Previously estimated to cost 3.4 billion euros, the European Commission said an extra 1.9 billion euros was needed to complete the constellation of satellites, raising its price tag to 5.4 billion euros ($7.2 billion).

Aimed at rivaling the US-built Global Positioning System (GPS) and Chinese and Russian projects, the system needs more cash due to the higher costs of the development phase and satellite launchers, the commission said.

"We need to bear in mind that Russia is engaged in deploying its global system and China is continuing to increase its own systems too. Japan and India are also entering the scene," Tajani said.

"That means Europeans cannot lag behind," he told a news conference at the European Parliament in Strasbourg, France.

Galileo is scheduled to go online in 2014 -- six years later than originally planned -- with an initial constellation of 18 satellites. The first two satellites will be launched in the third quarter of this year.

But the commission said in a policy paper that 3.4 billion euros was "not enough to complete the infrastructure."

An extra 1.9 billion euros is needed to launch the remaining 12 satellites by 2020 and offer the full services promised by the project.

In addition, the commission said the operating costs for Galileo and a sister system called EGNOS will amount to 800 million euros a year.

Europe wants to end its dependence on the US GPS system in a market the commission said would grow from 130 billion euros in 2010 to 240 billion euros in 2020.

"The Galileo project is going ahead, the commission has decided on this," Tajani said.

"It will improve the lives of citizens in sectors such as transport, agriculture, energy and combatting illegal immigration," he added.

A row erupted over the system after the whistleblower website WikiLeaks published a US diplomatic cable quoting scathing criticism from the head of German firm OHB Technology, which was awarded a 566-million-euro to develop 14 Galileo satellites.

According to an October 2009 cable from the US embassy in Berlin, OHB Technology chief Berry Smutny said: "I think Galileo is a stupid idea that primarily serves French interests."

He went on to say that Galileo was "a waste of EU taxpayers' money championed by French interests," according to the cable.

The company announced Tuesday that it had suspended Smutny, who has denied making the comments.

Tajani dismissed the WikiLeaks report, saying he had met Smutny before the leak and that he had stated that he believed in Galileo. The company has since committed "wholeheartdly to delivering the Galileo system," Tajani said.

"WikiLeaks isn't the gospel," Tajani said.

earlier related report
Price tag of Europe's Galileo satellite rises again
Brussels (AFP) Jan 18, 2011 - The price tag of Europe's much-delayed and over-budget Galileo satellite navigation system rose by another 1.9 billion euros on Tuesday, amid reports a contractor derided the project as "stupid."

Previously estimated to cost 3.4 billion euros, the European Commission said the additional funding was needed to complete the constellation of satellites, raising its price tag to 5.4 billion euros ($7.2 billion).

Aimed at rivaling the US-built Global Positioning System (GPS) and Chinese and Russian projects, the system needs more cash due to the higher costs of the development phase and satellite launchers, the commission said.

"3.4 billion euros is not enough to complete the infrastructure resulting from the Galileo programme," the European Union executive wrote in a policy paper.

In addition, the commission said the operating costs for Galileo and a sister system called EGNOS will amount to 800 million euros a year.

Galileo is scheduled to go online in 2014 with a constellation of 18 satellites.

But the commission said an extra 1.9 billion euros is needed to launch 12 more satellites by 2020 and offer the full services promised by the project.

The head of German firm OHB Technology, which was awarded a 566-million-euro to develop 14 Galileo satellites, was suspended by his firm after he criticised the project in a US diplomatic cable published by the WikiLeaks website.

According to an October 2009 cable from the US embassy in Berlin, OHB Technology chief Berry Smutny said: "I think Galileo is a stupid idea that primarily serves French interests."

He went on saying Galileo was "a waste of EU taxpayers' money championed by French interests," according to the cable.

Smutny has denied making the comments.

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