European Governments Urged To Bail Out Sat-Nav System

LONDON — European governments will be urged to increase their funding for the Galileo global satellite navigation project if, as feared, private builders fail to meet the deadline of 10 May to sign contracts to begin construction of the necessary satellites and infrastructure for the European project.

The eight member consortium — which includes European aerospace giant EADS; France's Thales and Alcatel-Lucent; Britain's Inmarsat; Italy's Finmeccanica; Spain's AENA and Hispasat; and a German group led by Deutsche Telekom — was given the date as a deadline by the European Commission to agree to the terms.

The consortium, however, is reluctant to take on the risk.

Earlier this year, EU transport commissioner Jacques Barrot suggested as much as Euros 1.2 billion more public funds will be needed to put the 30 satellites needed into orbit and build the ground infrastructure.

In March, Barrot threatened to sack the companies given the task of developing and building the navigation system unless they sort out their differences within two months. He said unless the consortium partners created a single company and appointed a chief executive to run the project by May 10, he would consider "reasonable alternatives".

The alternatives are believed to include making the Euros 4 billion project entirely state funded or underwrite the costs of getting the system in orbit and up and running but setting up a private sector company to run the service. However, some governments have talked of scrapping the system altogether.

Earlier this week Dalia Grybauskaite, EU budget commissioner, proposed a 51 per cent increase in spending on Galileo in the EU's 2008 budget, to Euros 151 million, but said more could be needed as the project was "under serious question" with doubts about "its ability to perform at all."

The in-fighting is causing major delays to the project , which was officially launched in 2002 as an alternative to the U.S. Pentagon run Global Positioning System and which the EU sees as an important element of the continent's aerospace and electronics industries. In the meantime, China and Russia are pushing ahead with their own versions of a global satellite navigation system.