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Sainz had lost 21 minutes to the leaders on stage two when he went off course and had to double back.
But when his Red Bull team argued that the incident was caused by problems with the rally's own satellites rather than the GPS in Sainz's Buggy, his 21m26s delay was cancelled and he was put back in the rally lead.
On Monday night that decision was reversed when further investigations revealed that the Buggy's secondary GPS was functional and should have picked up the problem.
"The race management took its decision on 6th January 2013 further to a claim from competitor #303 on the basis of partial technical analysis proving that the main GPS experienced malfunctions," said a statement from the organisers.
"Comprehensive and more detailed analysis, based on the final report made by ERTF, in fact revealed that the second GPS was functioning correctly."
With Sainz having also lost 20 minutes to electrical problems on Monday's stage, he is now down to 10th overall.
Last year's winner Stephane Peterhansel leads for the X-raid team.
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