EU looks to public funds for satellite system

European governments have abandoned plans to seek private financing to build a satellite navigation system to rival the U.S. global positioning system.

European Union ministers meeting in Luxembourg agreed on Friday to fund the remaining costs of the estimated $5.4-billion Galileo project with public funds, though it remains unclear where that money would come from.

The project had originally called for two-thirds of the funds to be provided by a consortium of eight member companies asked to run the system.

But the project had been plagued by delays and infighting between the companies, forcing the European Commission, the administrative body of the EU, to take over the project in May.

EU officials "unanimously agreed that work with the concession holders should be terminated and that the next phase would be considered under the responsibility of the public sector," said German Transport Minister Wolfgang Tiefensee on Friday.

But how the project will get its funding is still up in the air, with the EU now having to decide whether funding will come from its common budget or through direct contributions by the 27 member states.

The Galileo project was originally to have launched 30 satellites six more than GPS's 24 by 2008. The project was delayed until 2011 because of questions over how to pay for the system, and Tiefensee said it now likely wouldn't be operational until 2012.

Only one of the 30 satellites has been launched.

The EU has said its system will more accurately detect the positioning of users and will be civilian-run, unlike GPS, which is controlled by the U.S. military but free to use.

But the EU also has to contend with China, which is building its own global positioning system that is expected to be operational next year.