To recall, the development phase of Galileo was intended to be carried out by a Public Private Partnership (PPP) and to be completed by 2008, at a total estimated cost of €2.1 billion, with the private sector contributing €1.4 billion. However, it is well known that negotiations with the private sector on a concession agreement collapsed in 2007. For the Galileo implementation, deployment and commercial operating phases, approximately €1005 million had been properly accounted for in the EU’s financial framework for 2007-2013. The additional €2.4 billion had been found from the revision of the Financial Perspectives. Brussels agreed, therefore, to fund the deployment phase of Galileo entirely from the Community budget, which means that EU taxpayers will pay a bill of €3.4 billion for the period 2007-2013.
In January 2010, the European Commission announced the award of contracts for the procurement of Galileo’s initial operational capability. The deployment phase was, originally, intended to be completed by 2008. Galileo should have been operational by 2010, however it is, now, expected, by the Commission, to be operational by 2014. The contracts awarded last year have a combined value of over €1 billion.
It has been widely reported the WikiLeaks’s release which quoted Berry Smutny, the chief executive of OHB-System AG, describing the Galileo project to US officials as “a stupid idea that primarily serves French interests” and “a waste of EU taxpayers’ money.” The comments were allegedly made in October 2009, consequently, before the German company was awarded a contract, worth €566 million, to build 14 Galileo satellites. Berry Smutny has denied making such comments, but OHB Technology suspended him on 18 January. On the same day, the Commission published its midterm review of European satellite navigation programmes Galileo and EGNOS. One could say that the alleged comments are a better description and assessment of the project. The Galileo programme is extremely delayed and over budget. This is another example of Brussels wasting taxpayer’s money.
The Commission reiterated, in the present Communication, that Galileo will deliver initial services in 2014: an initial Open Service, an initial Public Regulated Service and an initial Search And Rescue Service. However, the Commission also stressed “The implementation of the full constellation depends among others on the availability of further financing and is currently expected to be achieved towards the end of the decade.” According to a report published a few months ago by the Financial Times Deutschland Galileo will not be in operation in 2014 but in 2018. Moreover, taxpayers will have to pay €20 billion for Galileo’s development, construction and operating costs.
The Commission is not sure yet about Galileo’s costs. Last year, Antonio Tajani, Transport Commissioner, said, “For now we are in line with the budget as it has been approved to date, (…)” However, he also said “I cannot tell you that we will not run over cost because of the increase in the price of the rocket launchers (…)” In its present review of the project, the Commission has acknowledged that “€ 3 400 million is not enough to complete the infrastructure resulting from the Galileo programme, owing to the increased cost of the development phase, the increased price of launchers, the lack of competition for the award of some packages …” Consequently, according to the Commission “an additional financial injection of some € 1 900 million will be needed to complete the infrastructure of the Galileo programme.” The Commission has also estimated the annual operating costs of Galileo and EGNOS at €800m. However, the Commission has stressed that the figures related to the period after 2013, provide in this Communication, are merely indicative and “without prejudice to the Commission’s final decision concerning the ultimate content and structure of the programmes.” It remains to be seen how much more money taxpayers would have to pay for this project.
