The European Commission said on Thursday that the European Union’s Galileo satellite navigation system would need to be entirely financed with public money to get the troubled programme back on track.
The private consortium building the project was supposed to give plans on Thursday to overcome the current impasse, but their solutions had been ”far from being sufficient”, Commission spokesperson Michele Cercone said.
Therefore, EU Transport Commissioner Jacques Barrot was preparing recommendations to member states, with the best option being that public authorities take over the financing of Galileo’s construction.
”It would be less expensive to take the entire construction of the infrastructure to the public authorities than to guarantee 100% of a private loan at the market value” as the consortium wanted, Cercone said.
The construction was originally expected to cost â,¬1,5-billion ($2-billion), but Barrot now expects the price to reach ”a range between two and three billion euros”, Cercone said.
As the project drifts farther off course and schedule, it has become a growing embarrassment for the EU, which wanted Galileo to break Europe’s dependence on the free United States-run GPS system used in many cars, boats and aircraft.
Delays have piled up as the consortium — comprising AENA, Alcatel, Eads, Finmeccanica, Hispasat, Inmarsat, TeleOp and Thales ‒ began to express doubts about the project’s commercial viability, demanding that public bodies take on more of the risk and cost.
Meanwhile, the concession contract for Galileo remains unsigned as the firms squabble over who will do what, leaving the commission frustrated that there is no single mediator representing them as a group.
Despite the troubles, Cercone insisted that taking over the financing of the project’s construction would not be a costly bailout with taxpayers ultimately footing the bill.
”This scenario will not require taxpayers to put [in] more money, but is the scenario that would protect best taxpayers,” he said.
After Barrot makes his recommendations for saving Galileo, ”it will be up to the [transport] ministers to take whatever they think is the best decision” at a meeting in June, Cercone said.
If public bodies took over the financing of the project, it could be up and running by the end of 2010 or 2011, he said. ‒ Sapa-AFP