjoys over peat production, according to the Department of Transport, Energy and Communications. This represents a setback for Bord na Mona, which had ambitions to own and operate the station.

Mr Lowry said yesterday that his Department's ongoing investigation of Bord na Mona managing director Dr Eddie O'Connor's pay package was completely unrelated to the Department plans for the future of the company. It was a question of ensuring that proper procedures were followed, he said. The Government could not ignore the breaching of its own pay guidelines, he added.

Mr Lowry said yesterday that his policy towards the state owned peat "company had always been one of encouragement and support.

He point that he had secured the injection of £120 million in state aid for the company as well as £21 million in EU aid for the Europeat project.

A full report on the remuneration received by Dr O'Connor during his nine years in charge of Bord na Mona was requested by the Department after it emerged that he had received £53,000 in unvouched expenses over the three years to last March. The directors of the company have postponed any decision on the issue until the report has been considered.

The new Europeat station will sell" electricity to the ESB and employ 500 people. The consultants to run the competition are due to be appointed early next week and the competition itself should commence in early August, according to Mr Lowry. The contract will be awarded in 1997 and the station itself should be operational by early in 2000.

The new peat burning station and the injection of £120 million in state aid will help to secure the future of Bord na Mona. As a condition of the aid package, the price which the ESB pays for peat will be cut from £19 a tonne to £13 a tonne.

The Government is hopeful that EU approval for the plan will be obtained shortly. However, companies in Northern Ireland and the Netherlands that produce peat for horticultural markets have objected, claiming that Bord na Mona will use the money to subsidise its horticultural peat business.

The general secretary of SIPTU, Mr Bill Attley, has denied that he made any representation to Labour Party politicians over the controversy concerning Dr O'Connor, as reported in the Irish Independent. "Equally the union has not been requested by the worker directors to make any such representations," he said in a statement yesterday.

The unions representing the bulk of the employees at Bord na Mona have also dismissed reports that they are supporting Dr O'Connor. "As far as the unions and worker directors are concerned, this is a matter for the board of Bord na Mona and the responsible Minister to resolve and, as such, it is inappropriate for the unions to become involved."

Mr Lowry called for an end to what he termed a "campaign of innuendo" concerning the role of his Department in the coming to light of Dr O'Connor's package in Bord Na Mona.