Profile: Taking the Reins Amid the Galileo Chaos

Pedro Pedreira

Executive Director, European GNSS Supervisory Authority

For Pedro Pedreira, 2007 is probably going to be a difficult year professionally. The fact that it is also his first year on the job may or may not help.

Pedreira, a Portuguese national, was named executive director of the European GNSS (Global Navigation Satellite System) Satellite Supervisory Authority, or GSA, in May 2005, but the body did not begin work until January of this year. Created by the executive commission of the 27-nation European Union, GSA succeeds the Galileo Joint Undertaking in negotiating with an industry consortium on a 20-year concession contract to run Europe’s Galileo satellite navigation system.

Galileo is supposed to be operated as a profit-making business, with some of its signals available only for a fee despite the existence of the U.S. GPS timing, positioning and navigation system, which is provided by the U.S. government free of charge. Russia’s Glonass, now being rebuilt, is also free. Regional systems operating or planned in China, Japan and India also plan to be free of direct user charges.

Finding a company willing to cover two-thirds of the capital costs of deploying the 30-satellite Galileo constellation was never going to be easy in this environment.

But GSA has had the further difficulty of negotiating with a consortium whose eight industrial members cannot agree among themselves on contract terms. Nor can they agree, despite some 16 months of effort, on how to incorporate into a Galileo Operating Co. with a management team capable of making decisions and sticking to them.

Negotiations on the concession contract came to a standstill in November and have not moved since. European transport ministers, who with the European Space Agency are financing Galileo’s early development, have ordered the industrial consortium to provide a written explanation of its behavior in time for an evaluation at a meeting of these ministers March 22 in Brussels.

Pedreira, his frustration clearly in evidence, discussed his view of the situation with Space News staff writer Peter B. de Selding.

You were supposed to sign a Galileo concession contract this year. Will that happen?

I hope that in 2007 we will be able to make tangible progress. But we will not have a contract by the end of this year. The implications for this on the deployment of the initial test satellites and on our Egnos system [a regional GPS satellite-based complement, to be fully operational in 2007] are serious. The concession is also supposed to take over Egnos operations.

Industry says part of the holdup relates to the difficulties of apportioning Galileo risks – design risks, risks of financial difficulties – between government and industry. Do you disagree?

These are certainly tough issues. But the reason the negotiations are stalled has nothing to do with these issues.

What is the cause then?

Some members of the consortium think that if they stall, they can get a better deal. They think that sooner or later, they will get orders for more satellites — even if there is no concession contract — because of concerns about the deployment schedule. So some people are holding out, thinking they will be better off with a different business model.

How can you counter this tactic?

What I want to say to them is that there will be no more satellite orders until the concession agreement is signed, and there is no further business outside the concession context. This is what I propose to the commission. Until we can all be clear about this, we will have a problem.

You report to the European Commission. Is the commission willing to back you on this point?

The commission shares my exasperation. As for how it will proceed, that is for the commission and the transport ministers to decide.

Is it time to loosen the constraints of the Galileo business model – for example by having governments finance the cost of building and launching the 30-satellite constellation and then handing over to a private company?

If the Transport Council tells me, ‘You can go for something else,’ then I will propose something else. For now, I am operating inside the mandate I was given, and that includes the PPP [public-private partnership] model. But of course we are looking at all possible scenarios at the same time.

But you have been watching this from the sidelines for over a year. Do you think demanding private-sector financing so early in the project was a bad idea?

I like to refer to this as a government-business partnership, and it has many advantages. For example, assessing market risk for Galileo is probably a job that the private sector does better than the public sector. Involving business in Galileo from the outset means market risk will be part of the thinking right from the start. Imagine if governments simply handed a finished Galileo infrastructure to an operating company — ‘Here, it’s yours to operate.’ There is a danger that the operating company would say, ‘I would have designed this differently.’

Do you expect the Transport Council to propose something completely new for Galileo at its March 22 meeting?

I don’t expect radical decisions. What I do know is that I must present to the council my assessment of the reasons behind the blockage. Then we can evaluate options. My responsibility is to propose something that can work. What is not acceptable is that Europe be held hostage to this situation.

You and the GSA took over from the Galileo Joint Undertaking in December, just as negotiations with the consortium were running aground. Was the transition a problem?

The transition was close to perfect. We kept about 15 of their people and I must congratulate the Joint Undertaking staff on this. On this point there were no difficulties that entered into the equation.