CELSIA S.A. E.S.P. (CELSIA) Earnings Call Transcript & Summary

Good morning, ladies and gentlemen. Welcome to the third -- to the third quarter result -- financial results presentation. [Operator Instructions] This conference has English and Spanish language interpretation. You can select the language by clicking Interpretation on the lower -- on the bottom right corner of your screen. In your cell phone, you can press the plus button and then select the option Language Interpretation, select the language, and you will be ready. If you don't want to listen to the original presenter, you can silence original audio. Thank you for being here connected. And now Ricardo, you have the floor, our leader at Celsia.

Thank you, Gonzalo, and hello to everyone who's listening to us today and following us in this conference about financial results. We're going to present what happened in this quarter, in this third quarter. And we'll see in the end, Esteban is going to give you some details on financials. As you saw yesterday in the memo, in the communication, there was a lot of movement and with the sale of -- the sales and Tolima and, well, the superintendent's issue, right, I mean, the sale of the duty-free zone, and what happened with the entire electric system. But we want to give you some details because you were asking about that. And so I want to thank our customers because they trust us, and they allow us to bring all the best energy, and all the people working and the staff in the company, our customers and the people who have been affected by COVID-19. I want to especially thank our suppliers because they always contribute to us, and we can offer our reliable service. To continue with our progress. The company continues to boost the social and economic improvement, promoting sustainable solutions and contributing to the life quality of our customers. When the emergency was declared, we have been working with all the interest groups to provide the electrical service. We have to provide this in a quarantine, of course, and we work with the protection of the administrative staff. Most of them are working remotely. The operations staff is using the biosafety protocols and all the protection equipment to operate as safely as possible. Thanks to all these biosafety protocols, everything we have been doing in our offices, in our stores to ensure the health of our collaborators and customers, we have a very low percent of contagion. Sadly, one of our collaborators passed away. But in a -- for 2,100 people, our rate has been very low. And we want to thank all the health institutions and health care professionals who support us. Best -- the most important of all, there are no situations that jeopardized the operation. Okay. So we are committed to creating jobs and taking care of people. We have over 2,100 collaborators, and we have received about 172 new people. We have 69 apprentices. These collaborators are helping us to meet the needs of our customers during the pandemic, and we are aware of the positive effect on the community by providing these jobs. We launched a spectacular employment plan in Tolima. We expect to hire over 200 people in Tolima to work with our contractors. So we are really committed with generating income and generating jobs in this country. We -- in Celsia, we know that the private sector companies are essential to boost the economy and recover the growth on employment. We have been supporting our suppliers during the emergency. We have lowered the payment terms. We have made some advanced payments, benefiting all the suppliers. We have been doing advanced payments over COP 50 billion for our local suppliers when the pandemic started. And they are mostly SMEs, small and medium enterprises. And that's our scenario regarding suppliers. We have also designed a return or a go-back-to-work plan, and we expect to implement it next year, early next year. We also have a program for customers from socioeconomic levels 1 to 4 implemented for other customers of the company. For commercial and industrial customers, the benefits add up to COP 39 billion. Out of them, COP 34 billion will be managed through Findeter mechanisms, both at rate zero and rate -- compensated debt rate. In our service, our customer service teams, we have approached customers who had doubts before the COVID to -- so that they can enjoy the service without inconveniences. Since August, we have been collecting all the installments of these financing schemes. And in October, we have seen that the operations are going back to normal. I mean, the operational plan we had before COVID is now running on the company. I mean, we are working without any special considerations. All our teams are on site. They are -- we are acting with the same schemes we had in the beginning. So that's very positive. Some relief for our customers include the payment or -- are the fee -- was the fee freeze since March. That represented COP 70 billion that you pay what you paid for energy at cost, as we say. And in Tolima -- in the Tolima market, it has represented COP 65 billion savings. In Tolima, we gave them the good news because they had no subsidy for socioeconomic level 3. The subsidy is 50% over consumption on the regulation top. 50% is a very important number, and we benefited over 75,000 customers in Tolima. This is provided by the national government. And the companies who have this -- these subsidies on their bill, well, we have to charge the government. In this case, nobody wanted to implement this in Tolima. But we managed to benefit our customers with this subsidy with the support of local, national and departmental offices. And another positive result is distribution business. We have been working very hard with all the investments to continue with our service levels and improve them. We have made our COP 140 million (sic) [ COP 140 billion ] investment -- in investments this year in the continuity of the distribution business. And in expansion, we have invested COP 114 billion. In Tolima, we still have challenges with SAIDI and SAIFI indexes. But in the last quarter, we noted an important improvement. We expect that this is the final improvement towards the indicator path, and we will see how our PQRs started to lower compared to last year. They went down 11% despite the rainy months. So we are very happy, very content. And then the availability of our distribution assets is at 99% still. So this is very good news, guys. All those efforts made by the company are recognized by our customers. This has added to the recovery -- economic recovery of the last months, and this has been very important for recovering the level of collection we used to have. Our portfolio is very healthy. Our customers are very good payers, and we have portfolio of really near 99% in collection terms. The demand for energy. The collection has reached an average of 95%. In September and October, we have almost the same levels of the pre-COVID period. In terms of collection, we are working normally in October. In October, we expect to have the collection near to the historical levels. We are committed to support our communities in the framework of contributions in the Argos corporate group. To support the most vulnerable families during the contingency, we joined many initiatives, and we have contributed over COP 10 billion. Nonprofits, 73 hospitals and institutions have been benefited with inputs, medical equipment. We have delivered over 14,000 nutritional kits and over 3 million liters of water to vulnerable population in La Guajira in our communities. And so our social and environmental work teams have been supporting the community completely. We expect that with the wave of contagion, we are able to support the community with medical elements and biosafety. And we are very happy that Celsia is able to support and to help the community. And we expect to continue doing that. Some other aspects are the works for taxes. We have used this mechanism that the national government has opened. We do the works, and we deduct taxes that we would have to pay for doing them. And we had some important approvals for Tolima, especially one was an institutional building for 9 institutions in 91 offices in Tolima, in Prado, Villarica and Villahermosa municipalities. When we were there delivering, we delivered over 4,800 items of furniture to those institutions. And we gave them -- and we are going to deliver over 500 computers to aid educational institutions in Planadas municipality. So this will help them with the problem of many public institutions, connectivity problems. So -- because this has [ created ] a lot of school dropouts over the average. Well, in the financial front, we have managed to make some savings of [ COP 36,000 billion ]. Our goal was COP 45 billion. So we're doing good. We're almost reaching that goal. I'm talking about net savings, right? We talk about net savings because we had to invest a lot in improvements and staff training for our customers' outreach stores. So everything goes net. And we are doing good in general terms, and we are providing good service to customers. And we also incorporated to this package of results. So you can add the environmental, social and governance charter. We have a positive impact and good management in these 3 aspects. I want to tell you something. We continue to work sustainably at Celsia. First, we opened the PCH in San Andrés de Cuerquia, a 19.9 megawatts. Some of you guys joined us in our virtual opening. This will generate energy for 25,000 homes. We were always accompanied by all the institutions and Corantioquia was -- received -- the properties in páramo de Santa Inés, to protect the basin and the origin of this river, and this was very nice. We continue to strengthen this environmental reserve. We continue to support them. And little intervention among trees. We rescued and translated -- or moved 100% of the trees, and they were taken to the páramo area. We initially constructed 2 greenhouses to propagate the species in the area. This plant was finished almost 3 months before it was expected, and this was very interesting. And talking about social issues. We reformed 2 institutional -- educational institutions in terms of energy and water, and we continue to work hard on this area. But I also want to address PCH. I wanted to say that we expect a 90% plant factor. This is a permanent generation, and we're going to deliver to the municipalities of San Andrés de Cuerquia and San José de la Montaña every year, together with the resources given to Corantioquia for use of this center, about [ COP 1,200 million ]. Well, that is the summary of this third quarter and this very good results. Esteban is going to present the different effects, nonrecurring effects that were presented there, especially the payment to the superintendent of services that we are fighting in every legal front because we are not -- we do not agree with this payment they are demanding, and we're going to tell you about the good results in this third quarter.

Thank you, Richard. As you know, the general context of the industry, talking about operational and financial results, you can find them in the reports published yesterday on the Investors website. What we were talking about in -- on the report mainly is that this quarter, we had huge effects or impacts coming from the 2019 operations. In order to understand the results of the organization, we need to choose what we need to compare. We have the operations of the Celsia free duty zone that contributed to net income. And the other one is the Caoba effect because if we compare to the assets translated to -- or moved to Caoba and in 2020, we are now managing the participation method. As Ricardo mentioned in the introduction, before going to the financial results, the contribution for COP 22,180 billion to the Superintendent of Public Services, that we were notified to this payment. And this generates a very important increase in this item. It's almost 5x the contribution we expected. And this is -- there are 2 parts. The increase in the contribution and to the special contribution to finance the corporate fund. We have several suits against this contribution that are pending to be solved. After this introduction, let's talk about consolidated income in this quarter. They reached COP 819 billion. That's almost 17% lower than the last year in the same period and a decrease of 1.1% after adjustment of the operations. In the accrued amount for the year, the income is over COP 2.6 billion -- COP 2.6 trillion. There is a decrease of 4.3% compared to last year and an increase of 17.7% after adjustment. The income of Colombia represent 89% of the total consolidated, and Central America is 11%. The cost of sales consolidated was [ COP 562 billion ] with a decrease of COP 90.1 billion compared to the third semester of 2019, and the reduction is 3.1%, excluding the free duty area. In Colombia, we have increased -- we have seen an increase of the variable cost, pushed by the exchange rate that increased this component in other variable costs of generation. Throughout the year, the consolidated sales cost is COP 1.78 trillion, and it's 10% less than last year. The administrative expense of the trimester of the quarter was COP 97 billion. That's 70% more than compared to last year. But out of those COP 97 billion, almost COP 23 billion correspond to the contribution that was accrued during the trimester. If we don't include this -- if you include this contribution, the contribution, we would have a variation of minus 10.4%. On the variation of -- the contribution will be 1.6%. EBITDA reached COP 257 billion with a reduction of 19.7% or a growth of 6.1% after adjusting. And in Colombia, Colombia contributed with 80% of the EBITDA, COP 207 billion, and Central America contributed 19.4%. That means COP 50 billion. In the first trimester, we thought that Central America would have an important comeback in this month, and they have managed in the third semester. It was a very solid third term. And we expect that this third quarter continues to do well despite the market conditions. Talking about business EBITDA. EBITDA generated COP 153 billion; distribution in Valle, COP 79 billion; Tolima distribution, COP 31 billion. The commercialization business showed a negative EBITDA of COP 5.4 billion because they are collecting the effects of reliefs and collection reliefs we have been doing. So that business has to assume that. The consolidated EBITDA for the year, we have COP 900 billion with a 2% growth or an increase of 23% after adjustment. The EBITDA margin is 34%. It represents an increase of 200 basis points compared to last year and 153 after adjustments. Financial expenses, COP 76 billion. It was a reduction of 30%. And after we acquired the Tolima assets, I'm mentioning the increase -- transitory increase in debt. While we were looking for the capitalized structure in the long-term for that operation, the provision of taxes in the quarter was COP 27 billion. The net income for the quarter was COP 69 billion, 78.1% compared to last year. We can see that in the free duty zone, because of the free duty zone, the accrued for the year of net income was COP 252 billion, 30% less than last year. But after the adjustment, there is an increase in 61%. And net income was COP 56 billion for the controlling entity, a reduction of 81% compared to last year and, after adjustment, 11.1% increase. In terms of debt, the company closes with debt of COP 194 billion. During the semester, we started deleveraging after taking the capital debt. We have paid COP 100 billion in Colombia. In December, we have a negative effect of the devaluation of peso, Colombian peso, and our debt from dollars to pesos has increased COP 156 billion. But I told you -- as I told you, Central America is in a deleveraging process. We have seen a decrease in the graphics -- in the graphs. And in Colombia, we have started the payment of the COP 100 billion we mentioned. We closed our consolidated cash flow of COP 373 billion. Colombia has available to COP 178 billion, and Central America has COP 195 billion available. Talking about Caoba. Through the participation method, they contributed with COP 45 billion -- COP 45 million. They were affected by the long-term closing and commissions, special adjustments. The main numbers for the vehicle were COP 33 million. The EBITDA was COP 30 billion, and the net income for the organization was COP 86 million. Caoba had coverage with a forward after the bridge loan finished. We -- they received one disbursement by worth COP 1.05 billion, and the cost of debt was set to a fixed rate. The long-term structure of the derivative will be managed through coverage method. The expenses of the restructuring the derivative was -- were seen on the third semester -- or the third quarter, and we have to receive the disbursements for Tolima expansion and Toluviejo execution. This is the end of the results of comparison. And our third quarter was full, very full of items. And the fourth semester or the fourth quarter -- I mean, the fourth quarter will see disbursement for Caoba -- from Caoba.

Thank you, Esteban. Yes, I want you to feel where you're measuring the results. The EBITDA after the adjustment and when we compare the effects of Caoba's Zona Franca, and we complete the accrual of EBITDA, we have COP 93 billion with a 23% of growth in EBITDA. The result of the business -- operational business is very solid, very strong in terms of EBITDA. The recomposition of asset portfolio manages to reach a good profitability, and net income is generating numbers that surprises in a positive way. We never thought we would have this -- we will be this high. We have 61%, COP 252 billion net income in the third semester -- in the third quarter. So we maintained operational company. Customers are happy, which is most important for us. Okay. To close, one of the breaking news that is making us happy is a silver seal we got on labor equity. We have been working with Grupo Argos. At Celsia, we want to eliminate the crystal ceilings or the sticky floors, as we call them, so that women can reach positions that were usually offered to men only. We want to eliminate any kind of discrimination after eliminating some positions 4 years ago, and we used the [ ROLLs ] model. We managed equal pay. We managed to establish equal pay as they say. So we are happy because there is an intergenerational balance throughout the company. Talking about gender, we have 30% women in the company. And as we continue to grow, we expect to increase the participation of women with talent and of this -- of feminine thought and contribution to the companies. So we are very happy for receiving this award. Esteban and myself have finished this presentation. And so we are now having the Q&A session.

Ricardo, Esteban, we are ready to start the Q&A session. [Operator Instructions] We have some questions on the Q&A session. So we are going to start Juan Gallegos from Porvenir. He has 3 questions. Pursuant to the report on results, there are suits against the expense demanded by the Superintendent of Public Services. What are you expecting? When are the suits going to be solved?

Well, I want to invite Santiago Arango, our leader in corporate matters. This surprised the entire industry in a very negative way. And this is almost, I would say -- the contribution of the superintendent went up 5x, which is totally absurd. And we are fighting against this. So Santi, can you help us with that process? Why did this contribution appear? What are the suits we have said filed? And where is the progress?

Of course, Ricardo. Because of Murphy's law, I don't have a very good signal. So I have to keep my camera off, I'm sorry. But the context, after the national plan of development, there was a modification of Article 85, the Public Services law. They modified the taxable base. It was made by the Superintendents of Public Services. They say the contribution is in order to finance the operational expenses, but also the investment expenses of these institutions. So that's what happened. There was an additional contribution, temporary contribution for the Superintendents of the Public Services liquidated on the same taxable base, which, as I told you, was -- increased at a 1% rate. So what is the effect of this modification in law? First, the taxable law -- taxable base only included [indiscernible] companies, but the superintendent had a deficit. They would include certain costs. That deficit is what was discussed. Under the new regulation, after overcoming the discussion, they included the total costs accrued minus taxes and other items, whether there was a deficit or not in the superintendent. So this increased the taxable base importantly, the rate as well or the fee. The fee is determined by -- based on the net budget of the superintendents, plus the investment of the superintendents over the taxable base of all the agents. So what happened? What did we find? The budget of the superintendents increased importantly. Therefore, the fee increased as well. So this [ generated ] that in Celsia Colombia, we increased -- the taxable base increased, and the fee increased in Celsia. So the contribution for the corporate fund is the same taxable base incremented but with a 1% rate. So this impacted us in a significant way. To date, there have been several suits. We have identified 7, and 1 of them has been ruled. And the others are to be solved. What happens is that there is little clarity on the contribution, the contribution use, and this is our main grounds. The contribution is meant to cover the operational expenses of the entity, not the investment expenses. So this is what we are discussing there, and this might be caused by the Electricaribe issue that was liquidated last year. Then the agreements in the plan, increasing the taxable base and including the special contribution, we indicated that there is not connection with the special requirements. So they are filing the principals. But we don't know the sentence -- sorry, we don't know the ruling on that suit. But they had indicated that the enforceability will be applied as of January 1, 2023. But it is the same because the additional contribution is created only until 2022. So we are expecting -- or we are waiting for the suits to be ruled. And we are trying all the governmental ways and using all of our resources because we consider that this increase in the contribution is not legal. That is not legal because the use should not include the investment expenses. However, as you know, this is a principle of causation and this includes our financial results. We want to declare the illegality of those standards. And they are going through the -- well, we expect that the suits going through the constitutional court will not defer the application over time. Well, this is a complex topic, and the entire system is fighting against these 7 suits, 7 suits and 1 ruled. The ruling has not been published, yes. No, we have only a press release. We don't know the ruling yet. So we need to know more about it. Yes. We will keep you posted about any progress, and we expect that we will go back to our normal payment to our -- to the institution that surveils us.

There is a question from Juan Gallegos about Central America.

Yes. Central America has 3 important assets. The hydraulic asset in Costa Rica, we had an important maintenance in the substation, the level transformers in September. We had no generation there, but the remainder of that contract that we have with the government, with the ICE in Costa Rica, they buy all the energy. We have 6 months of high hydraulic generation and 6 months of low generation and lower price. So we take advantage due to the maintenance. So in the general scheme, in the general results, we have no problems. The Dos Mares are [ 2 Cs ] asset in Panama. In the last quarter, they beat all the records of hydro generation. The spot price is about $40 in Panama, and it was $70 before, $80 before. So we are very happy because this is a set that is fully contracted, and we are growing fully in energy. The BML (sic) [ BLM ] asset with a very low price in the spot, we are just complying with the commitments we have for the next 2 years. This is a carbon generation asset. But in Celsia, we have become renewable. So this asset we want to overcome, but we are looking for options to set the future and the medium-term for this asset that will take us back in their results. I don't know if Esteban has any comments about Central America.

No, Richard. In terms of perspective of contracts, I have no questions. On 2 new markets we have, we continue to capture customers in Panama and Honduras. We are growing our business. We're focused on the solar photovoltaic business, and we continue to grow very well. And we send our love to Honduras, who is enduring the hurricane.

Well, the one last question of Juan Gallegos was the result of loans from Findeter. And did you receive the disbursement?

Well, after this long journey, after this long journey, we managed to sign the contracts to have the resources disbursed. We are signing them this month. And out of COP 36 billion comes from there, almost COP 30 billion will be disbursed through Findeter from November to December. And the national government, I don't know if you guys noticed, but they have signed decrees on compensated rate. Findeter told us that they [ approached ] the management, but we are going to find first floor -- first tier bank. This was very low. So we're going to -- it was very slow. So we're going to find a first tier bank for the operation of these credits, and this has been notified to the ministry. And we are going to file the forms for disbursement of resources, which is the lowest proportion. This is from socioeconomic level 1 and 2.

Okay. Now we're going to combine with the questions on live. Diego Buitrago from Valores Bancolombia.

I have 2 questions actually. One is related to Caoba. Is it possible to know the conditions of disbursed loan over COP 1 billion to Caoba? And talking about Caoba again, when do you think that -- after the stabilization of operations and infrastructure, when is Caoba going to give us some news about new projects, with the -- that they're going to participate apart from the projects mentioned in this call? And can you remind us the solar projects and the hydraulic projects in terms of licensing, et cetera?

Well, Diego, that's a good question. Related to the details of the projects, yes, some questions have been repeated, so we can solve several questions with one answer. So yes, that's a chapter we needed to detail in the presentation. Diego, Caoba is a company burn on their own. It was burned on their own because this time with Cubico from Celsia, we were -- would continue to do the planning, design, preparation of procurement for new projects. And we have the entire package, remember, level 3 and 4 assets of Tolima. This asset, we are developing in our everyday activity. The projects under construction, we have the Toluviejo-Bolívar project. And they will require investment for the next 2 years, COP 160 billion. It's $70 million, actually. But that's a topic, Diego, we are very happy with the association. And they're happy in the partnership, the partnership not only with our transmission business but also solar and photovoltaic, medium and large-scale business. I will let Esteban talk about the credit of Caoba. And he would then talk about hydraulic and solar projects under construction.

Okay. I will close the topic about the Caoba projects. They were basically, one is -- the future is [indiscernible] station of Caoba. It's a 500 [ STN ] that was awarded to us, and this substation will be invested -- will be managed by Caoba. Caoba is going to buy it back from Celsia because that's about COP 100 billion, and we will continue to work in projects 3, 4, 5 in Tolima. And Caoba should think about expansion in Valle. Caoba is always a vehicle that is working on growth. And the news, you can look for the Celsia hashtag, because #Celsia, you will find the news there. And the conditions for this first block, we have signed a bullet contract for 4 years. The project finance market is not the one we wanted for these type of assets. So we decided to use a bullet structure, a 4-year term credit. The combined rate of all the terms is 7%. And we have 3 spheres. One is -- has been disbursed, and one of them is in dollars because that is Toluviejo area. It is disbursed in dollars. Well, what are we expecting in Caoba? After the project finance market comes back, we should try to find a long-term structure, those that match the type of assets owned by Caoba. But right now, we are in a bullet contract for 4 years. Okay. Let's talk about the projects we have in terms of solar energy. We have the solar platform, as you know, [ COC ], [ COC ] with Cubico. This platform takes the largest project of 8 megawatts, the large-scale farms connected to one of our customers or delivering energy to the system. Well, we have over 600 megawatts that we're going to build next year. The team is working very hard on this scheme. In the 1 month, we're going to open another solar farm, 10 megawatts. This platform, with its own financing scheme comes with very aggressive projects for growth. Very cool progress, and we are happy with the know-how and the relationship with Cubico. Businesses in times of aeolic generation, we have Guajira project which is project reaching 330 megawatts. We continue to work with queries after the quarantine and restrictions, our social teams are working hard on the area. We continue to progress. You guys know there is some noise about some communities that want more clarity on the projects. Ombudsman office also wants more clarity on the project, there are some tables installed in Guajira with several stakeholders. So the projects that are going to provide a lot of wealth to La Guajira. This project should be implemented the best way possible. This is a very nice work in the community where we have the parks. We are very -- we're doing very well. We are progressing in our consultation. We don't depend from on the collecting line of building in Bogotá, but our products are connected directly. So we are going to build the transmission line and we are working really hard. We hope that this [ project ] is in the end of next year, we expect to begin the building and finish the building by 2022, 2023, we should be finished in the last parks. This is our -- within our budget. And we have a delay because of the COVID-19 pandemic, but we will see how to catch up in terms of equipment, procurement, detailed engineering, selection of the latest technology. We are going from 3 megawatts aero generators. The first generation -- generators were 3 megawatts. We're going to generators over 5 megawatts. So we are optimizing the park. And we are doing very interesting savings on the CapEx. We hope we complete the goals in terms of savings, but we continue to progress. Guajira is going to enter some milestone of energy generation in this country and the ministry, the government or -- of Guajira, they are all working together to become this true. So we expect that this goes well. That is the report, Diego, of projects and that there are of projects and then answering the questions. Okay. Ricardo, I would like to talk about projects. We are focusing on aeolic and solar. We continue to -- in Tesorito, we continue to progress very well. Tesorito team, the field work, the foundations, the access roads, camps, substations, they have started their works, and they are very happy. Last week, we got a picture that made us proud. The first engines coming out of the construction line with a flag of Colombia, and we should start the inspection process and other processes. So Tesorito is doing very well in terms of schedule, as we mentioned in the last conference.

Well, Esteban, actually, all the engines are constructed. Right now, all the engines. So the bottleneck that we have there is overcome, and they have -- the inspection is -- the inspection has been passed. Okay. So we are seeing that we are going ahead in time.

One question about Guajira projects, we have listened that or we have heard that some inconveniences in besides licensing. You explain we have no licensing problems with -- there are some issues like logistics to transport and move equipment, aero generators, to access the area. So can you tell us about that, talking about service projects.

Good question, Diego. We are all expecting eagerly because bigger aero generators require bigger shovels. And so we are thinking about 2 options. They should reach [ Puerto Rico ] or they can reach Puerto Cerrejón, Cerrejón dock. So Cerrejón is to receive cargo other than carbon. So we're taking different options. If it reaches Cerrejón, that would be easy. The logistics will be easy. In [ Puerto Bolívar ], we will have to do some road improvements. We would have to modify or change the path or the route. But, Diego, I would say that they are not going to be bottlenecks. It's a matter of defining this site, doing the logistics improvements so that the turning of the trucks is easy and equipment can enter. So we are not going to have a bottleneck there.

Ricardo, to clarify our generation products are already licensed. We are doing some licensing management, the process is -- but that doesn't depend on the collector.

Diego, do you have any other questions?

No, that's all.

We have Roberto Paniagua from Corficolombiana. He was raising his hand.

I have several questions from -- about several topics because it's the last conference of the year. I'm going to go through different topics, and then I will go back on some other topics. The first one is about investment vehicles. You mentioned Caoba and the loans. I understand that there is a first loan of COP 1.5 billion, at 7% per year for 4 years, right?

Yes, sir, that's Caoba.

Is that debt? One debt or the entire debt of Caoba? Or is that only the first installment?

Those are 3 disbursements. That's the first disbursement and the other disbursements are related the Caoba projects. So the second is Toluviejo, $70 million.

That would be the loan, the investment value right?

Yes, that's the other disbursement.

The rate is the same?

No. The term is 4 years. But the rate is going to be negotiated after the disbursement, but that's a dollar rate. So it's going to be significantly lower.

And the third disbursement, how much would that be?

More or less the third -- okay, the third disbursement would be COP 160 billion, but the same term, 4 years, the rate is going to close at the time of disbursement -- to be closed at the time of the disbursement.

Talking about investment vehicle of the platform, [ ZOZ ] Energy, is that accounted for in terms of CapEx? If you have 50%, you put that 50% from the CapEx, how does the debt work there?

C2? C2 is different from Caoba. C2 is a joint business with Cubico. The JV is recorded on Celsia's accounts. C2 is not a vehicle as Caoba. C2 is registered as a joint agreement, as a JV. We record our own part in the agreement. So that's embedded in all the numbers we explained.

Does the full solar business and part that corresponds to Celsia? So in the CapEx, you would register 50% of the CapEx?

Well, depending on the agreement. And depending on the agreement, I wouldn't -- there are some confidentiality agreements. Each part has a different contribution on the agreement. So that's what is reflected there.

Other topic is talking about this topic Chicamocha that in the next year, you expect to reach 300 megawatts through that platform. You expect to begin the construction in 2021. If we're talking about 2021, are you including the projects you mentioned lately? Or the 600 megawatts come from new projects?

In 2021, we are maturing the development we have been making. The big farms are going into the construction stage. Chicamocha is the first farm, that it goes to construction stage in 2021, and there are several other farms. As Ricardo mentioned, we estimate that 2021 is going to be about 600 megawatts. Our pipeline -- solar pipeline is over 800 megawatts. The idea is to continue to do the solar development to meet the needs of our customers and the organization.

Okay. The next topic that I didn't see in the quarter report, there about COP 400 billion of pending from Caoba and COP 150 billion from the sale of thermal free zone or Zona Franca. So I don't know when are those resources shown.

Caoba closed financial structure and received the resources. Celsia received the pending resources from Caoba. Talking about the Zona Franca, those are not pending resources to be received, or of the exercise of Celsia ends up with PPA option, a purchase option of Termoflores, which is what we have been working with in this year. We had about COP 18 billion. We executed about COP 18 billion from the balance. And the idea is to use this option when the market offers the window. But let's say that, that is not as -- that is not an account receivable. That's a PPA.

Talking about taxes, do you consider that using the investments that are projected? You have laid the topic of investments in Colombia for a topic of 27%.

We are not taking the projects through mega investments. We are taking other roads, [ 17, 15, ] for example, is the big engine associated to aeolic and solar, that's what we are talking about in terms of specific benefits.

Talking about Capex. When we started the year...

Okay. We're going to go through some other questions, and we thought half time, we are going to continue with [ route ]. Okay. Go ahead, Nicolás. Nicolás? It looks like Nicolás is not. There's one waiting for us in the chat. What dividends are you planning to pay next year?

Well, that question is not yet set. We have to wait until the year closes. And depending on Board of Directors' decision and the possibilities, this decision is made later on. And you would always say that the results are very good. I would say that we can continue to provide a dividend, which is the question whether the company can pay the dividend or not. And I think Celsia has -- would have no problem, but that's a decision made by the investors and the Board of Directors?

Another chat question, do you have any progress on the 2021 budget, the investment for next year? [ Francisco Javier Gomez ] from [ Valera Analytica ].

Well, Francisco, we're working hard on the budget. We want to imagine the world post-vaccine, post-vaccine world because COVID is here to stay for long. But after the vaccine arrives in Colombia, and we go to the actual new normality, we are working very hard on the budget issues right now.

Well, Nicolás, can you make a question then?

I don't know what happened with my mic, but it was like talking to myself. I have two questions. I would like to ask, we talked about calculation and the retribution of the contribution to public services, the Superintendent of Public Services. But I would like to know if the base to calculate this, the taxable base and whether the regulation is contemplated in December 2022 -- until December 2022. So it's 24 months that is going to be a recurring effect. I don't -- I might be wrong, but I wanted to check this with you guys.

No, it is not the same base as liquid income. Our life would be easier. The basis for contribution is the sum of costs and expenses for the organization. This is -- we are discussing this in the application because there are many costs in the business because of the separation of agents, their replicas for example. Our marketer of energy has many purchases of energy because they are only marketing. But does the sum of costs and expenses of the organization within a year what determines the contribution and the law of the plan established the increase in the contribution during the planned duration -- during the planned term. So that's until the end of 2022. Santi, you can correct me if I'm wrong.

Until December 2022.

There's another question about inner Tolima, we have transferred some assets, but the EBITDA register this semester of COP 31 billion. Can it be understood as a recurring EBITDA of Tolima operations? Or we have to wait for something else on this front?

Well that is basically the EBITDA that is recurrent according to the assets adjusted for Caoba. We expect the level of the [ fracturing ] level to increase because the service quality is going to increase, and this will generate as a result in incentives from the regulation. This will be a contribution to EBITDA through the next years. And the other topic is marketing strategies of the -- or commercial strategies of the organization, commercial strategy constructed in [ Bahía ], and this is going to contribute to EBITDA. For the basic business, yes, COP 31 billion is the normal contribution of that business in the quarters of the organization. We expect improvement in operational areas and the commercial strategy.

[ Diana Mosquera ] is writing on the chat on the question-and-answer tool, I see a reduction on short-term debt, but there is an increase in long-term commercial debt. Is that due to any reclassification of any debt? Or why did this change happen? [ Diana Mosquera ].

Well, the balances tend to coincide, but they are not the same. COP 400 billion is the account of Reserva Colombia Caoba that is closed with the credit and assets, long-term assets, we have the increase, mainly: one, the effect of the rate, but in the third quarter COP 75 billion. That's registered in the accounts receivable in the long term; two, we have revalorization because that with we have is dollarized the same effect of Central America. We have that in a corporate account. Like this, we have COP 30 billion -- COP 30 million debt and the increase was about COP 600 in the exchange rate. So this will increase the debt. And as an organization, we have an investment in financial asset because it is a large term asset, but we expect to rotate it because it's a portfolio position. But because of the nature of the asset, it is right now long term. And it is registered in the accounts receivable.

Andrés Duarte, you joined with a personal email, Corficolombiana. And this, please can you do the question and open the mic?

I have two questions actually, first, can you remind us with regard to [indiscernible] spaces for distribution that you're incurring -- that you currently have? And a similar question about distribution and transmission for Caoba. And also the distribution is about Caoba specifically, and the investments, taking into account the current [indiscernible] and the debt, current debt. What's the relationship between operational income? [indiscernible] and the debt service [indiscernible]. I am asking this because [indiscernible] is deeply in debt, as expected, and I'm trying to understand in the current scenario, can we expect any come from -- something come from the particular [indiscernible], taking into account the future debt? Or do we need the investment to see a positive contribution to the participation?

Andrés, I'm going to answer the last question, Caoba and its structure. The participation method is positive already. And it is not a huge participation method because it reflects leveraging structural design for transmission assets with contract. One of the advantages of Caoba for Celsia. Well, you see the consolidated of Celsia -- consolidation of Celsia as an integrated business, Celsia would not have the advantage before the leverage of vehicles let's say that only dedicated to the transmission. You have a huge leverage. We wanted a vehicle with a partner with a more efficient capital cost and get very good income in obtaining the assets and also leveraging the vehicle with the ideal capital structure for that vehicle. So this is a vehicle that has been leveraged 6 or 7x compared to EBIT. That is normal. That is normal in the transmission industry. But we have another advantage, Andrés. Caoba is here. But we are receiving resources for the operations from Celsia, design operations. Looking for business operation of assets. So all this infrastructure is not obligated in Caoba. Caoba is a vehicle. But the operational optimization is still in Celsia. The operational team is also operating with Caoba. I don't know, Esteban, if that's the response or where we can give...

No, I appreciate the answer you have given here, but what was the surplus of the annual debt in both interest and capital? [indiscernible] because we have been building credit over there and some other credits.

Esteban, we can give them the data. We can publish that on the web page. Yes. It is interesting that you guys said. Thank you, Andrés, for asking that. And I believe that you, as analysts, when you start to see the results, we need to start monitoring the results of Caoba and the results of JV as Esteban explains, which are an integral part of our management.

We have a question from Francisco Javier Gomez from [ Valora Analytic ]. Go ahead, Francisco. You raised your hand. So please, get ready to intervene. Okay. I'm going to read the question from Francisco, how do you see the recovery of internal demand in Colombia? They said we were reaching pre-COVID levels.

We're very happy with the recovery of operation, the recovery of demand in Colombia. When we see the last month data, we see a recovery of the demand near to last year. When we see the results, depending on the -- will go down from 1% to 4%, depending on the basis, which is very little compared to the situation we have left. So we are seeing a very interesting economic recovery and our commercial teams are beginning to see, as you have seen, the energy business is improving even more than expected. This is a positive message for Colombia. Recovery is going to continue. And eventually, we will have November and December and very well within the expectations of -- after [ the coming months ] recovering.

Francisco, do you have any other question?

No. Well, [indiscernible] for people in [ Valora ].

Question on the chat, [ Yan Hill ]. Are you planning to launch green bonds to lower the cost of debt?

We were the first to launch green bonds in Colombia, although some colleagues said that they were the first at the things that we use to the investors the IFC and the FDN. Our team here -- and Esteban is laughing. We have a very nice partnership in [indiscernible] we are an ESG company. Sustainability Index, aeolic emissions. We are working with Argos Group, but possibly our neutral carbon at Celsia has a negative carbon because in terms of emissions, it's correcting the -- because our emissions are very, very low. And this joint with planting of trees, 5 million trees in this year, almost 6 million. Yes. So we are a company that is compliant with all the criteria. We have the team that is monitoring whether we are able to have window to optimize our cost, because many investors that come to us and they say, "Hey, I want to invest in Celsia and this portfolio." Our companies are worth a lot of money in the exchanges in New York and Europe, but our share has been spectacularly growing compared to the market. So that's a long answer to a simple question, but yes, we are considering emissions of the green bonds or ESG. And yes, we will use them if we need for financing projects.

Okay, [ Diana Mosquera ] please go ahead. You can ask your question now? [Technical Difficulty]

I'm sorry. I was asking you guys, Grupo Renova is doing an auction of nonconventional. Is Celsia going to participate in this opportunity?

[ Diana ], we received yesterday Renovatio's needs. And Renovatio is commercializing. So they want to join 2 points. We have a powerful business in B2B, over 2,000 customers. We have a strong commercial network with markets in Valle and Tolima, in all the country. And we have the possibility to generate our own energy and place it. We have bought project energy, we have brought energy from -- Esteban, I think, 40 gigawatts from solar projects that are ready. We are buying them to commercialize in our network. As soon as we receive -- we received the information from Renovatio yesterday. And we think it's the first auction, and this is groundbreaking. And we expect to replicate the Renovatio mechanism. But we're not going to participate with our project in this auction. Remember, Renovatio was our co-developer in aeolic projects. So we love working with them.

Camilo Roldan asks, what are the expectation in the new contracts and procurements in Central America?

There are none, Camilo because we are currently on standby talking about the thermal asset and the hydro asset has contracts until 2023. That's why we are doing our own portfolio of huge customers so that when the contracts are due in the hydro asset, we can go to B2B contracts. That's our strategy, and we haven't seen any procurements in Panama.

From [ Yan Hill ], are you thinking about repurchasing assets?

If we are thinking about repurchasing assets, no, we are not. Today, we are in an investment mode, and our needs and requirements are directed or focused on that investment, the profitability that we expect. Those investments are higher than those we could offer to investors if we went through a repurchase strategy. We have a philosophy with investors in Celsia. If you remember when we had this very hard moment in 2014 -- 2014, 2016 with El Niño, we had to pay the dividend. We paid a dividend of [ COP 3,300 ] at share dividend and the profitability has been spectacular. Several minority investors wanted to invest more in the company. So we have very good profitability. Our rate is no lower than 15%. We are very demanding in capital allocation. So repurchasing shares is not an option. The price of the share is today making us happy because it went through COVID without any issues, and we are on the top 3 in the share behavior, and we expect a very positive figure of the share in the next year so that investors are happy with their support.

[ Juan Paolo Arboleda ], how is the alliance or the partnership working with electric vehicle?

Well, that charter, yes, is sold. That's a modest or a humble penetration because on the road there are many vehicles, electric vehicles. In the country, our residential charter continues to have a good participation in the market. We are working with marketers of electric vehicles in the country, and we are -- I think our market share is good. Our phase right now is really signing chargers that are more powerful, and we are in the phase of installing the charging of TransMilenio buses. We're receiving 100 -- over 100 vehicles in November. That's our focus. In terms of electric mobility, we expect that [ Humira ] is going to do good after the economy is dynamized in the car -- in the country. The alliance with Suramericana, we have different for -- also for bicycles and different customers that require the service.

And [indiscernible]. [ Juan Paolo Arboleda ], how's the mix of the company in dollars and in peso, or Colombian pesos?

Well, consolidated all of Central America is in dollars. So that's 90% of the income is in dollars. In Colombia, the proportion is very slow. Then out of the total income in the organization is not even 5%. That's the only dollarized income we have, that's under 25%. Under 5% of the consolidated income of Celsia.

And now Roberto Paniagua is going to go live to ask a question.

Yes. I have three questions. In Panama, I understand that recently, a new [indiscernible] contract of power procurement. What is the price of procurement? And are you getting income from that contract? Is there any extension?

Well, the price, I don't have it on my head. This contract gives us COP 2.1 million.

And another question is understanding the data in [ ekis ] -- Exane. They published some long-term contract info. If you see the price average, the Celsia contracts is going down COP 230 versus in 2024 it's like COP 156 kilowatt per hour, that's what I see in the long-term regulated contract. Is this due to anything in special? Or is this updated as you guys changed the contracting?

Well, [ Roberto ], COP 156, no, we're not going to sell at that price, Roberto. That's why I was analyzing this -- the numbers. We're going to check the Exane information. You can give us -- because no, the prices of the regulated market were going down. They were down 2 or 3 years ago. The typical duration in distributors is about 3, 4 years, is going -- is extending. There are new conditions in the way that those contracts are procured. We have seen that 2 years ago, the price curve started to go down with the Hidroituango expectations, the aeolic projects. But with the delay in Hidroituango, the price of energy has gone up like crazy, and we can see that in the markets. It goes -- it goes over COP 200, COP 210 and this is a trend for the next 2 or 3 years. And it goes flat a little bit because the expectation is to receive -- we're going to receive Hidroituango and some strong projects like the [indiscernible] project and then we will see a normalization of prices, but this is always changing.

Because I was checking the numbers, and that was kind of weird. The prices of Celsia, Calima, for example, compared to [ Kimbon ], compared to Chivor, they're higher prices. So my interpretation is a little less competitivity next to the other hydroelectric plants. Is that due to the location strategy?

No, [ Roberto ] each reservoir is very different. Calima is very small next to the other 2 that you mentioned. Our reservoir is big in Salvajina, that is not multiannual. Multiannual are from the north of Antioquia, but these reservoirs can go on 3, 4 months. Calima will not reach that. If we use Calima full capacity 24 hours in less than a month, we will deplete it. Our reservoirs take the best prices to deliver when we have an opportunity in the stocks change. And there was support to our contracts in the medium and long-term in the company. That's the strategy that we have with our reservoir and those living around the reservoir and the municipality and those who go on vacation suffer a lot.

And finally, sorry, just to finish. Annually, we see in the last year's declaration and sale of energy in Celsia goes down, but not necessarily at national level. So is this due to the portfolio, the strategy of you guys?

Well, [ Roberto ], the most important piece of information is the sale of Zona Franca or free drilling zone. And all the growth comes from 2021 with the solar installations. So we are in budget, and we are going back to growth, but Zona Franca change is huge, and there was a huge impact. Well, [ Roberto ], I think, Gonzalo, that the Q&A question was like never been before.

Yes, this was a very, very nice and very information of Q&A session. And this is very good for this kind of events. Santiago, Esteban, Ricardo, any final thoughts?

No, I just want to thank everyone here. All the participants in this event stay safe guys. Take care of yourself because of COVID. And we are happy with the Celsia's development in the last month. We expect to reach a very good final result, and we expect to have our customers happy and to keep the ongoing projects running. Thank you very much for your time. Have a nice day. Thank you, guys. See you later. See you on the next one. Bye-bye. [Statements in English on this transcript were spoken by an interpreter present on the live call.]