The US company Hughes Space and Communications International, Inc. notified Japan this week of its intention to cancel the contract with the National Space Development Agency (NASDA).

"This is a very big problem for us," admitted a spokesman for Rocket System Corp. (RSC), the private agent responsible for satellite launch contracts on Japan's H2 rockets.

"We received a request from Hughes this the week to cancel the contract. We are currently holding negotiations over this and we have yet to reach a final conclusion," he added.

The spokesman, who declined to be named, refused to give further details of the contract.

Under the deal, Hughes had initially planned to launch 10 satellites with the next generation H-2A rocket, a high-performance but cheaper version of the H-2, said a NASDA official, who declined to be named.

The 10 launches would add up to a value of about 90 billion yen (830 million dollars), he said.

"This cancellation reminds me that this is how the world thinks of us. I think we have to do a better job," said the NASDA official.

The rocket had a 90 percent success rate, he said, admitting surprise at the cancellation.

Asked how it might affect the H-2A rocket project, he said: "Our sole purpose is to develop a good rocket for reduced cost, so we have to proceed with our current project."

"That is the only way to regain confidence from the world."

The US giant was scared away by successive failures of the current H-2 series, which sports an almost identical engine to the next model, said a report in the Yomiuri Shimbun, which could not be confirmed.

In November last year, space authorities exploded a 24-billion-yen H-2 rocket and satellite by remote control when it veered off course after liftoff.

And in February 1998, a 36-million-dollar satellite was lost in space despite a successful separation from an H-2 rocket because it was released at the wrong altitude and sent into an elliptical orbit.

A clause in its contract allowed Hughes to cancel and get a refund in the case of two successive failures, said the Yomiuri Shimbun.

Hughes was demanding a refund of about 28 million dollars from NASDA which it paid in advance for the deal, it said.

The spectacular rocket failures forced NASDA to postpone the launch of the next generation H-2A rocket, orginally scheduled for last February, to some time before March 2001.

NASDA's chief, Isao Uchida, resigned last week following last November's rocket failure, quickly followed by the agency's director for rocket development, Eiji Sogame.

Copyright 1999 AFP. All rights reserved. The material on this page is provided by AFP and may not be published, broadcast, rewritten or redistributed.

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