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Tuesday, 4 December, 2001, 13:37 GMT
Funding doubts for Galileo project
Galileo project website
Project architects hope the project will be operational in 2008
The plan to launch up to 30 satellites into space to form a global positioning system is being considered at a meeting of EU finance ministers on Tuesday.

It is estimated that the Galileo project could cost more than 3bn euros ($2.6bn; 1.8bn). But with some of the member countries facing recession, now might not be the time to fund the idea.

Britain and the Netherlands have already questioned the timing, and Germany has raised issues over costs. In contrast, France and Italy whose aerospace industries both stand to benefit from the system are looking forward to a go-ahead.

The technology behind Galileo is claimed to be more accurate and more reliable than current satellite navigation systems in use.

No guarantee

In a summit last March, EU leaders were reluctant to contribute finance to the project without any guarantee that private investors would definitely come onboard.

Belgium's Minister for Finance Didier Reynders, left, and German counterpart Hans Eichel
Some finance ministers are keener than others
The project architects plan deployment in 2006-7, becoming operational in 2008 at a yearly cost of 220m euros.

Brian Lerner from PriceWaterhouseCooper's has compiled a business plan for the project:

"We recommend that it should be run as a public private partnership. There are very significant benefits to the economy but the returns and the profile of the returns would not on their own attract private capital. So, we are recommending that it should be developed with a concession whereby the private sector is paid for the provision of service."

The producers of Galileo have highlighted the advantages of its applications that may entice private investors.

Navigation tool

Galileo's supporters believe the project is necessary to prevent the EU having to rely on the American Global Positioning System (GPS), or the rival Russian GLONASS system.

The producers claim Galileo will be superior, even allowing safety-critical systems - such as air traffic control, and ship and car navigation - to be run on the technology.

The system should also guarantee coverage to previously inaccessible areas such as those that are either blocked by buildings or isolated areas at high latitudes.

One consideration, however, is the possibility that governments could end up carrying the can if this fails, like many other private public partnerships - especially in traditionally military areas.

"We do envisage that the public sector will make a significant contribution at least until 2015, in our view," explains Brian Lerner.

"Our projections are that after that the project will effectively be self financing."

PriceWaterhouse Cooper's Brian Lerner
"We recommend that it should be run as a public - private partnership"
See also:

04 Dec 01 | Business
EU eyes German budget deficit
21 Sep 01 | Business
EU finance ministers in crisis talks
15 Nov 01 | Business
Niue's astronomical economic plan
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