Brussels to present finance plans to save Galileo satnav project


location based services

by Catherine Marciano 1 hour, 20 minutes ago
BRUSSELS (AFP) - The European Commission will on Wednesday present its public financement plans for the troubled Galileo satellite navigation network, with unused farm funds viewed as a potential piggy bank, according to sources.
Whatever the solution, the warnings are growing that the whole project, seen as a showcase for Europe's technical know-how, could crash and burn without a swift funding agreement.
"For us it's not time for more options but for decisions," said European Transport Commissioner Jacques Barrot.
"If no decision is made before the end of December, including for financing, the whole project will be placed in jeopardy," he added, without detailing the Commission's proposals.
Galileo is designed as an independent European alternative, for civilian use, to the free, military-run global positioning system (GPS) in the United States.
Promising location precision of around one metre, as opposed to ten metres for the US version, the Galileo system, due to be up and running by the end of 2012, has so far failed to get off the ground due to cost over-runs and bickering among private contractors.
Somehow the Commission needs to find an extra 2.4 billion euros from the public coffers to finance the project in the 2007-2013 period.
Critics have warned that the costs could keep rising and have questioned the logic of replicating the existing, free US service.
Also while Europe has dithered over Galileo, Russia and China have been working hard on getting similar projects into the sky and at the same time the United States is updating GPS, which is already used widely in cars, boats and planes.
Last spring the European Commission adjudged that the emblematic project could be helped from funds already in the EU budget, but unused and theoretically to be redistributed to member states in the form of credit.
According to European sources, the Commission could finally assure the project's survival through affording it unused funds from the Common Agricultural Policy for 2007 and 2008.
Brussels, while favouring communal funding, has also been persuaded to submit an alternative proposal under which the EU governments involved in the project would make supplementary contributions, according to sources.
While Germany, where industry has a key role in Galileo, strongly supports that approach, France feels it leans too heavily on the public purse.
In the second scenario the European Space Agency, expected to manage the whole project under Brussels supervision, would put forward half the funding with interested member states stumping up the other half.
Under that scenario contributing countries would be guaranteed contracts for their industry companies.
ESA comprises 17 countries -- 15 members of the European Union (EU) plus Switzerland and Norway.
Industries in France, Germany, Italy and Spain are particularly involved in the project.
On the other hand Britain and the Netherlands, notably, have reservations.
Under the original plan, public money was supposed to pay for the first four satellites and then the private consortium companies building the satellites were to pay for two-thirds of the 26 remaining satellites.
The companies -- AENA, Alcatel, EADS, Finmeccanica, Hispasat, Inmarsat, TeleOp and Thales -- were to cover their investment costs by then operating the satellites and collecting the fees once they were in operation.
However, after successive deadlines were missed as the companies argued over their share of the pie, the European Commission recommended a shake-up that would see the whole project financed with public money.
Not wanting to be left out in the cold, the main industrials involved -- Astrium (EADS group) and Thales Alenia Space (Thales and Finmeccanica groups) -- have stressed in recent months their wish to pursue industrial cooperation in the project.
EU transport ministers conceded in June that more public funding was required. They will meet again in Luxembourg on October 2 to examine the options which the Commission comes up with.
EU finance ministers, and behind them their heads of state and government, will also have to give the green light to a revised financial plan