EC, Presidency to Seek More Govt. Money for Delayed GPS System
The German Presidency will propose increasing public financing of Europe’s Galileo satellite navigation project, Transport Council Pres. Wolfgang Tiefensee said Mon. With an industry consortium assigned to build and deploy Galileo’s 30 satellites likely to miss a May 10 deadline for ironing out major problems with the program, Tiefensee thinks the public- private partnership requires reconsideration but isn’t dead, a Presidency spokesman said.
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Govt. ministers have joined the EC in calling for major changes to Galileo. EC Transport Comr. Jacques Barrot will announce his recommendations May 16. In a March 14 letter to Tiefensee, Barrot noted that Galileo last year began its development phase, intending to end 2009 with a test of the first 4 satellites. At that point, “we planned for a private consortium to take over and build and launch the remaining 26 satellites” and exploit the system, he wrote.
Development was to be by the European Space Agency and an industry consortium of AENA, Alcatel, EADS, Finmeccanica, Hispasat, Inmarsat, TeleOp and Thales, Barrot wrote. The bid finally accepted was subject to 3 conditions, he said: (1) It should lead to a better offer. (2) The merged consortium should create a single entity to act for all. (3) The merger offer shouldn’t lead to more delays in the program.
All 8 companies accepted the conditions, but they haven’t created a unified organization or named a single negotiator, said Barrot. There’s no evidence that the merged bid would improve on those before it, he said, adding that industry expects govt. to bear ever more risk for the project. A Nov. preliminary agreement “leaves major issues open,” Barrot said, citing design and market risk.
When talks stalled in Jan., the EC and the Presidency gave the companies until May 10 to incorporate the Galileo Operating Co., appoint a chief executive and set a negotiating schedule aimed at completing the agreement by Sept. 15.
Tiefensee doubts that the consortium will meet the deadline, the spokesman said. The main hurdles are discord on risk-sharing and unrealistic industry expectations for return on investment, he said. So the Presidency and the EC will urge more public financing of Galileo during implementation -- private investment to rise once the project is running, he said. In the long run that should prove more economical to public budgets, the spokesman said, and it won’t mean reassigning the public tender under which the consortium was created.
The EC view is that the current set-up “cannot work,” Barrot’s spokesman said at a news briefing. The Council asked the Commission to suggest ways to get the project on track, and the EC thinks it needs reshaping, the spokesman said. He wouldn’t discuss the recommendations, saying only that they will be made public May 16.
In her 2008 proposal, Budget Comr. Dalia Grybauskaite urged raising the EU’s spending for Galileo to 151 million from 100 million for this year, her spokesman said. The Financial Times Fri. quoted Grybauskaite as saying Galileo needs more money because the project is “'under serious question’ with doubts about ‘its ability to perform at all.'” But she added that “Galileo is very important and Europe needs to invest in it.” Grybauskaite doesn’t doubt Galileo’s feasibility and those remarks must be read in the context of her statement about its importance, her spokesman told us: “There was no sign that the commissioner expressed any doubts about it.”
The Council-EC proposal will be presented to transportation officials at June 7 meeting. An EADS spokesman couldn’t be reached for comment and Alcatel didn’t comment.
Galileo’s delays are for more political than technical reasons, speakers said at a May 3 space-policy hearing of the European Parliament’s Security & Defense Subcommittee. Several experts backed the idea of giving Galileo a “military dimension in case the U.S. Defense Dept. should cut the global positioning system signal for security reasons,” a committee spokesman said.