ESA Commits to Galileo Financing Package

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  Space News Business

ESA Commits to Galileo Financing Package

By PETER B. de SELDING
Space News Staff Writer
posted: 05 September 2006
03:31 pm ET




PARIS — European Space Agency (ESA) governments have made binding financial commitments for just about all the money needed to complete the design and development of the Galileo satellite navigation system.

In what may be the last large investment they will need to make in Galileo, ESA governments signed on to the remaining 186-million-euro ($237 million) tranche needed to complete the project’s In-Orbit Validation (IOV) phase.

IOV includes design of the full ground network to work with the 30-satellite Galileo constellation and the installation of about half of the ground infrastructure, plus the design, construction and launch of the first four operational Galileo satellites in late 2008.

The launch of those four satellites may slip if the next Galileo test satellite, Giove-B, faces substantial delays. The satellite, which had been scheduled for launch this fall , suffered a short circuit during thermal-vacuum testing in Italy and likely will not be ready for launch until early 2007, European government and industry officials said.

Galileo deployment and operations, and the completion of the ground network, is supposed to be financed by a private consortium that will manage the project as a profit-making business. The consortium is now negotiating contract terms with a specially created government agency. A contract is expected by the end of the year, but government and industry officials concede they remain stuck on major issues involving risk-sharing.

Under current plans, the industrial consortium will finance 1.4 billion euros in Galileo deployment costs, with the European Commission paying an additional 700 million euros for that stage of the project. Galileo is expected to be operational around 2011.

But before these follow-on commitments could be made, the IOV package needed to be fully paid. It is budgeted at about 1.5 billion euros, with ESA and the European Commission splitting the costs. Both sides had agreed to an initial payment of 1.1 billion euros more than a year ago, but the remaining funds were withheld to permit ESA governments to verify that they were in fact needed.

The European Commission earlier this year had approved its remaining stake, and ESA had given its governments an Aug. 25 deadline to commit to their share.

Didier Faivre, head of ESA’s navigation department, said Aug. 30 that ESA is lacking about 20 million euros in Galileo funding but that several smaller nations have assured the agency they would produce that amount. In addition, he said, several larger nations whose industries have received more Galileo work than foreseen are likely to make up the difference with minor future payments, Faivre said.

But while Galileo funding is no longer a problem, several Galileo subcontractors have complained of delays in being paid for work approved by their customers.

“Months have passed and we have received zero for our work,” said one industry official. “Big companies can absorb these delays, but we smaller companies have real problems.”

Faivre conceded that Galileo’s complexities and layers of red tape had congested the payment pipeline. He said ESA and Galileo Industries, the prime contractor for the IOV phase, in July agreed to new procedures that should ease the problem.

“We cannot revamp entirely our process, nor can we oversee every contractor-supplier relationship in Galileo, but we can shake the tree,” Faivre said. “It will have an effect. The blockage up to now has been caused by procedures used by all sides.”

Juergen Ackermann, the new chief executive of Ottobrunn, Germany-based Galileo Industries GmbH, agreed. In an Aug. 31 interview, Ackermann said the two organizations are streamlining the process in ways that will cut the time between billing and payment.

The Giove-B satellite, built by Galileo Industries — a consortium of Europe’s biggest satellite-hardware manufacturers — features a signal-generation system, an atomic clock and an antenna design that all differ from the less-complicated Giove-A satellite launched in December. Giove-B bears a closer resemblance to the full 30-satellite Galileo constellation whose launches are supposed to begin in late 2008.

Giove-A is working well and has permitted European government authorities to register the reserved Galileo frequencies with international regulators. Registration is necessary to prevent the frequency registration from expiring.

Faivre said that even if Giove-A failed in orbit today, Europe would have about two years to build a replacement satellite before the frequency reservations are cancel ed.

But Galileo Industries, which also is building the first four operational Galileo satellites, wants Giove-B in orbit as soon as possible to test its on board systems in advance of the launch of the follow-on satellites. Galileo Industries is under contract to build the first four operational Galileo satellites.

Ackermann said the Giove-B component short circuit may be simple to fix, or may involve modifications to the broader avionics package on the satellite.

Giove-B is scheduled for launch aboard a Russian Soyuz rocket, whose most recent launch, in July, was scrubbed to give ground teams more time to test new systems used on the vehicle and at the launch pad. The launch of Eumetsat’s Metop weather satellite, initially set for July, has been rescheduled for October. The Corot astronomy satellite, built for the French space agency, CNES, is next on the Soyuz manifest after Metop, and Giove-B would follow Corot.