“Mr Einstein”, the eternal perfume and 3 denials


First we secure an investment, then we seek for profits…

When we invest in a project / business / property, we should make sure that we will not lose the capital, then search for profits. Otherwise…

My secretary called me: “Your next meeting has arrived”. Even before to enter in the conference room, I could smell a heavy perfume. I stepped in and noticed a woman looking at the old photos of Romanian and Greek cities on the walls. It was Tuesday around noon, but she was dressed as if she had just left a club. Her smell was reminding me of something… The man was enjoying the view of her back, dressed in her tight clothes. Around 40 something, you could shoot him a photo and post it next to the word “bored”. He was dressed in expensive clothes, wearing an even more expensive watch. I told them hello, she returned to her seat while he started playing with the keys of his car, an extremely rare and expensive one…

A photovoltaic project searching for partner or investor

The “golden age” of the Romanian Photovoltaic market lasted for less than 3 years. If one would like to evaluate the authorized projects that appeared for sale, he would split them in 3 “eras”: Most of the first era’s projects were developed wrong. Papers were missing, owners did not know much, engineers were making mistakes, lawyers were issuing negative Due Diligence reports. The situation got better in the second “era”, when 20 – 40% of the projects became acceptable, while in the 3rd and last one, more than 70% of the projects were correctly developed and authorized. In a market that absorbed almost 1,5 billion Euro in such a small time frame, the 2nd and the 3rd eras were the ones that allowed the investors to purchase licenses and build.

The gentleman in front of me was presenting a project which clearly belonged to the first “era”. It was located in central Romania and its construction had started. “I want a partner for the panels and the inverters, I am doing the rest”. Indeed, he did the rest, but in his own way, as he knew about everything… I asked what his profession was, but I didn’t understand the reply: “I spot opportunities”…

“I know better”

– “Why does the land cost that much?”

– “This is how much I bought it, what is the problem?”

– “You paid 12 times more than what a land for a photovoltaic project costs”

– “I know what I am doing, in the future it may have value as a property as well”

– “But this kind of projects use land that is not expensive”

– “I know better, go on”

– “Who is building the fence, the structure and organizing the construction site?”

– “A company, why?”

– “Do they have experience? Did you get guarantees?”

– “They were the cheapest and I know the owner, we are good friends”

– “But the cost is high, as if you brought a top company from Germany with people from there so as to construct… plus these companies must give you guarantees for their quality and performance, in every step…”

He started becoming angry and looked at my hands and neck, searching for a sign of wealth…

– “My friend will not betray me, I know better, this is not your business”

– “I am asking you the questions that every investor will ask as well”

– “Which type of panels have you chosen for your project?”

– “It does not matter, we put whatever we like”

– “The building permit and your connection contract describe the type of panels too”

– “What, do you think I don’t know about it? Of course I know, let me call the designer”

The designer said that he chose a type of panels which was obsolete and it would need to modify the papers or pay much more so as to find them somewhere on this planet…

– “Do you have any idea of what the investor will do with the green certificates? Where is he going to sell them?

– “I know, this is not difficult, we will sell them in the market”

– “In the near future it might be difficult, so investors are asking for long term unbreakable contracts, signed by a major player, an offtaker”

– “I know, I know, I spoke to some companies”

– “And?”

– “We will see. In worst case scenario, what is so difficult? We pay 2 guys, give them a room and a computer and we get the license to trade directly ourselves”

– “The guarantee is 500.000 Euro and if these people don’t know, you might lose even more…”

– “I know better, I will take special computers, I spoke to some friends”…

“If they have money, they come and invest. As simple as that”

The perfume of the lady was really disturbing, while the man was checking his very expensive mobile phone, so as to show me that he was really upset…

– “Why do you ask me all these questions? You are not professional. I spoke to others as well, they took the papers and they will find me an investor”

– “And they did not ask anything at all?”

– “They said that this is for the investor to ask”

– “And how are they going to present something they don’t know anything about it”

– “I know myself all the answers, it is enough”

– “But I don’t work like this…”

He stood up and told to his lady that they were leaving…

– “If they have money, they will come and invest. As simple as that. If they don’t have money, your investors will ask for questions”.

He barely shook hands with me and left my office. His woman opened her mouth and told me in Romanian with heavy Moldavian accent: “please send us an email with your questions and what papers you need and we will see”.

The “Romanian Einstein” and the eternal perfume…

– “Who was he?” my brother Grigoris asked when I entered in his office, on my way to mine

– “The Romanian Einstein”, I replied. “He thinks that knows everything about every subject”

– “In Greece we have millions of them”

– “Here as well. Too bad that he has paid much more money than he should and he does not know the sector at all”

– “Let’s see if we can protect him, if he wants to listen. What’s with this smell? Never mind, we have a new email by our friend from Sofia, Bulgaria…”

– “Correct! Bulgaria! This perfume is probably a cheap Bulgarian perfume of roses! Like the legendary ones we were making fun of… in Greece, in the 80s! “An old man goes to the doctor. “Sir, did you visit Bulgaria?” “Yes, when I were young. Why?” “I can smell it”.

A revealing site visit…

I admit that I have not visited all the projects I was selling. It was impossible for me to travel all around Romania, to every possible small village etc. Still, I was trying to check any project or location that was close to my route. This is why I asked “Mr Einstein” to visit his project, when I had to conclude a transaction in Transylvania. “Go, they are still working, you will be impressed”…

I landed at the nearest airport, had already reserved a car and decided to stop by, on my way to the other city. It was around 10 in the morning when I reached the project, thanks to GPS and the kindness of the local villagers.

When you go to a photovoltaic project under construction, you expect to see equipment, people working, an engineer or someone expert making sure that everything is built based on the design, plans etc. Well, this was not exactly the case… an old man was sitting on a plastic chair in front of a “door”. He was studying carefully the text written on a plastic bottle of beer. I noticed that he was quite educated, as there were several other empty bottles nearby.

I talked to him, but he did not pay much attention. I noticed the pillars placed in an area, a half built fence and 3 workers eating something there. I headed to them and asked to talk to the person in charge. – “He is in the city, to buy stuff” one of the workers replied. He was not so big fan of education, he just had a small bottle of beer in hand, not a big plastic one.

– “When is he going to be here?” they raised their shoulders… (this is normal, this question was out of their field of interest, if I would have asked “what is the bra size of Bianca Dragusanu?” I am sure I would get a firm reply).

– “Can you please give me his number so as to call?” They did not know… I returned to the “guard”…

– “Hello again. The responsible person here… where is he? Can I talk to him? Do you have his number?”

– “I don’t know if I have the right to give you, I need to ask my boss first”

– “Good, ask him and also tell him about the beer you are drinking. He will be happy to know”

He gave up and “spitted” the number…

– “Hello, I am Ilias Papageorgiadis, I spoke to the owner of the project and I came to ask some questions…”

– “Yes, yes, ask”

– “How do you install the pillars? Do you have the special equipment? I did not see any marks so as to place them where they should be”

– “What are you talking about? I show them where to dig and they execute”

– “You show them based on…”

– “Based on how I think and on what my boss told me”

– “Did you prepare the ground before? So as for them to stick well?”… I continued with several questions so as to realize if he was building something based on norms…

– “I don’t know who you are and what these things are. I do what my boss told me to do. I don’t have time anymore, talk to him, bye”.

First denial

His project was built without any control, the materials were of the lowest possible quality, the land was bought at a price which was 12 times higher than the normal one, the cost to connect was outrageous…

So the first offer I have found for the owner’s project was to re-evaluate everything from the very beginning, keep all the works that were acceptable and replace the rest. Then build according to standards, with guarantees etc. He would get his money plus a profit of 500.000 Euro, once the project was commissioned.

Of course his reply included the fact that he knew…

– “I know this kind of offers, but this is crap. I told you how much I want, this is how I have calculated and this is the profit I want to get out of this project”

– “Wouldn’t it be better firstly to secure that you won’t lose money? You have a project without any standards, you don’t have money to continue and you risk for your licenses to expire”.

– “It is a matter of pride, I know better”

Second denial

Several months have passed. “Mr Einstein” was always ready to sell the project but in the end a negative Legal or Technical Due Diligence was blocking the deal. I had also stopped insisting, till an investor asked me for a project in that particular area. I suggested for them to meet directly, having warned the investor about the project’s risks…

On the left part of the table, the investor and his lawyer. He had already acquired several projects and he wanted more, so they were in my office meeting project owners all day long. On the right part “Mr Einstein” and the lady. “Ilia, are they Bulgarians?” the investor wrote to me in a sms…

– “Look, this is an excellent project and I don’t intend to give it to you, a foreigner, so as to earn money on my work. I want my fair profit”

– “Ok, build it, deliver it to me and I pay you the price you ask for”

– “Good. You will give me the money to build…”

– “In this case we become partners and you cannot get the same offer”

– “So what do you propose?”

– “I start from scratch, resolve all problems, build and commission the project. I guarantee for you 200.000 Euro profit and if my budget remains at the expected level without surprises, I pay another 100.000 Euro”

“Mr Einstein” stood up and screamed to me: “Never make me lose my time again with people like this! I am not here for you foreigners to steal my money”. He added couple of “nice” words and left the room. The investor and his lawyer could not forget him during the entire day. The smell…

Third denial

More than a year had passed and the market was already at its last phase. Project owners were desperate to sell their licenses, people who were asking 150.000 Euro / MW were ready to sell for 50.000, as  investors were backing off.

“Mr Einstein” had disappeared. I admit that I also had not searched for him anymore, until a day that he called again…

– “Hello”

– “Hello”

– “Do you remember me?”

– “How could I ever forget you? How is it going? Did you sell the project? Did you build it yourself?”

– “No, I am still open to proposals. Some bloody foreigners promised to me financing, but nothing happened in the end”.

– “You don’t like my proposals, they are too realistic for your style”

– “This time I will like them, just find me one”

In one week I came back with a call:

– “Someone is ready to take over your project and pay to you what you invested so far”

– “How much profit?”

– “None”

– “Then why to sell?”

– “So as not to lose the money you paid already”

– “I don’t sell without profit. I read it somewhere, an American said it, Warren…”

– “Warren Buffet, yes”

– “You see? I know”

When we invest, we don’t gamble…

An investment is not an action of gambling. You invest based on some rules and the first of them is to try and secure your capital before talking about profits. If you risk your capital, then you expect profits correlated to the level of risk you undertake. Still, each investment should have an “exit strategy” and a “stop loss” decision ready to be activated, because life is full of surprises, even Warren Buffet would confirm this.

Hundreds of photovoltaic projects were built in Romania but “Mr Einstein” did not manage for his project to be one of them. As the construction quality was extremely poor, couple of winters with snows and heavy rains had caused very serious damages to the works performed, until the case was abandoned.

I heard about “Mr Einstein” that he was the “front man” of some other people, all of them searching for “easy money”. This is what they heard that you can get by investing in the renewable energy sector. I met him once more, by coincidence on the street. He told me that he knew from the start that his project would remain unfinished.

I believed him and I am sure that he will always know everything. Actually his wisdom is eternal… like the perfume of the woman next to him…


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