However, the European Commission and EU member states are being forced to reconsider the original financing plans as the companies demand more public support in bearing the risks and costs.

With China making strides with its rival "Compass" satellite positioning system, pressure is growing on the EU to avoid further delays to the programme, which was intended to rival the United States free global positioning system (GPS).

"The matter is urgent, since Europe faces global competition as a base for technology," German junior minister for aerospace policy Peter Hintze said.

Although the project is becoming more of an embarrassment than a showcase for European technological prowess, European Commission spokesman Michele Cercone insisted that full public funding did not amount to a costly bailout.

"This scenario will not require taxpayers to put (in) more money, but is the scenario that would protect best taxpayers," he said.

The European Commission had given the consortium -- comprising AENA, Alcatel, EADS, Finmeccanica, Hispasat, Inmarsat, TeleOp and Thales -- until Thursday to come up with plans for sorting out the mess.

However, Cercone said that since their proposals were "far from being sufficient," the next best option seemed to be simply using public money to build the satellite network.

"It would be less expensive to take the entire construction of the infrastructure to the public authorities than to guarantee 100 percent of a private loan at the market value" as the consortium wanted, Cercone said.

The construction was originally expected to cost 1.5 billion euros (2.0 billion dollars), but the EU's executive arm and member states will likely have to cough up an extra 2.4-2.6 billion euros if public money is to pay for it, according to the Commission.

If public bodies took over the financing of the project, it could be kept on course to be up and running by the end of 2010 or 2011, he said.

As delays have piled up, the concession contract for Galileo remains unsigned with the firms squabbling over who will do what, leaving the Commission frustrated that there was no single intermediator representing them as a group.

Cercone raised the prospect that the consortium members could be shaken up, saying that if public money payed for getting the satellites in space "the concession contract's conditions should be changed."

A source at the Commission, speaking on condition of anonymity, said that "there will be new tenders" for building the satellites as well as for their commercial operation.

One industry source said that the companies were still willing to play a financing role "once we can see a return on investment."

Inmarsat spokesman Chris McLaughlin said the project became trickier for the companies when the competing consortia were forced to merge their bids last year.

"We were happy for it to be a public-private initiative but then last year when they brought two consortia together, that changed things," he said, stressing that Inmarsat for one still wanted to participate in the project.

After the Commission makes recommendations next Wednesday for saving Galileo, "it will be up to the (transport) ministers to take whatever they think is the best decision" at a meeting in June, Cercone said.

Related Links
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