Brussels, 17/03/2006 (Agence Europe) - Transport Commissioner Jacques Barrot has written to the EU transport ministers briefing them on the state of progress of talks underway on the concession contract for the European satellite navigation system, Galileo, on the basis of a joint offer made in June 2005 by the Galileo consortium. The aim of the talks is to reach a twenty-year concession for the deployment and operation of Galileo, the first totally European infrastructure of its kind.
Negotiation initiated with the Galileo consortium will unfold in three phases. Firstly, the phase covered by Mr Barrot in his letter, the principles of risk-sharing between the EU and the Galileo consortium will be negotiated. Both parties should then specify the risks that they will each be willing to take. The third phase will consist of detailed negotiation of a concession contract and determination of the financial cost of such risks as well as the instruments that may be used for funding. As soon as negotiations have come to a close, in principle end 2006, the Commission will present the offer for approval from the European Parliament and Council.
Once the contract is signed, the consortium will begin building the system. The European Space Agency (ESA) will first of all launch the first four satellites, in 2008-2009, to place the system into orbit. The concessionary will then launch the other 26 satellites over one year (the solution envisaged for now is to launch 18 satellites by three Ariane 5 rockets and the other eight by two Soyous rockets). After verification, the system should be operational in 2010-2011. In total, 30 satellites (27 operational and 3 in reserve) will be spread out over three orbits and have a 15-year lifespan. This means that in 2025, at the very latest, a new generation of satellite should be launched.
Galileo is an enormous machine and a continuous process of innovation for satellites and technological verification. The stakes are high as, according to the Commission, it should create 150,000 jobs in Europe, mainly for the small and medium-sized enterprises (SMEs), whereas the Galileo/GPS market (the European and American system will be complementary) should engender EUR 300 billion annually - an ambitious project whose cost, for the deployment and operational phases, is evaluated at EUR 3.5 billion over 20 years, without financing costs. Community financing foreseen (EUR 900 million) amounts to one third of the cost of deployment and part of the operating costs.
Although American GPS services are free of charge, some commercial services proposed by Galileo will be pay services. It is partly thanks to such revenue that the consortium hopes to have a return on its funding although on this point, and although studies have been made, there is no guarantee of the revenue that Galileo will bring in.
In parallel to its talks with the industrial sector, the EU hopes to create a global partnership with a “pool” of countries: China, Israel, Argentina, Canada, Australia, India, Norway, Switzerland, Morocco, Ukraine, South Korea, and Saudi Arabia. The state of progress in talks varies according to the country (agreement signed with China, Israel, Ukraine; initialled with India, South Korea and Morocco; negotiations underway with Argentina, Norway, Switzerland; informal consultation with Saudi Arabia; and contacts with Canada, Australia and Brazil) but all present similar characteristics: a large market, advanced technology and the ability to be regional “leaders”. These countries will not become joint owners of Galileo. On the other hand, they will be able to finance the setting up of regional systems similar to the EGNOS system (European Geo-Stationary Navigation Overlay Service to be integrated into Galileo in other regions of the world) and to become owners of these. Alongside these priority partners, the EU also has contacts with other countries interested, for example in Africa where there is above all an interest in the air sector, via its Galileo information centres.
Negotiations are also being continued with Russia with which it is a question of sealing an agreement of compatibility with its GLONASS system, similar to the agreement signed with the United States and GPS. Problems are not of a political nature, the Commission assures, but are rather technical and legal. In Russia, for example, it is still prohibited - as it used to be during the Cold War - to use satellite navigation receptors for civil applications. The EU considers Galileo's interest lies in the fact that it can be used by a maximum number of users, which will require a change in Russian legislation.