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

[Interpreted] Good morning to everyone joining us through the different channels. I'm Gonzalo Velásquez Communications Leader at CELSIA, and I would like to welcome all of you to the first quarter results. Today we are joined Ricardo CELSIA (sic) [ Ricardo Andres Sierra ] and Esteban Piedrahita -- Directors of the company. [Operator Instructions] We are also live streaming through Twitter spaces. We had some technical issues at the beginning, but now everything is solved. So welcome, everyone, joining us through Twitter. This webinar has simultaneous interpretation from Spanish to English. [Operator Instructions] Thank you and Ricardo, it's all yours, take it away.

Thank you, Gonzalo. And everyone, we're sorry for the delay in the start. There were a couple of technical issues here. We had to set up the Twitter space, but everything is working now I'm being told. Okay. So let's continue. Well, today, we will be talking a little bit about the first quarter of this year. And we will also be talking about the several sales of assets in Central America, we will be summarizing about these assets. First of all, in 2014, trying to diversify risk and currency, we acquired GDF Suez, Dos Mares and PEG, which is the wind power plant in Costa Rica, This cost -- the equity that we put up was COP 424 billion in 2014. This is what we call the tip of the spear to internationalize the company. We know that in the case of PEG, we had a reversal of the assets to the ICE in 2028. This means it's like a bond. Also in Dos Mares, the hydroelectric plant in Costa Rica, the contract was going to expire in 2023, which imply that it would change to sales in the spot market. The other asset that we had was Bahia Las Minas, BLM, and we had the challenge of transforming it technologically and financially. However, this was really difficult. It was a coal plant, and you know that this is being decommissioned. And throughout all these years depending -- due to the energy needs in Panama. This ended up in the liquidation process in 2021. We had BLM as a partner. We had the Panama Government with the 50%. We have 8 years of presence in the region that doesn't finish with this operation. This is very important. This is a decision not to go away from Central America, but to stay in Central America with other type of operations. So let's look at the summary of what we achieved during these years. We acquired Dos Mares with an annual generation of around 350 gigawatts per year. In 2021, we achieved 500 gigawatt hour year. And if we hadn't had the [ SE ] phenomenon in September, that year we would have closed with a generation between 500 and 550 gigawatts hour. This means we -- from the operational perspective, we achieved an improvement in the operation of 50%, which is marvelous. We also managed to jump into the B2B in Panama, which is basically innovation, there's practically no B2B in Panama. And we signed 32 contracts with big customers. Additionally, we start to build a solar portfolio in Panama with 2 plants of -- that add up to 19.7 megawatts. And we also built what we call a portfolio new businesses. Currently, we have -- and this is within the company, 34 megawatts of solar power systems between Panama and Honduras. By the end of the year, we will double that, almost double that figure. We will reach 55 megawatts and we want to reach 200 megawatts in the coming 2 years. All this was achieved without deploying additional equity on behalf of CELSIA more than the COP 424 billion that we initially gave in 2014. In spite of achieving the plan, there were several factors that had an impact on profitability on the invested capital on this acquired assets than initially, set at 600 points under the ROCE of Colombia. Among them, the lower energy prices. This is what had the biggest impact in the projection and profitability. The lower prices in energy. The -- and with the coming of liquefied gas in the generation because this basically reduced the price of energy for the spot, the [ terms ] of the PPAs and the lack of long-term bidding that didn't allow us to hire the assets given the existence of signed contracts, but that hadn't been executed due to the plants that the Panama government never canceled. So all of this made it that our profitability scenarios were lower. And in spite of the operational improvements, this was an asset that wasn't profitable. We didn't [ save ] the assets. So we not only have the situation, but having that invested capital in that plant was a -- is a cost of opportunity that's very high, which is why several months ago, we started this transaction. We started more or less a year ago. We decided to turn around this asset and transform it into other things. So let's look into how we see that we can perfect this sale and how is it that we're going to achieve important changes in the consolidated financial results in CELSIA. First, the perceived value of the sales is going to be $194 million. So around COP 933 billion. This will strengthen the liquidity of CELSIA S.A., and the cash that will be received from this transaction will represent practically 30% of the capitalization of the market of the company, considering the price in the market value yesterday -- in the stock market yesterday. This is astonishing. Unfortunately, this price doesn't really reflect the reality, and you can look at the cash flow that we would have in a couple of months. Additionally to these resources, we can reduce indebtment in the company in $198 million and reaching a value of COP 4.78 billion -- sorry, COP 4.78 trillion and net leverage of 2.93x the EBITDA. And this is going to be [ 2.14x ], what we were discussing. So it's going to be a value that is going to be extremely good this year. So we're having practically COP 933 billion in cash for the company and additionally, it will allow us to lower almost $200 million debt. The sale was performed in the high multiple range considering that the assets don't have long-term contracts and the [ BOT ] of PEG in 2028. So the multiple that was calculated for the EBITDA with normal -- with the normalized EBITDA is [ 11.5x ]. This means that we will improve the ROCE consolidated of CELSIA in 400 points -- basis points overcoming or being above 18%. This means that the capital -- the invested capital has been really profitable. Finally, I would like to highlight our strategy in the region and what assets we will have in the region. And several shareholders were asking about this. We will have a thermal asset in [indiscernible] of 154 megawatts. It has a strategic location. We have a very valuable asset, which is the [indiscernible] substation. So we hope that in the future, we will develop options with technological conversion and see what kind of work can we do with that plant to see if in the future, we might make that plant improve new technology and participate in new biddings that the Panama government will be doing in coming months. Additionally, we will have a project in Costa Rica that we were developing in a land next to the wind power plant. This is a project that has what in Costa Rica is called eligible. This means that it can become part of a bidding, and we have 60 megawatts in the [ early ] projects where we can participate. We are structuring the project. Additionally, as I was telling you, we're going to have -- or today, we have 34 megawatts in -- with solar panels. We're building additional 21 megawatts and with the pipeline that we have in Honduras and Panama, are very strong in Honduras. In 2 years, we will reach around 200 megawatts. And before we will continue with that perspective, Esteban is going to tell us about the profitability of the business and how are the figures -- how is the closure of the books and a little bit of what we're going to see because as you know, we have to pay a lot of attention to this. So Esteban, go ahead.

Thank you, Ricardo. First of all, I would like to greet and welcome, everyone, joining us. First, I would like to mention an important detail that we have with EnfraGen, it implies a fixed price with the assets and the benefits and risk for 2023 will run on -- we have on the [ buy. ] This means that for 2022, when we reclassify the assets and passes available for sale. So by the end of 2022, the assets minus the passes added up to [ COP 1.8 billion. ] And the difference in the ORI is [ COP 884 billion ] with which we will receive around COP 933 billion, closing with the rate of 2022. The net accountable profitability or utility would be around 1,700 -- sorry, [ COP 17 billion. ] And these figures will depend on the fluctuation of the representative market trade exchange rate. And I would like to start with the figure that Ricardo was giving, which is how much did we invest. So we invest COP 424 billion in 2014. We are receiving now COP 933 billion in cash after reducing the debt, as we were mentioning. And we are continuing investments that were built with this that is around COP 127 billion. That corresponds to what Ricardo was mentioning, our investment in solar power in Honduras, eligibility in Costa Rica and so on. And this would give us a profitability from December 2013 to the closure of those assets was around 12.9%.

Thank you, Esteban. I would like to add another thing, important, which is the multiple of the transaction of the sale. The EBITDA for 2023 that was expected was around $33 million, which represents a multiple in [ EV ] EBITDA of 11.5x. This is a multiple that is really within the high range of percentages. Now considering everything, the investment in these assets have -- makes all the sense for the company. And this will make that growth abroad will be under platforms just like what we're doing in Colombia. So we will be focusing in the nonregulated market with solar power, and we have already determined that for the next 3 years, we will multiply almost 4x the capacity in Central America jumping from 55 megawatts to 200 megawatts. We will also assess projects in infrastructure, both in distribution also in transmission, one instance can be the fourth line Panama or the participation in a bidding -- in bidding in Costa Rica for renewable generation. So all of these with this platform concept that we have in Colombia. Additionally, business category, which is framing a broad concept of energetic efficiency, in which we are emphasizing a lot restrengthening. We want to work with our teams in Central America. Also part of the resources that we will be receiving, we will be allocating into reacquisition of shares, reinforcing the message that the object was to do this without going into depth. This is a mandate from our shareholders that were -- that was decided during the recent assembly. And Santiago Arango will be talking about that. So we will be giving estimates on when can we participate in the market. Now let's jump to the positive results of the first quarter of 2023. The EBITDA was COP 514 billion with a growth of 13% compared to the same previous year. The net consolidated earnings was COP 122 billion that was affected in an [ important ] -- due to the increase in the financial costs product of the [indiscernible] in the index. We had new assets in infrastructure and generation. This means that the EBITDA when considering the platform reaches COP 605 billion, registering an increase of 22% compared to the same quarter of the previous year. When comparing, we're talking about COP 90 billion in the quarterly EBITDA perform. This means that this is becoming very important business which is almost 22% of the consolidated EBITDA, Caoba, which is the transmission platform had a growth of 33.1% in income, 32.9% in EBITDA. This platform has an average of assets of 22.1 years. And today, we have assets of [ COP 2.06 trillion ]. The C2 energy is growing significantly, and it went to COP 17 billion. So it's almost COP 14 billion in the EBITDA. We had an operation of 166 megawatts, and we are currently building 133 megawatts. Recently, commercial operations were declared the [indiscernible], the San Felipe, and we're about to declare 5 other plants to strengthen our presence in the market. This project gives competitiveness to the companies to -- they generate a lot of local employment during construction, and they also avoid the CO2 emissions. El Tesorito thermal platform give us all the backup to the nonrenewable business. And this first quarter 2023 generated EBITDA of around COP 35 billion. Laurel, the platform for solar energy at a small scale generated income for over COP 3 billion and an EBITDA of COP 1.4 billion. So we're very proud about the results. And obviously, we are addressing all the risks. We're managing all the risks now we can find in the country. So Esteban, if you would like, let's talk a little bit about the financial things.

As you know, the detailed analysis of the results for more financial information. You can look into the report that you will find in the Investors website. In the first quarter, the consolidated income added up to COP 1.5 trillion, the operations in Colombia reached incomes of COP 1.35 trillion, representing 90% and Central America added COP 145 billion, adding 10%. In Colombia, the income were boosted by a generation for the charge of reliability due to the income of -- to the operation of Tesorito. We also registered an increase in the income for use and connection in networks with a higher IPP and IPC. Here, I would like to make a comment that I think we've never done it, which is the platforms in CELSIA Columbia represent all the platforms. So through the incomes, we will see the total income of the platforms even when each platform will have its corresponding share, but you will be seeing the total incomes from the platforms with the representation that CELSIA Colombia has. In Central America, the incomes in dollars decreased 31% and 17% in pesos compared to the same quarter in the previous year. So it's very important to mention the behavior. The income is mainly due to the combination of the contract of the Dos Mares complex and in this operation also meant that all the income is coming from the spot market sales. And we also have the [ SE ] phenomenon. Now in costs -- in sales cost, this reached COP 995 billion, so an increase in 30% mainly due to the higher purchases of energy, the exchange rate and also what I was mentioning previously to the different platforms that Ricardo was mentioning and you can see the sizes -- the EBITDA sizes that they have achieved. The administrative costs reached COP 83 billion, 5.6% is -- 700 basis points below the inflation of the last [ 12 years. ] As Ricardo was mentioning, the EBITDA reached COP 514 billion. We registered a growth of 13%, led mainly by the positive contribution of all the businesses in Colombia. The EBITDA margin of the quarter was 34.1%, the EBITDA, the individual Colombian EBITDA was COP 472 billion, and the Central American operation had COP 42 billion. So this is the operational side of things. And as you can see, we had excellent results. Now let's talk about what's below the operational line. And there are 2 points that we want to make. First, the net financial costs reached COP 222 billion, out of which 140% were financial, and this is increasing 140% due mainly to the increase of the indexators in this last year and the interest rates of the back of the Republic that has increased the line of the PPI. The -- this is correlated to the readjustment of the income in the regular business, and when we do the match between what the operational line growth with those index and what -- the index are growing in financial costs, we have a balance of almost net of those 2 figures. That's why we have this strategy. The tax to -- the income taxes were COP 64 billion in the quarter, and they were reduced 31.6%. We were able to mitigate the impacts of the tax reform over the last year, things that we've been incorporating the tax benefits, thanks to the solar power plants that were operating last year. We had a positive contribution of the different segments last year to a net profit of COP 122 billion, a reduction of 26.3% compared to the same period of last year due to the financial cost and to the effects of the tax for tariff [indiscernible] in the income generation transmission distribution. The net profits of the owners of the controller was COP 75 billion. Now the consolidated debt was [ COP 5.7 trillion ] and a leverage of 2.89x net debt-to-EBITDA. The half-life of the company is 5.6 years. We closed the cash -- with a consolidated cash around COP 382 billion compared to the first quarter without considering those assets that will be de-invested. The main figures would be the follow, so that you can see the impact of this investment. The income would be COP 1.4 trillion. So it would reduce -- we will see a reduction of 5%. The EBITDA would be COP 476 billion, a reduction in 7%, and the financial cost would be COP 209 billion, that means 10%. The total indebtment would be 4.7 -- COP 4.78 trillion. And as Ricardo was mentioning, the leveraging of the net debt then would be 2.93x. So with that, we will close the financial figures.

Great, Esteban. So later, we will be talking a little bit about the questions on that thing on how is it that things would be comparable and the picture after the sale. So the operational results are still very positive, and they reflect the good rhythm that we have. The projects focused on clean energies, the development of new products, and energetic efficiency for customers has started to become more important. The investment of assets in Central America will allow us to strengthen many aspects and to consolidate the strategy that we will set us in a path for the future of the company. Now jumping to the projects. We would like to tell you in the first month of the year, we started the operation of 7 solar power plants. For these, we will be providing energy to the national integrated systems. It's a total of 89 megawatts of renewable capacity. Before we finish; let's mention some things on the ESG side. On the works per taxes, we were able to finish a rural way or we paved a rural road, so the investment closing COP 29.5 billion. This is wonderful for this part of the country in La Guajira. We built and we delivered to the community multiple platforms, and we hope that 180 kids from Libya and their neighboring communities to come in. This is the second educational infrastructure work that we've done after the one in [indiscernible]. So this is a safe classroom with solar-powered bathrooms, kitchens and it's an area that it's really beautiful, that was really well designed and painted. And during this quarter, we handed out 24,000 scholar kits. So imagine 24,000 kids with the -- school kids, and they can -- this was in Tolima, [indiscernible]. And the alliance between the ReverdeC program and Grupo Exito, they plant over 1 million trees, more than 270,000 clients made their donations in supermarkets, and we were able to achieve, but not only that, but go over the goal that we had. And recently, we started the partnership with public, and we will be restoring 30 hectare the Otún river basin in Risaralda. We hope to plant 100,000 native trees. So we're planting almost 3 million native trees a year. With the Internet business, the company had the intention to connect all educational institutions in [indiscernible] for free. Up to date, we have connected 211 schools. This is incredible, 211 schools that have high speed optic fiber Internet. So this means 114,000 students from lower income. And this is just a cherry on the cake, but it's important to mention because all of us who are part of CELSIA enjoy from all of this, and we're very committed to ESG. So now we can jump into the Q&A. So thank you very much.

Thank you, Ricardo. Thank you, Esteban. So now we will be opening the space for questions. [Operator Instructions] We have a first question from Jose [indiscernible]. He is asking information on the estimated semestrial repurchase of shares in the Bogota stock market. So Santiago and Esteban, if we can make a quick summary of this, of what we had in the shareholders' meeting, what is it that we're doing? What are the expectations and what's going on there.

Yes. Good morning, everyone. I'm Santiago. So let's remember that in the past shareholders meeting, we had an approval of repurchase shares, which will have 2 mechanisms. The first one is transactional, which is through the Colombian stock market and the other one is the independent mechanism, which is outside of this market. We are starting, and it's important to remember that we had a time where we couldn't start the process until we presented the results, which we did yesterday and what we're doing today. So formally, as of today, we can start formal corresponding process. We already started with the Colombian stock market, where we had sent the letter for the legal representation and what's going on. We need to coordinate with the stock market and then publish the information that is relevant. We also have to remember that this transactional -- cannot go outside of the minimum and maximum limit. This means this is a completely regulated mechanism. We are finishing with this, and we hope that in a couple of weeks, we will have all the mechanism ready, so that we can start with the transactional operation. After we have discussed it and structured with the Board of Directors, we will start with the independent mechanism.

Yes. So for Jose, yes, we're really eager to start that program. As we promised, we will be starting. We will be setting up communication channels for the transaction with the shareholders in general so that you know how is it that we are approaching this? How is that we're behaving with the market. Okay? So we can continue.

Thank you, Ricardo. There is a person with their hand raised Roberto Paniagua.

Can you hear me?

Yes, Roberto we can hear.

Thank you for the results. The music in the beginning was really cool. A couple of questions, brief questions. So it was an excellent [indiscernible]. First, regarding the transaction in Central America. We have an EBITDA, I don't know if you have the figure of the purchase of EBITDA in 2014. The second one is in transaction in Central America. Can you remind me the MOIC of the transaction? This is the first thing. And the second thing is something key that you've mentioned in the previous webinar with El Nino, if you can tell us a little bit on the strategy that you want -- that you're going to be implementing to manage risks and also to have a profitability in the markets. These are the 2 main things that I wanted to ask. So I would like to know more on this.

Yes, Roberto. Thank you for the comment on the music. Yes, I would like to tell you Esteban -- you asked on something that we haven't talked about, about the MOIC, which is the profitability over capital, right?

Yes. As I understand it, in equity it's just basically the total of money invested compared to the total money that I received.

Yes. So I'll let Esteban start with that. And then we will talk about the other thing.

So give me a second. I was calculating the MOIC really quick here. So Roberto, if my memory serves me right, but -- at that time, when we came into Central America, we had a multiple of around 9.5x, 9.6x the EBITDA, something like. And as Ricardo was mentioning, it was a really different thing. We had to do a combined multiple of the transaction at the time. But basically, we had the replication of the [ assets in total ]. And it's important to consider that at that time, the price in Panama was around $180 per watt in Panama. Nowadays, the -- that price is around $70. So it's a significant structural change. The second thing is that [indiscernible] as we were discussing, we had a [indiscernible] of 12.5% considering the income into equity, but this is an equity transaction. And we're -- as we were telling you, it was COP 400 billion that we invested and now we're getting COP 900 billion. And now we are having also with assets that are around COP 127 billion that was built with the same platform. So we have a [indiscernible] of [ 12.9% ] . As we were estimating, this would give an order of 2.3x when we add COP 900 billion. So the assets -- and if we divide it on the COP 424 billion, we're talking about 2.3x the MOIC, which will be writing down so that we will continue doing it in further -- okay...

Now regarding El Nino phenomenon, we have -- we were like traumatized from 2015 and 2016. If you remember, there was a regulatory issue during that time when El Nino came, and it was linked to fuels that was not related to the gap to the fuels that was using in 2016, so it was extremely low price, and we were producing at an extremely high cost. And this led to our financial crisis of the thermal sector that was corrected by adjusting to the real price that this is used. This is now being regulated. So what's the coverage here? First, we've done a very thorough exercise from our generation teams by estimating our generation capacity in a very critical scenario. So remember that to calculate the energies in Colombia, you need to take the historical -- the historic, take the lowest or the most critical scenario and then you calculate from there. Now from that perspective, the contract that we have is around 85% to 90% is we can say, of our [indiscernible] in what's coming up. But I believe, as Roberto mentioned, this Nino phenomenon, we're seeing that the temperature of the ocean is setting a historic figure, we've never seen such a high temperature. So this is not an indicator that it's going to be a strong or weak Nino, but we have to prepare for the worst-case scenario. So we have that coverage. We have other contracts and other structures that allows us to cover this. So I'm going to give you a detail and Esteban, please help me with this. The first is that we have purchase options in some of the [indiscernible] of around $30 million that can be executed during times like this where the prices can be critical. This is one coverage. Another coverage that we have for us is fundamental or structural is Tesorito platform. As you can see, the EBITDA in the first quarter was an EBITDA of COP 34 billion. And this is thanks to take high-margin prices in stock, if there is no change in regulation, but we need to set up an alarm system here because while we are gaining from the ministry with El Nino with -- the natural resources can generate big distortion. So hopefully, we will be patient with this. We will review the figures and take the best decisions because we don't know how El Nino's going to look like. So Tesorito provides a protection that is really robust in terms of expected results, so that we can compensate with any issues that might arise.

Thank you, Ricardo, for your answer. But look Roberto, And I thank you for the comment. The problem is that we don't have energy in this country. If you try to buy energy, no one is going to sell it because everyone is preparing for El Nino. So you have to understand this. And Here, I would like to do some education. The prices and stocks are going to rise because we need to save water for what's coming. So we need to get the resources from the thermal part. So when the stock prices are high, it's not that it's a speculation. No, is that we're saving water because El Nino is coming at the end of this year and the beginning of the next year. And this is something that is really important. I'd like to remember that the prices in stock only have an impact of 7.5% of the net tariff of our Colombian receipts. This means those headlines that are really scandalous, you need to really look into it. For [indiscernible ] Tolima, we see a coverage of practically 100% in the generation contracts. So each trailer has a special situation. So in [indiscernible] Tolima, prices can really go up. But we have a management there and the energy has already been purchased.

Also if you can give me a view on those prices and those stock prices when El Nino comes, if you have anything to mention there?

It's really difficult. Now the price in scarcity is really low. This means that if the cost of energy goes over this, it's up to COP 1,200 per kilowatt in the most extreme scenario. But I would like to here do a PSA. We need to continue exploring gas because look at the importance of Tesorito. Tesorito can produce energy between COP 300 and COP 400 per kilowatt. And if we have to import gas, that multiplies the price 3x -- 3x or 4x. So we need to continue with the exploration here so that we can continue with those prices and those rates.

So next, we will be -- have a questions from Juan F Pulgarin, which new sources of income do you have -- have you foreseen to replace those incomes that the companies than you were selling in Central America would do?

Here we are not forecasting an immediate replacement. We will have development projects, as we're telling you with the solar projects. We will be participating in transmission lines and distribution assets and a lot of things in energetic efficiency. So there's a bunch of things there. Now at a -- the level of the work that we're doing outside of Colombia is to continue pursuing those businesses in an active way -- manner. So for instance, if we have a -- we end up with a transmission line, those -- these are very relevant. So we're looking to those new platforms in which CELSIA provides a part of the equity, and we bring investors so that we can continue with the expansion and growth. And the other thing is that we will not only be subscribing to countries like Panama and Honduras and Costa Rica, but we're looking into options in other countries.

And here to complement Ricardo's answer, I think that we are seeing a change in the trend, just like the one that we've seen in 2014. So we had a very strong activity, and we were looking to many countries. And we will remember that we pick some countries over others because of prices have been [indiscernible] and now more than the economic situation. There's been a change in trades in all of the markets. And we know that more -- beyond Central America, there are other markets in the region because even the U.S. is going back to scenarios that are interesting. So we're looking into that from this perspective, with this vision. How is it that we can deploy those resources in the smartest way so that we can have a return on investment that will be worth it.

Also from Juan Fernando Pulgarin, what is the budget for income in 2023? And what's the goal that you've set it as dividends per action -- per share, sorry, for the 2023 operations?

So the goal that we have, and we were talking about this in the previous meeting is in line with the income of the last year. So we're talking around more than COP 5.6 trillion. And for guidance for dividends per share, there is no one. And we have the reacquisition shares of buyback -- the buyback.

The next question is, what -- the big question, which is what should we tell our friends to convince them to invest in CELSIA?

I think that CELSIA has a playing margin is really broad. So one thing is to sign and another thing is to close, but we hope to have that check by the end of the year, but having $1 billion cash -- COP 1 trillion in cash is something that it's really nice, right? Second, here's a detail that's very important. The ROCE that we have in CELSIA is around 18%. This is what we are achieving. We demand a lot from the profitable side of things. So yes, we're doing a very nice work on the platforms that has generated a lot of profitability. Remember that a platform like the one in Caoba, we invested COP 500 billion in the -- then we incorporated assets from Tolima that we had buy at a really good price. We recover all the equity, and we end up with 50% of the company. So it's a company that's producing around COP 300 billion in EBITDA per -- a year. So this is just to give you an idea of the capacity of playing or moving in this company, and we created a business like the one of the optic fiber Internet. This is creating a highway for all the clients in Tolima and [indiscernible] to bring other products. And we have the good news that this is an internal start-up, and this month looks like we will have a positive EBITDA this month. So this is something that's really interesting. The support that we have from banks, multilateral entities to do things in Colombia and outside it's very relevant. And for the hard times because this government that's -- it's like if you like cycling, it's one of those [indiscernible], those cobblestone stages. And we're -- that's what the government is doing is taking us to one of those stages is -- please don't doubt in investing in CELSIA. And the door of the elevator has opened as Gonzalo would say.

Now we will give the floor to [ Sebastian Gallego ].

Can you hear me?

Yes, Sebastian.

Thank you for the presentation. I wanted to ask about 3 things. The first one is regarding the [indiscernible] projects. I would like to hear from you what is the progress on those projects. According to the -- well, to the numbers that you were talking and the estimate is starting -- the start of operation would be around December. But if you could tell us a little bit about the advances? And what are the expectations there? Second one is regarding the usage of the transaction resources, you mentioned that the buyback is COP 300 million. So I wanted to understand a little bit, now considering that you're closing the transaction, the additional resources left from the acquired resource and from the acquisition or the buyback, what would be used towards? And the third question is regarding regulatory risk that you mentioned in the previous meeting. I wanted to know from your perspective, what are the main queries? What are your concerns with the government plan? And additionally, how is the tariff review that's still ongoing?

Yes, Sebastian, so they are very good questions. So we will rephrase and we will repeat them. So the first one is what's going on with the Guajira projects, that's basically the question. So first we've been working in La Guajira for 5, 6 years. What is it that we're facing right now? First, there's -- there are previous consultations that we haven't been able to close basically because the requests that we're receiving are -- yes, outside of any economical logic. And there's additional figure, which is a proportionality test, which is if I already closed 10 previous consultations. And there's a new one that I can close. Well then, the government has a mechanism that is a proportionality test. Unfortunately, this government hasn't helped with this test. They don't want to do them, this proportionality test. The second one is that we -- the environmental study for the license was filed for the transmission line that we were doing and not just to us, but many other of the players with different consultants and advisers that have had those lines, and we don't -- we really don't understand what's going on there. Because what normally happens is that [indiscernible] national agency allows for changes, but now they're filing them. They just aren't closing them. So basically, it is starting from [indiscernible]. This takes other 8 months, 12 months to develop this process with the new vision that the government -- that the agency has. But yes, we're having those delays. And there are many things that are stopping the progress. And yes, it's a 2-year delay compared to what we are -- we had estimated and what has happened, Sebastian, is that in the news, we are seeing the big problems like the [indiscernible] plant have, that they have all the permits. They started construction 1.5 years ago and from the news what I've seen is that it's been able only to operate for 50% of the time. So the advance, its minimum, and we're considering retiring -- they're considering retiring from La Guajira based on what we're seeing on the news. So it's a very delicate situation even that -- which is really hard to work with other permits. So this is a call for the national government that they should be mediators that they should constantly facilitate if we want wind power to come into the region.

I just wanted to add the delay in the permits. We have [indiscernible] and [indiscernible]. For [indiscernible], that has to be done with [indiscernible]. And from 2021, we filed the request for the environmental license -- sorry, in 2022 -- sorry, by the end of 2021. And so today, we haven't received any nominees on that. So this makes these types of projects really difficult. And it's important to mention that within the line or within the general project, we have over 120 previous consultations that we develop all of them, and we only have 2 to execute. And it's because of these 2 consultations, I don't know, 120 that we haven't been able to obtain the license. So it's worrisome to see the rates at which the government is conducting this process and also the delays in the transmission connections even when we had everything so -- we're not going to start the construction until we have anything ready there. So everything was estimated to start by the end of 2021. And now we're estimating that it will start by the end of 2024. So we're facing a hard technical reality because a part that could be built in 8 months, but these delays, it's basically out of everything that we've mentioned. So Sebastian see, we will continue working in those licensing procedures, continue working and seeing how is it that we can move. So it's the wind power projects in the region. So if we cannot do it in La Guajira. We can -- we will have to look somewhere else. Now let's talk about the national development plan really quick. This national development plan has -- is going through a very complex situation, which is that it's making that the wind and solar project was something that this government wanted to do. They put a break with -- and no one understands why. And I'm telling you it's a -- they're putting a lot of cost there. So this has 2 ways to balance the equation. First, there are projects that we -- will be closed. Then there are other projects that we will have to readjust with the prices, so that profitability -- so that we can pay it to the banks, and we can pay cost of operation, and we can see the return of investment and we can pay it to the shareholders and also pay tax, which is something really important here in this country. So this will make the prices of some projects go up. This means more expensive energy for Colombia and some other projects will be canceled. This is a news that for me, specifically for me, in particular, it's really sad. So there's a lot of -- there's a -- yes, in this country, they're talking from the renewal sector that with this -- that most of the profits will end up for the government or will be paid in taxes. So adding that in the tax reform, therefore, the minimum income the law, which was [ 17.5 ], which was something that [ DeSantis ] had achieved that the [ Duque ] government -- sorry, the [ Duque ] administration had reviewed and just to make it easier for the projects to be done. Unfortunately, in 8 months of this administration. That law is just a piece of paper now. So now, Esteban, if we can talk about the usage of resources.

Now as Sebastian was mentioning, is to use the -- is to do the buyback, which is COP 600 billion. The rest are going to be resources that will be available for -- so that the Board of Directors can decide what -- on which of the alternatives, what is it that we can do with these resources that we're receiving from this. But for now, we have the reacquisition, the leverage in the short term so that we can continue with the process of improving the organization.

There are a lot of questions regarding Guajira. So I think that the topic was already addressed. We also talked about the El Nino. So now we will -- Anna [ Vasco ]. She's asking about the indicator to index the energy rates. Are you expecting to have it this year?

Yes, when we do it. We do it by the increase that due to geopolitical factors. We had -- there was an adjustment in the CPI. So the war on Ukraine, the price tariffs, all that and typically, the Columbian regulation for the CPI, which had been favorable for the users and the clients in the last 1 year was changed. So we did the adjustment. And today -- until November, the CPI or PPI and it's the way to adjust the rates in those components -- in the distribution components because some come from generation. That's what we have today. And today, we think that the PPI is decreasing. We are -- it's an understanding that the government is calculating a new index for the sector. What's important is to have index that reflects the increase of the cost in the sector. So 30 years ago, before the big blackout, the rates in Colombia were determined by what was called the national rate board. So it was basically a meeting from technical parts, but the politicians were the ones who set the agenda for those prices increasing. And obviously, the incentive from the politician is different from the one of the technicians. And the rates in Colombia never had or never considered and never covered the cost of the service. So hopefully, we will have with an index in consensus that will allow to keep the cost of service and it won't generate any issues in the future. And [ Anna ] actually we'll all make a [ PCA ]. Doing an analysis of the rates in Latin America, Colombia is the fourth or fifth lowest in the region. The ones that are above us are the ones that have made -- the countries that have taken the decision of reducing the cost of utilities or what they achieved is that the electrical systems are a disaster like Venezuela, Argentina, they have blackout after blackout. Now why is it that has to be done. First, the appliances did damage. Second, you need to have compensation with backup stations or plants, so more generations like the ones when for us, for those of us who are old enough, you remember that there was a lot of power plants or generators out on the street. And [indiscernible] most these days was remembering the during those 10, 11 months -- years, the meals taste like oil because we had to cook with gas. So we need a technical indexator; right? And we hope that's the case.

There's a couple of questions on CapEx. How much is that you going to be investing?

So first, we had a perspective. We're looking to the CapEx really closely. The CapEx that we're developing are CapEx that are first, regarding regulation. Second one, efficiency and productivity. And third, the projects that first are close within the financial system, but have a guarantee of availability and willingness of investment from our Board. This has reduced a lot the volume of investment. I don't know if -- Esteban if you would like to talk about that.

So in the meeting that we had in March, it's around COP 2.1 trillion, COP 2.3 trillion. So yes, there was a reduction in the investments that were planned for this year. We haven't adjusted those figures, those numbers.

So overall, we've covered all the questions. There's one from Juan [indiscernible], and he is asking what's the percentage of thermal generation, especially with coal?

We are no longer generating with coal. We are zero-coal today, basically, we have the backup generation with 2 plants which is the one that we have in [indiscernible], which basically is turned on when there are moments of really high prices or when we experience like a El Nino phenomenon. And the other one is Tesorito. And in Tesorito, we have the most efficient plant in the system. And I dare say it's a new generation plant, [ lasts ] now -- it's low emission. And the other thing that we have is that really important is that it's from the mouth of the well, this means there is no problem of regassing. There is no issues of leaks in the transportation. So it's the most efficient thing that you can have in terms of gas generation, is what we have. And I would like to remind you all that we are a carbon-neutral company, which is -- we're the first company to be like that in the region.

Thank you, Ricardo. So overall, we have addressed the questions. We've had 105 participants in Zoom and 64 people joining us via Twitter space. So thank you all for joining us in this meeting, and I do know Ricardo if you would like to close with some parting words.

Yes. I would like just to mention that we are still starting and being very aware in managing the regulatory risks as I've continually mentioned in CELSIA, we have the capacity to adapt and change. We continue -- there was a question on [indiscernible]. And yes, everyone in CELSIA, we're committed to continue developing this line of work in renewables. The Net Promoter Score that we have -- and our retail business is one of the highest. If not, we double and -- we doubled any competition in the country. So that's a big effort to provide a high-quality service in spite of all the issues that come up. And also our energetic efficiency business is growing because it's not only with rooftop -- with solar rooftops, but everything that we do inside of the company is efficiency. So from compressed air, air conditioning, energy quality, the illumination engines, all of those types of things, we have the capacity to surveil, monitor and run operations on that. So we have growth lines in operation that is really beautiful. So there are a lot of opportunities with all of our clients, and we can open the frontiers to our working teams. And that's it.

Thank you, Ricardo, Santiago, Esteban, to everyone who is joining us today. And in Twitter, we're trying to provide information, figures, data. So we -- through Twitter, we have set up threads to really show the reality of the energy sector in Colombia. And hopefully, we will have you again with very good news in coming meetings. Thank you very much, and goodbye. [Statements in English on this transcript were spoken by an interpreter present on the live call.]