Chapter 33: Electricity
After more than three years of intensive construction, a multitude of factories had sprung up in cities like Bucharest, Constanta, and Ploiesti. While the larger factories boasted comprehensive facilities, the smaller ones, often housing just a few dozen employees, suffered from inadequate conditions. Among the most pressing issues faced by these industrial hubs was the provision of electricity. In cities with major factories, the power supply was relatively stable, but even there, shortages were common. Additionally, the demand for residential power was on the rise, exacerbating the overall energy deficit. Edel, deeply concerned about this issue, mused, "We can only hope the royal family will fund the necessary infrastructure."
The government's financial struggles were compounded by the need to reorganize the military, an endeavor made feasible only by the recent increase in factory output and corresponding tax revenues. If the economic conditions had remained static, the government would have found it impossible to allocate funds for emergency power solutions. This financial strain wasn't new; Prime Minister Sturley had previously been unable to pay government officials their full salaries due to budget shortfalls, though this issue was temporarily resolved after the back payments were made.
"Go and invite Mr. Hirschmann, the consultant," Edel instructed his chief guard. Understanding the future trends in power supply was crucial for the crown prince if he was to effectively address these recurrent issues.
The following day, Edel met with Hirschmann in his office. As a German, Hirschmann brought a characteristic meticulousness to his work, combined with a deep sense of responsibility. He also had a penchant for travel and enjoyed exploring the scenic landscapes of various regions.
Upon greeting the crown prince, Hirschmann asked directly, "Your Highness, how may I assist you today?"
"Hirschmann, given your expertise in electrical power, do you have any recommendations for addressing Romania's current energy shortages?" Edel inquired, hoping for practical advice.
Hirschmann, who had previously worked at Siemens and as a technical expert in a small Romanian thermal power plant, was well-acquainted with the local industry. Edel had been impressed by Hirschmann's capabilities during a facility inspection and subsequently recruited him as a personal consultant on electrical matters after a successful negotiation for equipment in Germany.
"Your Highness, the root of the electricity shortage lies in the rapid industrial growth of Romania, which has outpaced the development of power infrastructure due to the high costs involved," Hirschmann explained diplomatically, hinting at previous oversights in procurement. Edel understood this critique; his earlier focus had been on more visible sectors like steel, chemicals, and military, neglecting the less glamorous but essential power sector. Initially, only ten 5,000-kilowatt generators had been procured, a number that proved insufficient as small factories proliferated and private investment in power generation remained minimal due to its low returns compared to industries like light manufacturing and finance.
"Now, I am looking to change this situation. What specific advice can you offer, Mr. Hirschmann?" Edel asked, eager for solutions.
Hirschmann suggested, "Considering the ongoing developments, it's crucial to plan for future needs. Romania has significant hydropower potential, which could be harnessed to alleviate some of the power shortages in cities near rivers. For other areas, constructing thermal power plants locally might be advisable."
Edel noted the advice; while hydroelectric power was cheaper over the long term, its upfront costs were substantially higher than those for thermal power plants. Despite the economic and environmental downsides of thermal plants, including high operational and personnel costs, the immediate need for power was paramount.
"Mr. Counselor, can you project the future electricity demand for Romania?" Edel inquired, focusing on his primary concern.
"Certainly, Your Highness. In a few years, I estimate that Romania will require an installed capacity of approximately 300 to 400,000 kilowatts to meet its needs, with cities like Constanta needing slightly more," Hirschmann responded, providing a detailed forecast.
Grateful for the insights, Edel thanked Hirschmann and then signaled to his chief guard, "Please escort Mr. Hirschmann out."
Carust, the chief guard, extended a hand and said, "Mr. Hirschmann, this way, please."
Hirschmann nodded his thanks and departed.
Reflecting on the consultation, Edel considered the financial implications. The cost of a 10,000-kilowatt thermal power unit ranged from 15 to 18 thousand pounds, with a complete photovoltaic generator set costing up to 450,000 pounds. Factoring in additional equipment like boilers and steam turbines, the minimum setup cost would be around 800,000 pounds.
Anticipating a surge in economic growth, Edel realized that Hirschmann's estimates fell short of future demands. His own calculations suggested a need for 500,000 kilowatts of capacity, requiring an investment of 1.4 to 1.6 million pounds. With only 3.14 million pounds available from the royal funds after accounting for other commitments, and only 1.2 million pounds allocated for power development, the financial gap was evident.
Despite the daunting challenges, Edel was determined not to let industrial progress stall as it had in historical examples he had studied. He contemplated leveraging a financial strategy that had once led to the downfall of a major Eastern power, hoping it might provide a means to fund the necessary power infrastructure.
Resolved to take immediate action, Edel instructed Carust to send tender invitations to Siemens and General Motors for the construction of thermal power plants with a total capacity of 500,000 kilowatts. Recognizing the significance of the project, both companies promptly decided to send senior executives to participate in the tender, setting the stage for a critical development in Romania's industrial future.
"Mr. Herlsmann, as a former colleague, I wonder if you might be able to offer us some guidance in this tender? We would be immensely grateful," said Dika Stewart, the Deputy General Manager of Siemens, as he approached Helsman.
"I'm merely a consultant now, and there's little I can suggest. If you really need advice, focus on cost-effectiveness," Hirschman replied, aware of his role and the limited influence he should wield. His position as a consultant was clear, and he knew that the decision-making power for Romania's bidding lay with Crown Prince Edel. It was not his place to meddle unnecessarily, particularly since he still valued the friendship with the Crown Prince.
Dika Stewart, recognizing Hirschman's reluctance to leverage his influence on behalf of Siemens, chose not to press further. This was just one of the many strategic choices Stewart had to consider. His best bet now was to engage with the German ambassador, Baslob.
After the previous ambassador, Borges, had returned to Germany with his accomplishments, Baslob took over and quickly made a favorable impression on the German emperor. Borges, under Baslob's humble guidance, had briefed his successor on the intricacies of Romanian politics and emphasized the importance of Crown Prince Edel.
Following his meeting with Hirschman, Dika Stewart proceeded to the German Embassy on Providellie Avenue. The embassy, housed in a three-story building constructed in 1877, originally served as a combined office and storage space for a businessman who later went bankrupt. The German Foreign Ministry had since converted it into an embassy.
Ambassador Baslob awaited Stewart's arrival with anticipation.
"Good afternoon, Ambassador," Stewart greeted upon arrival.
"Hello, Mr. Stewart, I am pleased to welcome you to Romania," Baslob responded warmly.
After exchanging pleasantries, Stewart outlined his purpose. Ambassador Baslob was already aware that the Siemens Vice President was in Romania to secure a power order and had previously commended the Crown Prince for his commendable efforts. Now, it was Baslob's duty to ensure that this order went to a German company, ideally Siemens.
Reflecting on this responsibility, Baslob mentioned, "Mr. Stewart, our embassy is committed to securing orders for German firms. However, arranging a meeting with the Crown Prince requires advance scheduling, and I am presently tied up with the finalization of another project. Could you possibly wait a couple of days?"
Stewart, astute and experienced, quickly grasped the underlying message. He knew Baslob had a reputation for being somewhat indiscreet within diplomatic circles, a trait that ironically seemed to have played a part in his appointment to this relatively relaxed position, likely backed by a powerful minister.
Realizing what was implied, Stewart responded, "Mr. Ambassador, might you be available this evening? I would like to invite you to enjoy some delicacies from our German homeland."
Emphasizing the word 'delicacies,' Stewart caught Baslob's attention, who then eagerly accepted, "It has been ages since I last savored the flavors of my homeland. I will certainly join you this evening."
The following day, a satisfied Ambassador Baslob stood before Crown Prince Edel, advocating for the consideration of German relations and requesting that the order be awarded to German companies.
"Mr. Ambassador, while I recognize your support for a German company, this is, after all, a business transaction. As the Crown Prince of Romania, I must act in the best interests of the Romanians. I cannot guarantee that the order will go to Germany, but given our friendly relations, I will give preference to German companies if their offers are competitive in terms of performance and price," Edel responded thoughtfully.
Appreciating the Crown Prince's diplomatic reply, Baslob expressed his gratitude, "Thank you for your consideration towards Germany, and I hope our nations continue to enjoy a strong and enduring relationship."
Returning to the embassy, Baslob relayed the promising news to the waiting Siemens team.
"This outcome is very favorable for us. Now, we need to determine the right price to secure this order," Stewart instructed his team, aware that it was unrealistic to expect Romania to hand over the order directly to Siemens. They were now slightly ahead of General Motors in the race, and while other companies were also in the fray, Stewart knew that realistically, the competition was primarily between Siemens and GM, the two leaders in the power industry.
A week after Siemens' arrival in Romania, GM's team, led by the determined executive Sicor, landed. Known for their dominance in Europe, Siemens was seen as stiff competition by Sicor, who viewed the Romanian order as a chance to demonstrate his capabilities to GM's board and potentially expand into the European market.
Like Stewart, Sicor also sought influential connections upon his arrival in Romania. However, the United States had limited sway in the country, which only fueled his determination. He even reached out to Smith from Rockefeller multiple times for assistance.
As the bidding day arrived, representatives from various power companies gathered in a Bucharest hotel's conference room. Each participant was well-prepared and patiently listened to the details of the order, knowing the importance of the upcoming decisions.
After the presentation, companies were given two hours to complete their bid forms in private rooms designated for each. The stakes were high, and careful consideration was crucial.
When the time came, all companies submitted their bids, and the anxious wait for the results began. Stewart noticed Sicor and his GM team seated a few rows away.
Time seemed to accelerate until finally, the host announced the winner. "I announce that the winning bidder is 'Siemens.'"
The room filled with mixed reactions, but for Stewart and his team, it was a moment of triumph. Their strategic engagements and careful planning had paid off, securing Siemens a critical victory in the competitive landscape of the power industry.
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