The European Union was set to take over responsibility for the Galileo satellite navigation system on Thursday after industry balked at its costs and risks, missing a deadline to resume talks on managing the project.
EU governments had given a consortium of companies until May 10 to get talks to build and run the system back on course, but the companies, plagued by infighting and worries about the multi-billion euro price tag, failed to meet it. "The concessionaires missed the deadline," said Michele Cercone, spokesman for Transport Commissioner Jacques Barrot.
"That's why we will propose a scenario to abandon the current private partnership." Cercone confirmed the Commission would propose that the EU take on full responsibility for building the project, a rival to the US Global Positioning System, including up to 2.4 billion euros ($3.25 billion) in additional costs. The originally planned public-private partnership element would be maintained by industrial companies operating the system once it is in space.
Cercone said industry had demanded the EU take over 100 percent of the risk and debt associated with Galileo's deployment phase. Taking over the project completely was more economical and would ensure that the delays and problems under the current arrangements would not resurface, he said.
"The consortium would continue only if the public money would take all the risk and all the debt," he said. "At this point, the expenses for the Commission would be such that it would be more ... profitable for the Commission to build the infrastructure itself."
Under the new plan, the system would be partially operational by the end of 2010 or early 2011, he said, and would offer full services in 2012. Barrot is due to present his proposals next week, and EU transport ministers will discuss them at a meeting in June. Current EU president Germany has indicated its support for the EU taking a bigger role, but it may have to convince some governments to support taking on the extra costs.
EU policymakers have stood firmly behind their desire to get the project off the ground, despite some criticism that the market for satellite navigation was too small - a factor that played into the consortium companies' reluctance to take on financial risk.
The consortium is made up of European aerospace giant EADS, France's Thales and Alcatel-Lucent, Britain's Inmarsat, Italy's Finmeccanica, Spain's AENA and Hispasat, and an eighth member that includes Deutsche Telekom and the German Aerospace Centre.
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