Q3 2023 Enel Américas SA Earnings Call
Yeah.
Okay.
Good day, ladies and gentlemen, and welcome to and then La Medical's third quarter 2023 results Conference call. My name is Gigi and I'll be your operator for today. After the speaker's presentation. There will be a question answer session to ask a question. During this session you will need to press star one.
One on your telephone.
We'll then hear an automated message advising your hand is raised to withdraw your question. Please press star one one again.
Please be advised that today's conference is being recorded.
This presentation contains statements that could constitute forward looking statements. These statements appear in a number of places in this presentation and include statements regarding the intent belief or current expectations of Enel Americas and its management with respect to among other things and.
They'll Americas business plans, and Ela medical cost reduction plans trends affecting enel Americas financial condition or results of operations.
Including market trends in the electricity sector in Chile, or elsewhere supervision and regulation of the electricity sector in Chile or elsewhere, and the future effects of any changes in the laws and regulations applicable to enel Americas or its subsidiaries.
Such forward looking statements reflect only our current expectations are not guarantees of future performance and involve risks and uncertainties actual results may differ materially from those in the forward looking statements as a result of various factors. These factors include a decline in the equity.
Capital markets and increase in the market rates of interest in the United States or elsewhere adverse decisions by government regulators in Chile or elsewhere and other factors described in Enel Americas integrated annual report.
Readers are cautioned not to place undue reliance on these forward looking statements, which state only as of their dates and then Americas undertakes no obligation to release publicly the results of any revision to these forward looking statements except as required by law.
I would now like to turn the presentation over to Mr. Rafael de La Plaza, and then Americas head of Investor Relations. Please proceed.
Okay.
Thank you <unk>.
So the Lewisville Badri, ladies and gentlemen, I won't go through all of the third quarter 2023 results presentation.
And then I think investor relations of Amerigas.
<unk>, our seal instead of really old steel will be presenting the main figures of these periods.
Let me remind you that this presentation will follow the slides that you can sign in the company's website.
Following the presentation, we will have the usual Q&A session.
Please remember that west coast can be made totally through the telephone line.
So now let me hand over the call derailleur, who will start by outlining the main highlights of the period in slide number three aurelio.
Florida.
Thank you Rafael.
During the last few months, we have continued with our renewable generation planes as <unk> added more than 400 megawatts of new capacity. This quarter with this our matrix is now around 93% renewable in line with our energy.
Transition goals.
Adjusted EBITDA in the spot increase it by 20% compared to the third quarter of last year.
This considers homogeneous perimeter is meaning that we are including results from the roof in both periods and excluding from 'twenty to 'twenty two results.
<unk>, Yes, <unk> suite as we do not consolidate DS at those companies anymore.
We are also excluding FX effects, which had a positive impact of 7 million U S dollars. During this period.
This improvement is mainly explained by better results in distribution business in Brazil.
In generation business in Colombia.
We also saw earnings bought in recovery on our group net income for the first nine months of two anti <unk>, III, which reached <unk> eight.
8 billion U S dollars, a significant increase compared.
Compared to last year.
Which was minus zero point minus $100 million U S dollars.
This increase is mainly explained by the impairments related to sales of <unk> and <unk>.
And better adjusted EBITDA.
Adding net debt as of September 30.
We reach at $6 1 billion U S dollars, which is 12% lower than year end 2022.
This is mainly explained by lower debt consolidation related to asset disposals.
On slide four I will highlight our positive performance during this year.
This is slide shows a summary of our main indicators in a homogeneous view.
This means excluding for both periods sold assets Fortaleza gas, Xi'an, Costar data and docs sheets, and including the roof in asset, which as you know are in the sale process, but still a part of our operation.
In generation business, we significantly increased our installed capacity and net production. Thanks to the deployment of new renewable part thanks.
Greek business, we increased our customer base and have just sold while smart meter grow by almost three times.
Our financial indicators indicators showed a very positive performance, improving EBITDA, increasing our capex, maintaining our net debt rate and ratios basically in line with the last year.
All of those are these reflects that we are performing in a solid manner and our main indicators are improving across our businesses, let's now analyze the following slides our operational highlights.
In generation business during this year.
<unk> added close to one gigawatts of renewable capacity.
After the sale of course generic duck sued and Democrats are Hana, we reached 414 gigawatts of installed capacity of which 90% is renewable.
Net production in the third quarter reached 13 nine Terawatt hour.
<unk> of 7% compared to same period of last year explained by the deconsolidation of course, then Adrian dark suit isolating. These effects production would have increased by 11% explained by higher generation in Colombia and Peru.
From our total Brit total production, 87% is emission free a significant growth compared to the 74% of the same period of last year.
And then just say has decreased by 3% during this quarter, reaching $18 eight hour, mainly due to the change in the perimeter isolating. These effects sales would have increased by 4% mainly explained by higher sale in Colombia.
On slide six we will focus on our development of renewable capacity.
Yeah.
During two and three we have added almost one gigawatts of new renewable capacity.
593 megawatts of our wind farms located in Brazil, and 381 megawatts of solar plants, located in Colombia, Peru and Central America.
We have invested $1 billion in renewable energy during the first nine months of this year.
Mainly located in Brazil, and Colombia. We are currently working on addition, one four gigabits of capacity under construction located in Brazil and Colombia.
300 megawatt side wind projects and one point to one gigawatt solar projects during two NDA vintage III.
400 megawatts will begin operations, while one gigawatt or 1000 megawatts will enter into 2024.
Regarding our pipeline.
We are going to see that is 51 gigabyte soft new capacity from these amounts vintage three gigawatts are in early stage and 285 gigabyte, sorry mature stage.
In addition to this we have around one gigawatts of battery energy storage system and we are also considering one four gigawatts of projects under construction already mentioned.
Let's continue with grids operation highlights on slide seven.
Electricity distributed reached 27, eight terawatt hour in the third quarter, which represents an increase of 4% compared to the same period last year in homogeneous bedroom is explained by higher sales in all our distribution companies regarding number of customers.
Without considering custom is outstanding as last year, we had an increase of around 400 into A&P thousand.
In the last 12 months, reaching 23 6 million customers.
Smart meters increased around two six times, reaching 605000 during this period, mainly due to the deployment in some follow.
Our net rod.
Has increased by 19% in the last 12 months, reflecting the significant investments that we have done in our rates the ratio net broad Brooke estimate also reflects an important growth of 17%.
In terms of quality indicators.
We can see any book in degrees in Argentina, mainly explained by the extremely extremely high temperatures that we saw during December of last year.
After this year sorry.
In the rest of the countries our quality indicators improve it.
Our remaining flat except for <unk> in Peru, which increased due to a change in calculation great detail compared to last year. Finally in terms of energy losses, it improve it in Argentina, Brazil, and Peru, a remaining flat in Colombia.
Analyzed all of the investments of the period in the coming slides.
During the third quarter of this year, our case, our capex decreased by 8% compared to the same period of last year, reaching $766 million, mainly explained by the disposal Fortaleza and everybody asked NFC anchors danita and dark suit and lower investments in generation.
Business in Peru.
If we exclude this the perimeter impact of Capex would have increased it by five 5%. This is mainly explained by higher investments in Colombia and renewable business in Brazil.
From the total amount, 67% was invested in in Brazil, while in terms of business, 51% was devoted to renewable and 40% degrees grew.
Gross capex reached $431 million.
Whats mainly devoted to renewables with 83%.
Now I will comment on the financial results of the period in the coming slides.
EBITDA in the third quarter reached 1 billion U S dollars.
11, 8% higher than the same period of last year, mainly explained by better results in generation business in Colombia and distribution business in Brazil.
This was partially offset by the fact that we do not consolidate <unk> Fortaleza <unk> CN, Costa Haneda and Dr sued in disputed.
If we exclude this effect and now also include results in Peru and isolated effects.
<unk>, we get to an adjusted EBITDA of 1140 $2 million.
An increase of 19% 19, 6% compared to the same period last year.
Opex decreased by 19% mainly explained by the change in the consolidation perimeter net financial results increased by 38, 1%, mainly due to lower financial income related to regulatory asset in Brazil.
Group net income in the third quarter reached $307 million, which compares with a negative net income of $680 million last year due to the negative impact coming from the sale of land and a bias and annual Fortaleza.
This positive net income is a consequence of good operational result and growth in EBITDA.
Finally in terms of debt, we see an important reduction of 11, 5% compared to December 2018, we will analyze in detail the escalated at all.
On slide 11, we will analyze the EBITDA evolution and breakdown.
Starting from $894 million of EBITDAR of third quarter of 2000 <unk>.
We have to exclude $105 million come from.
And in Fortaleza, <unk> and CN <unk> suite in order to make it comparable comparable with third quarter of dentistry.
Then we see that we have positive operational results in renewable grids retail and Enel X, while thermal generation decrease it.
With this we get to an EBITDA of 991 9 million U S dollars for third quarter of 2023, which is 26% higher than last year, considering the same period.
Effects.
FX had a positive impact of $80 million result, resulting in a reported EBITDA for the quarter of 1 billion U S. Dollar.
<unk>, 12% higher than reported EBITDA of same period of 2022.
As already mentioned the roof and Asics are considered discontinued operations, meaning that its results is considered below EBITDA LIFO. If we can see that EBITDA coming from Peru, We get and then EBITDA of 1000 149 million.
From our reported EBITDA of 54% came from Brazil, 43% from Columbia, and 3% from Central America in terms of business lines greets represents 47% of our reader and renewables 46%.
And then the next contribute with 6% and 1% respectively.
Let's see EBITDA breakdown on accumulative basis in the coming slides.
Starting from 2000 $930 million of EBITDA.
Of these first nine months of 'twenty to 'twenty, two we have to exclude 341 coming to the asset disposals.
And we see that we have a positive operation results in renewables and greets businesses, while thermal generation repay and in lax degrees. It with this we get to an EBITDA of $8 $3 to $1 billion for the period, which is 19% higher than last year, considering the same period.
FX had a negative impact of $172 million, resulting in a reported EBITDA for this half.
<unk>.
For this period of 2008.
$899 million U S dollars, 1% lower.
Then reported EBITDA in the same period of 2022.
EBITDA from Peruvian operations was $515 million, reaching an EBITDA of 3000 $450 million.
From our reported EBITDA of 59% came from Brazil.
The 8% from Columbia, and 3% from Central America in terms of business lines greets represents 50% of our EBITDA and renewables, 42% retail and then leaps contributed with 7% and 1% respectively.
On slide 13, we will have a focus on the cash flow of the company.
Starting from an EBITDA of 2890 $9 million, we see that net working capital amounted to 986 minus $926 million.
I'll explain it by what those scratch scar city accounting Brazil.
These <unk> credits used in connection with reimbursement to final customers CVA impact in Brazil, and FX and high any inflation impact in Argentina.
Taxes paid to do it in the period amounted to <unk>.
$553 million, while net financial expense amounted to minus.
$479 million.
With these funds from operations amounted to $942 million.
A decrease of $830 million compared to the same period of last year.
After investments offer for 2040 $4 million, including 1000.
$132 million of growth Capex, we get to a free cash flow of minus 1000 $102 million. Let me now analyze the debt of our company in the coming slides.
Gross debt amounted to $7 2 billion, a decrease of 11% compared to December 2022, mainly explained by the deconsolidation of assets available for sale in 2023.
As of late and this effect gross debt would have increased by one 7% mainly to the higher debt.
And in Colombia, and El setup, partially offset mainly by lower debt in Enel, Brazil, Enel Americas, holding and have some paolo.
Gigi: Good day, ladies and gentlemen, and welcome to Enel America's Third Quarter, 2023 Results Conference Call. My name is Gigi, and I'll be your operator for today. After the speaker's presentation, there will be a question and answer session. To ask a question during the session, you will need to press star 1-1 on your telephone. You will then hear an automated message advising your hand is raised. To withdraw your question, please press star 1-1 again. Please be advised that today's conference is being recorded.
<unk> reshaped reach at $6 1 billion.
Reduction of 11% compared to the same.
To the end of two anti <unk>.
This includes free cash flow for minus 1001 hundred $2 million net.
Net dividends paid for minus $199 million extraordinary operations for one 1000.
$530 million related to the sales of <unk> suite.
Unnamed Speaker: This presentation contains statements that could constitute forward-looking statements. These statements appear in a number of places in this presentation and include statements regarding the intent, beliefs, or current expectations of Anel Americas and its management with respect to among other things. Enel Americas business plans, Enel Americas cost reduction plans, trends affecting Enel Americas financial condition, or results of operations, including market trends in the electricity sector in Chile or elsewhere, supervision and regulation of the electricity sector in Chile or elsewhere, and the future effects of any changes in laws and regulations applicable to Enel Americas or subsidiaries.
Net debt deconsolidation for $906 million and FX effect, four minus 340 $46 million.
In terms of currency and country, we see that Brazil remains as the largest contributor while the debt at holding level represents 80% of the total.
Finally regarding the cost of debt, we can see an increase for disputed going from nine 8% to 12, 5% mainly explained by higher interest rates in Brazil, and especially in Colombia and to the fact that in December 2022.
We had the Peruvian operations, which had the lowest cost of debt.
Unnamed Speaker: Such forward-looking statements reflect only our current expectations, our not-guarantees of future performance, and involve risks and uncertainties. Actual results may differ materially from those in the forward-looking statements as a result of various factors. These factors include a decline in the equity capital markets, an increase in the market rates of interest in the United States or elsewhere, adverse decisions by government regulators in Chile or elsewhere, and other factors described in Enel Americas integrated annual report.
Our next slides I will conclude this presentation with some growth in <unk> remarks.
During the third quarter of 2023, we had solid operational results across all our businesses with relevant increase in energy demand.
We maintained a solid financial position, which allow us to execute our Capex plan.
We are a strong believer delivering and executing the new capacity coming from renewable sources in line with our strategy.
Unnamed Speaker: Readers are cautioned not to place undue reliance on these forward-looking statements, which state only as of their dates. Enel Americas undertakes no obligation to release publicly the result of any revision to these forward-looking statements, except as required by law.
Regarding our corporate simplification, let me comment that our asset disposal plan is on track with no relevant news from the moments.
Finally, let me announce that we are going to present, our strategic plan for the period Duane to 'twenty four 'twenty 'twenty six during the last days of November.
Rafael de la Haza: I would now like to turn the presentation over to Mr. Rafael de la Haza. Enel Americas head of investor relations, please proceed. Thank you, Yi Yi.
Soon we will send you the EBIT <unk> to all of you.
Rafael de la Haza: Good morning, ladies and gentlemen, and welcome to our third quarter's 2023 results presentation.
Well, thank you Aurelio.
Clear.
So now we are going to.
Rafael de la Haza: I'm Rafael de la Haza, investor relations of Enel Americas, and in the coming slides, our CEO, Mr. Orelio Urfillo, will be presenting the main figures of this video. Let me remind you that this presentation will follow these slides that you can find in the company's website.
Call to the operator for the Q&A session. Operator. Please proceed.
Thank you as a reminder to ask a question. Please press star one one on your telephone.
And wait for your name to be announced to withdraw your question. Please press star one one again please.
Rafael de la Haza: Following the presentation, we will have the usual Q&A session, but please remember that questions can be made only through the telephone line.
Please standby, while we compile the Q&A roster.
Rafael de la Haza: Now, let me hand over the call to Orelio, who will start by outlining the main highlights of the period in a slide number three.
Our first question comes from the line of Javier Suarez from Mediobanca.
Hi, good morning, and thank you for the for the presentation three questions. The first one is on slide number 13 on the cash flow of the period.
Aurelio Oliveira: Orelio, that's all the Q&A session.
Aurelio Oliveira: Thank you, Rafael. During the last few months, we have continued with our renewable generation plant execution, adding more than 400 MW of new capacity this quarter. With this, our matrix is now around 90% renewable in line with our energy transition goals.
Net working capital absorption that is close to one 1 billion 1 billion. So you can help us to understand the evolution of that working capital by year end. When you are expecting that net working capital negative impact, but yes, indeed, our comps.
That would be the first question. The second question is on the cost of debt in slide number 14 that has been we have seen a significant increase in the cost of them and that has been explained by.
Aurelio Oliveira: Adjust the Davida in this quarter increased at by 20% compared to the third quarter of last year. This considers homogeneous parameters, meaning that we are including results from Peru in both bureaus and excluding from 2022 results. Fortaleza Goyaz, CN, Constantin and Docshoot, as we do not consolidate these adults' companies anymore. We are also excluding effects, effects, which had a positive impact of $7 million US dollars during this period. This improvement is mainly explained by better results in distribution business in Brazil and generation business in Colombia.
Hi, Yeah, because of data in Brazil, and Colombia. So the question for you is how do you see that cost of debt in 2000 for the rest of the year.
In 2023, and then in 2024.
What's the implication this half for the heating of the company that the company, which is the level of net debt to EBITDA with the week Enel America feels comfortable with.
And the final question is on that statement that you have made at the end of your presentation are now on the asset disposal plan, you can give a little bit more granularity on how the processes proceeding on are you will you may see.
Expect some significant news flow before the year. Thank you.
Aurelio Oliveira: We also saw an important recovery on our group net income for the first nine months of 2023, which reached $0.8 billion US dollars, a significant increase compared to last year, which was minus $100 million US dollars. This increase is mainly explained by the impairments related to sales of Enel Americas and Enel Americas and better adjusted the Davida.
Thank you. Thank you Javier. Thank you for your question regarding for networking capital have there.
There is an impact right that we are recovering.
That we are and that was due to.
Especially for their the account the CVA.
Regarding.
Hydrology in Brazil right.
And also but this is a great partner and also part of the of the physical thing issues.
Aurelio Oliveira: Regarding net debt as of September 30, we reached $6.1 billion US dollars, which is 12% lower than year end 2022. This is mainly explained by lower debt consolidation related to asset disposal.
This is something that we are.
Just.
Correcting or adjusting effects from previous periods. I mean, this is not something that will repeat next year. So from these 900 in 2026.
Aurelio Oliveira: On slide four, I will highlight our positive performance during this year. This slide shows a summary of our main dictators in an homogeneous view. This means excluding for both bureaus sold assets. Fortaleza Goyaz, CN, Constantin and Docshoot, and including Peruvian asset, which, as you know, are in a sale process, but still are part of our operation perimeter.
Half of that roughly half of these amounts.
Due to the all the support that we had in the previous period.
Related to hydrology related to the physical convenience issues that we are giving it back because it's not for the company right, we're giving back to the consumers as they can.
Similar to the clients in Brazil, so for these amounts.
Despite its not.
Aurelio Oliveira: In generation business, we significantly increase our installed capacity and net production thanks to the deployment of new renewable power plants. In Greece business, we increase our customer base and energy sold while smart meter grow by almost three times. Our financial indicators showed a very positive performance in proving Enel Abida, increasing our capex and maintaining our net debt rate and rates of basically in line with the last year. All those, all these reflects that we are performing in a solid manner, and our main dictators are improving across our businesses.
These are extraordinarily two are not repeating the in the in the coming in the coming periods right. This is the mechanism in Brazil, you'll see that we have.
This delay of one year of impacting in terms of CVA right different from for example, if I if I can say in Colombia, Colombia two months. After you you have you received it or give it back in Brazil, we will have a delay of one year regulatory delay. So that's why we are.
Seen impact is not due to this year to the current EBITDA that was generated due to us from the Bureau produce.
But of course, it affects our our cash flow.
Related to the cost of debt, yes, exactly we are.
We follow.
Aurelio Oliveira: Let's now analyze the following slides our operational highlights. In Generation Business, during this year, we have added close to one gigawatts of renewable capacity. After the sale of co-saneera, doxude and termocata henna, we reach 14 gigawatts of install capacity of which 90% is renewable.
The major part of our debt coming from variable.
<unk> cost.
So the CS index it basically in the Brazilian.
<unk> and benchmark also in.
In.
In Colombia right.
So of course, it affects us but.
We are projecting a reduction were projected reduction like everybody.
Aurelio Oliveira: Net production in the third quarter reaches 13.9 teravatt hour, a decrease of 7% compared to same period of last year, explained by the deconsolidation of co-saneera and doxude. I saw later in these effects, production would have increased by 11%, explained by higher generation in Colombia and Peru. From our total production, 87% is a mission-free, a significant growth compared to the 74% of the same period of last year.
In that in that.
Is that different let's say in a lower base, but we are projecting a reduction.
This is very important because we see.
More room to a reduction also in our in our own.
Capital or.
And our cost of capital.
But this is not.
Something that.
Concern it does.
This is not our concern because we have a very low.
Aurelio Oliveira: Energy sales decreased by 3% during this quarter, reaching 18.8 teravatt hours, mainly due to the change in the perimeter. I saw later in these effects, sales would have increased by 4%, mainly explained by higher sale in Colombia.
Leverage of this company.
Now we are talking about a company that is.
One four times.
Net debt to EBITDA.
Even though if we include the pension fund of some policies around one six times, which is very low.
Aurelio Oliveira: On this like-six will focus on our development of renewable capacity. During 2023, we have added almost one gigawatts of renewable capacity, 593 megawatts are wind farms located in Brazil, and 381 megawatts are solar plants located in Colombia, Peru and Central America. We have invested one billion US dollars in renewable energy during the first nine months of this year, mainly located in Brazil in Colombia. We are currently working on addition 1.4 gigawatts of capacity under construction, located in Brazil in Colombia. 300 megawatts are wind projects, and 1.1 gigawatts are solar projects, during 2023, 400 megawatts will begin operations while 1 gigawatts or 1000 megawatts will enter in 2024.
And.
I mean this is something manageable.
S Enel Americas, we have this possibility to batter.
Choose.
The way, we are where we increased the depth and power of our company.
A far better even at that we see that Brazil, Brazilian, especially Colombia they are higher.
Interest rates, but we can manage with this very low leverage levels. So this is something that.
Of course, we need to be very proactive also in the Netherlands.
Debt and liability management of this company.
But something very very manageable.
And last but not least <unk>.
Bozo questions. The asset disposal question, we are seeing that.
Aurelio Oliveira: Regarding our pipeline, we are considering 51 gigawatts of new capacity. From this amount, 23 gigawatts are in early stage, and 25 gigawatts are in mature stage. In addition to this, we have around 1 gigawatts of battery energy storage system, and we are also considering 1.4 gigawatts of project under construction already mentioned.
Well as you know we give all.
The information since our strategic plan.
Where we are.
We are advancing and we are.
Very proactive in giving you.
From time to time.
Information about these now.
Aurelio Oliveira: Let's continue with Greed's operation highlights on this live 7. Electricity distributed reach at 27.8 terabatao in the third quarter, which represents an increase of 4% compared to the same period of the last year in the Mugenios perimeter, explained by Higher Sales in all our distribution companies. Regarding number of customers, without considering customers of Enel Goya's last year, we have an increase of around 420,000 in the last 12 months, reaching 23.6 million customers.
From the Peruvian side.
The distribution business is advancing on our own.
<unk>.
On the antitrust front.
And the generation, we are as announced that we added.
Advancing on the negotiation negotiation front, we expect expected according to the time timeframe than that.
The timeline.
That usually.
Moving these kind of.
<unk> transactions, we expect that these designs that can be concluded by the first quarter of next year.
Aurelio Oliveira: Smart meters increase at around 2.6 times reaching 600 and 5,000 during this period, mainly due to the deployment in São Paulo. Our net rub has increased by 19 percent in the last 12 months, reflecting the significant investments that we have done in our grids. The ratio net rub per customer also reflects an important growth of 17 percent.
Regarding the Argentina in Argentina and assets.
We are.
We launched the process.
We are expecting also.
In parallel.
How the situation of the country evolves.
And.
To give you more more color in the.
And probably in the beginning of next year.
And also in Brazil, we are moving the process of of our.
Aurelio Oliveira: In terms of quality indicators, we can see an important increase in Argentina, mainly explained by the extreme high temperatures that we saw during the summer of last year. In the rest of the countries, our quality indicators improve or remain in flat except for Saigi in Peru, which increase due to a change in calculation criteria compared to last year. Finally, in terms of energy losses, it improves in Argentina or Brazil in Peru and remains in Colombia.
Distribution et cetera.
We are.
Analyzing and seeing especially the condition for our renewable concessions renewable.
To have more and more.
A more clear view of this process and.
In analyzing the possibility to give you more more call out of this process by the beginning of next year.
No.
Processor.
They were they were allowing chip.
I repeat what I said in the in the in the previous in the previous call that.
Aurelio Oliveira: Let's analyze our investments of the period in the coming slides. During the third quarter of this year, our CAPEX decreased by 8 percent compared to the same period of last year, reaching $766 million, mainly explained by the disposal of Fortaleza, Enel voyaz, Enel Cien, Cossanera, and Doxwood and lower investments in generation business in Peru. If we exclude the perimeter impact, the CAPEX would have increased by 5.5 percent. This is mainly explained by higher investments in Colombia and renewable business in Brazil.
Of course, it will not sell the assets at any price we will sell if it's in the right price the right the correct price.
So.
But we understand that this kind of situations in the country skin.
Ken can give some more mark more clarity of this process and we expect to give you more more clear with you in the coming months.
Interesting many thanks.
Thank you.
Minder to ask a question. Please press star one one on your telephone.
Aurelio Oliveira: From the total amount, 67 percent was invested in Brazil while in terms of business, 51 percent was devoted to renewable and 40 percent to Greece. Growth CAPEX reached $431 million and was mainly devoted to renewables with 83 percent.
Wait for your name to be announced to withdraw your question. Please press star one one again.
Okay.
Yes.
Southwestern us.
By email or the first one.
It was related to.
Aurelio Oliveira: Now I will comment on the financial results of the period in the coming slides. A bit by the third quarter reached $1 billion, $11.8 percent higher than the same period of last year, mainly explained by better results in generation business in Colombia and distribution business in Brazil. This was partially offset by the fact that we do not consolidate Enel Fortaleza, Enel voyaz, Cien, Cossanera, and Doxwood in this period.
It is from.
Andrew Mccarthy.
Paul.
The question is is we're glad to be.
Generation in Colombia.
That lag.
That advertising.
Third quarter 2023 benefited from higher sales volumes and a strong price realizations.
Considering the presence of El Nino on the position of your reservoirs.
We are approaching the commercial strategy in the fourth quarter fourth quarter of 2023.
Aurelio Oliveira: If we exclude this effect and also include results in Peru and isolate effects, we get to adjust a bidat of $1,142 million, an increase of 19 percent, 19.6 percent compared to the same period last year. OPEX decreased by 9 percent, mainly explained by the change in the consolidation perimeter. Net financial results increased by 38.1 percent, mainly due to lower financial income related to regulatory asset in Brazil.
Should this trend.
Pressure a lot of these during the final quarter over here into 2020.
So commercial efforts in Colombia are taken into account the situation.
<unk> on the position of our Russia, Russia.
All of us in the company.
Thank you Johan Thank you Andrew for your question.
Yes.
We anticipate the DCM, we add up our reserve that in a very good position in terms of either.
Right.
Lisa.
Uh huh.
Aurelio Oliveira: Group net income editor quarter, which is $307 million, which compares with a negative net income of $680 million U.S, dollars last year due to the negative impact coming from the sale of Enel Voyas and Enel Fortaleza. This positive net income is a consequence of good operational results and growth in Enel Vida.
Compared to other regions.
In Colombia as you mentioned the affected very strongly with the <unk>.
But we manage very well the reservoir by the beginning of the of the.
This station of the O'neill Nino season.
And.
And also benefit further up the position of our of our small hydro near the consumption area in Bogota. So that's why we got we have this flexibility to go up.
Aurelio Oliveira: Finally, in terms of that, we see an important reduction of 11.5% compared to December 2022.
This.
Aurelio Oliveira: We will analyze in detail our deaths later on.
These better results.
We expect that these better results.
Aurelio Oliveira: On slide 11, we will analyze the bidirevolution and breakdown. Starting from $894 million of a bidirevolution of the quarter of 2022, we have to exclude $105 million from Enel Fortaleza, Voyas and C.N. Cost and Enel Indox soon in order to make it comparable with 34th of 2023.
Well you know that the season ends in the first one.
And.
And.
And then.
The first quarter of 2024.
It will answer that.
The season.
And.
When you turn a dance, we probably it will be.
Aurelio Oliveira: Then we see that we have positive operational results in renewable grid, retail and Enel X, while thermal generation decrease it. With this, we get to Enel Vida of $991 million U.S, dollars for third quarter of 2023, which is 26% higher than last year considering the same perimeter. Effects had a positive impact of $80 million result in Enel Vida for the quarter of $1 billion U.S, dollars, 12% higher than reported a bidirevolution of 2022.
Part of this of these impacts will be consuming bye bye.
By the generation assets.
By the end of 280 283, we expect it to at least maintain these benefits during this period.
This is something that we cannot control, but the homework, we did it very well as you well mentioned because we entered in this season in the better in a better position of.
Okay.
Is that obesity.
Especially related to <unk>.
Well in the other side you have the distribution no bid.
Business.
<unk> affect the purchase of energy from the distribution business, but as I was explaining the first in the first question.
Aurelio Oliveira: As I already mentioned, the roof and assets are considered discontinued operations, meaning that its result is considered below a bidirevolution. If we consider a bidirevolution coming from Peru, we get an Enel Vida of $1,149 million. From our reported bidirevolution, 54% came from Brazil, 43% from Colombia, and 3% from Central America. In terms of business lines, grids represent 47% of our Vida, and renewables 46%. Retail and Enel X contribute with 6% and 1% respectively.
This pass through.
<unk> is two months after after day impact so.
Probably you have a.
A big check.
Our worst picture, but then you will recover in the following two months. So this is something not.
And very fast.
If youre asking me by the end of 2020 fee will have the probably the negatively impacting the distribution visit but in the other hand compensated by the generation business and the negative impact in the distribution business will be reported in the first quarter of 2024.
Yes, so the Columbia in Columbia and assets. We have this we have to show important things here first of all you managed the reserve one so we did a very good job in terms of.
Aurelio Oliveira: Let's see a bidirev breakdown on a cumulative basis in the coming slides. Starting from $2,930 million of this first nine months of 2022, we have to exclude 341 coming to the asset disposal. Then we see that we have a positive operation of results in renewables and grids businesses while thermal generation retail and Enel X decrease it. With this, we get an Enel Vida of $3.1 billion for the period, which is 19% higher than last year considering the same period.
In terms of how NIM right that we can save some months before the El Nino the season ends.
And on the other hand, we have this said this.
Better or this fast recovery from their regulatory assets that compensates the distribution.
When we have.
Negative impact from the from.
The purchase size that we purchase energy more expensive in the distribution side. So.
Aurelio Oliveira: Affects had a negative impact of $172 million resulting in a reported EBDA for this period of $2,899 million. 1% lower than reported EBDA in the same period of 2022. EBDA from Peruvian operations was $515 million reaching with this EBDA of $3,415 million. From our reported EBDA, 59% came from Brazil, 38% from Colombia and 3% from Central America. In terms of business lights, greets represent 50% of Aurelio Beda and renewables 42% retail and analytics contributed with 7% and 1% respectively.
At the end of the day this is.
Very good balancing that with the assets in the in the Columbia.
In the Columbia assets I don't know if I answered all perfect.
I think that you have.
This is a very complete.
Thank you very much.
Then we have <unk> for his closing remark the logical follow.
The question is the following its rollout.
I really think that Thats our plan.
Loss.
Hey, phosphide sales will be completed.
Particularly with the loss was asking about the plus or the Sao Paulos Pascal Fob.
Okay.
Outside of these properties.
Got it thank.
Thank you Tomas.
Well.
We still follow the same.
Hey man.
Aurelio Oliveira: On this lighter thing will have a focus on the cash flow of the company. Starting from EBDA of $2899 million, we see that net working capital amounted to $926 million, minus $926 million.
Our strategy since the beginning right.
Working for the risk of this plan.
Solving the removing the sponsorship.
We do not have any any changing any change on on these.
We are facing some.
Aurelio Oliveira: May explain it by water scarcity account in Brazil. Peace and co-fins credit using connection with reimbursement to final customers, CVA impact in Brazil, and effects and hiring inflation impact in Argentina. Texas paid during the period amount to $553 million, why on that financial expense amounted to minus $479 million. With these funds from operations amounted to $942 million, a decrease of $830 million compared to the same period of last year.
Some.
Opposition from the.
The unions in on this.
But we are pushing and we are moving forward.
Probably in the next year will.
Well, we are starting to execute this strategy, but following that the impact will be probably in the in the coming in the coming year.
<unk>.
Since we are moving.
Lots of <unk>.
Efforts as I told you also to to manage this higher cost.
We will present, our our financial strategy and our initiatives in terms of liability management in the next.
When we will publish our strategic plan.
Aurelio Oliveira: After investment for $2,044 million, including $1,132 million of growth capital, we get to a free cash flow of minus $1,102 million.
I ask you to wait for the end of this month that we'll presenting in these days but.
There is no.
No surprise or any issue related to this because we are moving exactly with this.
Aurelio Oliveira: Let me now analyze the debt of our company in a company's life. Gross debt amounted to $7.2 billion, a decrease of 11% compared to December 2022, mainly explained by the deconsolidation of assets available for sale in 2022. As relating these effects, gross debt would have increased by 1.7%, many to the higher debt in Enel Colombe and Enel Serra, partially offset mainly by lower debt in Enel Brazil and in America's holding and Enel São Paulo.
Productivity in terms of liability management from one side and in terms of pension fund we are exactly moving the same direction to reduce our exposure to the financial to the pension funds I mean, especially related to.
The the time the time off.
The discount rates.
Actually with <unk>.
Life's stable of retired ease I mean this is not our business. So we went to the risk and execute the final there risk of this place.
Aurelio Oliveira: Not that's reached $6.1 billion, a reduction of 11% compared to the same to the end of 2022. This includes free cash flow of minus $1,102 million, not dividend paid for minus $199 million, extraordinary operations for $1,530 million. Related to the sales of Goyars, Costanero and Doxwood, net debts deconsolidation for $906 million and effects effect for minus $346 million.
Thank you okay. Thank you told US earlier now, let's move to <unk> 12 for level three.
Three questions. The first question is a follow up what part.
Hardly a folks of their restaurant level technical report that the last day of renewable diesel obviously regional call centers and good afternoon.
We are a lot of implications it may have.
In Italy, our distribution processes.
Second question.
Update in the USA model industrial any progress.
You bet.
On the vertical lift.
For Btu, plus a number of solid or the total proceeds of the <unk> asset sales how much will you actually get up.
<unk> seen it in that space.
Aurelio Oliveira: In terms of currency and country, we see that Brazil remains as the largest contributor, while the debt at holding level represents 80% of the total.
Okay.
Thank you.
Thank you for now for the questions.
Aurelio Oliveira: Finally, regarding the cost of debt, we can see an increase for this period going from 9.8% to 12.5% mainly explained by Javier interest rates in Brazil and especially in Colombia and to the fact that in December 2022, we had the Peruvian operations which had the lowest cost of debt.
Related to the concessions.
In Brazil.
We.
Yes, we are.
We have advanced a lot since you saw since we see that.
And we saw the first proof.
Bozo from the government, which was not.
Let's say a very good proposal then after Oh.
Aurelio Oliveira: On next slide, I will conclude this presentation with some closing remarks. During the third quarter of 2023, we had solid operational results across all our businesses with relevant increase in energy demand. We maintained a solid financial position which allowed us to execute our CAPEX plan.
The public hearing.
The discussions with the government.
We the gasoline meant that reach a better proposals proposal.
Of course this is preliminary.
<unk> been analyze it but we have.
On the table a very good proposal in terms of Av.
Aurelio Oliveira: We are strongly delivering and executing the new capacity coming from the newable sources in line with our strategy. Regarding our corporate simplification, let me comment that our asset disposal plan is on track with no relevant news from the moment.
Our concession renewals and.
We are confident that we will moving in.
In the right way.
I think the the gasoline manta is perfectly aware of the importance.
For the distribution business and to have it.
It balance it.
Aurelio Oliveira: Finally, let me announce that we are going to present our strategic plan for the period 2024-2026 during the last days of November. Soon, we will send you the invitation to all of you.
And also.
An attractive business for investments in <unk> in Brazil in this area.
The distribution business needs investment infrastructure needs investments, so it's important and the government.
Correctly.
Rafael de la Haza: Well, thank you, Ovelio, very clear.
Adjusted there.
Proposal. So we are confident that we are moving in the right way.
Gigi: So now we are going to pass the call to the operator for the interview.
You mentioned.
Gigi: Thank you. As a reminder to ask a question, please press star 11 on your telephone and wait for your name to be announced. To withdraw your question, please press star 11 again. Please stand by when we compile the Q&A roster.
<unk>.
And of course, it's aligning with other added distribution, which which is lighting and.
In Rio.
We have a different situation.
In Rio regarding the <unk>.
The losses in <unk>.
In the city.
Javier Suarez: Our first question comes in the line of Javier Suárez from Mediovanca. Hi, good morning and thank you for the presentation. Three questions. The first one is on its line number 13 on the castle of the period and the net working capital absorption that is close to one billion. One billion dollars. You can help us to understand the evolution of that working capital by the year end on when you are expecting that net working capital negative impact to be reabsorbed in your accounts.
Well the good thing is that Ah.
Now and also the.
The minister of energy.
Well there is an alignment that we have a different problem in.
In Rio and all the technical analysis is moving in the correct way of analyzing this as in any specific.
Concession area, which is.
Something that.
Javier Suarez: That would be the first question. The second question is on the cost of debt in its line number 14. There has been a, we have seen a significant increase in the cost of debt that has been explained by Javier, cost of debt in Brazil and Colombia. So the question for you is how do you see that cost of debt in 2000 for the growth of the year in 2023 and then in 2024 and which implication this has for the guillotine of the company.
We do not have a close it proposal yet.
You know that.
They are there to move these is to have this this total let's say this total or for other concessions.
The the model.
Very well frame it and in parallel establish a special model or a special adjustments for the case of the concessions in Rio.
Javier Suarez: That's the company which is the level of net debt to evida with which any Latin America still feels comfortable with. And the final question is on that statement that you have made at the end of your presentation on the asset disposal plan.
We are we are still we reinforced our interesting concession offer you.
Javier Suarez: You can give a little bit more granularity on how the process is and we may expect some significant new flow before the year end. Thanks.
We are.
And we are confident that we will reach.
Aurelio Oliveira: Thank you. Thank you, Javier. Thank you for your questions.
Good that solution of this specific model for the concession of annual review.
Aurelio Oliveira: Regarding for networking capital Javier, there is an impact right that we are recovering that we are that was due to the especially for the the account of the CVA regarding the high-drology in Brazil, right? And also, well, this is the great part and also part of the physical thing issues. I mean, this is something that we are just correcting or adjusting effects from previous period. I mean, this is not something that we'll repeat on next year.
Especially in terms of.
Areas of high complexity, let's say or or definitely have lacked lack of safety, especially where we have higher losses and the company cannot operate in these areas.
A key issue.
We know how to operate we know how to reduce the losses. The problem is that there are areas in the state of free that we cannot debate.
So we are confident that from the regulatory aspect.
This this issue will be addressed it in the next.
In the next period, so the government.
Aurelio Oliveira: So from this 926 half of these are roughly half of these amounts is due to the all the support that we had in the previous period related to hydrology related to the physical things issues that we are giving it back because it's not for the company, right? We are giving it back to the consumers, the consumers, the clients in Brazil. So for these amounts, this part, it's not, it's extraordinary, it's not repeating in the coming in the coming periods, right?
And also with the companies.
And we strongly technical and independent view Wheeler.
We'll address this on this situation.
Second question.
Sorry.
Sorry stewardship stewardship.
Sure.
We are advancing on the solution. We have we have a very good thing we have.
Our pipeline and our pipeline 'twenty six 'twenty five 'twenty six gigawatts of.
Mature pipeline, which means that that item.
Aurelio Oliveira: This is the mechanism that in Brazil you see that we have this delay of one year of impacts in terms of CVA, right? Different from, for example, if I can say in Colombia, Colombia two months after you have it, you receive it or give it back in Brazil, you have a delay of one year regulatory delay. So that's why we are seeing impacts is not due to desire, to this the current ABDAD that was generated, it was from the previous period.
Excellent projects.
That's a R.
Good projects.
And we are executing one four gigawatts, we entered into into operations 400, Gigabits I mean the.
The figures.
They are as sound as they are sound season, as they are a strong figures.
It makes sense it makes sense to to get to find five net.
To.
Do these alliance with us and to move forward with the with our projects why is this because we can do more we can execute more.
Aurelio Oliveira: But of course, it affects our cash flow related to the cost of debt. Yes, exactly, we follow the major part of our debt coming from variable costs. So this is indexed basically in the Brazilian CDI and the benchmark also in Colombia, right? So of course, it affects us. But we are projecting a reduction, we are projecting a reduction like everybody in a different, let's say in a slower pace, but we are projecting a reduction.
Of these good projects.
We are.
In a process of.
We have.
We are finding interest on these projects.
Of course, it's not audios deaths.
Cost of capital.
It's not.
In a very good moment, but its cyclical it's ed.
And that will.
Will improve in the coming in the coming months.
So we are confident that.
Again here is something that.
We use the same on the same theme that we spoke in the.
Aurelio Oliveira: This is very important because we see a more room to a reduction also in our capital or in our cost of capital. But this is not something that concern does. This is not our concern because we have a very low leverage of this company. I mean, we are talking about a company that is 1.4 times net debt should be done. Even if we include the pension fund of some policies around 1.6 times, which is very low.
In the less confidence in this conference we will only sell the asset at the right. The right prices stewardship is nothing but selling selling projects selling selling and selling assets at the end of the day. So of course, we are looking for a partner that paid the right price for our assets if not.
We will take more time to get the better the better the better partnership that we that we are we want we want a win win approach. We are working for a win win but what we can offer all of our proven track records in term of executing projects always innovating also.
Operating good projects right.
And last but not least.
It's about the pending asset sales.
Aurelio Oliveira: And I mean, this is something manageable. As in, in El Americas, we have this possibility to better choose the way we, or where we increase the deaths of our company. Of our perimeter, we see that Brazil and especially Colombia are higher interest rates, but we can manage with this very low leverage level. So this is something that, of course, we need to be very proactive also in the deaths and liability management of this company. But something very, very manageable.
You are totally get in gas costs, we had in tax payments et cetera.
Well.
We already are.
Already mentioned this these figures it doesn't change.
Sure.
Too much.
But.
The tax.
The sale of the sale for the for the asset represents.
Yes.
Sorry, just one second.
This is not.
The question is the total of distribution generation North Asia distribution distribution.
Aurelio Oliveira: And the last, but not least, the disposal questions, they are a disposal question. We are seeing that, well, as you know, we give all the information since our strategic plan of where we are advancing, and we are very proactive and give you from a time to time information about this. From the Peruvian side, the distribution business is advancing on the anti-trust front and the generation we are as announced that we are advancing on the negotiation, negotiation front.
Yes.
This $2 9 billion U S dollars right the total.
Yeah, but he is asking about the tax rate that that rate of the local.
At 29, 5%, 30% more or less.
Yes.
Exactly.
Yes.
<unk>.
This is more or less.
This 30% over the $2 93.600 billion U S dollars.
The tax for the distribution park and the generation part where you are.
Analyzing but it's not different from from what's so different from what we announced it since the beginning.
Aurelio Oliveira: We expect it according to the time frame and the timeline that usually move in this kind of transactions. We expect that this transaction may be concluded by the first quarter of next year. Regarding the Argentinian assets, we are, we launched the process and we are expecting also in parallel how the situation of the country evolves and to give you more color in the future, probably in the beginning of next year. And also in the review, we are moving the process of distribution in CERA.
Both assets were talk we're talking about 5 billion U S dollars right.
Okay well.
They don't know multiple lift deals I think.
We conclude the results conference call, let me remind you that it doesn't.
Not only have Cmos here shortly is liable for any thoughts as it relates to thank you for the color Face-nail. Thank you Ian.
Sure.
David.
Thank you. This concludes today's conference call. Thank you for participating you may now disconnect.
Okay.
Okay.
Okay.
Okay.
Okay.
Aurelio Oliveira: We are analyzing and seeing especially the conditions for renewal of concessions renewal to have a more clear view of this process and analyzing the possibilities to give you more color of this process by the beginning of next year. So the process they were launched, I repeat what I said in the previews, in the previews call that of course we will not sell the assets at any price, we will sell if it's in the So, but we understand that this kind of situations in the countries can give more clarity of this process and we expect to give you more clear view in the coming months.
Javier Suarez: Interesting. Many thanks.
Gigi: Thank you. As a reminder to ask a question, please press star 1-1 on your telephone and wait for your name to be announced. To withdraw your question, please press star 1-1 again.
Andrew Mccarthy: Okay, Gigi, we have received some questions from by email on the first one. Aurelio is related to this is from Andrew McCarthy, criticor. And the question is regarding generation in Colombia. Andrew, underlying that the results in the third quarter of 2023 benefit from higher sales volumes and strong price realizations. Considering the presence of El Niño and the position of your reservoirs, how are you approaching the commercial strategy in the fourth quarter of 2023?
Andrew Mccarthy: And the second question is should this trend to preserve margins during the final quarter of the year and into 2024? So commercial strategy in Colombia taking into account the situation with El Niño and the position of our reservoirs in the country. Thank you. Thank you, Andrew, for your question. Yes, we anticipated this. We are always there, but they are in a very good position in terms of the hydrologicity. Compared to other regions in Colombia, as you mentioned, affected very strongly with El Niño.
Andrew Mccarthy: But we manage very well the reservoir by the beginning of the stations of the El Niño season. And also benefit for the position of our small hydro near the consumption area in Bogota. So that's why we have this ability to got these better results. We expect that these better results. Well, you know that the season ends in the first quarter and the first quarter of 2024. It will end the season. And when it ends, it will be part of this impact will be consumed by the generation, but by the end of 2023, we expected to at least to maintain these benefits during this period.
Andrew Mccarthy: This is something that we cannot control but the homework we did it very well as you well mentioned because we entered in the season in the better position of the Dralisity especially related to well in the other side we have the distribution no business which affect the purchase of energy from the distribution business but as I was explaining the first in the first question this pass through it's two months after the impact so probably you have a picture a worst picture but then you recover in the following two months so this is something not and very fast if you ask me by the end of 2020 free you will have the probably the negative impact in the distribution business but in the other hand compensated by the generation business and the negative impact in the distribution business will be recovered the first quarter of 2024.
Aurelio Oliveira: So the Colombian the Colombian assets we have this we have two important things here first of all you manage the reservoir so we did it a very good job in terms of in terms of El Nino right that we can save some months before the El Nino the season ends and on the other hand we have this better or this fast recovery from the regulatory assets that compensates the distribution when we have a negative impact from the purchase size that we purchase energy more expensive in the distribution size so at the end of the day this is a very good balance in the with the assets in the in the Colombia in the Colombia assets I don't know if I answered. Hello perfect I think that you have this is a very complete answer thank you very much Andrew.
Aurelio Oliveira: Then we have a question from a Scotia Land Tobago Fale and the question is the following it's about the liability management plan once the M&A transactions will be completed and particularly Thomas is asking about the plans for the South Paolo's pension fund and what are the strategies for the United States and these regards. Thank you Thomas. Well we still follow the same strategy since the beginning right we are working for the risk of this plan solving the removing the the sponsorship.
Aurelio Oliveira: We do not have any any changing any change on on this we are facing some some Opposition from the unions on this. But we are pushing and we are moving forward and probably in the next year, we are starting to execute this strategy. But the impacts will be probably in the coming year. Since we are moving lots of efforts, as I told you also, to manage this higher cost, we will present our financial strategy and our initiatives in terms of liability management in the next when we will publish our strategy plan.
Aurelio Oliveira: And I ask you to wait for the end of this month that we are presenting in details. But there is no surprise or any issue related to this because we are moving exactly with this productivity in terms of liability management from one side. And in terms of pension fund, we are exactly moving the same direction to reduce our exposure to the financial or to the pension funds, I mean, specially related to the time, the time of the discount rates, especially with the life table of retirees. I mean, this is not our business so we want to the risk and execute the final risk of this plan. Thank you. Thank you, Tomas. Thank you, Eurelio.
Fernando Fale: Now, let's move to the key part 12. Fernando Fale, three questions. The first question is the following one.
Fernando Fale: What are your thoughts of the recently published technical report that aligns the renewable distribution concessions in Brazil, any particular implications it may have on energy distribution concession? Second question, any update, investment model in Brazil, any progress being made? And the third question is from BGP Actual, Fernando Fale, of the total proceeds from the 10.6.6. How much will you actually get in cash after considering tax payments? Okay. Thank you. Thank you for now for the questions.
Fernando Fale: Related to the concessions in Brazil, we are advancing a lot since we saw the first proposal from the government, which was not a very good proposal. Then after all the public euring and the discussions with the government, the government reached a better proposal. Of course, this is preliminary and it's been analysed, but we have on the table a very good proposal in terms of.., of Concession Renewals. And we are confident that we'll move in the right way.
Fernando Fale: I think the government is perfectly aware of the importance for the distribution business and to have it balanced it, and also an attractive business for investments in Brazil in this area. The distribution business needs investment, infrastructure needs investment. So it's important and the government correctly adjusted their proposal. So we are confident that we are moving in the right way. You mentioned Enel Rio and of course it's aligned with other distribution which is light in Rio.
Fernando Fale: We have a different situation in Rio regarding the losses in the city. Well, the good thing is that Enel and also the minister of energy, well, there is an alignment that we have a different problem in Rio and all the technical analysis is moving in the correct way of analyzing this as an specific concession area, which is something that we do not have a closer proposal yet. You know that the order to move this is to have this total, let's say, this total or for other concessions.
Fernando Fale: The model very well framed and in parallel establish a special model or special adjustments for the case of the concessions in Rio. We are we still we and we are confident that will reach a good solution of this specific model for the concession of Enel Rio especially in terms of areas of high complexity, let's say or that we have lack of safety especially where we have higher losses and the company cannot operate in these areas, that that the key issue.
Fernando Fale: We know how to operate, we know how to reduce the losses. The problem is that there are areas in the state of Rio that we cannot operate. So we are confident that from the in the next period. So the government and also with the companies and with a strongly technical and independent view, will address this situation. I don't question what's about the issue. Sorry. This is to a ship. We are advancing in this solution.
Fernando Fale: We have a very good thing. We have a pipeline. In our pipeline, 26-35-26 gigawatts of mature pipeline, which means that there are excellent projects that are good projects. And we are executing 1.4 gigawatts. We enter into operations 400 gigawatts. I mean, the figures, they are sound figures. They are strong figures. And it makes sense to get to find a partner to do this alliance with us and to move forward with our projects.
Fernando Fale: Why is this? Because we can do more. We can execute more of these good projects. We are in a process of, we are finding interest on these projects. Of course, it's notorious that the cost of capital is not in a very good moment, but it's cyclical. It's something that will improve in the coming months. So we are confident that, again, here is something that we use the same thing that we spoke in the last conference in this conference.
Fernando Fale: We will only sell the asset at the right place. The stewardship is nothing but selling projects, selling assets at the end of the day. So of course, we are looking for a partner that paid the right price for our asset. If not, we will take more time to get the better partnership that we want. We want a win-win approach. We are working for a win-win approach. What we can offer, all our proven track records in terms of executing projects, also in operating good projects. And less, but not least, what's there?
Fernando Fale: The only one is about the, depending on how much will you actually get in gas after considering tax payments in Peru? Well, we already mentioned this figures. It doesn't change too much. But the tax... The sale for the assets represents, sorry, just one second. The question is the total of distribution generation distribution is 2.9 billion US dollars, right, the total. But he's asking about the tax rate, the tax rate of the local European corporate.
Fernando Fale: 29.5%, 30% more or less. This is more or less, this 30% over the 2.9 trillion US dollars, the tax for the distribution distribution part, and the generation part we are still analyzing. But it's not different from what we announced since the beginning. Both assets were talking about 5 billion US dollars, right.
Gigi: Okay, well, as there are no more questions, thank you, Julio, and we can include the resource conference call. Let me remind you that the investor relations team has usually available for any doubt as you may think. Thank you for your attention. Thank you, Gigi, for school. I have a good day. Thank you.
Gigi: This concludes today's conference call. Thank you for participating.