The European Commission said on Thursday that the European Union鈥檚 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 鈥渇ar from being sufficient鈥�, Commission spokesman 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鈥檚 construction.
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鈥淚t 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鈥� as the consortium wanted, Cercone said.
The construction was originally expected to cost 聙1.5 billion ($2.0 billion), but Barrot now expects the price to reach 鈥渁 range between two and three billion euros鈥�, Cercone said.
As the project drifts farther off course and schedule, it has become a growing embarrassment for the European Union, which wanted Galileo to break Europe鈥檚 dependence on the free US-run GPS system used in many cars, boats and aircraft.
Squabbling firms
Delays have piled up as the consortium 鈥� comprising AENA, Alcatel, EADS, Finmeccanica, Hispasat, Inmarsat, TeleOp and Thales 鈥� became concerned about the project鈥檚 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 intermediator representing them as a group (see Political infighting threatens Europe鈥檚 satnav plans).
Despite the troubles, Cercone insisted that taking over the financing of the project鈥檚 construction would not be a costly bailout with taxpayers ultimately footing the bill.
鈥淭his scenario will not require taxpayers to put (in) more money, but is the scenario that would protect best taxpayers,鈥� he said.
After Barrot makes his recommendations for saving Galileo, 鈥渋t will be up to the (transport) ministers to take whatever they think is the best decision鈥� 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.
