Enel Chile SA (ENIC) 2022 Q2 法說會逐字稿

Good afternoon, ladies and gentlemen, and welcome to second quarter -- to the second quarter and first half 2022 results conference call. My name is Victor, and I will be your operator for today. (Operator Instructions) Please be advised that today's conference is being recorded.

During this conference call, we may make statements that constitute forward-looking statements within the meaning of the Private Securities Litigation Reform Act of 1995. Such forward statements -- sorry, 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 anticipated in the forward-looking statements as a result of various factors.

These factors are described in Enel Chile's press release reporting its second quarter and first half 2022 results. The presentation accompanying this conference call and Enel Chile's annual report on Form 20-F, including under the Risk Factors. You may access our second quarter and first half 2022 results press release and presentation on our website, www.enel.cl, and our 20-F on the SEC's website, www.sec.gov. Readers are cautioned not to place undue reliance on those forward-looking statements, which speak only as of their dates.

Enel Chile undertakes no obligation to update those forward-looking statements or disclose any development as a result of which these forward-looking statements become inaccurate, except as required by law.

I would now like to turn the presentation over to Ms. Isabela Klemes, Head of Investor Relations of Enel Chile. Please proceed.

Many thanks, Victor. (foreign language). Good afternoon, and welcome to Enel Chile's Second Quarter and First Semester 2022 Results Presentation. Thank you all for joining us today. Joining me this afternoon is our CEO, Fabrizio Barderi; and our CFO, Giuseppe Turchiarelli.

Let me remind you that our presentation and related financial information are available on our website, www.enel.cl, in the Investor Relations section and in our Ask Investors. In addition, a replay of the call will be soon available. (Operator Instructions)

In the following slide, Fabrizio will open the presentation with our main highlights and strategy updates, and then Giuseppe will walk us through our financial results and our recent material fact released. Thank you all for your attention. And let me now hand over to Fabrizio.

Thank you, Isabela. Good afternoon, and thanks for joining us. Let me now start with the highlights of the period on Slide 3. As you know, the market pressure remained over during the year to second quarter. Given this, we have been taking several management actions to offset this pressure and take advantage of the natural resilience of our assets, proving that our strategy is sustainable and resilient. I will give a detailed view of the actions contribution for this first half in the following slide.

We had several rainfalls and (inaudible) during the first semester, bringing us the bright hydrological perspective for the second semester. Also, there has been some regulatory updates like the approved 2.0 Energy

Stabilization

Mechanism, the Distribution Basics

Service law, that related into (inaudible) and some recent updates related to the 2020, 2024 VAD.

Regarding our economic and financial performance, we have faced some temporary headwinds of the margin related to the commodity pressure. But thanks to many actions we have put in place and the positive hydrological perspective for the second half, we are comfortable that we will sure execute our 2022 guidance as we will relay in this presentation. And finally, as we have just released, the asset rotation process is part of our sustainable balance sheet proposition is ongoing and evolving as expected in terms of both timing and multiple supplies in the transition, confirming the quality of our assets and our proposal to unlocking value for all our shareholders.

Today, we signed the pays and purchase agreement with Sociedad Transmisora Metropolitana SpA, the company fully owned by the Inversiones Grupo Saesa, for an equity value of $1,345 million for the entire stake held by Enel Chile. We hope everything will be growth by the year's end as a (inaudible).

Now let's move to Slide 5 to briefly talk about the market situation. The national electrical system has been impacted by a set of factors correlated with the Russia Ukraine conflict and the last year's critical hydrology. Commodities continued their uptrend particularly coal prices that (inaudible) to a lower (inaudible) resulted in the sharp increase of the coal price in the period.

This scenario has been softened due to the presence of Argentinian natural gas after April and several actions in terms of thermal fleet optimization that we put in place. Unfortunately, the coal prices in the period were also negatively impacted by declared LNG force measures in the system, thermal risk maintenance and outages and some transmissions of trade.

Despite this strong adverse scenario, we have been able to put increased several actions that contributed for around $130 million in EBITDA. Our solid LNG supply position, which includes our long-term LNG contracts we share and the Argentine gas supply, which was successfully delivered, upgraded this year, it will ask to increase the generation volume and optimize our operating natural gas thermal fleet contributed to the first half of the year with $27 million and is up from natural gas trading activities that contributed more than $34 million in the first half. In addition, our commodity hedging instruments contributed an additional $68 million in the first half.

Complementing these short-term actions and also having in mind the new configuration of the market, we have also decided to enter into long-term PPAS with some few renewable developers as an anticipated move of a review of our portfolio strategy to reduce our nonhedged saved position.

Renewable growth has been one of the main pillars in the energy transition. So let's now look at how we are consolidating our renewable position on Slide 6. The current conflict is unquestionably remains an important challenge for the energy sector, and we have acted as necessary to adapt to this new environment. In this sense, we have been one of the principal driving forces in the energy transition forces in the country.

One group of the aforementioned is our strong position in the renewables market where we have consolidated our leadership, connecting more than [1,000] megawatts of renewable capacity in 2020. During this year, we have already connected 215 megawatts of solar capacity. Moreover, our efforts and CapEx are committed to connect until year-end, a more significant part of our project in construction, as is simplified in this slide. We are strongly convinced about the potential of Chile as the renewable development pool in the region, and we will continue contributing to consolidate this position aiming for a clean energy metrics.

Now on Page 7, let's take a look at the geological conditions and the outlook for the second half of the year. During June and July, there has been a significant increase in rainfall and accumulated node, especially in the south of the country. In fact, in the 8 region where the basis of Laja and Biobio are located, the rainfall recorded today is equivalent to one recorded in a year with normal erosion, something that we haven't seen for a while in Chile.

As you can see on the left side of this slide, the look over in the melting is clearly better than the last year's figure, and therefore -- highlights a very good situation, allowing us to foresee an optimistic hydro scenario for the rest of the year, especially for the fourth quarter.

On the other hand, we have also been carrying out value sections to maintain our portfolios to be resilient, mainly thanks to the higher availability of Argentine gas. During this year, we have been able to reroute our LNG capacity, increasing our trading activities and optimizing our thermal generation. This year, we have rescheduled part of our LNG deliveries from Quintero to the Port of Mejillones. For the second half of the year, the presence of the Argentinian gas and the cargos to

Be received will permit us to continue going forward with this optimization.

On Argentinian gas, during June and July, the government has organized the 3 auctions in which several Argentinian gas suppliers have participated to deliver natural gas to Chile. 2 of these auctions were focused on the -- the electrical system. In both bids, we chartered 4.7 million meters cubic per day of natural gas from October 2022 to April '23 at competitive prices that will allow us to maintain a resilient portfolio. All in all, we are convinced that there are signs that the war is leaving us behind, recovering our performance in second half and confirming our target for the full year.

Regarding the new stabilization mechanism project and other regulatory method for the energy sector, let me highlight some topics on this on Slide 8. On July 13, the second backlog that creates an energy stabilization and emergency funds and those established a new mechanism for the transitory stabilization of energy price for regulated clients was approved.

The approval of this though seems positive for our company and also for the sector as a whole to bring back system rationality since it means that the generators will not continue financing sectors to (inaudible). Now with the new mechanism, we expect to reduce the impact on our cash flow, and the receivables shall be backed by the new energy stabilization mechanism.

Regarding the basic service law in early February '22, a new law was approved to solve the problem of the debt accumulated between March '20 and December '21. Enel Chile consumption limit of 250-kilowatt hours per month was established to define the customers that will be in advantage , replacing the criteria of vulnerable profiles and other distribution. The collection system of this law shall begin in our concession area in August.

In June, the contractor report was published on the distribution tariff review, and we have already addressed more than 100 comments in the regulator, who shall review. Any potential discrepancies between the companies and the regulators should be reviewed by the expert partners in the next phase.

On transmission, the process is pretty completed. The largest sector company arguments were ended by the final investor, and we expect the new VAT to be published during the second half.

Now let me recap our strategy based on electrification and decarbonization. Despite all the temporary headwinds we see in our market, we continue pushing our long-term goal.

Now on Slide 9. As you will know, our strategy embeds sustainability. That is why the quality and digitalization of our network remains a key enabler for the decarbonization and electrification of our final customers. As you can see in our main KPIs, we are improving in our quality, digitalization, decarbonization and [paid litigation] indicators, as demonstrated by our network and Enel X business. All the strategy is backboned by a solid ESG structure that is aligned with the UN SDG and is well recognized, confirming our leadership on the main SDG indices and in transparency and reporting.

Let me now hand over the presentation to Giuseppe, our CFO.

Thank you, Fabrizio. And let me...

Giuseppe, are you on the line?

Yes. Yes. Are you hear me?

Giuseppe?

You hear me? Yes. You hear me? Hello.

So sorry, you all, we're just having problem connection with Giuseppe. Just a second.

You hear me?

Giuseppe, we can hear you.

Okay. That's right. Okay. Sorry for the problem. Many thanks, Fabrizio. Good evening to all our investors connected. I will start my presentation on Slide 11 with a quick summary of the adjusted EBITDA applied in the period in the quarter. In the first half and in the second quarter of 2022, we applied an adjustment in the EBITDA due to the impairment made to the coal stock of the period, which amounted $62 million and $41 million, respectively.

This adjustment had an effect at the bottom line of $42 million in the first half and $28 million in the second quarter. Through the same period of 2021, we applied an adjustment due to the coal stock and the voluntary retirement, which amounted to $40 million in the first half and $27 million in the quarter. At the bottom line, this effect amounted to $28 million and $19 million in the first half and the second quarter, respectively.

The second quarter 2022 adjusted EBITDA had a decrease of 54% or $110 million, mainly due to the higher commodity prices which increased the spot prices and had an increase in the variable cost of the period. This affects has also impacted the first half 2022 adjusted EBITDA performance, which decreased of 21% or $82 million.

In terms of adjusted net income, during the first half 2022, this decreased by 3%, reflecting the lower EBITDA of the period which was offset by the lower financial costs coming from the factory of the PEC accounts made in the first half of 2021 to improve the liquidity of the company. In the second quarter, the net income decreased 65% due to the same reason mentioned before.

First half 2022 CapEx almost reached $500 million, 12% higher than the first half 2021, mainly due to the construction of the new renewable capacity. In the second quarter, our CapEx reached $336 million, a 63% higher than the same period of the previous year. FFO reached minus $219 million, representing a significant reduction in the first half 2022, mainly coming from the stabilization mechanism effect in the second Q 2022.

Now let's review more about our CapEx on Slide 12. In a consistent trend throughout the last year, our primary effort has been mainly focused on boosting the country energy transition. As a result, during the 2022 first half accumulated CapEx reached $499 million. Of which, 95% was [linked to SDGs]. Customer CapEx totaled $35 million and was mainly allocated to enhancing our network, building new connections and improving the experience for our customers.

Asset management CapEx reached $68 million, mainly related to maintenance activity in order to increase the resilience of our thermal capacity, thus reducing an availability risk. Development CapEx reached $397 million, representing an increase of 10%, mostly due to the activity of our projects under construction, as a clear signal that our renewable expansion plan is still on track.

Let's move now to Slide 13, where we have the summary of the second quarter adjusted EBITDA breakdown accounting for $92 million. This variation was mainly related to an increase in our PPA sales of $100 million, primarily explained by the higher devaluation of the Chilean pesos against dollar; new renewable capacity, which was connected in December 2021 and during 2022, adding $12 million in EBITDA of the period; gas trading activities that generated $21 million of margin, mainly due to the sales of gas as a consequence of the Argentina natural gas availability and selling these during the second quarter of 2022.

All these effects that I have just mentioned in generation side were offset by $11 million due to the lower hydrology and negative effect on variable costs mainly due to the higher thermal generation costs driven by higher commodity price. This was partially offset by a more efficient thermal generation in the period and by the hedging commodity coverage instrument in the period and higher spot price in the system in the second Q 2021, mainly due to the higher commodity price and several system facilities that were into outages during the period.

Following on the slide, let me talk about the other elements that explain our EBITDA. Network remuneration and demand accounting for a positive impact of $16 million related to starting the station in both network and transmission business; the recovery of the regulated demand in the period, which increased 9% in the Q second 2022 compared to the last year period, reaching pre-pandemic levels; other effects accounting for $6 million, mainly related to the hedging instruments associated with the bond debt.

Let's move now to Slide 14, where we have the summary of the first half adjusted EBITDA breakdown accounting for $313 million, 21% lower versus 2021 figures. This valuation was mainly related to $190 million higher PPA sales in the first half 2022 primarily explained by the higher foreign exchange of the Chilean pesos against dollar. New renewable capacity, which was connected in December 2021 and during 2022 first half added $20 million in EBITDA of the period.

Cash trading activity that generated $24 million margin, mainly due to the sales of gas as a consequence of the Argentina natural gas availability and LNG, largely during the second quarter 2022. All these effects that I've just mentioned in generation start were offset by lower hydrology with an impact of $27 million; a negative impact of $100 million on variable costs, mainly related to higher thermal generation costs due to the commodity prices and higher regasification costs in the period due to the higher volume, partially offset by a more efficient thermal generation in the period and by the hedging commodity coverage instrument in the period; a negative $234 million due to the higher spot price in the system in the first half.

The remaining variation of our EBITDA comes $35 million due to the network remuneration and demand explained by $14 million mainly due to the release of the final transmission technical report issued by the regulator in the first quarter 2022.

This final tariff allowed us to reduce the provision we have been made since the beginning of the new regulatory cycle that started in January 2020; and $16 million of tariff indexation in both networking business; and the recovery of the demand in the period, which increased 7% in the first half 2022 compared to the first half 2021, reaching pre-pandemic level. Other effects accounted for $9 million, mainly related to the hedging instrument explained before, partially compensated by lower OpEx in network business due to the union agreement signed in the first quarter 2021.

Let's now give you more detail on Generation KPIs on Page 15. Net electricity generation grew by 11% to 10.2 terawatt hour during the first half of 2022, mainly as a result of higher dispatch of our combined cycle power plants and the additional capacity coming from our new connected solar units in the period. During the second quarter 2022, net generation increased 8% to 5.1 terawatt hour, also due to the higher thermal dispatch, coupled with higher solar, mainly due to the new projects in wind generation. Even though our first semester generation was affected by poor hydrology, during the second quarter, there was an improvement in rainfall that enable a recovery in our reservoir level, and there's no cover in the moment that brings a new and better perspective for the second half of the year.

Nevertheless, since there is a variating electricity rationing decree enforced until September 30, 2022, 0.4 terawatt hour has accumulated as a deep well water reserve for the whole national electricity system, out of which 0.2 terawatt are in our reservoir. The impact of this water reserve is basically in April since the accumulated water belongs to the system and will be generated a return to decision once the decision expires in proportion to the sales of (inaudible).

Our energy sales increased 18% during the first half of 2022, mostly related to the higher sales to free customers, primarily due to the new contracts, coupled with an improvement in sales to regulated customers. During the second quarter 2022, physical sales increased 10% as a result of higher sales to both free and regulated customer.

Let's quickly see the EBITDA performance on the pillars by business line on Page 16. As it was mentioned previously, our first half 2022 EBITDA decreased by 21%, mainly due to the performance of our Generation business, which was affected by the increase in commodity prices worldwide and the doubt that has affected the country and the consequence that this effect have had into the production costs and into the spot market.

On the network business side, this had an increase of $41 million, mainly due to the reduction of the provision as a consequence of the technical tariff report published in the first quarter 2022 and the recovery of the demand during 2022. Besides this effect, the one-off effect of the UN agreement made in the first quarter 2021 had a positive effect in the OpEx this year. Others reflect mainly the holding OpEx of the pillar and the effect of the debt hedged.

Now on Slide 17, let me show you how our '22 EBITDA guidance will be accomplished. During this presentation, Fabrizio indicated our portfolio centers elements and strengths that make us in reasonable confidence that the current headwinds should not jeopardize either our guidance or our long-term goals for our asset in Chile. Let me give you a few words on our adjusted EBITDA guidance for the year-end.

As you may know, our Generation business is quite seasonal. That is mainly related to the fact that from June to August, we start of the raining period in Chile associated with the starting of snowing. At the beginning of our spring during October, we start to have a higher hydro generation in the country associated with the melting season. All this in October, we start to have a higher hydro generation in the country associated with the melting season. All these effects associated with the return of Argentina natural gas, results in the reduction of the spot prices and higher generation of our hydro facility, generating a higher EBITDA in the second semester of the year versus the first one. This seasonality that I have just introduced associated with several active portfolio management actions in place and a better-than-expected hydro season year support our view that we will be able to tackle this year's guidance. Next quarter, I should give you more detail on the evolution of our EBITDA performance and our actions.

Now on Slide 18, let's go through the main drivers of our group net income. Our first half adjusted net income amounted to $102 million, representing a flat variation versus the last year's figure.

The main variances are coming from lower adjusted EBITDA, which decreased $82 million or 21% mainly explained by the effect of higher commodity prices and its consequence in the spot market and variable cost and generation business; higher D&A impairment bad net debt by $28 million versus last year period, mainly related to higher depreciation and amortization in Enel Green Power assets, primarily explained by the exchange rate effect in the period and the initial commissioning of a new solar power plant; and the higher depreciation in the distribution and transmission segment related to the new projects and higher amortization of intangible assets related to the new commercial system recently upgraded at Enel distribution.

Also, we had a higher provision of bad debt in the distribution business, mainly due to the increase in overdue debt in the retail clients and municifires.

Financial results and (inaudible) investments recorded a $53 million, declining by $59 million in the first half 2022, mainly due to lower expenses related to the factory executed in the first half 2021 in Generation business on the accounts receivable that arose from the tariff stabilization law.

Income tax decreased by $49 million, mainly related to a higher tax credit due to the higher monetary correction in the period among the lower EBITDA results of the company and bad will accounting effect of 2021. The adjusted net income for the second quarter 2022 reached $15 million, which represents a reduction of $28 million in the quarter, mainly explained by the same effect of the (inaudible).

Moving to the FFO of the first half 2022 on Slide 19. The first half 2021 as first amounted is a negative $219 million in the period, mainly explained by the accumulated stabilization mechanism accounted in the first half 2022 for $211 million, has reduced the cash conversion of the period. During the second quarter, this effect had a significant impact in our FFO accounting $144 million out of $211 million.

The working capital in the period accounts for a negative impact of $187 million, mainly due to $57 million related to the delta payables in June 2022, mainly coming from the CapEx execution, $43 million related to the lower collection in Enel distribution mainly associated to the final turning on the commercial system update. Most of this impact should be recovered within this year. Another effect in the period mainly related to $62 million referring to the cost of -- cost of payment, not including the EBITDA adjusted transmission tariff revision, provision and bad debt.

Let me just underline that regarding the working capital, in 2021, it included defect factoring instruments that we have executing totaling $189 million. Income taxes reached $35 million. With regard to the variation versus last year period, I would like to recall that last year's numbers were impacted by FX losses resulting in a lower payment of tax.

And finally, the financial expenses amounted to $100 million related to the debt cost payment in the period, but was concerned the last figures, which include the expense related to defect factoring instruments that I have just mentioned.

Moving to our debt on Page 20. Our gross debt has increased by $665 million amounting to $5.7 billion as of June 2022 due to in-debt company loans provided by Enel Finance International to Enel Chile for $400 million and third parties for $300 million in the second Q 2022, offset by the amortization of Enel Chile and amortization leasing contracts. As of June 2022, 18% of our debt at SDG linked to our Q2 Scope 1 past reduction for 2023 and 2024.

In terms of debt amortization, our schedule remains comfortable, with an average of 5 years. For the current year, we have around $400 million debt than in Chile level with (inaudible) that has a maturity in December. And that we aim to renegotiate looking at the opportunities in both local and international markets. Regarding the debt maturity in 2023, we will use the proceeds from the sale of transmission to repay this maturity.

In terms of liquidity, we continue to have a comfortable position. We are reserving some available committed lines, considering the possible headwinds in the market coming from the international conflict in the Eastern Europe. Despite the increase in our debt, its average cost in June 2022 decreased to 3.9 percentage versus 4.4 percentage as of December 2021 as a result of our financial management carried out during the last month.

As a part of our goal to strengthen the sustainability of our balance sheet, we have put in place an asset rotation strategy, focusing on optimizing our indebtness, increasing value for all the shareholders. Let me spend a few words on the recent material fact regarding the sales of Enel Transmission on Slide 21.

As we have just informed the market, Enel Chile has signed today with Sociedad Transmisora Metropolitana SpA, a company 100% controlled by Inversiones Grupo Saesa, an agreement to sell its entire stake in Enel Chile, equal to 99.09% of the share capital. In Santiago Metropolitan area, Enel Chile operates 683 kilometers of transmission lines, managing 60 substations.

The purchases in sales, transition will be carried out through a public tender offer by the (inaudible) Grupo Saesa and is subject to certain condition precedent customer for this kind of transition. Like the approval from the Chilean Antitrust Authority, fiscally and national economies, the agreement provides the Grupo Saesa will pay an equity value of $1.345 million for the entire state has Enel Chile equal to USD 1,526 million of enterprise value. The capital gain embedded in this transition -- transaction shall generates a significant impact in our net income in 2022 of $783 million.

The pricing is subject to a price adjustment maintenance based on the interest rate from January 1, 2022, until the launch date of the public tender offer mentioned before.

The closing of the transaction is expected by the end of this year. The transaction is part of our asset rotation initiatives focusing on the capital recycling of our company and contributing to optimize our leverage. The timing and the pricing, we have reached on this negotiation clearly expressed the quality of our portfolio and our continued path to unlock the value of Enel Chile. We are going to give you further update about the process in the next quarter call. But what I can anticipate is that the services we obtained in this operation shall be used as an input of availability management we are focusing for Enel Chile.

And now I will hand over to Fabrizio. Many thanks.

Many thanks, Giuseppe. Just to point out some closing remarks. During our presentation, we have detailed several actions we have taken to create extreme (inaudible) starting from the impact of an international conflict in the commodities market. All these scenarios led 2 main messages for us.

First, we are on the right path to continue conducting the energy transition through the destabilization of our magic and electrification of the consumption. Second, continue to reshape our actions to bring value to all our stakeholders. The asset rotation transactions was raised today, and our action plan gives us confidence that we will reach our 2022 guidance.

Let me be clear that there are no low-hanging fruits on this part. But we know that we are trading the right growth, and we continue to unlock the value of our qualities and resilient portfolio. Let me now hand over to Isabela.

Thank you, Fabrizio, and let us open now the Q&A section. (Operator Instructions) Operator, please, you can start the Q&A section.

(Operator Instructions) Our first question will come from the line of Murilo Riccini from Santander.

So considering the level of water and there's no storage so far in the reservoir and in the mountains, would it be possible to generate approximately 10 terawatt hour of hydro generation this year? This is my first question.

And the second one is, could you provide us your view on the availability and prices of fuel during the second half of this year after this lower shipments that we are currently seeing to Europe? Do you believe -- or do you see the possibility that your gas provider cancel any gas ships during the winter in Europe, even if they need to pay a fine, for example?

And the third question is, do you have any other asset rotation in process or under analysis?

Okay. Let me go with the first 2 questions and let Giuseppe answer on the third one. Well, yes, we are quite optimistic on the second semester. And we think that we could reach all of 10 terawatt hours of hydro production this year. This is our best estimation today. Of course, the rainfall as known season is not yet finished. It depends also on how it goes on in the next week. But as of today, this is our best estimation to be close to the 10 terawatt hours that you mentioned.

Second question, no, we don't foresee any problems in our gas supply. Our contract is very tight with many professing closes in our favor, in this case. So no, we are not worried about any potential cancellation of shipments to our range. Giuseppe?

Fabrizio, concern possible other asset rotation -- I mean, we are always looking whatever opportunity would come up from the market. We don't have, so far, anything on the table, but as you have something, will [computize] for sure we're going to share this information with everybody. But again, it's a regular process to look to our assets in order to find a way to unlock the value for the company.

Our next question will come from the line of [Isaac Fernandez from Velance].

Thank you very much for the materials. Very complete as always. I have 4 questions, and I would like to go one by one, if you do not mind. The first one is pretty much an accounting thing. We saw an unusual jump in the other operational expenses, P&L line, not related to fuel, which affected EBITDA. Could you please tell us a little bit what's behind this?

May you explain exactly which line you are referring to because...

Yes. Before getting to -- yes, before getting to EBITDA, you have 4 different operational expenses lines. And in the second quarter, the last one that says other operational expenses, that's the one that jumped quarter-over-quarter significantly. If it's too specific, I can take it by e-mail with the...

Yes, because I'm not sure that I am understanding which topics you are referring to.

No worries. No worries. We'll do that. My second question is related to the Bocamina 2 shutdown. And what's the latest on the timing?

To fulfill the schedule, it was defined with Minister of Energy. And of course, as you well know, it was expected to close in May, then we received an instruction, a formal instruction, to perform this at the end of August, September. And to be honest, we don't see any reason to postpone that again. We said (inaudible).

Thanks to the [hydrological] condition that we commented, thanks to the availability of Argentinian gas, how the system is not expected to be on -- any more. And for the rest, going forward that we have also to consider the come into ration of the renewable plants. So we don't see any reason why we should postpone again Bocamina 2..

Okay. Great. My third question or actually topic has to do with the sale of the transmission lines. I wanted to get a sense of how much tax you expect to pay on the gain of that sale? And when should Enel Chile pay that?

Well, for what concern, the tax is going to be paid next year. The amount of the tax, if you look at the -- capital gain impact. So we are talking about around $350 million. But we have to consider that we have some losses that we can use in order to offset such amount that we are estimating around $100 million, $110 million. So in -- in short, we are talking about $240 million, $250 million next year.

Okay. Perfect. And well, Giuseppe Turchiarelli mentioned that Enel Chile plans to use the proceeds from the sale to pay down $1 billion debt amortizations due 2023. And I wanted to know how much of that are intercompany loans?

Well, let me say that all the loans, all the funds which they are going to dedicate to the repayment of the loan, the criteria based on which we are going to select the loan that is going to be repeated are basically the expiration date and the costs associated to the -- like, breakage fee or other kinds of costs.

I would say this. A good portion of this amount is going to be used in order to repay the revolving credit facility that we got this year during this year and that they are going to expire next year. And we are talking about most of them are in the company's revolving credit.

Perfect. That's very clear. My final question is also, well, after selling the lines, collecting the cash, paying down the debt, I think you might still be a little bit above your comfort level regarding leverage. Is the Enel group thinking about an eventual equity injection, a capital raise?

Well, of course, I mean, and the answer is going to, have to be done by Enel SpA. For what concern, I mean, what I know as of today, there is no plan of capital injection on the table.

(Operator Instructions) Our next question comes from the line of Henrique Peretti from JPMorgan.

I have a few follow-up ones. The first one would be, so if tax payment is about $250 million and the equity value is over $1.3 billion. So the cash inflow with the sale is going to be about $1.1 billion. Is that correct?

Well, Isa?

No, I would say, just the line, we weren't able to hear you, so you can just be closer to the line to be more easy to us to listen from here.

I'm sorry. I was using the headphones. I want to try again. So the question was if the equity value is $1.3 billion and the tax payment is about $250 million. So can we expect the cash inflow of about $1.1 billion in the asset sale?

Yes, yes. You have to consider that, of course, Enel Transmission has a loan, an intercompany loan owned by Enel Chile. So basically also the loan is going to be paid, but a lot of tax, we are talking about [$1.1 billion] roughly. Again, the correct amount for having the correct amount, we need to wait the end of public tender offer because there is a price adjustment mechanism that will change a little bit the amount of the equity win. So roughly, this is -- the calculation that you made is correct.

The second question would be if the annual EBITDA of the transmission business, it is still about $70 million? And the third question would be, you mentioned the company could consider other opportunities in the market if they arose. My question would be, what type of assets would Enel Chile consider selling or a minority stake in case all their asset rotation measures would have to be taken?

Well, again, we used to evaluate those kind of assets really Enel transmission was out of our strategy. You know that we are focused basically on the renewable and generation side and distribution side because of the client together with the new services of Enel X.

Having said that, it is clear that renewable projects are easy to split in the model distribution and Enel X is all together. So we are analyzing everything we still not have a clear view of the potential opportunity, but if something will come up, for sure we're going to do.

Okay. And just to confirm, the EBITDA of the transitional line. Thank you so much.

It's around $70 million, if I'm not wrong. Give me a second. Yes, roughly.

All right. And I'm not showing any further questions in the queue. I'll turn the call over to Isabela Klemes for any webchat -- webcast chat questions.

Okay. Thank you, Victor. Thank you all for your questions. Now I go through the chat that we received several questions from different analysts and investors connected.

One of the questions here, Giuseppe, is just to say again, like the numbers of this transaction, the sale of Enel Transmision. Some analysts are requesting more details about the amount that we are expecting that is going to be the cash in of this operation. And how much would be an estimate of the reduction of the net debt of the company considering this cash in?

Okay. As I said, we are going to -- the projection that we have is to get after the payment of the tax to have around $1.1 billion. $1.1 billion that is going to be dedicated to the payment of the debt and to the distribution of the dividend related to the 30% dividend policy. So we are talking about around $200 million dividend and around $190 million of debt, because, again, on top of the amount that you received, the -- going to be paid also for the loan that is inside of Enel Transmision that we estimate at the end of the year around $170 million. So basically, we're going to reduce significantly our debt.

Perfect, Giuseppe. And on the turn, we are also receiving question regarding dividends. So the company is expecting to increase dividends related to the sale of these assets.

Well, we are not going to -- let me say, we are going to increase the value of the dividend because we're going to have this capital gain. We are not going to increase the dividend payout that it will remain 3%. So since the 30% is mandatory in case of the company has positive results, we are going to distribute the dividend associated to the capital gain after tax, please. We're talking about roughly $200 million.

Giuseppe, thank you. Then the other question that was made by Rodrigo Mora from Moneda is he's requesting more details about Bocamina 2. He's asking that the system is still very pressure due to the hydrology and commodities. And if you are indeed thinking on close this facility now in September, or if we're expecting to let this unit in the reserve -- strategic reserve energy mechanism, Fabrizio?

Yes. As I already mentioned, we don't see the system to be any more like under stress. And this was also consistent with the great -- to think that there's no reason to postpone again the closure of Bocamina. And we were pretty clear since the beginning that we are not going to use the strategic reserve mechanism. So we'll simply shut down the plant and finding an alternative use of the site.

Perfect. Thank you, Fabrizio. We have more questions here also from several analysts and investors regarding the LNG. So what we are, first of all, what we're expecting regarding sales -- of potential trading sales of natural gas in the second half of this year?

And if we can give a detail on how much was sold to Endesa or any other play that Enel has sold, yes, during this first half of this year? So also the other question, yes, this is all the questions in terms of LNG and commodities. So Fabrizio?

Yes. Well, basically, in the first half, it was called approximately 15 Terabit cube, out of which, 10 was about this Chile Endesa plan. On the -- this final deal was last year that was done last year in order to manage and expect in the third group that is supposed to have during the first half of the year. So not a contribution to the numbers I commented during the presentation. While the other phase were more short term contributed to what I mentioned as an action to cope with a challenging scenario and putting these one of our resilience of our assets.

And about the second half, we expect to have, as I mentioned, and it's a significant surplus considering the combination of Argentinian gas availability and our long-term LNG contract we with Shell. And so we expect another at least 10 Terabit to be available to sell in the second half. And the whole piece of news about that is that, we have still to do. So we are trying to, of course, optimize, expect the opportunity and to leverage on this very good market outlook about Argentinian gas.

Thank you, Fabrizio. We have another question also regarding the CapEx. What we are seeing regarding CapEx for Enel Chile this year, if we are estimating any kind of a reduction in the CapEx or postponing to the next year?

Well, for what constant the CapEx? As you probably know, most of our projects are projects already under construction, actually. All the projects are projects already under construction and committed. So we are confirming the CapEx at the end of the year for -- because, of course, we need the energy that this product is going to produce in order to improve our margins. So as of today, we confirm that the CapEx is going to be in line with our Capital Market Day production.

Perfect. Thank you. And final question here that we have is regarding the rating agencies. So have you had recently discussions with the rating agencies? And what you are anticipating regarding the movement of the company?

Yes. Well, we always are in touch with the rating agency. We discuss and we pass all the message that we believe that are needed for them. We discuss about the projection of the business and EBITDA and also about the evolution of the debt. I believe that we are in line with their expectation in terms of (inaudible) actions that are needed in order to delever the company. So we don't really believe that rating agency is going to give a negative feedback about the situation that we have today. So we have signed with them.

Okay. Thank you very much, Giuseppe and also Fabrizio, and thanking you all for being connected today. In case you may have any other doubts or any other consultations, please let us know. And as always, our Investor Relations team is going to be available for any other information you may need. Thank you very much, and have a nice day.

This concludes today's call. Thank you for participating. You may now disconnect. Everyone, have a good day.