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Canada's next-generation high-tech satellite is $177-million over budget, mainly because of a drawn-out political dispute with the United States over how sensitive data from the Radarsat-2 satellite would be used.

Documents released yesterday show that because of the dispute, Radarsat-2 is far behind schedule and the government's bill for the project is 75 per cent higher than the $225-million first budgeted.

As a result, the Canadian Space Agency has had to pull resources from other areas of its space plan, and rearrange its priorities, according to the agency's report on plans and priorities.

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"I'd say things are now okay, [but]it took a good year to resolve all the issues," said Luc Brûlé, the agency's manager for Radarsat-2.

MacDonald Dettwiler Associates Ltd., the Vancouver-based company in partnership with the federal government in the satellite project, has invested an extra $10-million on top of its original $80-million investment, Mr. Brûlé said.

All told, the satellite bill comes to $482-million, instead of $305-million (the original budget plus MacDonald Dettwiler's investment).

The satellite is due to be launched in April, 2003, instead of this year, as originally planned.

"This is a cutting-edge spacecraft. None of this has been built before commercially. It's normal to suffer scheduled delays," Mr. Brûlé said. He said the need for extra funding was beyond the space agency's control.

"They were external events that caused us to bring more money to the project."

The Radarsat-2 project has been a top priority for the federal government since it was announced in February, 1998. Former industry minister John Manley touted the satellite technology as being cutting-edge, designed to make Canada a world leader in Earth observation.

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The satellite should be able to take pictures from space of articles as small as a car on Earth. Unlike existing technology, the Radarsat-2 will be able to take pictures in the dark, and through clouds at any time of the day. The technology will be used for tracking floes in shipping channels, for capturing images of forests for the forestry industry, for weather information, for surveillance and for other environmental and agricultural data.

But the project has been plagued with problems from the start.

First, the National Aeronautics and Space Administration pulled out of its deal to launch the photo-taking satellite. NASA launched Radarsat-1 in return for data, but refused the same arrangement for Radarsat-2. Now, the space agency has to pay $108-million to launch the satellite privately in California.

Then, Canada and the United States got caught up in a continuing dispute over a U.S. crackdown on military exports. The United States would not allow U.S. companies to freely export parts and technology to Canada, and that hurt the construction of Radarsat-2.

Plus, the United States feared that Radarsat-2's sharp radar would allow terrorists and rogue states to get a peek at sensitive military installations.

MacDonald Dettwiler and Associates Ltd. of Richmond, B.C., which won the government contract to build the satellite, had to make major changes to its plans so that it could buy parts and technology from countries other than the United States.

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The company was forced to go to Italy to find a firm to build the shell of the satellite.

While the dispute between Canada and the U.S. has not been completely settled, the space agency says it has now resolved all of its problems through bilateral agreements with the U.S. government.

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