Centrais Eletricas Brasileiras SA - Eletrobras (EBR) 2020 Q3 法說會逐字稿

Ladies and gentlemen, good afternoon, and thank you for waiting.

Welcome to the earnings call of Eletrobrás for the results regarding the third quarter of 2020.

(Operator Instructions) Remember that this audio file is -- and the presentation is available in PDF at the website of eletrobras.ri.

(Operator Instructions).

Before proceeding, any of the things that are said during the earnings call regarding different business respect of the company's projections, operational goals, financial goals, our beliefs and promises of the Board of Directors of Eletrobrás as well as being based on information that is currently available to the company, future considerations do not ensure performance.

They involve uncertainties, that's why -- and they might be based on things that might not happen.

Other operational issues might also influence the results.

Now I would like to give the floor to the President, Wilson Ferreira Junior; Ms. Elvira Presta, the Director of Eletrobrás; and Pedro Luiz Jatobá, Director of Generation.

Thank you.

You may proceed.

Good afternoon, everyone.

Thank you to the investors, the analysts and everybody that is kicking up at this -- following up the earnings call of the third quarter, good afternoon.

Now that we're done with the disclaimer in this presentation, because of the specificity of the results, it will be a little bit longer.

I will try to be as objective as possible in such a way that we can answer all the questions.

I give the floor -- well, let's go to Page 4. Here are the operational highlights.

Here is a good news, the market of energy is recovering.

And we are here with a daily load that is already operating above what was '19.

Well, in 2019, we have a difference, 26%.

And in May, this was changed, 11% more.

And the situation shows it's an important evidence of what we are doing.

When we look at this in the average ticket, monthly ticket, the same thing takes place in the bottom graph.

We have the green area that was very strong this year since the beginning of the pandemic.

And since then, we have been operating above, and here, the monthly base will be 4% above the year 2019.

So it is a situation that shows the regaining of the economy.

It's important to highlight, because of the specificity of Eletrobrás, the -- on the side of PLD, we see BRL 327 at the beginning of the year, a little bit before the pandemic.

And exactly because of the drop on the consumption and the usage, the prices on the unregulated market, the price dropped, and it got to the bottom until May, BRL 40, and now it's starting to recover.

We have in September BRL 100 and here in the north part, it's a volume that is very important, and it's actually BRL 288.

We are reporting prices per megawatt that is still lower than the average value of PLD, and they affect the results.

Next page, 5. Let's see the highlights, positive ones.

You can see in the third quarter, the first one is the reduction of the periodic tariffs -- reduction of tariffs.

We had, in the last quarter, talking about RBSE.

Here, we see the payment of [KA], and in this semester, we had BRL 819 million due to that process of the hiring asset regarding the infrastructure in the transmission agreement for the new RAP, and this will also have a readjustment in the transition, BRL 91 million in renewed LPs, and the O&M generation in the quarter.

The power plants, we had a readjustment in the quarter, another BRL 123 million.

We have a reduction in PMSO, BRL 60 million.

I am talking specifically about that said subcontracted 4,000 people in Furnas, BRL 60 million.

We have an advancement of the dividend anticipated by September 2020, BRL 2.5 billion.

So the payment to the shareholders, BRL 2.5 billion, but it impacts the net debt of the company.

And because of that, we have a slight growth in our leverage.

The sales that we had with FTEs, we had the signed contracts, and we're waiting for it to be concluded, the BRL 434 million and BRL 134 million.

Next page, we have the negative results, negative highlights.

First, talking about the generation revenue.

If you follow Eletrobrás, Eletrobrás with Eletronorte had a big share of energy, and they hired with the bid A-0 when we started in 2014.

These contracts ended last year, and they had a very high value.

BRL 360 megawatt hour.

Now changing these volumes that were hired with a price that was already above the market, in the unregulated market, we can show the numbers in the -- first applied in my presentation.

We have 2 extraordinary events that were not positive.

The first was the stoppage of the power plant at Angra 1 and 2 longer than necessary, and that mandate a provision of BRL 217 million in generation of the quarter of 1 and 2 -- of Angra 1 and 2.

We have a problem with the power plant at Candiota 3, Turkey, inflexibility in the period, and of an adjustment of BRL 52 million.

Future events with Angra 2 already working.

Candiota, coming back this weekend.

These are extraordinary events in the third quarter.

They are limited to this quarter alone.

PMSO.

We have an effort for the reduction here, but this third quarter is not a good quarter to evaluate this.

They are less than the expectation because, first, we have less investments.

As we can see, we got to 90% of what we predicted, but we are capitalizing less personnel with investment -- with personnel, with labor.

There's a noncapitalization of labor per investment lower than what was budgeted.

We had labor issues.

The anticipation of vacation because of COVID-19, more expenses in the company.

And we had a readjustment of the ACT, the contract, of 3.55%.

We also had, due to the pandemic -- and we had the personnel that retired.

We did the provisioning for the people.

454 people actually are leaving the company by January 21, but we have with the period an economy of BRL 252 million.

Now with the anticipation of the dividends and the impact in the net debt and EBITDA, there is a leverage of BRL 2.5 billion.

The investments that were not done BRL 409 million, BRL 50 million is standstill, which is good news.

We have here a quarter that was atypical in regards to provisions, adjustments that we did with the compulsory loans and what we have provisioned and the contingency -- the increase that we have because of the efficiency in our budget and the contingencies, well, that generated an increase of BRL 600 million in this quarter, may in our -- mainly in our controllership.

Page 7. You should remember that we have the official publication, MP 998/2020, and it says that the CNPE, that the contracts for commercialization, fundamental issues, so we can have the process of finishing Angra 3 now with the MP, we have the usage of 50 years plus 20, and the contract first of line for 40 years.

If renewed for another 20, price of energy will result from studies done by BNDES.

Remember, the BRL 580 in July of 2018, but we also wanted to bring economic, financial viability of the enterprise, the reasonability and the tariff low [density] -- modality principle, and they're adjusted for inflation and by the cost of nuclear fuel.

The discount -- the reduction in cost of the energy will come from the competition between the bidders.

Once we adjust the 4 items, we can have a reduction in cost and then we can compete.

And we can have a lower value than what was updated for today.

And the official publication establishes peak conditions so that we can restart the work.

And once we have a PPA, we can finance adequately.

The extraordinary assemblies that we had impacting the credits, there is an increase in capital of Eletronuclear that was approved at BRL 1.8 billion.

Now GSF, we can see the BRL 1.8 billion corporate.

This is the assets, BRL 539 million are -- have a participation in SPE, this is still being discussed.

We will talk about this up ahead.

And as I said, the impact of the advancement in September during the payments that we had with the compulsory loans for -- are just elevated and adjusted it to 1.9x to adjusted LTM, resulting in consideration, the RBSE LTs that were renewed the revenues.

Without RBSE, we have a 2.8 net debt over the EBITDA, 2.8x.

Page 8, evolution of our businesses for generation and transmission.

And let's see the financial results.

Generation, on Page 9. We have our participation 51,301 megawatts of installed capacity, about 30% of the Brazilian capacity.

All of our corporate installations, all of our certification in SPEs that assures more than 10,500 average megawatts, the physical guarantee in the power plants, and another 9,000 megawatts average, which is the quotas of the hydroelectric and nuclear power plants.

The physical guarantee, if you add everything, we have 20,000 megawatts of physical guarantees, generated energy, 23% of the installed capacity.

And we generated 23%, almost 50,000 gigawatts hour were generated by Eletronorte.

On the right, we see this big transformation that I was just mentioning.

With the breakdown of our participation, looking at the quotas of guarantees of our hydroelectric plants, plus nuclear in blue, 2019 to 2020 reduced from 57% to 49%.

There is the effects that we've already discussed.

ACR that we had a contract that I just mentioned, there was a reduction from 17% to 12%.

And this reduction promotes what we see in green, the growth of our participation in the unregulated market, ACL, from 26% to 36%, and only 3% of the volume was not contracted.

The revenue from generation in terms of billions, 2018, we -- declined from BRL 20 billion to BRL 23 billion in the annual base from '18 to '19, we have received the contribution of ACR.

And what we see here in gray, it goes from BRL 4.7 billion in mid-October.

We have, in the first 9 months of this year, you can see on the right, and it was impacted by the change in the prices in the market.

We go from BRL 7.3 billion in green to BRL 5.6 billion in the 9 months of '20, and the total is BRL 16.2 billion.

This drop is because we are considering 3 quarters.

So BRL 5.4 billion per quarter.

Obviously, we should have a value of over BRL 20 billion, but below the BRL 23 billion of last year.

And the main reason is the fact that we have a change in contract that is very important.

We lose important contracts in a very high value.

We will make an effort to maximize the contingencies, and we're trying to find better conditions in the unregulated market.

Page 10.

Very complex explanation of what is called the periodic reduction effects over RBNI, the impact of RAP (sic) [RTP].

It has, in the cycle in this period, an impact of an additional BRL 441 million per year, and it is divided into 2 components.

So first component is the incremental effects, which is BRL 206 million, over contracts that were renewed.

This is reflecting the new WACC, the new values of O&M benchmarking that are the new installations that we had from January 13 to December 18.

When we look at down below, you can see here in the middle in green, it gives you that variation at RAP, a RAP of BRL 1.346 billion, it was to BRL 1.546 billion.

We don't have here the contract.

And then the total variation of that is 2.3% to 2.5%, it's actually 8.8%.

Particularly, I'd like to note the total values.

We had it subdivided in the contracts of our companies, Chesf, Eletronorte, Furnas and Eletrosul, but we also added as I showed you above, there is a second amount of value, which is the readjustment.

And then we will have an adjustment installment regarding to the delays in the application of official norm, and we have the review of the contractual asset.

Here, the contractual assets of the infrastructure agreement T, for RAP is BRL 819 million addition, and the impact in the revenue in the building of IFRS 16.

When we look at the results, we will find these 2 values.

And we understand that we concluded the process and transmission, and we are going to make the additions that we had from the previous quarters.

Something important for transmission, and we are showing here in the work that we are doing, Page 11.

First, an increase of our availability, we got to 99.96%, is the best indicator since 2015, third quarter.

This is a reduction of 27.3% of contributions by cutting -- of lows in the Eletrobrás Systems.

You see, for example, the issue of what is happening in Macapá, in the state of Amapá.

We spent 3 years since we had a lot of blackout -- since we had a blackout that was over 1,000 megawatts originating at Eletrobrás on one side.

We are very robust with our procedures of operations.

Maintenance has kept the availability very high, and that level of trust worthiness are very high.

On the right, we have the variable installment with the penalties, 1.66%.

And here, we have the best results since 2015 as well.

The variable installment, once again, is 1.66%.

We got at the third quarter of '16, 3.38%.

There's a bit of improvement, therefore, it adds value to the company.

It's BRL 25 million less when we compare the application of penalties in the third quarter of 2020 regarding the third quarter of '16 -- sorry, of the third quarter of '19.

We have 43.9% of the Brazil, over 70,000, almost 71,000 transmission lines in Brazil and Eletrobrás.

64,000 are above 230 kV.

And we have here, our financial performance.

On the left, on 13, we had the numbers and explanations on the right.

What we are seeing is the report on the left in IFRS also in the first 3 columns, and the work that we do usually, which is to incorporate the recurring values, so we can see our results.

It's important to highlight, our growth in our gross revenue of 2%, and if we place it in a box, in a recurrent, is dropping 4%.

And this is BRL 348 million.

And it's explained because of the drop in generation, BRL 589 million.

Remember the contract of ACR that I just mentioned, we have stated in this period that is lower because of Santa Cruz, and the operations on the short term.

We have a drop in BRL 94 million in PLD.

Now the readjustment of the hydroelectric quotas, there is a credit from Amazonas GT, BRL 28 million, with UTE Coari and better and a higher procurement of BRL 59 million of ACL.

We can see that the value is positive, as we were just talking, here on the right, and nonrecurring was positive, BRL 554 million.

The first one is the tariff for RBNI, BRL 819; and the inflexibility of Angra 1 and 2, minus BRL 216 million and Candiota 3, which is minus BRL 52 million.

So the tariff review of RBNI is only done once -- sorry, BRL 0.5 billion.

When we look at the result of this demonstration, and here, PMSO, we can see that there is a drop of BRL 34 million in personnel; services, almost BRL 100 million.

And we have an addition here of BRL 66 million (sic) [BRL 166 million] being mainly taxes and expenses, additional expenses in the holding because of payments, et cetera.

If we look at the operational costs, it has dropped, and this is due to less investments.

Also, we have less payment in Amazonas GT.

They see the drop in usage, for example, for fuel.

We -- the fuel that we can buy in Candiota and we have here for the readjustment of the Tust, Tust readjustment of plus BRL 68 million.

Well, the result of the EBITDA is dropping 29%, and dropping 18% when we do the recurrent analysis, getting to BRL 3 billion.

We see depreciation and amortization, which is regaining with the investments in the company, but still very modest growth.

Financial results, also, we have a drop in minus 13%.

In a recurrent way, we have from minus BRL 745 million to minus BRL 706 million.

This is due to the adjustment of RBSE, the big change that we had in regards to [AMG and B] and the cost of capital in the transmission lines, we had an impact of the exchange rate, and the numbers should change in the next quarter.

If we do not have the continuity, that might be positive, and the effects of derivatives and the contracts that we have in Eletronorte that has to do with the price of aluminum and the exchange rate.

And we see the reduction of the main Eletrobrás debt in Brazil.

Unfortunately, we are reporting a result of BRL 96 million of profit on core in comparison to BRL 700 million of last year.

But we see that the recurrent values, we are talking about a drop of 17 million -- 17%, getting to BRL 1.6 billion.

So we can see a little bit of that of what happened in comparison of the third quarter of '19, that we dropped in the net revenue from BRL 716 million to BRL 96 million.

Here, on the right, we have, as you know, the recurrent, we have a reduction of BRL 90 million, and as I've talked about, Candiota 3 and Angra 1 and 2.

The recurrent, we had a drop in revenue of 3.9%, BRL 348 million.

Above, we have the IFRS sequential plus BRL 2.2 billion and BRL 194 million.

Going back to the bottom, the BRL 348 million is we have lost a contract.

And now we are working in the unregulated market, as I told you, we had in the period lower prices.

Given the regrowth of the economy in the future, we have good expectations.

We have a growth of BRL 185 million that happens in the O&M., in the revenues for operations and maintenance and also transmission in RBSE and contractual revenue.

These -- all the transmission values are positive, and there is less investment when you compare to the last quarter when we talk about generation.

Now because of the less availability of equipment being imported or by the important variation in the exchange rate for some imported products, that was difficult.

That we see an improvement, that is important.

This is what I would have to talk about, our gross revenue.

And here, just a detail in generation, and this is more complex.

And we need a professor actually just to explain this.

But remember, the table, trying to be deducted our volumes of energy and negotiated in the regulated free and unregulated market.

In the regulated, we have the quota for the nuclear and hydroelectric power.

And here, what you see in the first line is a drop in the volume, from 200 -- 2,841 to 2,170, a variation of 23%.

We have the number of Furnas and Eletronorte and that impacts in dropping 17% in the revenue because of the drop in volume that was -- but at a higher value, about BRL 362 per megawatt, and we have the 2 stoppages with the hydropower plant and the nuclear plants.

Now the quota for hydro is going to have a readjustment, adding BRL 123 million.

And when we look at the right in the top table, we see the effects of PLD in each of the markets.

You can see the comparison that we have here in the third quarter of last year.

The value was 200 -- BRL 215.

And when we look at the third quarter, we were talking about values that are about BRL 80 to BRL 90 per megawatt.

Some contracts have an indexation of the values, and we have a lower volume.

And this is in the bilateral agreement -- bilateral contract that we have for ACL here at the bottom.

And if we look at the volume for of energy, there is a drop of 3% up ahead, and there is just an increase of 9%, almost 500 megawatts on average.

We are highly -- at higher volume.

What we have is what we do not use -- we will -- the variations of the liquidation and a drop in PLD and CCEE will be minus BRL 123 million because of the dropping of the PLD.

16, just a report of PMSO, the company personnel material services, subcontracted and other expenses, PMSO in Portuguese.

The third quarter, we have a 42% drop, BRL 60 million in IFRS.

For recurrent, an addition of 2% or plus BRL 30 million due to the positive aspects are dropping in the personnel, less than what we expected, and we talked about this.

Materials are less, 8% less than rest year, another BRL 5 million.

And there are things of OBZ COVID in services drop of BRL 97 million.

Here, we see the aggregate of the subcontracted contract of Furnas.

And on the other side, we have others that was very heavy this month, in the quarter, actually.

BRL 166 million in red, while BRL 26 million of dropping the credit that are renegotiated with clients, and the labor cost of just BRL 24 million for the donations for the campaigns of COVID-19, something very important from the standpoint of our social responsibility.

We did take around the installations of Eletrobrás , and we have BRL 12 million of insurance at Eletronorte, BRL 12 million.

Well, you need to see the glass half full.

In Page 17, we see the evolution.

We are still with an important reduction in PMSO.

You see that the number of employees in yellow, 12,487 in '16, now close to 6,000.

Our cost is, well, we are talking about 9 months -- I'm sorry, it was -- the number of employees 26,000, now 12,000.

The PMSO, the cost, BRL 12 billion in PMSO, and a drop to BRL 5.8 billion.

And on the previous year, we had BRL 9.8 billion in costs for PMSO and we are making this value ever lesser.

We have a positive material and personnel, and next year, we will have another 500 employees leaving, and we will have more economies.

Now Page 18.

The issues connected.

We have a drop of 1.2% in the recurrent and 2% on the recurrent (sic) [IFRS].

Actually, when we look at the energy that was bought for resale, we have Amazonas GT, BRL 26 million.

They were less exposed in the short term.

We had negative results in Furnas, that is a reduction of BRL 28 million, in fuel and this is getting all of our installations.

A drop in the fuel because of the energy in Santa Cruz.

And as we've done before, there is a drop in the building investments, a drop in 13.5%, minus BRL 35 million.

From here, we go to Page 19.

More difficult issues, provisions.

Operational provisions are important.

We need to have a governance that is important for this.

And here, the main aspect of variation is regarding the contingencies that are here highlighted.

Furnas is the main one, a very important growth, in the rest of the previous quarter, almost BRL 262 million in labor.

And the contingency credit compulsory loans, we have BRL 377 million.

We have assets connected to PECLD in the prospective Amazonas D, the prospective risk regarding PECLD CPC 48.

We have work that we're still developing with ANEEL, and the provision for ANEEL CCC, we still need to do it.

And here, the Amazonas D, where we have the bad debt increase in regards to last year.

We have a reduction in the provision of ANEEL.

We have onerous contracts.

Remember, the impact of Jirau and Coaracy Nunes.

We are working with the controllers in Jirau and Chesf, the values for -- well, we have a loss that you can see.

The provision that we just talked about, Candiota, the inflexibility here, which is BRL 31 million in losses of credit of the coal in -- that is BRL 76 million.

This is necessary due to high level of governance, so we can have the best evaluation of our contingencies.

Page 20.

We see one page on compulsory loans, Remember that they determined the issue of shares, 142 million shares, basically half of our PNB, over 9% of the capital of Eletrobrás . This quarter, we had an investment.

If we look at the lower graph, we're leaving a provision of BRL 16.197 billion, and we have additional provisions.

The update of the exchange rate, BRL 155, we paid the claims of BRL 1.286 billion and the position that we have here at the end of the third quarter is BRL 15.443 billion so a drop in BRL 754 million.

We have 2 events that are important.

On the right, that imply in BRL 558 million in nonrecurrent provisions that are additional to our contingencies.

First, operational provision, we can see the shares that need to be delivered updated in their value.

In the third -- second quarter, it was BRL 268, now it's requiring that update equal to BRL 621 million.

It's BRL 353 million of updates in regards to the shares, preferential B share, that should be delivered.

And we have the financial results of the company, compulsory that is not paid of consumers that disagree with the loan, is updated by the IPCA-E plus 6% of interest rates during the time of [update].

In this case, we have an authorization, an update from BRL 219 million to BRL 424 million, more -- an additional BRL 205 million.

Now we talked about the compulsory.

With all that, we have the impact of EBITDA, reporting EBITDA, 21%, in a recurrent way, 18%.

The main aggressor, let's say, in this drop is the operational net revenue that we just mentioned, that has to do with the contract of A-0 that was granted and the stoppage in Angra and Candiota.

In the recurring participation, everything that was there was a drop of 9%.

And the operational cost, the MSO, and recurring costs, we reported an improvement of 1.2%, BRL 23 million.

We had PMSO recurrent growing up BRL 30 million, and we had operational provisions recurrent mainly from the contract of Amazonas Distribution, and ensuring the provision of GAG Melhoria and other reversals, a variation of BRL 205 million.

And it goes along with the net revenue, the aggressor responsible for the addition of the 18% of EBITDA recurrent at the quarter.

We are reporting a net debt -- a net revenue.

We have the 87% in the quarter, while we have the recurrent, we have a lower drop, instead of BRL 620 million, we go to BRL 327 million, we go from BRL 1.9 billion to BRL 1.6 billion.

The aggressor is EBITDA.

And we have here the financial results, plus depreciation and amortization, there is a drop of 1%, so BRL 10 million, and obviously, because of the worst result on dropping the income tax of BRL 343 million.

Let's go to Page 23, we talk about the financial discipline.

I said in the beginning that we had an increase of our -- while we have the EBITDA that was reported, BRL 12.8 billion to BRL 12 billion, a drop in the EBITDA, and an increase in the net debt by 2 aspects: the main one, the dividends, BRL 2.5 billion; and second, the payment of the loans, compulsory loans.

It gives you a variation of almost BRL 4 billion, which is what we show with the increase in the net debt.

This makes our indicators go up slightly, to 2.8% and 1.9%, respectively.

Now Page 24 and 25, the investments.

Good news is that we improved in regards to what we've done in the second quarter.

We've invested in corporate generation, BRL 334 million out of these projects that are detailed down below, have growth in regard to the second quarter of 115%.

In the corporate transmission, a growth of 66%, getting to BRL 281 million this quarter.

Total corporate climbed 84%.

I highlighted here, SPEs, which is our total investment, when you look at the last column, the last line, would be BRL 3.603 billion.

And in fact, this means BRL 575 million, the SPEs.

In the first couple of 9 months, we invested BRL 91 million.

This is a good news because we are investing -- this investing as, mentioned in SPEs was either to cover, mainly, issues connected to GSE.

And we don't need to do that this year because of the standstill, that a great deal was obtained from this.

So it's the details.

It's reasonable to think that we should be comparing ourselves to BRL 3.028 billion, not BRL 3.6 billion.

And at this moment, we have BRL 101 billion -- BRL 1.3 billion invested in -- and shows -- and I will show you in the next page.

If we do any valuation that we did BRL 681 million, we didn't do investment in BRL 290 million.

But for the aspects that are connected for the impacts of COVID and authorization of ANEEL, we have here optimization of costs, and we have, mainly in the case of Angra, we need to have the legal budget -- for general legal budget, and we didn't have that authorization.

It was done recently, and out of the BRL 85 million, it was a value that was limited.

And that was -- it's meant to be resolved because of the authorization.

And that's why we will recover that schedule mainly what has to do with Angra 1 and 2.

And in the quarter, we -- because of the standstill, we invested in general, for over BRL 400 billion -- BRL 400 million.

Now the total budget was BRL 1.088 billion.

And if we see where we invested and what we did not do because we couldn't do because of a legal limitation or because of COVID, we will get to something like BRL 956 million or 89% of what was predicted.

I am getting towards the end of the presentation.

I wanted to show you some relevant highlights.

Those of you that have been following since 2016 when we had 178 SPEs, now we were on the 11th here, 131 we sold, the one that we closed.

Also, you can see the closing incorporation, and those that are ongoing in such a way.

And here, there is an observation.

Due to some delays, we have the prediction that, at the end of the year, we're going to get to 81 -- from 175 in 2017, we're going to get to 81.

This is due to sale -- of the selling that we already formalized, and the incorporation right now with SPE, TGO -- TSBE, sorry, TGO Pindá I, II and III.

And we have IGESA, Punaú.

We are closing here IGESA and Punaú, 7 SPEs; 8 in total, so we get to 81.

What have -- we did not do?

What did we not do?

We could not conclude the process of selling Chapada do Piauí I and II, 15 SPEs.

We have a few closings that we're presenting more complexity.

Well, we have announced, we have Amapari, Baleia, and same as rationalization of the structure of Baguari and Famosa is 4 SPEs.

And they are going towards next year.

Here, I am advising that our planning, we should conclude this process of restructuring with 49 SPEs by December 2021.

Page 28.

Just to report the public consultation of ANEEL 66/2020, regarding GSE -- CCEE actually, we have here all of our corporate power plants.

The first observation BRL 1.823 billion are the nominal calculations.

Here we don't have Itumbiara, there is not any calculation due to the renewal of the concession of CCEE.

There was -- in the context of ANEEL, being recommended by ANEEL yesterday, and this is the official publication 3,108 of 10/11/20.

This is a very important point.

The second point.

There is -- as you know, there was a public consultation, all the companies contributed through the media.

And there are things that we are paying IPCA over the spend capital, the allocation of regulatory assets.

It's an alternative, so you can have the limitation of the maximum deadline, but we have a lot of contributions.

We should have, in the 9th of December, more resolution and the rule for the commercialization after the proper consultation.

And then after 60 days, we will present the new calculation for CCEE on February 9. Once we do that, in 30 days, we have the publication of the calculations by ANEEL on March 9, 60 days, we have -- if they accept that extension, we have to renounce the legal proceedings.

Now the investors, the issue of Chesf has a value that is not paid, which would be an appeal BRL 1.278 billion.

And here, BRL 891 million of credits, retaining from Chesf at CCEE, so that this profit is working.

The net value that has to be paid should we do that adherence is BRL 387 million.

As you've seen, there should be some installments, some payment in the comment.

And going up ahead, we have the report of Amapa, an extraordinary event, very difficult.

But here, reporting that Eletronorte, our controller here in the north, immediately was working and they were volunteers to contribute with this work of the energy.

In the state of Amapa, we mobilized engineers, specialists, technicians, always having people.

We support it through our regional so we can move equipment, transformer, oil, et cetera, et cetera, investment.

We actually have an official publication for (inaudible), so they can do an emergency procurement of 40 megawatts that is distributed by the generation, and it can be up to 150 megawatts.

We have the cost covered through sectorial expenses after the approval of ANEEL.

This is an approval that is ongoing.

And here are the efforts that were made available.

So once again, transformers, power.

And remember that there, we only have one important asset, which is the UHE Coaracy Nunes and is one of the suppliers of energy of the region.

We have to close in the next pages.

The highlights of ESG that we've reported.

We increased the number of ODS' that we prioritize in our activities.

We have here the growth -- economic growth.

Now we have a consultancy with Dupont with a new program for the time -- for the health and safety at the workplace that is developed by Dupont here at Eletrobras.

Here's an example, 86% of the labor is tested every 15 days.

We did over 60,000 tests of COVID-19 in Eletrobras.

The climate changes, we have the 13 actions, and we established the commitment with the task force on climate-related financial disclosures regarding through the climate change and in human rights, everybody adhered.

All the companies adhered on the right-hand program, which is an initiative of Childhood Brazil and the objective of fighting against the sexual exploitation of children and adolescents in Brazil.

And on the next page, we have the client relationship.

We have a satisfaction report that goes close to 89%.

We went over the goal of last year.

In the 2 -- or the 10 and 11, we are reporting contributions and donations that we've done over BRL 23 million to 109 hospitals benefited around our operational installations.

The -- we have the actions for the implementation of the LGPD here at Eletrobras and the sustainable management of suppliers.

We have -- we did the addition of the national meeting with suppliers with over 300 suppliers.

And that concludes here, say, the next steps.

We have up ahead on the short term: the reduction of our personnel in 454 people that are leaving; our GSF regulatory assets, with the definition that we mentioned; the issue of the AFAC of Angra 3, we transferred BRL 370 million that was transferred to Electronuclear, BRL 640 (sic) [740] million still waiting for the legal PDG and as well as we will solve this issue with this implementations.

The effort to simplify our shareholder's SPEs from 131 to 49 up until 2021.

Candiota 3, returning in November 2020, and we're still waiting for regulatory solution for the over procurement of Amazonas D by Amazonas GT.

We have a lot of work.

And once again, thank you.

And I apologize not only for the results that saddens me, it was a very small result, but I am sure that it will be the effort and the government.

And the report, the risk evaluations, et cetera.

Of course, we have here extraordinary events, and we will very quickly go over this with Eletrobas.

So in the name of my colleague, Elvira, I am available for questions.

Very well.

With that, we will do a Q&A session.

(Operator Instructions) We have a few questions.

The first one from Andre Sampaio.

I have 2 questions.

The first question, in regards to the privatization.

We have a lot of news where the blackout in Amapa, if you can comment, what is the impact in the privatization process?

And what is the plan up ahead in the future?

That is the first question.

And the second question is hydrology.

We have a lower -- we have a poor prediction of rains and the consequence will be that the prices will go up, and a very big impact for next year -- and the (inaudible) has passed for next year.

Thank you.

Now in regards to several things.

We had -- well, the election and everything.

And this is a result that we have in the slide that is common here in Brazil, in the states that are -- have a limitation here, and Brazil is always developed in extremes.

So we have, in the case here, we have a reservation.

And fortunately, this is an event that is not clearly clarified.

We [lost] both transformers in the distribution of energy.

The company is being -- the distributor is being at the process of being privatized and unfortunately, we have the negative results of the pandemic.

And here, you don't have the conclusions of the reports that are being -- now part of the investigations.

We have the due diligence.

We have 5 days reading that first that involved ANEEL.

And it had our contribution of Amazonorte.

And here, the challenge is to reestablish the system and obviously, spare the citizens of Amapa of this very difficult and rare situation in Brazil.

We are now talking about an event that takes place in Brazil every so often.

I understand that there is an exploitation because of the possibility of movement of Eletronorte of that privatization.

Well, that investment, maybe there were some place of it and they couldn't win.

The review of the investment is private.

So if we have a regulation, when we will modernize the regulatory framework, discussions in several levels of the government, that is important to attract investments, and the investments will be private.

And if we do not recognize that, I always tell you, we improved a lot, but we don't have the financial capacity to do all the investments and regaining the market share of the company.

And that is happening in Brazil and throughout the world.

And we have the necessity -- the capital to actually find projects on the long term that have higher profitability than the interest rate in the countries.

This is important for our the [pensions] and everything.

There is no changes.

And here, we're talking about privatization.

I think that the Minister Paulo Guedes has said -- has made available to start in regaining these projects, and it is natural -- well, this is not an event that is necessary to see what happened.

So we can hold accountable, either us or whoever it is, responsible for this unfortunate event.

I believe that, once again, not only do we have the [blessing] of the ministers, but our Minister of Mines and Energy, Paulo Guedes -- and also Paulo Guedes, on the economy.

We have the public debt without the condition of exception that we are living.

Well, we're going to have to do it by January.

So it will be necessary more and more that we see that the public debt is also being worked with privatizations.

This is why I do not believe that there will be any changes.

And of course, the plan was to do restart this year.

And we have the elections.

And we will have a regain of the (inaudible) of Eletrobas at the beginning of the year.

And we had Minister Paulo Guedes and the secretary that has done an extraordinary work with that.

Well, about the rains.

November 11, I always believe that we are waiting for the rain on the 15th.

We wait for it in the beginning of the month but it's on the 15th that we should get the rain again.

And we really have still a year that we have the La Nina as a meteorological phenomena, and we have more rains in the North and Northeast.

We are -- we're still optimists and we will finish the end of the year better than last year.

This is an important point.

And somehow, we have to look at the market.

We have an impact, and that will make the prices lower.

And I still think that there is no reason for us to be worried.

And we've concluded several projects and all of them giving contributions to the system.

I think that it's early for us to worry about this.

And we don't have to go.

Thank you very much.

Next question will be Carolina from Credit Suisse.

If you can talk a little bit more about the provisions.

You did a very good job for recycling in capital allocation, a work that has been very significant.

And this part is complicated, but it shows how many things are very relevant for strategy.

I wanted to know if talking about the compulsory loan, is there anything that you can do?

And specifically with Amazonas, I will mention at the end of the call, they were expecting maybe the resolution of ANEEL and the procurement, is there any other option or something else that we can do to avoid that -- the bad debt that will continue to give us problems?

Thank you, Carolina, for your question.

I think it is important to highlight that we have 2 important liabilities that are being addressed with -- as a priority for the company.

One is the compulsory loans.

I believe that we have 2 things here.

First, most of the projects and the claims are being concluded.

We have had responses.

And sometimes we have, for these bonds, we need clarity.

But here, we have a small variation, and where they are provisioned.

BRL 1.2 billion this month -- this quarter is because of that.

Now we have other lawyers here and we also issued here the policy of agreements.

And that happens for the provisions of loans so that we can anticipate and do agreements that are lower than what was provisioned.

A lot of companies they might have -- be interested in closing the process, and therefore, giving an advantage to the paying party.

And this is where we're looking right now.

The compulsory loan, we will have more lawyers that will help us with agreements in the issue of the labor issues.

And here, we have a system of the -- well, the same thing that we had for SAP.

We have artificial intelligence, and we are implementing this at Eletrobras Group.

This is very important because we have the judicial deposits, and this is being phased through the systems.

And also we have to do the defenses or at least a great part, and this asset will be shared with lawyers, private lawyers to represent Eletrobras in these processes regionally.

We expect, in the combination of loan and the assets, that has to be, once again, we need an effort.

And the provision, they need to be done more perfectly with our assets.

This quarter, we did this movement, but we need to do 2 things: anticipate that this might bring a benefit to the company; and on the other side, we have to work in the sense of mitigating the occurrence of any similar event in these 2 things.

And this is the great work of Eletrobras.

And we will have an important events over the next quarters.

Next question will be Pedro Manfredini.

Pedro?

I have a question.

Next year, you start to think about this new RBSE, the generation of capital for next year, this is very important.

Well, after the strong reversal of RBSE, and as you commented, it is complicated.

And I wanted to understand with you if there is a payment of dividends above what was practiced before in the fourth quarter of 2020?

Is that a possibility?

And would the privatization hinder this process?

The second point, I just wanted to understand how and what was the effect of the pandemic in the contracts.

We have the free market in the company, was there a structural change, any renegotiation or short-term reduction?

I'm going to ask Jatoba to talk about the contracts.

But in this first theme that you talked about, the dividend, the answer is no.

You need to highlight while we were never called so that we anticipate the dividends.

And we never had the demand presented to the government.

And I just want to say one thing, along with the (inaudible), something in around BRL 2 billion and we've seen in our -- to make a controller's make the type of payment in such a way that we can, in the first opportunity, do the payment, that is regarding the FY of 2018.

And this is in our table to debate this issue and take this to the Board of Directors.

To do this, we don't have any perspective payment.

If we are -- if we have projects, we are evaluating the participation in the area of transmission.

This is one of the projects that we have.

So we are evaluating this.

Let me talk about the capacity.

To be entrepreneurial and we have almost a lab so we can really act as a company, establishing committees that validate the financial framework so we can see the return rate.

That clearly has to be above the capital cost.

And the company, regardless of the environment, in the private and in the public, we don't have to pay the dividends above what was expected.

It's important to highlight that we have a robust cash flow.

Now the demand, it's better to do this payment.

We don't have any prediction of payments above the minimum return of the company, and we will only have things that are -- regarding the payments of dividends that are retained so we can liquidate this.

And in regards to the second theme, contracts.

We had a big movement right at the beginning of the pandemic.

And maybe Jatoba can talk a little bit about this situation.

And I would just like to say that a great deal of them, we have the difficulty of immediate payment and keeping as a criteria the students and some type of seasonality.

Can you comment on that, Jatoba?

Thank you for the question.

The dividends took place in April and May due to the -- we didn't know the impact of the crisis.

And we, through the Committee of Commercialization, we established the guidelines.

And we want to prepare the economic values of the contracts and the management of volumes.

We had very little problems with the regrowth of the demand from June, July, it was practically normalized.

And basically, we do not have any case just like last month.

Thank you.

Thank you for the answer.

Now the subsidiaries, you have a cash that is retained at the subsidiaries.

The idea is to -- well, is there any other thing in the pipeline to optimize the capital besides this up -- going up of the dividends of these subsidiaries?

Is there any...

Well, I know that we have the concessions, but we have the other concessions along the way.

We know that there is a potential path for the recycling of capital, of the SPEs, also.

At SPEs, yes, we have clearly the freedom to lead.

But yes, we understand that we have a lot of contracts with BNDES where we have costs that are comparatively higher than we can get in the market.

So this discussion occurs with our subsidiaries.

It's important to highlight that the contracts, we have very onerous conditions.

So this has to be done with a lot of care.

We are not the only ones.

We have components for financial -- for financing with the [entries] that are the objective of prioritization.

So we can, in fact, pay, and this is worth.

And our companies, as you've said, in the past, that had contracts, financial contracts, with the holding.

And in the case of Furnas and Eletronorte that can, given the financial solidity, getting financing directly without having any need of assurance from the holding.

So that is something that we are taking care, and we've done a great work with this.

Some of the things that you followed recently, we also had the rollout in reais.

So there is still space, an opportunity with our operations with the controlled companies.

Thank you.

Next question is from Marcelo, Banco Itau.

I have a question in regards to GSF.

We did the calculations.

It would be NPV-positive.

And I wanted to know how that would impact the results of the company.

And should this take place, is there any payment of taxes?

Or would we have to pay with 0?

This is the first question.

The second question, in regards to the comment that you did and while they will participate in the space, will you get into a partnership with someone?

Or would it be Eletrobras as a controller for the investments?

I'm going to ask Elvira to talk about this, the first theme here, for tax.

But I'm just going to answer for the second.

This is going to participate corporate, we should participate alone.

And the issue of partnership, we had synergy.

I cannot add value to that asset or because they are synergy with other assets, but we are close to our partnerships.

We have preference, corporate speaking, with our controllers, with our regionalized projects, so we can have the capacity to compete alone.

This is the idea that we're nourishing right now.

But giving the preference to the corporate investment that we're recently authorized and with the exception of Chesf, they have been authorized to participate.

Can you talk about that?

Well, in regards to the accounting, we are still -- internally, we depend on the final solution.

And will this be something that we can infer that this will be an asset that will be registered once and we have to do a technical discussion, but it's something that we do not have a definition.

In regards to GSF, we would have to do a payment?

Do you think that a payment be done once?

Or the companies will have a chance to defer this payment?

I don't know if they have the capacity to pay or not to pay.

So there should be other companies that have cash flow that might have difficulties.

Maybe there is a government plan to finance this amount.

I do not believe that there will be any support from the government to do this type of financing.

But yes, I believe that we will establish, as it happened before, a process of negotiation where we have the installments.

Expensive, but either because of the amount that is involved, there are -- well, we are having against a bad debt in this process.

And in this case, we can have via Chesf.

And yes, there will be some sort of payment in installments.

(Operator Instructions) The next question is from Daniel, Banco Safra.

I want to explore a little bit about the shareholders.

This question -- well, you have a prediction of getting in December of 2020 49 SPEs.

I wanted to understand how is your perspective up in the future?

That 49 is stable, and where would we have more space for the simplification of the structure?

Now this -- I have to talk about this.

We have SPEs of any type, even international participations, et cetera, and we made a decision that is strategic.

What was a strategic decision?

Now we had SPEs where we can increase our participation.

When (inaudible) the SPEs, sometimes the partners stopped, and we followed.

So we did that sequence.

And what we want to do, okay.

And this can be a company that can be accounted for.

We wanted to incorporate the company by 100%, and incorporating it as a corporate asset.

And there is an advantage.

The SPEs have a management Board, Board of Directors.

And actually, what makes the SPE work is the operations that are local.

What we did here, I think it was 13, if memory serves me right, and we have this process here.

These are processes for incorporation.

Then we had an evaluation here of the cost of the partner.

We did the negotiation.

And actually, we made the negotiation viable, and we will finish with 14 SPEs.

These were created and now made viable in the last year.

A great deal of them related to wind power.

Due to the contracts, remember the providers that went bankrupt, and then we had the difficulty in the construction.

In this case, we got into that bit of not hiring and then we eliminated the risk.

The next step is closing.

That's why you have the second.

And also, we did a strategic analysis where we wanted to remind you that the sales process was preceded by a recognition of our debt -- of the debt of the controller, the controlled company in such a way to check, to reduce this so we can do a process that is systematic, and we can attract more competitors.

And we have the competitive process.

And the only thing that we didn't sell is this one.

Now these assets have been chosen because they are assets that they -- have conditions that were important for the debt of the controller and the holding.

And these are assets that we would have the same activity as the controller.

One criteria that you need to know is, we weren't working with hydroelectric power assets.

What we have today is the GSE, it was a definition of those companies.

We followed many that tried, and they were not successful.

And a great deal of that is due to the solution of GSE.

Now we have to think about this in an important way from now on.

The companies have a perceived value by the market, different than what they perceived before.

So you have the physical assurance, and there is a set of activities that are here placed.

The objective was to simplify with the focus in the assets of generation, transmission in these 49 and create 0. For the hydroelectric power plants, we have Belo Monte.

And with that 49, we have a focus here.

A great deal of them will be integrated with the corporate asset.

And we have the private partners with this account, this operation.

And then we can work for the consolidation of the assets.

There is no defined plan.

I just wanted to show you that, in fact, we implemented a plan for the reduction of the number of the SPEs, which contributed for the reduction of the debt on the controller with the company.

And a very strong work, and I even joked around that this is a substation of the Olympics.

We can see the difficulty that it was -- including this process.

So we need to persevere, and we've done that.

And we will be happy to finish the year with any one, 100 left and what we had.

With an improvement of the results of the 14, the value of the SPEs, we can revert it.

They have several here.

We have 40 last year, 30 this year.

And we will try and find that, an asset that makes more sense because of the size of Eletrobas.

This is the idea in this process of rationalization.

(inaudible).

In regards to Amazonas' distribution, obviously, the problem of Amazonas distribution affects us because the supplier of energy had contracts that not necessarily -- they are not contracts that service the road of the distributor.

So this has been adopted of one norm, not only one, and the [delay] on the Ministry of Energy with the participation of Amazonas GT and Amazonas Energy and ANEEL.

I am very optimistic that we will have a solution for this in the next 60 days.

We will have a better expectation.

And the processes that are here, we will have one Director that will answer, and we will focus in our challenge and also the factor.

And I believe that this will happen.

[Industry take], we have authorizations.

And this mitigates a little bit of the problem.

It mitigates a great deal of the problem for the cash.

We can do it via Amazonas distribution, and we have less risk of nonpayment.

Thank you.

We close here the Q&A session.

And now we give the floor to Wilson Ferreira Junior for any final thoughts.

Mr. Wilson?

First of all, thank you for your attention.

Once again, it is difficult as the President should do a report.

We believe that we could have done much better.

The counterpart is that we made the quality more robust and this implies in the improvement of our processes and our controls.

Evidently, we were affected by the pandemic in Candiota and Angra 1 and 2, but I'm very trustworthy in the recovery of the economy and the processes that we are developing in the country and the company to train and evolve in our commercialization.

We have, and thereafter, the meeting that we are doing with all of the Directors of the company was the cultural transformation and -- well, having this digital time of the pandemic so we can have a network that is more modern, more contemporaneous, more collaborative, more synergistic, more sustainable.

We're working towards this.

And I believe that we advanced, and we will advance even more with the standardization of our organizational structures, and I do not see yet the perspective.

For the reduction of costs, we are making an effort.

Sometimes, we have an expectation of a lower impact in the pandemic, but we have an equipment that has a stoppage and that impacts the investment as a whole.

So we had a quarter that, unfortunately, we had a lot of events that are extraordinary and events that were predicted.

But I am very optimistic in regards to Eletrobras, it's a company that is recovering and will, in fact, now the perspective, still limited by the financial capacity is to restart the perspective of investments.

I hope that this was the worst quarter and -- that I will have to report in the last 4 years.

I am very optimistic that we will restart with the perspective that we will -- that we have over the last few years.

Thank you, and may you be healthy.

Thank you.

Therefore, the audio conference of Eletrobras has concluded.