EU defends budget for Galileo project

The European Commission defended its 3.4 billion euro ($5 billion) cost forecast for the Galileo satellite navigation program following a report the budget is bound to be seriously overrun, a Reuters report said.

The Reuters report quoted German weekly Der Spiegel as forecasting that Galileo, aimed at rivaling the US-developed global positioning system, will cost at least 1.5 billion euros ($2.2 billion) more than the EU executive believes.

'The estimates we have are really based on solid ground,' the Commission's transport spokesman, Michele Cercone, was quoted by the report as saying.

Der Spiegel also quoted unidentified financial and industry experts as saying Galileo could end up costing between 5 billion euros ($7.4 billion) and 10 billion euros ($14.8 billion).

Cercone said the Commission's forecast embraced the cost of building infrastructure needed to launch the project in 2013. He added other forecasts could be based on different periods.

The Reuters report added that Galileo has been plagued by years of doubts about its viability and cost despite Commission arguments that it would create thousands of jobs and ensure independence from the US service.

EU budget ministers agreed late last year to funnel unused public funds, mostly earmarked for farm subsidies, the report further said.