MPs take aim at EU satellite project

LONDON (Reuters) - Britain must try to prevent a European Union satellite navigation system from going ahead until its costs, risks and benefits have been thoroughly assessed, lawmakers said on Monday.

Parliament's transport committee said it had serious concerns about the merits of the 3.4 billion euro (2.4 billion pound) project and the way the European Commission plans to fund it.

The system aims to compete with the U.S. Global Positioning System (GPS). It has faced a 2.4 billion euro funding shortfall because private companies have been reluctant to foot the bill.

The European Commission has proposed plugging the hole mainly with unused agriculture funds and some from the EU's scientific research project. Unused funds earmarked for EU projects are usually returned to national coffers.

"The government must stop this folly and endeavour to bring the European Commission to its senses," said Gwyneth Dunwoody, Labour chairman of the transport committee.

"The Commission is poised to spend billions of taxpayers' money on a satellite system without any realistic assessment of its costs and benefits" and to "break all the rules for prudent budgetary discipline" in order to fund it, she said.

The European Commission said all EU countries had given their backing to the project and its cost estimates were sound.

"The figures ... have been double-checked by the European Space Agency and national space agencies of the member states and an independent contractor," said spokesman Michele Cercone. "It's crystal clear and it's based on solid ground."

He said proposed financing from the EU budget would cost less than covering loans and risk for the private sector to carry out the project.