Companhia Energética de Minas Gerais - CEMIG (CMIG4) Earnings Call Transcript & Summary

Good morning, everyone. I am Antônio Vélez. I am the superintendent for Investor Relations of Cemig. We right now start the transmission of our 26th Cemig's Annual Meeting with the Capital Markets, our Cemig Day. We would like to have you all here with us in the state of Minas Gerais. But unfortunately, due to COVID-19, we are all learning new ways to communicate and interact, respecting social distancing. In any way, we are happy to have all of you here with us, and we hope all of you and your families are doing well. I would like to stress that we have 2 access platforms. Both of them are available in our IR website. And one of them is an access link for those that wish just to watch this transmission. And the other one will give you access to the Zoom platform for those that wish to interact with us and ask questions. Today, we have with us Márcio Utsch, Chairman of the Board of Directors; Reynaldo Passanezi Filho, our CEO; Dimas Costa, Chief Commercial Officer; Eduardo Soares, Chief Legal and Regulatory Officer, Leonardo George de Magalhaes, CFO and IR Officer; Marney Tadeu Antunes, Chief Distribution Officer; Mauricio Dall Agnese, Chief Cemig Power Strategy and Environmental Officer; Paulo Mota Henriques, Chief Generation and Transmission Officer; Alexandre Ramos Peixoto, IR Assistant Officer; Carlos Eduardo [indiscernible], Special Projects Assistant Officer; Hudson Felix Almeida, People Management Assistant Officer; Luis Cláudio Correa Villani, IT Assistant Officer; Luiz Fernando de Medeiros Moreira, Compliance, Corporate Risks and Internal Controls Assistant Offer; [indiscernible], Supply and Logistics Assistant Officer; Roberto Bastianetto, Communication and Sustainability Assistant Offer. Starting our event today, will we now show you a video from the Governor of the state of Minas Gerais, Mr. Romeu Zema.

Hello to all of you that are participating on the Cemig Day. I would like to make a few remarks about Cemig, and also the state of Minas Gerais. Since I took office 2 years and 4 months ago, we are working to turn our financial area much healthier, and you know that it takes time. But we have been able to achieve promising results. We have paid over half of a debt of BRL 7 billion with the towns of Minas Gerais, is stemming from the last administration. We also have regulated payments for payroll deductible loans that were delayed in terms of our employees. And we are also working on several other fronts. And I would say my administration is working to put out fires. We are like firemen. But since we are already putting out many fires, we will at a certain moment to put out all the fires and then go back to having a state where you can invest in. But in this fight of all these financial issues, the state is doing well because not all depends on financial resources. A lot of that depends on good management, qualified employees and commitment. In these 28 months, the state has advanced a lot in education. We met request of evaluation that were at a halt for years. We, today, probably have one of the safest states in the country. In this first quarter of 2021, it was the best quarter in history in regards to violent crimes reduction in absolute numbers. And also, we then can see a better future, and in our health area and despite of being affected by the pandemic, and all the financial difficulties that are involved with it. Minas Gerais has the lowest death rate considering the states of the Southeast and South regions. But what I really would like to tell you more about us, about Cemig. This is a company that has a huge tradition in the state. It has an important economic purpose. And it's very important for the people of Minas Gerais, and it has a huge potential to grow, and the state. And it has the potential because I always visit the whole state, and the main comments that I hear about public services is I want more energy. I want more load. I want it fast. And Cemig is not serving me enough. And I know this is not a company's fault. The context that we had in the past years is the one that is to blame because the company ended up investing in other businesses, in other companies that did not bring return and did not invest within Minas Gerais. And what we want to do and to review is that to have this company back investing in the people of Minas Gerais, that today are not perfectly or rightly served the rural. Electricity is a clear example of that. Today, we cater to what I could say that just rural lighting is barely enough for rural owners to light the light bulbs of their own homes. They cannot connect anything heavier to the electric system. So we have a huge potential, not considering photovoltaic energy. We have a huge potential for that in the state. And with Reynaldo, the new CEO of the company, that has been with Cemig for around a year, we are working together in this company to streamline the -- so that it can be more efficient. A lot has been done and a lot will be done. I believe in efficient businesses. And I would like to see -- still in my administration, to see this company prioritized, maybe not fully sold, but that it receives capital funding, and at the state which always unduly interfered and the company loses the control and no longer can hurt it. This is how I see Cemig. This should be a cooperation and that the state would be just a simple shareholder with no power to create problems as it has always created in the past. So this is my vision for Cemig, a private company, a company that invests a lot and that brings development and well-being for the people of Minas Gerais. I wish you all a great event.

We thank very much the attention and the availability of our Governor, Romeu Zema. And now moving forward, we will have a video of the Secretary for Economic Development for the state of Minas Gerais, Mr. Fernando Passalio de Avelar.

Hello, everyone. Welcome to another Cemig Day. The government of State of Minas Gerais is honored to be here right now with you and bring you all the power of a structure that reflects a government management that is focused on legal, safety, private management and also a management that is promoting the sustainable economic development based on sound investments for the state of Minas Gerais. Just to give you one idea, and I administration in 2019, Minas Gerais administration brought BRL 56 billion in investments, and this is new money for the state for companies of different sectors, companies that wish to develop their own activities here in the state of Minas Gerais. In 2020, even with the pandemic, we had an additional BRL 32 billion in investments. And already in this first quarter of 2021, we went over BRL 100 billion. Just to give you one idea, in the past administration, in 4 years of administration, there were BRL 28 billion in 4 years. And in a little over 2 years, we are already over BRL 100 million. And this is thanks to an administration that values a technical administration, technical management, based on sound decisions for the best of private initiative so that we can have a dynamic pace and ensure the legal safety for public administration as well as for the management of our state-owned companies. Yes, so we are promoting a robust agenda of divestment. This -- and privatization in Minas Gerais administration, we believe this is not on the hands of the state to be an entrepreneur. Over the year, Cemig has lost many opportunities because it suffered interventions that were not rightful, therefore, losing growth opportunities and expansion opportunities as well. But today, we have a new Cemig with a professional management aboard and management that is concentrated on effective results and also to supply the needed energy demand in the state. We believe that Cemig by the means of some of its assets and subsidiaries are excellent options for investments in safe and profitable securities that I'm sure that make all the difference to society and to the economy of the state of Minas Gerais and the country. I wish you all a great event. And you can believe this is a sound company, well-managed with a professional management, and that will be more and more important for the past that we are going through in Minas Gerais, which is a sustainable economic development for an economy that can help everyone's development.

So now I would like to turn the floor to our Chair of the Board of Directors; Dr. Márcio Utsch.

Good morning, everyone. Good morning, Vélez. Thank you very much for the introduction. I will be very brief in my remarks because anything that I might say, I'm sure it's going to be discussed by Cemig's Executive Board. We just heard our boss, the Governor, Romeu Zema , and also the Secretary Fernando Passalio. And the guidelines are clear. The priorities or our guidelines and how we want to understand it. And I think priority is a word that would not -- should not allow a plural. We should not say priorities or priority #1. This should not be existing, I think. And I think the guideline is very clear is to privatize. And our governor, Zema was elected, and that was one of his models. And that's why we have to work on that. And the privatization. And for that, we basically depend upon the approval of our shareholders, and to convince our shareholders that privatize or to turn this company into a corporation or either way we go to -- about to meet this target. This negotiation involves showing our congressmen what are the advantages that we will have in a new Cemig. This has to be clear because Cemig and Minas Gerais population has to like this new result. And for that, we have to think about what is really important, what is really relevant and what is really going to make the difference for the Minas Gerais people consumer. In the future, they might be able to choose another distributing company, and we have to ensure the market share. And also, we have to ensure our share of mind. They have to think about us before thinking about anyone else. So to make that come true in the government -- and we are also very much aligned to that me and all the other Board members, and we are working in a very united fashion. And also Cemig's Executive Board and -- Vélez has mentioned all of them here. They are all here. We are working on that. And first, we have to show that there are advantages. We have to show that to our shareholders. It's important that it is approved. And this is the democratic game. It is normal. It's natural. It is legal that all congressmen analyze information to make the best decision according to their own platforms. And I hope the decision goes towards that, and you ask me. Why is it better? Why would Cemig be better like that? The Governor already said, sometimes the state really makes things more difficult. But I will list important topics and later on, they will be discussed in the presentation. The first one. Yes. The key word for me is we are going to modernize Cemig. What is that? Cemig's modernization will be used for when important for Cemig and for the people of Minas Gerais, both privatizing and before privatizing, obviously after privatizing. This is going to be one of our banners. This is going to be better for consumers in the state of Minas Gerais before and after it's approved, of course. So these are changes that are here to stay. This is not something that we are just talking about. And then nothing happens. No, we want to implement consistent changes from now on. So the key word for me is to modernize Cemig. How can we do that? I can tell you a few things in summary here. What is most important, the customers, the clients, those that pay the bill at the center of the table, they have to be at the center. They have to be the ones happiest with Cemig. Those that live in Minas Gerais, and they pay the electricity bill. That person has to be happy. That person has to be proud of paying that bill. Why? We are going to give them reasons to make happy -- to be happy about that. Okay, that's great to pay Cemig. Because then when we pay it, we will be able to do things right. We'll have more details about that. And here, I'm looking from outside to Cemig, okay? So clients and customers have to be at the center of decisions. So we have to take care of people. We need good people, and those are the employees. And second, we also need good people, prepared people and trained people. And third, what is most important in case of doubt, go back to first. Once again, well-trained people, nice people, good team, people that has good training that they know how good it is to work well. But a group and a team and employees that no one needs to be done. Okay. After people, what do we need? We need results. There is no use of placing customers and clients in the middle and not having results. We have positive results. We need that. And for that, it's important to work in the structures of results, to change what is not good. We should maintain what is good. You have seen that. You have seen our results, we will have more good news. But the company has to come forward with results. The regulatory results, and we should improve regulatory results also so that we can be proud of it. And after that, we have to digitize the company. To digitize, is not an IT process. It's it as well, but it also involves many other areas to cater to clients in a digital, fast manner, internal operations of the company that are protected against hackers and everything else to digitize our work flows inside. So our IT area will work on that, but we will have to rewrite processes, rewrite demands and results so that it can work. And this digitization is part of modernization and what is modernization? The energy sector is going through huge changes. And we are going through important changes, distributed generation is something that is there. We can look at it, whether it is photovoltaic or wind, natural gas. We have very important things to be done there. And we need to have distributed generation. That is important. Distribution is important, also storing energy. And in 10 years from now, I think it will be something very important to store energy during the day to spend it during the night. Maybe we will need a huge amount of batteries to store that energy. A lot of important things will come ahead then. And once again, with the customers inside or at the core here, and we will show you further on, the Governor talked about rural distribution, where we, in fact, have huge lines of low voltage. We have investments. We have money to modernize it. So this is at -- our priority is to privatize, as the Governor said. But we need to work with our shareholders so that it can work to approve what is needed. Then we have to bring our clients and customers at the center of the table and then take good care of our team to work on our results, digitize the company and modernize whether generation, distribution, transmission, internal processes, so that the company can bring results. That's what I had to say. From now on, Reynaldo and all the other officers of Cemig will be with you, and you have access to our long-term planned details. And we need to have a strategic plan, a long-term view, that can be brought to you so that you can understand it. And this is part -- part of it is to tell you, Cemig's investors what we aim to do. That's very important. That's not a secret plan that is in the drawer. This is a plan that needs and is being communicated. Thank you all very much, and have a nice day. I do hope you will enjoy our Cemig half day. Because it's only half a day. Okay. Thank you very much.

Thank you, Márcio. I now turn the floor over to our CEO, Reynaldo Passanezi Filho, for his financial statements, and to begin the presentation.

Good day, everyone. It is a pleasure to be here and to participate in Cemig Day. When I was listening to the Governor, the Secretary, and Marcio, I realize that today, we have very clear directions in terms of where we want to go, where we don't want to go. And this is exactly what we want to show you, our great strategic options. And with transparency, as Marcio mentioned, we want to open up our strategic plan in terms of what to do. As the company remained under the control of the government of Minas Gerais. And the next step in case of legislative authorization for integration. So I want to give you as many details as possible of everything we've been discussing in this past year, the main strategic guidelines for the company with as much transparency as we can. So let's start. Pleas show the presentation. So Cemig plan to focus and to win -- focus and win. So start this introduction, giving you a general diagnosis of what we see the recent past of Cemig and thinking about the strategy looking forward. So our strategic plan can be summarized very simply, to focus and to win means everything. We are going to focus on Minas Gerais distribution, generation and transmission in our core businesses in the state of Minas Gerais and focus means that we will not focus, we will divest from those non-core activities, as Marcio said. This is the priority, and that's what we should do. So I'd like to begin with a public acknowledgment to being a company because they reviewed our strategic planning. So I'd like to congratulate Antonio Farinha and his team at Bain & Company. They did excellent work. In recent months, we have been working fully on all of these topics, analysis of the market, internal diagnosis, the historical development and future outlook of the company's businesses, our strengths, our competencies, our ambition, where we want to go. And today, we have a very detailed governance and plan of initiatives, a results delivery office or RDO. And all of these set out very clear goals. And today, we will convey many of these targets translated into results expectations, the moment we start implementing the plan. Next. So we have 35 interviews, many external internal workshops, in-depth analysis. We counted on many specialists, the very best in the country, also some international specialists. And here, perhaps we have the main diagnosis in terms of our recent evolution. The historical importance of Cemig and its loss of market share in the electricity sector. So Cemig in 2009, was ranked 2 in terms of market cap, accounted for around 13% of the market cap of all listed electric electricity companies listed in Brazil. In 2020, our ranking dropped to 6. And our market cap share was 7%. So I guess that this summarizes, now we lost market value, and we lost relevance. And this was due to a diversification process, which, at the end of the day, destroyed market value for the company. And this is what we are reviewing. We want to get out of this diversification process. We want to go back to the basis. We want to go back to our core competencies, which are our concession contracts and the market of the state of Minas Gerais. So when we look of our share, we see that Cemig used to represent 5.9% -- had a market share of 5.9% in the generation market in 2009, dropped to 2.7% with shareholdings and 2% without them. So a great loss. Transmission, 6.2% down to 3.7% with holdings and 2% without them. So as you can see, a great share loss, we were the biggest distribution company, this go in 2009, we were #1. Now we are fifth, not in terms of the concession territory, but Cemig did not participate in the consolidation process. In terms of trading, we lost a little bit of share, but this is an area where we have advanced. So overall, we have diagnoses that the company is losing market value and market share in the several business segments of the company, and we need to understand the reasons for that. And we need to work, to change that, to reverse that. Here, we have this diversification movement in what we're trying to correct. Cemig decided to be all of the holding archetypes in addition to being in the operator, which is the tradition of the company being an operator in distribution, in generation, in transmission. Cemig became strategic control partner, setting the big guidelines for Cemig SIM and Axxiom. We started being what we call strategy architect, participating in the control block and managing a company through the Board of Directors of Cemig and others. And we became an active investor in Norte Energia, Santo Antônio and others. So the competencies for each one of the archetypes are different. And at the end of the day, what we are doing is leaving these archetypes of active investor strategy architect, strategic control partner, and we want to focus on the operator archetype. Because that's what we know. That's how we know how to operate. So this was a big discussion we had internally because we wanted to decide what are Cemig's core competencies. And effectively, how can we potentialize? How we can add more value based on our core competencies. And our core competencies are in our concession contracts and the size of the assets that we have in the unbelievable brand strength. If you are in the state of Minas Gerais, you have no idea how strong the Cemig brand is. And we can charge a premium for that. And of course, we have the last mile. We have captive consumers, 8.6 million captive customers. And here, we have a competency, an extra competency. The ability to have good government relations and participation in these policies. And these competencies show exactly that we should focus on those traditional businesses for Cemig, and thus divest from the other lines of business. So here, we have the big trends in the sector that we analyzed. And again, stress, in order to successfully take part into this whole transformation. Energy transition, technology revolution beyond the meter to face the competition as Marcio mentioned, because there are new entrants, there are new business models, and due to the evolution of regulation in order to do all that. There's no use of thinking that we'll be able to do all that if we are very diversified. No. We want to take advantage of this transformations that are underway to deliver the best service in our core market, Minas Gerais state, in our business of distribution, generation, transmission and trading. In order to be successful in digitization, in order to be in digitalization, in order to enjoy the opening up of the market, liberalization, enjoy opportunities and distribution and generation, in order to offer the best to our customers, we have to use the knowledge that we have of our consumers in the state of Minas Gerais. So here, I like this graph very much because it kind of summarizes this rationale of focus and win. Here, in the y-axis, we have the scope of activity. So on the bottom, a low scope of activity and the top high scope of activity. So we have a very high scope of activity. Very diversified. And in the x-axis coordinate, we have the ability to win sustainably, based on the company's competencies. So we were tempted to do what we called, try again. Number two, to repeat in some investments that Cemig were profitable after all. When we invested in Taesa, for example, that generated a lot of value. So we believe that because there's less political interferes, it is possible to try again. And I think that this was a big discussion. And we concluded that this is a temptation, it's better not to repeat, not to try again. We don't have the competencies to -- the holding of shareholdings to know how to manage through Boards of Directors and to be experts in mergers and acquisitions. No. Our competencies are more on the technical side, on the regulatory side, and we know our customers. So staying in quadrant number 2 is tempting. Because Cemig would be grandiose nationwide, but we worked a lot to conclude that, yes, this looks like a temptation. Indeed, what we need to do is invest in our core competencies. And what are our core competencies? Our core competencies are to focus and win. In other words, to reduce our scope of activity and look for efficiency, technical knowledge, pursuing our expertise to win in a sustainable fashion. And this is the path for us to resume a leadership position as a corporation. As a corporation, we have a greater ability to grow because we won't be -- we won't have ties in terms of increasing capital, because the state cannot increase capital right now. That will allow the company to think about a broader scope of activity. So this is the path. I want to give up on this idea of trying to repeat this model and move to a model of focus and win, and this model will then prepare the company for a future scenario because the state is still a relevant shareholder, but in a corporation model, the state would not be a controlling shareholder. We'll be able to grow in a sustainable fashion and eventually expand our scope of activity. All right. So let's talk about an overview of Cemig's 2025 strategic plan. So here, we have our 5 pillars of value. I think there are 2 words that kind of summarize and facilitate our decision-making, focus and win. And the second one is to transform lives with our power. When we talk about delighting the customer being digital, creating value, agile management, maximize efficiency. What we want is to transform lives with our power. As Marcio said, we want to be customer-oriented. Customers need to have the best service. So it's #1, delight the client. We want to be top 3 in NPS, and we want to have a minimum IASC score of 80. But does an effort linked to digitalized service to customers and digitalizing the whole company. And we want to have customer-oriented, customer-centered. We want to be digital. We'll speak more about that. We have to work full-time to maximize efficiency and create value. We want to be strict about this. The administration of Minas Gerais is putting a lot of effort to become more efficient. And we want to increase our EBITDA by BRL 600 million. But here, in 2020, we had spectacular result. We achieved a regulatory OpEx for the very first time in history, we fulfilled with the regulatory OpEx. This became like a mantra of the company. And we want to even improve our regulatory OpEx. And this was done with a lot of simplification. We used to have here 3 buildings. A huge building next to the central Cemig building, and we got out of that. Some subsidiaries like Gasmig were in a different location, but we brought everything to the same building. So we are putting a lot of effort to contain costs, to be strict costs. And our mantra is to always be below the regulatory OpEx and always closer to private benchmarks. And of course, this has a purpose to make room for us to do preventive maintenance, for example. So we want to make room in the PMSO to do things that weren't doing before. So one of the things we're doing today is we're going to provide maintenance in 100% of our network, which we then used to do. And we want to create value through investment by investing. And with that, we can have much higher quality services to our customers. And we have BRL 21.5 billion that will be invested by 2025. We'll speak more about that. It's a huge investment. If you come to think of it when Villani arrived, the distribution investment plan was BRL 4.8 billion. He's soon updated the plan to BRL 6.4 billion. And now we have in the plan over BRL 12 billion. So we practically increasing distribution investments by threefold. And this is exactly what Marcio and the Governor mentioned. We identified the pent-up demand -- and we have a pent-up demand of 1.5 gig of connections that were requested, and -- but we are fighting hard to supply. So we will be accelerating things. We're investing more than BRL 1 billion compared to last year's investment to provide what the Governor mentioned. We want to -- we no longer want to have a network that provides just subsistence. Just the basics. We want to be able to grow with the agri business. We want to have connections in a dairy farm. We want to be able to allow the growth of greater coffee crops, all of these things are fundamental in this so that we can create value with high profitability for Cemig, creating value and leading to development in the state of Minas Gerais. We're going to be an inducer of economic growth with maximum efficiency in distribution, 2.5x. The investment that we had in the one before the last management. And we want to supply this pent-up demand, and we want for that to delight our customers. Also in generation, we are increasing investments. There's another slide, and will detail that more. But in generation, for many years, we do not invest. And now we have a very ambitious goal of investing in growing 450 mega with BRL 4.5 billion invested. In transmission, I think, another BRL 2 billion. So these are initiatives to refocus to invest in Minas. Everything in transmission in Minas. In generation, the bulk of the investment will be in Minas Gerais and in renewable sources, not just hydro, but we want to grow solar and wind sources. And this is a change in mindset of a company that was traditionally a hydraulic power plant company. And now we're taking on the challenge to diversify to wind and solar power, always with agile management, with safety, with a modern, sustainable private logic management. This will set the tune of the modernization that we want to have in the company. Modernization with a modern management, with a culture which is result-oriented, a company, which is customer-focused, which is digital that creates value, always serving the customers. So here, we have these topics in a little more detail, and then our executives will detail this even further. So in delighting the customers, what I mentioned is to serve better, keep customers inside the group. We see that there's a challenge with distributed generation. And now with a liberalization, there is more and more in the possibility to -- for customers to migrate. And we want to expand activity, and we want to reduce the cost of serving, as I mentioned. And let's move on. Now on the second pillar, digital, I will turn the floor to Villani.

Those years what we call the IT year. Last year, it was a tech year. And we had fantastic results in terms of average outage duration per consumer. We had 9.6 hours. It was a record mark what we achieved last year. It is effectively -- we all joined the efforts to achieve that goal. But this year, that's the digitalization year. It's the IT year. The one we will speak about it. But I can tell you, this is a big corporate call for us. Of course, it is led by the information technology department, but it is a joint goal of the whole management, for the whole company. [Technical Difficulty]

Villani, you are muted.

I'm sorry for that. I want to say that the focus of digital transformation is to make the company more agile. Digital transformation is way beyond IT. It is about a company attitude. Including client service, internal processes and efficiency. Of course, IT is the enabler. It provides tools, it improves processes. And we have 3 big pillars in this transformation. Today, we come from a relatively legacy environment in terms of IT developed. Along the last 20 years, a lot was done in-house. A lot of things just look like Cemig. And we have to prepare for a market that is going to be more open, more competitive, less regulated, less captive. And we have to be efficient to really delight -- win, delight and retain customers. So on the left, we want to have 100% focus on serving customers. We want to simplify our service in terms of processes, and then we want the service to be an omnichannel approach. We know with the pandemic, this catapulted the use of digital channels, but we still have some face-to-face channels. So we need to build a customer journey that in which regardless of the channel that they use to interact with Cemig. They can have visibility of what they want so that they don't have to retell the story and restart a contact so that they can have a continuous journey, regardless of the channel that they choose. And whoever is [indiscernible] from Cemig or Cemig's partner will provide excellent quality service to solve the problem as quickly as possible with the highest quality and the highest customer satisfaction. So we are redesigning a partnership that has exactly the purpose. With more digitalization, with cognitive assistance, that simplify the life of users. Today, you have to choose a channel. You have to know how to choose the right option, then they have to upload document. And we want this journey to be more streamlined, more natural, more automatic and more user friendly. So this is a big power of digital transformation. Now for that to work, we have 2 other important pillars that are system, platforms that cover the whole spectrum of activities of Cemig in a broad fashion. [Technical Difficulty]

You are muted again Villani.

Sorry, I just clicked this by mistake and muted my mic. So it is important to say that there is a driver to redesign architecture of the platforms, looking for best market solutions in an integrated fashion, and no longer developing Cemig-only solutions. We have to use the best products with the best market practices. We are talking about platforms that go from our supply, going through commercializational sale, billing, et cetera. We are talking about corporate management, back office, management of supplies and logistics efficiently, specialist assistance to manage our electricity network that includes asset management, prediction, maximum automation to ensure availability, automatic reconnections, improving power reliability, regulatory indices, so that we can have an exemplary life cycle management of our electricity assets, which is the virtuous cycle of a dis-co. And putting a lot of emphasis on this upcoming market, which is the retail market where we can sell added value services and things in a soft service model. So that we can delight and retain customers with a portfolio offering that goes beyond the electricity meter. That's just talking about availability of powers, smart homes, electric vehicles so that we can have a market of [indiscernible] as we call them, interacting in a balanced way. And so that they can have an adequate and efficient relationship with its customers. And this will only work if data orchestration happens. We are talking about millions of data points. When we start having smart meters, equipment sensors, we started in a world that we call big data world. We start having huge amounts of data plans and we have to be able to extract valuable information from that. So we have to have security of data analytics close to real time, compliance and quality by design. So it's a transformation that touches many of the platforms. But above all, we'll be focused on simplifying processes we focused on providing a pleasant, simple omnichannel service to our customers with correct, operational, managerial, regulatory data, and we'll have the best practices with the leading market solutions. So it's a long journey. Two to 3 years of a lot of transformation, but we're privileged ongoing improvement delivery, quick wins. There's a lot mapped for short-term deliveries, and a continuous improvement in the coming years. And this will permeate the whole corporation. This is not an isolated-IT project. The concept of agile permits the whole business areas with the concept of product owners, and agility in defining new functional models and ongoing implementation of improvements to customers. This is the focus that we have. This is investment, then -- we -- investment of BRL 150 million a year in the coming years, and we believe this will be very successful. This is what I had.

Thank you very much. I think another important topic is to see that we are placing our clients at the center of our operations and we are customer-oriented. So when you talk about omnichannel, we had 15 different services. We had e-mail, the brick-and-mortar service, all sort of services, and everything was been very diluted. And when we think about digital transformation, I think about our chances of success. And here, we have an important change with -- which is also a variable one, which is to bring everything to proven market platforms. So it's going to lead the internal development process, and we are bringing that into tested market platforms. And that, of course, implies a transition, but we understand that this transition has a huge chance of success because we are going to implement all that with already tested platform -- market platforms. Let's move on then. So we talked about our clients. We talked about digitization. Now we are going to talk about efficiency. Here, we have that those 600,000 -- BRL 600 million, I'm sorry, concentrated very much in distribution and tackling losses, also delinquency improving our operating costs. So we opened a gap. If we check that, our regulatory PMSO on the cost side, and we are able to reach our regulatory EBITDA, tackling our losses. So we have been able to reach our regulatory PMSO. We are just breaking that gap. And in terms of losses for 2022, we want to be already within the regulatory EBITDA. And we are also bringing now with the same objective of being within the regulatory OpEx and transmission. We are working -- and we are back and investing in generation, and we are working in reducing our operating costs per megawatt in generation and transmission areas in 10% to 15%. So this is our commitment to improve the EBITDA by tackling efficiency. We can move on now to the next slide. And this topic is not including all these projections that I mentioned are not including something else that we also should discuss, which is post retirement here. We have liabilities in around BRL 7 billion, BRL 3.3 billion for health care plans, BRL 2.9 billion in the pension plan and BRL 500 million in life insurance. And those represent annual expenses -- actuarial expenses, BRL 500 million. This is a significant percentage of our PMSO. And we are bringing that up because this needs to be discussed. And we need to find a balance here. These expenses are growing above inflation. Historically, we have to ensure the financial sustainability of the company. And this is a process of an internal conversation in order to restructure all these obligations and these liabilities. This is growing beyond inflation, as I mentioned. And on the other side, we have to deal with it since we have established regulatory PMSO. If I have expenses growing higher than that. I have to shrink the other ones. And therefore, I lose my objective of delighting the customers because I have to work on preventive mentions, predictive maintenance and several other topics that involve the operating management of the company. And that might -- or end up being squeezed if I have growing expenses. On the next slide, we have our debt profile. Leonardo will comment on that towards the end of the presentation. But obviously, here, we have had very good results in terms of bringing down the leverage of our company. It's at 1.28x, our net debt over adjusted EBITDA. This is 1.79 percentage high -- it's very good. And maybe main issue here is related to the Eurobond. We have BRL 1.5 million in 2024. And here, we have our strategy. And this is what we are disclosing and instead of having all maturities in 2024, we will have cash tenders over this period. Obviously, that will depend on the conditions by definition. But we are considering the possibility of having this settlement process, diluting payment of these maturities over time. So that we do not have everything concentrated in 2024. So we should have cash tender between 2021 and 2022 and another cash tender in '22 to 2023, another one in '23, '24. And the final one, this then concluded in 2024. So we talked about clients, about digitization and about efficiency. And I think this is the slide that summarizes the investment plan for the next 5 years, considering that scenario of focus and win. We have BRL 22.5 billion, BRL 14.4 billion on what we are considering rebuilding and advancing in our core business. So we have BRL 12.5 billion in Cemig Distribution. Just comparing that was BRL 4.8 billion 2 years ago. So this is a huge effort, and I believe that the catering to customers and clients and generating a value. And we know that we can add value with the regulatory walk that we have now. So here, we have the substations, 300,000 lines of smart elements. And this will be further presented, discussed. But we want to eliminate the pent-up demand that we have today. In generation, we wanted to move forward with our investments in generation and transmission, of course. And here also I bring all the modernization of platforms and the structures in the digital area. So digital is in here. We also want to expand in our core businesses. As I mentioned, we are innovating. And once generation is diversifying itself also to have our own wind and solar panels. We are talking about 450 mega in generation of energy, 1 gigawatt of capacity also in transmission. Now looking at projects within Minas Gerais auctions or M&As in the state, and also move on with Gasmig. We have a divestment plan there that we can work with considering our legislation. And -- but Cemig will still be the controlling shareholder. But we have a bold plan to move on expanding our grid and also with the elaboration with the gas market. Therefore, we can also increase our gas pipeline grid. Also develop future businesses. We are stating here a variable target of distributed generation of BRL 1 billion, so that we can have a consistent footprint here in the state of Minas Gerais, and also BRL 0.5 billion in innovation and all new systems of management demand and energy efficiency. Part of that, obviously, will stem from the divestment process. Obviously, this is an indicator, something as BRL 9 million for divestments that would support and finance all this expansion, which always will be based on minimum rate of returns that have to be met, so that we can move forward with any of these investments. You can move on now. This was another slide that has been very much discussed about, and it shows us another way of seeing our ability to generate value. That's stated on the x-axis. And here, you can see that, in fact, the greater profitabilities are here in terms of size of the opportunity, I mean, are at Cemig distribution, Cemig D. As I have already mentioned, that is within the regulatory walk, generating value and also the enforcements and improvement in transmission, also expanding our core business. And if you look at it, all of them are there on the side of Cemig, where Cemig is generating value. And our divestment effectively will be of things that have had -- or are underperforming here, Ativas, Axxiom, Renova, Santo Antônio, Light, all of them that with the -- the ones that are here in this downward arrow is that they were below the acceptable minimum [ bought ] by the company. So of course, we are going to be -- to the right to rebuild and advancing core business, expanding core businesses and in distributor generation. This is a little bit above the maximum limit here of our chart. These are our avenues for value generation as well as divestment. As you can see here more towards to the left, where the company also had a lower value generation over the years. We can move on then. So I am concluding my share of the presentation. We talked about clients, digitization, efficiency investments. And we are bringing all that information to you so that you know about it, and you come back and check on us if we have carried it all out. Vélez will bring all that to you in terms of our financial projections as well. So this is a public commitment, and it's a way to have you by our side, supporting us and helping us reach that transformation. The strategic model, just like I mentioned, we are converting the role of the holding company, we want to leave that model, and we want to turn into the strategic controlling stockholder, of course, stressing our ESG practices that are very renowned. And we -- here, we always try to make the difference for our customers to change lives with our energy, to change Minas Gerais' people lives with our energy. And as the governor and the secretary said, we want to be the driver for the economic development of Minas Gerais, and not an obstacle. And in being this driver, we want to generate value. And I think this is what's nice -- to be able to delight our clients to make a difference in people's lives, generating value for the company. Everything that we are doing here has that objective, which is to generate value for the company, follow all these minimum profitability criteria. This is our history here. We are a main supporter of Minas Gerais culture. We are also being very successful in terms of renewable energy. We have social projects and a lot of other achievements. One more slide, please. Now our actions regarding COVID, everything that we have been working with the vaccination. This is a very dear subject to us. We have prevention inspection centers in different areas. We are helping the health care units with potential vaccination areas. We are helping with our vehicles. We are part of a movement that is called United for the Vaccine. So this is our response -- social responsibility. It's a little bit of our social responsibility here in this moment that we are facing. And here, we have the results. We can move on, Vélez. But this is a very broad overview. So one more slide, at this was the summary, focusing and winning. And now each one of the officers is going to comment on their own areas. But I wanted to bring to you this first slide, we want to focus on Cemig generation and transmission and rating, of course. We aim the customer satisfaction. We want to reach the satisfactory levels of efficiency with a private model and a sustainable rationale. We want to reach an EBITDA of BRL 7.7 billion, a TSR of 20%, of course, with all the investments of BRL 22.5 billion. So this is a summary. And that's what I want you to check on us. If we are actually executing it, we want to add generation capacity, as you can see here. We have to build something in transmission. And I'm reading through the slides. And I'm checking on each one of the columns. We want to go into retail as well and maintain our share in trading, always with positive gross margins. We want to invest in distributed generation, investment [ has made ] -- this is our divestment program as well. And we want to invest in innovation. I now end that overview and now I think we may turn to the different business areas. We are going to go into the details of these subjects. And once again, we want to bring you transparency of what effectively are the ups and downs, where we want to go and where we do not want to go, the yes and nos. And therefore, we have our decision-making process very clear. We know which is the path we want to go through. We know we are moving forward in this path. And yes, we do expect that the next step is if there is legislative authorization, is that with this path we still move towards a new and another path, which is the corporation model. So thank you very much. I do hope you support us in this transformation process that we are trying to carry out in the company. We are very proud. It's very nice to have you with us and see that we have that ability of transforming itself and therefore, changing the state and effectively generating factor for all of you. Paulo, your turn.

Thank you very much, Reynaldo. Good morning, everyone. I will now give you an overview of the strategy and the main projects for generation and transmission. Considering our strategic planning, our summary in terms of investment is to add 1 gigawatt of installed capacity up to 2025, with investments estimated in BRL 4.5 billion, obviously creating value. But I think the main driver -- the main differential here is to focus in renewable sources and the -- increasing the portfolio's efficiency. For that, we have guidelines, of course. The first one is the capacity increase itself, the energy generation. The second one is to increase operating efficiency, and this is related to the first topic because our focus is in addition to investing in renewable sources, we want to work on synergies, increase the efficiency of the assets that we already have, turning them more and more efficient. And on the other hand, bringing new investments where we can have synergies. Therefore, increasing more a positive flow, I would say, so that we can be more efficient. And of course, today, in this transformation environment, that the electric sector is going through in the world, especially in Brazil, it is crucial for any company that works in generation, we have to invest in renewable sources. On the other hand, considering the investments that we already have, we are analyzing our assets, and we want to invest in the ones that create more value and obviously divest from the ones which we understand that are not creating value or generating value or will hardly generate value. And on the other hand, we work in a regulated environment. Obviously, we are focusing on the free market, but regulation is crucial. So we have a proactive action of the regulating agency. And also renewing our concessions that will be expiring. On the next slide, here, we have projects that are in our portfolio. They are more mature. This is just an overview here. The main objective here is the free market of all these projects and the photovoltaic. We have always [ been a sub ] plant, which is a photovoltaic plant of 85 megawatts, and approximate CapEx of BRL 300 million. It is in the north of Minas Gerais. We already have the site. The energizing is planned for the end of 2022. So it's very mature already, just as our floating photovoltaic plant in Três Marias reservoir. Was forecast generation capacity of 600 megawatts (sic) [ 60 megawatts ], approximately BRL 250 million invested, and energizing is planned for 2023. And also in Três Marias, we have a project of a centralized generation of 70 megawatts with a CapEx of BRL 250 million also planned for 2023. These 3 photovoltaic projects are the ones that are up ahead, already very mature. And we have another one, and it's Cerrados, 1, 2 and 3. These are actually 3 projects. They have 260 estimated megawatts and approximate CapEx of BRL 920 million. This is our advanced photovoltaic portfolio. We also have wind project. Today when energy is crucial, especially to cater to the market. And we have around 1.2 gig being analyzed, and we have 4 mature projects. So we are working on evaluation and recertification for a possible contracting in the second half of 2020 to start working in '23 or '24. So as we mentioned, we estimate here, a generation of 4.5, specifically here, working with these photovoltaic projects. And in addition to that, just to let you know, along the same lines, we still have 2 projects, a possible opportunity of a natural gas thermal plant here in Minas Gerais. And that stemmed from a very important technical discussion. And in order to have renewables energy, we need to have base energy. And I think that is important, especially with gas line. And so we are implementing new technologies. So the trackers, which are the mechanisms that allow photovoltaic panels to turn according to the sunlight so that they have greater efficiency, these are a possibility. Also floating photovoltaic plants. This is something that is being used in the world and hybridization. That is the combination of these different sources. And here, we have the HPP combined with photovoltaic and that also seems to be very interesting. The study of new technologies in photovoltaic panels and the green hydrogen. We believe this can be a promising future, both for storage as well as to supply energy globally. And in terms of development, today, we have Poçp Fundo increasing from 9.2 megawatts to 30 megawatts. This is a small hydropower plant that is being implemented. It should start operations in the beginning of 2022, has been very well succeeded. And we are also analyzing the capacity increase of the SHPPs in Cemig, total portfolio, 50 megawatts. These are the projects that are already more advanced in terms of electricity. Now just a generation in transmission. First, we want to invest in improvements, which has to do with investing in our own installations, of course, improving the service quality. These are investments that create value and allow us to have greater reliability. So we want to have BRL 1.1 billion on updating and enhancement and BRL 1 billion in new projects. And here, the main pillars are to invest and strengthening our current assets. And I will show you shortly, that because of the growth of the photovoltaic plants in the north of Minas Gerais and the wind farms in the Northeast, the Minas Gerais state because of its location and its electrical -- electric grid is very important, and we forecast expansion of that in this state. And once again, adding to this growth and operating efficiency and all the synergies of these investments, we want to continue having operating efficiency within the regulatory level, always being close to the benchmark. And again, with a proactive action with our regulating agency. Just to give you an idea, this is a map of Minas Gerais, and we have forecasted for 2022. In orange, you can see some transmission lines that will be bid by ANEEL. This is forecast for 2022 to cater to the system increase. So that represents investments of BRL 7 billion and approximately 2,300 kilometers of lines. We believe that this is a huge opportunity that's our state, and we are working to compete and in an efficient manner as well. And of course, there is a possibility of M&A. If it comes up, we are working with that. And then Cemig will be investing as a controlling shareholder. So this is a brief overview of our strategy and main projects for generation and transmission that we have for the cycle. Thank you all very much. I turn the floor to Dimas, and he's going to talk about Cemig trading, right?

Good morning, everyone. I am Dimas, for those of you that do not know me, I am the trading -- Chief Trading Officer. Well, this ambition is our main challenge because the consolidation of client leadership and today, we have 25 -- we had 25%, and now we are at 17%. But it's not that we lost market share, but other players arose throughout the years. But our challenge is to maintain that volume. We don't even want to grow -- I mean, we might grow 1%, 2%, 3% a year, but the main challenge is to maintain these 3.7 gigawatt average, which is our current market with growing margins, not because of price increase because we see there is a trend in price reduction. But this margin stems from purchases that we are making, seizing the opportunity of price reduction. Whether buying or -- I'll talk more about that in generation because this is something that we are working on. We work closely to generation. Okay, generation has turned to the free market, and we are responsible for trading of all the energy in the group. So the objective, as Reynaldo mentioned, in all of us that have a relationship with the client is to reach the top 3 level in NPS. And our objective is to reach in 2022 an EBITDA of around BRL 500 million and BRL 600 million. And therefore, this EBITDA should be close to about BRL 550 million in the market, in the future. But what is the strategy to consolidate and to face that challenge? We changed. And those of you that know our market, you know that we were suppliers of key accounts. But because of the strategy of gains and along these key accounts to have the bargain power, either with a self production or going to other players in the market, we chose to concentrate on our average and small-sized clients. Why small-sized clients? Because growth today, when we talk about the growth ability for the free market is at [ 84 ], which are average voltage clients. And most of [ 84 ] clients, we and other players, the market available is not very large. The main market that we see here is with the regulation. When we start to see clients that have demand with lower than half meg. These clients will be served through a retail trader. For that, Cemig created 2 retail traders registered. And we will be focusing on this kind of customer. Paulo mentioned the challenge -- they have to generate half a mega. But looking at the next 10 years at a 10 year horizon, well, we have to look at a 10 year horizon. And I'll show you why, but we have a challenge there to add to some mix park by acquiring third parties, purchasing from third parties or our own generation, but by 2030, we have to add 2 giga, 2 gigawatt average to our portfolio to achieve a 3.7 gigawatt average. So this is a practice already. 2/3 of our power comes from third parties. 1/3 is our own energy. So it becomes more and more necessary to manage risks in a very transparent and sharp way. This is a tone set by the management. We have to manage risks. And as for a digital channel, either for retailers in the future market or for the current market that we serve, it is unavoidable to have a digital platform, not only to serve the market, but also to process, billing and CCE -- and this is unavoidable. I cannot serve this segment of customers with the old and current practice, actually. We are amidst a revolution in our commercial department. Using the Salesforce platform, we have a project there that brings a digital revolution to our commercial processes. And we have to have the right offering of products. The market is avid for a number of products. We are in a disruptive moment. And we mean [indiscernible] [ software ] direction, we have to adapt ourselves. And this is one of the pillars. Here, you probably know this -- in black, that's the market. And the market went down some steps with COVID-19 pandemic crisis. This will continue to grow, but not at the same pace. And we have a structural surplus of around 10% until 2025. In other words, the market can grow. Of course, there will be organic growth. And if you see green, hydro, it's stagnated, given all environmental risks and difficulties inherent to hydropower generation. So there will be some growth, but it's no use investing here. I have to supply this market. So we can see the thermal power will depend on government auctions, structural auctions. Because with this growth of intermittent sources, I need to have a base that will support energy variation. So we can see that until 2025, we'll see these sources growing. So we have some structural surplus, which is rather considerable. I'll speak more about that, but this is just to set the stage. Let's move 1 slide forward, please. This is like a snapshot of the Cemig Group in terms of power availability, market, sales. It's kind of old, but what we see here is sales in the regulated market. [indiscernible ] came out with ATE and also Lot D, an auction of Três Marias, and other plants, in which Cemig participated. A percentage went to the captive market and the other one to the free market. And in light green, we can see our power availability, conventional power availability. And in green, which is kind of marked, we have incentivized. In gray, we're having energy that we have in our portfolio available for trading. And we'll have large purchases as of 2022 and the potential market to serve, which is this white space in the graph. But I want to focus on the free market on the next slide. This complies with what we have been saying. If you look at the delta line, it starts in '22. The big challenge is to maintain this market of 3,700, and we have the resources to serve this market. This historic line going down is sales, actual sales. By 2024, we will have sold almost all our energy reserve in a strategy of always anticipating sales. So what we see in green are our purchases. As you can see, they come for 2/3. Today, 2/3 are purchased for the free market. And 1/3 comes from our own energy. So by maintaining this market of 3,700, the biggest challenge is to be able to serve these 3,700. As you can see. There's reduction even considering extending the concession of our plants. Here, we consider loss of plants. The total number of plants and here, energies that are purchased. We have a big challenge as of 2024, which is to -- we have to comply with the strategy of Cemig GT, which is producing energy. We want to play a leading role in supplying power to our Cemig market. So we're along with these alternatives to fulfill these columns until the dotted line, we have a renewal of concessions. They might be partial. They might be total. Total renewal of concessions. Or we may not even renew them. It will depend on the prices set out by the government and will depend on opportunities regarding other sources. But we have the possibility to purchase power from third parties. We have our own generation. We have to grow to [ giga ] Average by 2030. And we have a big opportunity here because in this time frame, we have a revolution in terms of change of sources and pricing, and we can be the protagonist. In recent years, if I look at our balance sheet, in order to maintain our market, which is the most important thing for us, we had to purchase power from third parties. By now, we have an opportunity to have our own power. This means that we'll stop buying from third parties that will buy greenfield or brownfield projects. It could be a mix. And this is the big challenge. In this market of ours, we have an opportunity to be able to supply power. And as Paulo and our CEO mentioned, we can [indiscernible] invest in Minas Gerais state or out of the state, but our challenge is to supply almost 2 gig in this decade. Next. Here we have a brief snapshot, considering last year, this year and 2022, in our situation in terms of revenue purchase, as you can see, third-party purchases and purchase of our own energy. In our own energy, there's a whole procedure involved. We are just talking about trading here. We in commercial buying power from generator at market prices, and this whole result is a result of the trading business. We're talking about an EBITDA of BRL 550 million and this is just for the trading business. This is not a generation result. We purchase power from generation. And you can see a margin, a gross margin BRL 554 million by 2022. And you can see that this margin grows in 2021, there was a margin reduction. This was because of more than 1,000 meg that we started buying as of 2022. We had to sacrifice the margin a little bit because we didn't have the whole power to serve the market. So I had to sell this power way before 2022. So we had to sacrifice our 2021 margin. But -- and in 2020, this market reduction was due to the crisis. We had a revenue loss as has been mentioned, because of some flexibilities customer had take-or-pay and the price [ permitted ] in power that was going to be sold to customers, had to be [ settled ] in the market. But now we have the estimate for 2022 to have a strong pace of an EBITDA of BRL 500 million to BRL 600 million. On the right, we have sales and purchases. And you can see the balance that we have. Energy sold. Because of this big purchase that we had, and you can see the price, the selling price going from BRL 220 million to BRL 227 million. While purchases have a decreasing trend, we ended some old contracts of energy purchase, and now we have new contracts with better prices. And here, we have a summary of the Cemig GT consolidated market. This is the whole energy negotiated by the group. And the group means Cemig GT, its subsidiaries, and also include here extension of concessions. And this is the market that we have, not only the current market, but the expected market in terms of growth. We can see the average sale price. It is increasing. But as of 2024, 2025, it drops. There will be a price reduction. There will be other players entering the market. So it's a decreasing trend. So this is considering our future profitability. This is how we can ensure that we will buy or generate at a cheaper price, enjoying the reduction of these new sources, wind and solar. And here, we can see. We have GSF. Without GSF, we have the spot price and GSF, maintaining the metrohydrological regime, GSF is one. If it's not one, all in the last 9 to 10 years, we had droughts. And that led to changes in power generation. And of course, the GSF was lower. But we see spot price, BRL 74 million, BRL 61 million. That reflects the structural surplus that we mentioned. If we have a normal hydrological regime we will see, and this is natural for that structural surplus. Plus, for the hydrological period, there's a decreasing trend. This is not what we are seeing. Rainfall has not been according to history. But so I guess that I will end here, and I will remain here if you have questions if I left something out in my presentation or if I was not clear, but I will be here during the Q&A. And I think I turn the floor to Marney. Thank you very much. Marney, you're muted.

I'm sorry for that. Good day, everyone. I hope you're all well. So let's speak a little about Cemig distribution. I've been in this position -- I'm the officer, here have been in this position for 4 months. And we want to be a reference, a benchmark in distribution. How? Well, I start saying that we are doing strong work regarding safety, work safety, given that the product that we work with is highly dangerous. And of course, with that, we're going to have reliable energy supply, good quality in our billing system with efficient meter reading, et cetera. And with that, we'll be able to be among NPS top 3, which is our primary goal. But it doesn't end there. In connecting with what the governor said, and our Chairman of the Board said, we have to be in networks, in districts of development in the state of Minas Gerais. I'm going to show you briefly and in a summarized fashion, how we are going to do that. Of course, it will require investments. Prudent investments with smart lines, digitalized, smart lines and increasing our analytics capability. We'll be investing BRL 12.5 billion by 2025. This is our challenge. And with that, we'll be among the top, if not the best DisCos in the country. Here are the main guidelines -- we want to be centered around the customer. This has been mentioned, to be an inducer of development, to optimize the management of revenue and increase operating efficiency. And we also have to be proactive with the regulator. And I'll speak more about that. We are developing fundamental work for us to achieve our goals. Here, cost structuring programs at Cemig D. First to achieve our goals -- well, to focus on the client, to put in place innovations, to improve clients' experience with Cemig. As some of you know, we signed a partnership -- a pioneering partnership with IBM. Well, we are using all of their tech capacity to digitalize service -- the customers are using artificial intelligence, cognitive service, the famous Watson. And now it's going to help us improve our relationship with customers. Excellence in CapEx. All of our investments have to be recognized in our [ tariffs ] so that we can have more power available. This has been mentioned before. This is our opportunity to be an inducer of development in the state of Minas Gerais. We are launching a program called 3-phase network in Minas, which means transforming 1-phase networks into 3-phase networks. As the governor said, we take a lot of lighting, light and not power. And we want to have more energy available. To give you an idea, we have installed 275,000 rural properties served through 5 kVA transformers. That doesn't allow them to have 2 showers on, electric showers on at the same time. So we are taking them a 3-phase network. Of course, there are rules for investments -- have to be prudent. But we want to be able to increase the load. We are eliminating these very small power transformers who have a minimum of 10K gig transformers. And Dr. Reynaldo said, it is difficult in rural areas. We have 57 feeders with more than 1,000 kilometers. Reliability of supply is hindered by that. So as part of this program, we will be reducing these feeders and how distant they are. So in addition to supplying more power, we will also be improving quality and reliability for these customers. So we'll be able to drive gains in addition to inducing development, we'll be selling them more power. To give you an idea, we have 1.5 gig of requests by customers and our system doesn't support that. That is why we have to invest in Cemig D. There's another Cemig here with a huge potential of growth. We also have a program of underground networks in 42 historic cities. Cemig wants to stand out in this. We want to take these underground networks for these historic municipalities, improving the quality of power and supply and also the image of the company in the eyes of the population. As for revenue, we're doing some work. We have the census of public lighting, for example. We will be recounting all public lighting, light poles. We have more than 2,000 light poles. And we'll analyze the power sharing of infrastructure. We knew that we have 3 million shared points with telecom companies. There's a potential for more. So we are recounting all that. It's census, it's hard work, and we're getting started, and we're also implementing low voltage zero networking circuits. It's shielded. It makes it impossible for customers to steal power. It has reduced losses and it improves safety. Because in these low-income communities where they steal power, they [ won't ] Be able to have access, and they will not be in danger. We have 240 (sic) [ 240,000 ] rural families that will be served by these networks. In terms of operating efficiency, we are doing strong work with our HR department to prioritize somethings, [ core social, ] to improve efficiency, such as fraud, inspection, centralizing dispatching, field crews, development of software. So that we can derive gains of productivity. So these are the main structuring programs that we are working on so that we can truly be benchmarks in this sector. Next slide. Also doing [ a little ] of our plan to fight energy losses. By the end of next year, we want zero losses to within regulatory parameters. We want to close the gap. How do we intend to do that? Well, there are a number of initiatives. Some of them are here. The main one that will bring us the biggest gain is client inspection through intelligence. So those customers that have a potential of fraud. Again, we'll use analytics, we'll identify potential of fraud and be assertive in terms of identifying who those theft customers are. We want to do more than 2,000 inspections. We invested BRL 300 million, and we have a revenue of BRL 691 million in this first item alone. We also want to replace obsolete meters, those that are malfunctioning. Or when the meters are depreciated, they don't work anymore. We replaced 500,000 meters, BRL 47 million to be invested, bringing [ a gain ] of BRL 39 million. So I think all of these initiatives, we'll be investing BRL 1.36 billion in 5 years. BRL 1 billion will be in CapEx. And with that, we'll have BRL 1.9 billion for us and this will continue in the coming years. So these are the main initiatives. And in the bottom charts, you can see our projections of commercial losses, and we want these losses to be below regulatory parameters. This is to be achieved in the fourth quarter of 2022. We currently -- our goal is to have 11.3% of total losses. This is our goal. Regarding store operating efficiency, our main goal is to reduce OpEx, OpEx per client developing actions that are considered to be CapEx. There are a number of activities that will make it possible for us to achieve in 2025, BRL 378 per customer. In 2021, BRL 344. And our goal is to get to 2025, 25% below. We want to reduce OpEx by 20% regulatory OpEx. Dr. Reynaldo mentioned that we have achieved this in 2020 with BRL 336 per client, but we want to increase this difference to contribute to efficiency. The COD -- doubtful debtors allowance, BRL 313 now, and we want to get to BRL 229 of doubtful debtors allowance. The result, we understand to be satisfactory, given the pandemic where we had some disconnections -- where we did not perform some disconnections that were due for a number of reasons, also for safety reasons. And we will be resuming the disconnections now. And here on the right, at the bottom, we will increase the number of disconnections from 1.7 thousand in 2021 to 2.2 thousand -- that's 2,200. And we include smart networks. We will install smart meters. With that, we will have 320,000 points in the next 2 years. And we're already buying these smart meters in 240,000 families, as I mentioned. And the low voltage 0 networks will also have smart meters. These meters, well, they don't require reading. And we can -- we can remotely disconnect, reconnect. There's operational gain, and it helps in terms of safety because in these places, where we are installing smart networks, that's where we have a higher risk of physical attacks to the network. These are the main actions to fight delinquency and doubtful debtors allowance. This is just an overview. We expect an economic recovery of our market where we stand and what we're expecting for the future market. In 2020, you can see this minus 5.3% is compared to 2019. The market dropped, and it was due to COVID pandemic. Of course, retailers -- the market was highly affected, as you can imagine. Merchants were highly affected. So we have here captive and free markets. And we can see that in 2021 from minus 5.3%, we went up to 3.2%, increasing 25 tera -- terawatts. And this is a sign of recovery for us. And then the stabilization, lower growth in the coming years. And here, we have an item that I would like to draw your attention to, which is distributed generation. Here, it has a strong impact on our market. And that's why I said at the beginning that it is important that we interact with the regulator so that our results will not be that impacted by micro or mini generators. And as you know, the state of Minas Gerais, is the state where we have the most plants installed. So now I will turn the floor to Mauricio.

Thank you, Marney. Good morning, everyone. I will now turn to distributed generation and gas and generation. I will start by distributor generation. We have an important footprint by Cemig SIM. It already has solar, wind farms which are [ 11 ], and we plan to invest in new projects over the years. This growth should stem from project development. Of course, seeing the engineering capacities of the group and also selective analysis of acquisition opportunities. But undoubtedly, this is a possibility that places Cemig SIM as a relevant player in solar farms, and that concentration in Minas Gerais allows us to make the best of our strength, the Cemig brand, the regional knowledge and the ability of trading. For instance, all these solar farms already in operation when they were integrated, they already had the energy 100% traded. It was being traded already in the commissioning process. And for this distributor generation project, consumers' experience is also key. Cemig SIM started with commercial projects that are totally digital and we'll move on and continue working with excellent services for our clients. And on the institutional aspect our objective is to work in a constructive fashion in order to create a distributed generation model, the regulatory model for distributor generation, which is sustainable financially of those that are investing the regulatory aspect, therefore, not causing unbalances and also allowing us to seize the benefits of this technology. I think this is the strategy here for Cemig distributor generation. I turn to the next page to talk about Gasmig. Gasmig has a strong point, which is a concession contract. That is unprecedented in Brazil. It is valid up to 2053. So we still have 32 years for the whole state of Minas Gerais. And those concession term is an opportunity to invest and tap into the economic return that is related to this business. The second important aspect for our Gasmig strategy is governance and transparency. We believe that an IPO could be a driver for Gasmig's growth in addition to allowing us to have resources to accelerate expansion. Also, the IPO will increase the visibility and improve governance of this company. Therefore, we are preparing a process and Cemig would be still the controlling shareholder as Reynaldo mentioned before. In order to do that, we have internal studies to define the best conditions and also the schedule of this operation. And another important pillar here is, why are we doing that? It's really so that Gasmig taps into this growth opportunity. There is a real opportunity here to use the existing grid in a more efficient fashion. That is, to increase saturation with a network that has already been rolled out. We have a potential to increase in 50% of the volume of distributed growth and also expand the structure. That is, to grow the network so that we can reach regions in our concession area where we are not present yet. For instance, the Midwest and the Mineiro Triangle. We plan to invest BRL 1 billion up to 2025. And then we will have several projects in different stages of maturation. I should say that these are the main comments for Gasmig. And I also would like to talk about innovation on the next page. We can not talk about the strategic planning if we do not touch on innovation. But this is not something that we see as an individual topic. It is integrated to business. We already have some real examples of changing the customer service, as Marney just mentioned, that allows us to have a quality leap with quick solutions rolling out. And the idea is to have innovation integrated to business -- that is, to tap into available resources, either to improve current services or to develop new markets. So we are working on solutions, for instance, that we improve the quality of service. We will allow a digital service or solutions that will allow us to have cost reductions, increase efficiency. I will once again refer to Marney's smart grids. This is a smart way of integrating innovation in the business. But we will also be betting on other products and services such as electrification or using emerging technologies such as storing technologies. So in summary, the strategy of innovation is related to business, and our mission is to be very practical, very hands on. And now I thank you all very much for your attention. I now turn the floor to Leonardo, and he will comment on the financial projections.

Thank you, Mauricio. Reynaldo talked a little bit. Actually, he went into the detail about the main guidelines of our strategic plannings and our officers went into each one of the businesses. And they told us how that is going to reflect in our strategic planning. And I now would like to turn to the next slide and show you our financial projections. Please Vélez, to the next slide. We will talk a lot -- a little bit about the investments, about the results, specifically at Cemig GT in the consolidated. Here, we have an investment -- consolidated investments in Cemig GT. First in transmission, forecast investments up to 2025, planned of BRL 2 billion. And investments already approved by ANEEL, which are the lighter green in addition to possible updating an enhancement, which are the organic investments done in our transmission concession. They are close to BRL 200 million a year. That would represent -- out of this BRL 2 billion, BRL 1 billion of investments from 2021 up to 2025. And then we have BRL 1 billion more in investments that would be these investments because of M&A or as Paulo Mota has shown, we have around BRL 7 million of potential auctions for our transmission. And in Minas Gerais, we believe our cost of capital now is low. We would be competitive within these auctions in the state of Minas Gerais. And here, we have a potential of another BRL 1 billion. But once again, we stress what has been -- we have said here, these greenfield investments and in new projects also applied to generation and transmission, and we will be very strict here so that they have the guarantee of return, and that is -- we are -- our management is very committed to generating value for these greenfield projects and possible M&As, business opportunities that might arise in transmission and generation, where we have BRL 5 billion of investments forecast and most of them, M&A and new greenfield projects. And Paulo has shown those that are more mature. These are investments that we can carry out with our own funds. The company has liquidity and expertise to do that. And more than that, we also have the market. That is, we would build that and we also have a relationship with major clients so that we can offer the energy stemming from this new investment. And on the next slide, we show our EBITDA forecast up to 2025. 2020-21, we already have a growth in our EBITDA. There was a band of how much it would be of the EBITDA, the maximum and minimum for the next few years. In 2021, we have more details here. You see a growing margin. 2025, the PMSO is growing a little bit because of the inflation and also because of specific expenses that we are going to have in the year with renovation of wind farms and also investments in the safety of some of the dams. But what we have here is that the margin is a little bit lower in '21, but it started in 2022 with our portfolio of buying energy, we will have several projects where we acquired the energy in prior years by the means of a huge auction of renewable sources. The energy was acquired at very competitive costs. And then the commercialization margin starting in 2022 starts to be higher. And that's more than an expectation. We can say that these are projects, in which we acquired the energy. And so with the maturity of the projects, we are very optimistic in terms of the execution of this project, and then the margin starting in 2022 is higher in the trading area, and we see the results of Cemig GT are good and starting in 2022, they will be even better, more significant, thanks to that margin increase in trading. As we mentioned, because of our competitive price energy acquisition in the past. Here, we see our strategic planning and that expectation of EBITDA. And in our strategic planning, we consider M&A, greenfield and also the divestment of some of the assets. And on the bottom part of the slide, we show the effects considering that these divestments would be made in 2022 and Cemig GT, the main ones would be Aliança, Santo Antônio, Belo Monte. If these divestments would happen starting 2022, what would be the effect by 2025? We would have minus BRL 244 million in our EBITDA, but the greenfield would bring us BRL 318 million in the EBITDA and up to 2025 would not be the potential growth. You would have more BRL 100 million of growth, thanks to the maturation of the project that would not be concluded by 2025. Now continuing in the next slide, we have Cemig distribution. We already mentioned the BRL 12.5 billion in investments and that intermediate area here, which is called the electricity system. We also have investments in infrastructure and investments that are funded by our clients, which are in the darker green. But these BRL 12.5 billion are investments that are very important for Cemig. They have to do with an internal compliance process, and they need to follow the regulatory guidelines. And that we estimate BRL for the year 2023 in BRL 13.6 billion. We believe these investments will benefit the society that is in our concession area. The society of Minas Gerais will be able to provide more energy with better quality, also helping us reduce OpEx when we have a more robust network. So these investments are also translated in our results for Cemig distribution, which we will show in the next slide. We're going to go into the details of our -- the expectation of ours. We believe that Cemig distribution is bringing consistent results in the past years, Cemig's EBITDA in 2020 reached the regulatory OpEx, this was a major achievement. It was the first year in Cemig's history. And in terms of this regulation that we were able to be and to meet the regulatory OpEx. Also, we have the same target in 2021. In 2020, we were 5% under the regulatory OpEx. But in 2021, we want to meet the regulatory OpEx, once again -- the regulatory EBITDA once again. And here, we have a margin increase. There is a reduction at ADA and reduction here in the PMSO. We have inflation effect, which is normal, but we also have cost. And despite of being higher costs, we believe these are investments that help us improve the margin. When you have an increase in the number of inspections and disconnections that it's also translated into reduction of nontechnical losses and delinquency. So we have less expenses with these specific topics. Therefore, the generation of revenue is much higher. And we are optimistic about our management, and these are our expectations for 2021. And the investment that we are making in this tariff cycle will be integrated into the next tariff review. And we understand that starting 2023, the results will continue to grow. And then we'll have more investments, prudent investments under concession and the continuous operating efficiency. And remember, these results are in our are nominal values. Moving forward, we have the results that Márcio mentioned already. Actually, here, our forecast investments for GT, close to BRL 1 billion up to 2025. They would generate BRL 173 million approximately in terms of EBITDA in Cemig's consolidated results. We believe that distributor generation is a reality. Cemig has a relationship with its clients. It has the brand, has the reliability of Cemig's brand. And we believe this is a major competitive advantage because we have competitors that have the capital but do not have that relationship with the market. So we understand that we have this competitive advantage. And considering that this BRL 1 billion investment up to 2025, we understand that this is feasible and would generate this possible legendary results in the next few years. Moving forward, the next slide, we have our Gasmig investments. This is a concession up to 2053. In 2020, we ended with 61,000 clients. Most of them are residential customers. We believe there is a full market here to be tapped into. We consider the possibility of reaching 134,000 clients in 2025, and we understand this is fully feasible. Considering this market and the -- when we compare to Rio and São Paulo, they are more mature markets. This is a market to be tapped into in terms of Gasmig's concession in Minas Gerais. And so over 100,000 consumers. And in terms of gas amount, basically 50% more gas traded in 2025 when compared to 2020. Investments close to BRL 2 billion and at BRL 1 billion actually in terms of investments. And therefore, Gasmig, you would go from an EBITDA of BRL 432 million to an EBITDA of BRL 638 million to BRL 707 million in 2025. Now on the next slide. Our forecast for our consolidated results. And we are ending here our presentation. After that, we are going to open for questions and answers. Well, we have -- for 2025, we believe our EBITDA will be between BRL 7.28 billion. We understand this is feasible. The company is investing in operating efficiency. This is already being reflected in our results. We have relevant investments to make out of those BRL 22.5 billion investments. More BRL 15 billion are investments in regulated activities, which are distribution, transmission and also in gas, with another BRL 7 billion in greenfield and M&As opportunities that we understand are fully feasible if we consider the market opportunities. Here on the bottom part, we have Cemig GT, and we show how much of these new investments we generate in terms of additional of EBITDA up to 2025, BRL 274 million. If we consider the maximum potential -- full potential of these new investments, we would reach close to BRL 500 million. We are showing here up to 2025, not all the investments are mature yet. On the bottom part of this line, if we consider the sale of all investments that we mentioned up to -- with effect, I mean, up to 2022, Taesa, Aliança, Santo Antônio, Belo Monte, that would bring the EBITDA down in BRL 495 million. But we believe these are investments that, once sold, would generate BRL 9 billion in cash for the company that will help us implementing those BRL 22.5 billion investments in the company. And another technical issue here, we consider that we would sell 25% of Gasmig in an IPO process. But then in that scenario, we would remain as controlling shareholders, and therefore, that would not have an effect in this forecast EBITDA for the next few years. We understand that these are feasible results to be reached by the company. And I would like to conclude with something that Bernardo said in one of our meetings. I understand that we are able to translate that into our results in 2019, 2021, and that's what we expect for the future. And this is it, we want to be a company with a rationale -- a management rationale of a private company and efficient company. So now I will turn the floor to Vélez so that he can coordinate our Q&A session.

Thank you very much, Leonardo. Okay. I will stop sharing the presentation. And if needed, we'll pull up a slide back if a question arises. So now we are going to start our Q&A session. [Operator Instructions] Marcelo, feel free to ask your questions.

I have a few questions. I am trying to understand the guidance. This is a huge EBITDA growth in distribution. And I understand that is thanks to a high volume of investments. It is higher of our regulatory EBITDA already, and there is a reduction and improvement in efficiency by reducing losses and improving OpEx. But even then, it seems too much. So what are you considering, for instance, in terms of assumptions for regulatory work for 2023?

Marcelo, thank you very much for your questions. The results for Cemig D, well, we are very confident about these projections. In 2016 and '17, if we had the adjusted EBITDA for Cemig distribution, it would be close to BRL 1 million. And we have an EBITDA now that is 100% higher, thanks to our operating efficiency measures. We believe that we still have development of this process to go through. Now we have a gap of BRL 200 million in nontechnical losses that we need to bring down. We understand that by 2022, we would be able to reduce them. Another measure that we believe that's very important is related to delinquency, our delinquency and our adjusted AFDA was close to BRL 300 million. And we believe this is going to come down to BRL 200 million this year. We understand that we have other operating efficiency measures such as review our public lighting structure, also grid sharing. We are going to review all that infrastructure sharing and the public lighting. We believe that we have an opportunity to increase revenue there. And also with this cost reduction of the company and the tariff review, we will also have a greater OpEx -- regulatory OpEx coverage. And I'd rather not go into the details in terms of our expectation about this OpEx, this regulatory OpEx and regulatory coverage that we are estimating for the next tariff review. But we understand that considering the standards used now in regulation, we understand that our regulatory level is going to go up. And if today, if we have 100% of regulatory coverage up to 2021 up to 2023, and we will be able to operate with a lower OpEx, lower than the regulatory one because of the operating efficiency that we are working on in the company. And within this projection, we are not considering any upside regarding reviews in terms of our costs, in terms of post retirements. We understand that this is an upside. And considering the nature of those amounts, and -- but we believe that with all these measures, all these investments and our position in the regulatory cluster in terms of regulatory coverage, we believe that these results are feasible. And in the future, in our next calls, maybe when we have that more material closer to the review, the tariff review, we can go into the details in terms of the figures related to the regulatory coverage. But we understand that we are working hard, we are seeing results, and we will have that for the next years.

But my question is more mathematical and how you do this math? You have a lot of investments, right? Probably more than all the analysts consider in the model. But we also have this effect being integrated in the investments happening up to 2023 up to this date. In the future -- for the future CapEx, that's not going to affect your regulatory EBITDA. And when I analyze EBITDA growth, so all that improvement that you had, which was a huge improvement, it is stemming from efficiency, and it might have something related to health care plans or also pension funds, but you said that this is not considered anyway. I find it hard to get to this number. That's why I wanted more details. For instance, what is the assumption for regulatory OpEx work? I'm not even talking about OpEx. And maybe the other question regarding the guidance is when you give us the GT numbers, that's much higher than what we had. I would like to understand how are you tackling [ RSDE ]? I don't know if this has affected Cemig's flow. I want to better understand these assumptions because it seems to be kind of high for me. Because when you show the effect of new investments, we can exclude that to be able to put everything in the same bag, but it seems to be it's a little bit high. And you are assuming that there is no concession renewal. So EBITDA should be going down, and it's going up.

Yes, Marcelo. Well, about Cemig D, I will talk to Vélez. And maybe by our IR website in our next presentations, we can provide you more information so that you can feel comfortable about the figures. But once again, we are confident about these projections. And we didn't even consider with the postretirement upside. Now it's important to mention that maybe -- well, first, about the concession renewal. Because of the GSF agreement, the major concessions of Cemig GT were renewed for 2 more years. So in our projections, we are considering the renewal of these concessions. This is important. And also important was something that Dimas mentioned and I stated as well, which is what involves the energy purchase that we made a few years ago that was done at a very competitive price. And now these projects are becoming mature, and the synergy is going to be delivered to Cemig starting in 2022. We have a risk in the process, which was building these plants. They might -- could not be delivered, but the projects already mature. We do believe this energy is going to be delivered to this company. And as Dimas showed, you see that the price doesn't change much. But because of the purchase, we have an increase in the margin because -- thanks to the legislation, and that's huge. And the transmission company, we had a tariff review. We have an increase in the EBITDA because of a change in the accounting criteria. Now our transmission company, Cemig -- transmission in Cemig GT has revenues having close to the other transmission companies such as Taesa and [ Cetapi ]. As you build the asset, you already record the margin, but that's not significant in the projections. The fact that makes the results increase is related to the margin improvement of our commercialization company.

In going back to follow-up question, [ Reynaldo ] showed the chart showing divestment and everything that was done in shareholdings with return and those without a return. What drew my attention is that in that chart, it said that Aliança has a low return, but Aliança deal was a merger of assets with [ Vale ]. So why was the deal bad given that these were assets that you already had? Was it the trade relation was not favorable? Why was Aliança a bad deal? And what is your expectation regarding Aliança?

Marcelo, I think that this is more than [ divesting ]. It would have been better if it had stayed with Cemig. It would have generated more value here than there. Because over there, it's very underleveraged. And here, it would have allowed a lot more business than what we can do being at Aliança. That's why you can create value. The assets were here. And then we did the calculation. We calculated market value, not historical cost but market value. And of course, it did not generate value. Aliança is an underdeveloped company. It could generate a lot more. Our expectation is the same as with the other assets, it is to divest from that asset. These are assets that are in our divestment portfolio.

Marcio, would you like to add anything? But I remember that, that was the calculation we took into account.

Yes, this is exactly it, Reynaldo. Thank you.

Thank you, Marcelo, for the questions. Now we have Andre Sampaio with Santander.

Actually, I have just 1 question regarding your investment strategy. I think that the plan to increase investments in distribution to reinforce transmission is something that the market will react well to, but I think that the big concern here is regarding your strategy in generation. I would like to get a sense from you, how do you intend to protect yourselves so that in the future, we won't have the problems that we had in the old generation investments. I think that this is the main concern regarding everything you presented here. As I mentioned, the numbers seem to be very positive versus the numbers that the market was expecting, but we would like to have some color on that.

Okay. Andre, I think that once Cemig does things, we have good generation. If you look at our whole track record, a good priority of the generation assets in the country were built by Cemig or by Cemig people who are now working for other companies. You forget the amount of good professionals that Cemig had that now are in other generation companies, it's impressive. When we look at generation, we see private equity funds investing. And there's no reason why a private equity fund would make a better investment than Cemig. So our insight is we need to be updated. We need to be investing where the world is investing. Today, renewable sources, wind and solar. We have a big tradition in hydro but we haven't had a technical update yet, but we do have a technical team that is very seasoned. We recognize the market. We have all the financial conditions. We have assets that can be lot more productive. A lot of these things were mentioned by Paulo, things we have inside -- in-house. The Tres Marias reservoir, it's right here, it's ours. So we have things that have a lot of potential synergies. We'll have a plant right next to an existing plant. And another advantage that we have is the customer. So an advantage in trading. So sometimes I get surprised when people doubt Cemig's capability, but no one doubts the capability of a private every fund. We have a lot more technical expertise than a private equity fund. So if we are financially disciplined, if we have the right capital allocation, we clearly have everything to be successful. The difference is we are not going to do this anymore through minority shareholdings. That is the big difference. So we are talking about things that are effectively under Cemig's control. So it is real. In other projects, we were minority shareholders or we were part of a controlling block, but we were minority shareholders. Now that's not the case. It's Cemig engineering, Cemig trader, Cemig trading in always in those locations that offer a lot of synergies with our current assets. So I can tell you, I was talking to an investor and he said, "Look what I have built." And I said, "You have built that? Look at what Cemig has built." And I see that eye of the tiger in our team. And we have this possibility of being able to play now in wind and solar, and that is very exciting for us. And you can be sure we have another great advantage, we have a trading company who knows exactly how much it costs to buy a third-party project. So the [indiscernible] of our generation is that it has to do enough CapEx to be competitive to the trading company, or else, we could buy it from a third party. And this is an important discussion of the company and will only make it feasible if it's competitive to do it here versus buying it from a third party.

Reynaldo, I think your answer is perfect. I just want to add that Cemig's technical team is focused now on projects developed in-house, with synergies advantageous for the mature photovoltaic projects. There's one on the reservoir, another one on ground. So it's a big synergy. And just to mention, we mentioned it very quickly, it's very small. But a little while ago, we resumed the Poco Fundo project. It's a small project, but it is significant, for exactly the reason you mentioned. We're implementing it, and it's very promising. And we have the trading company. And I believe that this is the big difference, this partnership with the trading company in selling the energy. And as Dimas said, as a company, we are -- we want to have competitive energy at a competitive price for the competitive project. Financial discipline is the big differential. And the team is very motivated. And we want to have this track record of successful projects implemented by the company as we used to have [indiscernible] when we had very affected projects implemented. So that's exactly what he said right now. I just wanted to underscore it. I understand Andre's concern, and indeed, we have this issue when Cemig chose to grow in generation. The company chose to grow in conventional power to hydro plants and outage for a partnership with [ Vale ], created Alianca. But [ Vale ], not now, but at the time, [ Vale ] was focused on other priorities, mining and energy was left to second moment. That is a [indiscernible], which would be the arm for renewables. We saw what happened. We did not have control over the company and everybody. So what happened with Renova and missed a great opportunity all these years. And then we were prevented -- due to impairment issues, we were prevented from investing in generation. Now it's a big opportunity with the big opportunity to generate is what Leonardo said. We have technical competencies. We have the market, you saw the market between our availabilities and the market ahead of us. And we have to use our resources adequately. So I don't envision a lot of risks and revenue. I do understand your concern, considering our recent past between us. Let me underscore this, we are not going to be working in partnership anymore. Not like in the recent past. It's our own deal now under Cemig's control.

Perfect. I think it became a lot clear. Now I can see your focus. If I may, I want to ask a follow-up question on the same topic. A second question that popped up in my mind is that the market has a hesitated with long-term energy price. And since you purchased a large amount of contracted energy in the long term, I would like to understand your sales strategy. Are you matching it with long-term contracts or that is to continue to operate with short-duration contracts and to continue to be exposed to a price risk?

Now in our portfolio of the energy purchased, as you saw in the charts, by 2024, we have the energy practically all sold. It was to start in 2022, but there was a lot of anticipation. So these are mature projects. So we started delivering in 2021. So we have contracts in our portfolio and the whole energy is spectrally all sold for 2024, 2025. The challenge starts in 2025 forward. But we have around 30% of that already sold in 10, 12-year contracts. So our characteristics, if you look at CCE, our characteristic is long-term contracts. So of course, I have to manage our clients. I will not avoid serving 3 to 5-year contract clients. But we work with more long-term contracts as well. To give you an idea, we bought -- we purchased so much energy and I still need a little energy for 2022. It's not due to underperformance. It's because we sell, we hedge long term power. So the average contract duration is 5 to 6 years. While in other players, their contracts have a duration of 2 to 3 years. So indeed, what you mentioned is a point of focus for us. We monitor that because we have decreasing prices. And the big question is with wind and solar sources getting cheaper, who is going to mark the prices in the future? If the government signals prices for 2027, and they mentioned BRL 150 to BRL 180, so inevitably, we'll need to have a thermal base to keep that price. So thermal, even if the dollar is cheap, and the gas, 1 million BTU, we still have a higher price. So we tend to have a price balance. But this is some difficulties, but we'll need to have thermal plants as a foundation to be able to hold this variation. If you talk about hydrogen batteries, yes, okay, this will come. But it won't tell you what cost. So in the coming decade, I believe that thermal plants will be there regulating the power. And even with all price reductions, thermal still pushes prices up. So pricing management reduces the risk of energy becoming a lot cheaper. But yes, we did this kind of management. I wish I could buy [ 1,000 mig ], [ 2,000 mig ] and sell it for a period of 15 years or 10 years, depending on the power purchase agreement, PPA. But that's why we have Cemig's commercial department. And there are rules to manage that risk and to be constantly, renewing contracts, seeking new clients, and as of 2024, focusing on retailers. So is it a risky activity in every market? Not in the captive market. Of course, you build a plant, you sell it in the regulated market for 30 years, and you just keep it there. Now the free market is about risk management, either in our own generation or purchasing energy from a third-party in a brownfield, or buying a concession to get to the free market. There are no assurances. It's hard to have a contract that lasts more than 10 years. It's a multiple. Trading is a risky activity, yes, but we look for longer-term contracts. We are indeed a trading company that has end customers. And I would just like to highlight 2 things: the opening of the market that is going to be a major opening. The expectation is that there will be a lot more agents maturating to the free market. And secondly, we have opportunities ahead of us. We're still renovating from existing incentives. That tends to shrink over time, subsidies tend to reduce over time. If you think about subsidies reducing. And when we consider we have a lot of dispatching, there's a saying that the price tends to increase as much as we have technology progress. When we look at the attributes and the concept of out of the merit order, it means that pricing is not doing its job. With the order of merger, the price should be higher. So yes, we have risk management, risk assessment, which is very consistent. I have a lot of metrics, and we are always trying to stretch this and have longer-term contracts. When also with the understanding that this market is going to grow a lot because there will be liberalization of the market and there will be a change in the attributes of sources in the pricing logic, which is expected when we look at the future. And all of this will be positive if you know how the market works.

Thank you, Andre, for the question. [Operator Instructions] Now we turn the floor to Henrique Peretti with JPMorgan. Go ahead, Henrique.

I have 2 questions. One is about divestment. In the guidance slide, we see practically BRL 500 million in 2025. And I would like to know which assets are you considering for divestment? And the goal of my question is, with the exception of Taesa, whose sale was announced recently, some other assets, such as Belo Monte and others, have been for sale for many years. And so I'd like to know if negotiations have progressed in the process to sell these assets. And also in the case of Gasmig, any progress? And then I'll have my second question afterwards.

Henrique. All right. We grow these BRL 9 billion because this is very strategic. If we look at 60 slides, and we have a little mention of BRL 9 billion, but of course, we're not going to break down the assets here. And you think about M&As, we don't know exactly when each one of the deals will come through. But the idea is to divest off all assets which are not core for the company. Include [indiscernible]? That's gone. Taesa, Alianca, Belo Monte, Santo Antonio, Renova, Axxiom, Ativas, I don't know, whatever, I forgot one, and Gasmig, it's what we mentioned. We're waiting for legislative or authorization to sell up to 49% working interest. We have a good price for the asset, but perhaps we would have an IPO. And people are smaller shareholding. It's what Leo mentioned. And all of these modelings are still being contracted. In the case of Gasmig, we are still looking for a financial adviser, but we would have an IPO of 25%. It's when we are pricing it, and showing the hidden value of Cemig because we have Gasmig. There's a huge hidden value. Gasmig has a gigantic value, which I believe is not adequately priced by the market. For the others, well, I like to joke about this. And we say, this is about untying knots. These sales are difficult. But there's a difference, we are progressing on it. We sold Light. We announced the goal to sell Taesa. And there are others that have knot to be untied, but what I can tell you is that we have been able to untie many knots. Instead of creating more knots in the past, we created more knots. And we frustrated some divestments, but now this is work that has been done by Marcio. He's untying knots. And I'm optimistic. I believe we have high possibilities of success. Let me give you the example of a knot we untied, the approval of a recovery of Renova. So with that, the judicial recovery, also legal protection. Without that, we would not be able to sell. So these processes have to mature. And all of them, and this is a positive, all of these companies have a positive value. All of these companies have prospects. So there makes a difference. Of course, we have to find the right price. We have to come a fair price. But we work with this guidance of untying knots. And these are all assets with a positive value, positive price. Not the value in terms of what we have invested because on average, these were investments that destroyed value. Thank you.

Second question regarding energy price. We feel the market is very concerned about long term prices, particularly with liberalization, increase of the free market. We see renewables, wind, solar, levelized energy cost of renewables. So my question is, in your opinion, what is the outlook for long-term prices in the fuel market as of 2023, 2025 for conventional power and incentivized? What is your view about subsidies? Do you see a downward pressure? Do you see stable growth? So I'd like to get a sense of what you're thinking in terms of pricing?

Of course, the government gave us an outlook for the next 5 to 6 years, and we see a decrease in prices. But the main question in our mind is when thermal plays to foreign prices. What we have is a trend, we see prices incentivized to energy prices of around BRL 145, BRL 140 in the long-term. In conventional, BRL 120, BRL 110 in the long term. But we have this price reduction, looking at these sources available, increasing the generation from wind and solar sources. But the government signals the cost of operation. In 2026, we start seeing an increase because of thermal plants. Have 2 factors: the price of the gas, and dollar exchange rate. People talking about $5 per million BTU dollar rate at BRL 4 or BRL 5. So there's some fluctuation there. Still, the price will be between BRL 150 and BRL 180. Now we have to take into account what we see today, prices of around BRL 130 for the long term. Of course, you have a 3-year contract on the price. We will consider 2022, 2023, the price will be higher. So you see pricing considers the [indiscernible]. Now the market will change. We'll have more retailers. And we'll have a segment of energy in which those who have energy, this will end in 2022. Incentivized energy will -- with a discount will be benefited to serve this upcoming market because if they have below 500 [indiscernible], their load factors is very low and their cost of transportation is very high. And the transportation cost is reflected in the price that the client can pay. So what we see is this kind of price, around BRL 130 to BRL 150, depending on the energy source. So the question is, we have a market that proves that. To answer Andre's prior question, we have to have the competence to produce energy at a low price. The investment funds also have the prices of around INR 140, BRL 130. If you say, oh yes, but there are different prices. But in reality, these prices that they have for a small amount to ensure collection of around BRL 110. But their [indiscernible] curve is the reference and this is the price that we're seeing. Now if you ask, what about 2 years from now? When have hydrogen batteries accumulators at a competitive price. Well then, so I guess, I then have the chance to be playing a leading role in the next 10 years to generate power at a price. If they generate price at BRL 80, we have competence to generate power at BRL 80. If they generate it at BRL 130, we'll do it, too. So in our strategic planning, we've been discussing this because if we get price projections by the government, and with Eletrobras privatization and the price signaling for 2 quarterly, the government's signal to the press for 3 years of BRL 167 and then BRL 155. So the government, they use -- if they signal a price, which is totally out of the market, no one will buy it.

If I can produce wind or solar in the BRL 110, BRL 120, BRL 130, why are they going to charge BRL 150 with the GSF risk and other risks?

So you asked a $1 million question. We have a price projection, a price forecasting. But '27, '28 will depend on the need for thermal plants. I don't know whether I was able to explain to answer your question, but you see, we don't have a final answer. We have contracts [indiscernible] that all of our old contracts are long-term contracts, even if there is a price fluctuation. It was a risk mitigation because the client set a contract with a price. One positive thing about the pandemic has been legal assurance of contracts during the pandemic with a force majeure provisions. I mean, they were not implemented. It was very positive. In a moment of a pandemic, there was some questioning by some clients regarding those force majeure clauses, they were not obliged to serve the contract, to honor the contract, but legal assurance was there. Of course, this is a very complex question, and this is how we mitigate the risks by transferring a good part of the risks together with the trading process when we enable the project. I have been following the projects we have enabled. We work with the client -- for the client. There are some advantages. Sometimes they are not even markets in -- or clients in the fuel market. And the remaining, the surplus energy, we have to commercialize it. And the breakeven happens at a very, very competitive price. So more than that, Henrique. We do not forget. Well, you're not with the company, so you don't know it. We cannot forget. One thing is the big technology trends. Another thing is the process of change on a day-to-day. These processes are much more slow. So it's a topic that has to be regulated. The attributes of the sources. We have to pay for availability, for power. So all of these things. The experts, the people who are in the market who know enjoy the advantage. Of course, we have to consider the risks. You have to coexist with risks, you have to mitigate the risks. And if you're part of the market, if you know the work, you're perfectly equipped to enjoy the opportunities and to create opportunities. So we have a lot happening in storage, in hybrid plants. But we are a winning player, and we have to be investing in power storage and hybrid plants. Why will they do it? Because I'm afraid it will fall? Of course not. I have to be in that business. And I will be taking steps forward whilst trying to mitigate risks.

Okay. Perfect. Thank you very much, Dimas and Reynaldo. Thank you very much, Henrique, for your question. Now I would like to turn the floor to Marcelo Sá once again from Itaú.

I have a comment first, Governor Zema talked about the idea of selling the controlling of the company of becoming a -- Cemig becoming a corporation and that the state would have a minority control. But we know that this depends on the shareholders' meeting approval. And now when you talk about your strategy for Gasmig, where you want to keep the controlling shareholder, we would like to understand why you want to do this IPO of Gasmig. So how do you see these 2 different topics? And also about solar generation. There was a client event that talked about a solar park, and where distributing companies will have a share of the centralized solar park, and you would have the benefits of self production. Are you considering a similar model for Cemig?

Well, Marcelo, about the second question, yes, that's easier. Yes, this is one of the possibilities, okay? So this is the easier question to answer. Clearly, that is part of our possibilities. And also seizing opportunities, regulatory opportunities that are out there, subsidies that are just out there and our gaps in the legislation or tax gaps, and this is part of the process that I mentioned in to mitigate the risk so that we can move on with these investments. Now the -- another -- the other question. This is going to be very clear, that scenario focus and when, if you go to the presentation, where we have those items 1, 2, 3 and 4, this focus on the wind scenario, this is a scenario for Cemig as a mixed economy society. So that only considers the current rule, which is up to the selling of 49% of Gasmig capitals. Another scenario, it's another possibility, of course, and we do not have the legal authorization for that, so we can't talk much about it anyway. But the other one is the integration scenario, and that depends on the approval in the state assembly, the state administration assembly. And if there is a legislative approval, we leave the scenario that we are bringing to you. Now focus and when, and we will go, then we'll turn to a cooperation scenario. But it's not that we are letting one go. No, this is the right moment to have that type of debate. And we are convinced that the corporation scenario is generating or will generate more value for the company. It will add value to shareholders, and we will add value to the state of Minas Gerais, and I -- mainly the population and the Minas Gerais administration in terms of its equity as well. So I think this is very positive for the people of Minas Gerais because they will have more ability to invest, and that's also positive for the public equity because their shares will be appreciated.

Thank you, Marcelo. So now I will turn the floor to Lily Yang. She is with us now. Lily, can you open your microphone? I see you now.

The indebtedness level of Cemig is very low. The cash generation is strong. So the divestment strategy is just to optimize your portfolio and to maximize capital return. But what is the timing for all that? Is this a plan for up to 2025 and how much forward are you? What is your urgency sense in order to be able to deliver something up to the end of next year because that's when we are going to have elections in Brazil and in the state of Minas Gerais as well? Then another question. And now it's more about ESG. But considering the target of investors to have funds on companies that focus on decarbonization, how can affect this trend when I analyze your business plan? Today, you have 100% of generation in renewable. You mentioned gas and your energy matrix. And you also mentioned potential projects for generation using gas as well. So what type of return you, Cemig, would demand for this type of gas projects vis-à-vis a project of solar energy, for instance? And also, your defined target of TSR for 20% of a project here and there. So if you can talk a little bit more about these figures and what kind of returns you want for one project or another. And if you can give us a color in terms of return, in terms of generation and transmission and distribution?

Thank you, Lily. It's nice to see you. Well, yes, today, we have a leverage level that is low. But when we run our projections, although we have the divestment aspect, considering we have a lot of investments, we will be at a satisfactory leverage level. It's not that we are deleveraging, but the projections show a net debt over EBITDA ratio that is healthy. This is not a sub leveraged company. And I should say that we have a rule that you obviously know in terms of dividend distribution, which is 40% of our net income. But part of this net income sometimes are not cash. So sometimes, when we have a capital divestment, 50% of that is profit as net income, and it's distributed when we have GSF registration, and we have capital gain. All of that also becomes dividend distribution. So when we talk about the distribution of our corporate net income is out of our corporate net income. That is our practice. And that involves sometimes a percentage on cash generation that is different, okay? Because now you know that with the new methodology calculation, we have a new one for transmission that has to do with gain in the construction, and this is noncash, and this ends up affecting distribution results and therefore -- and dividends distribution. Our scenario is a very healthy leverage and we don't strive only until 2025. We presented our plans for 2025, but these forecasts have been produced until 2030. And the ESG area is very important. The Sustainability Index of New York and its origin, of course, we want to preserve that. This is a strong topic. We are very much focused on the environment. This is a constant and permanent topic for us. And of course, we have invested a lot in corporate, social responsibility and governance, and also decarbonization. In our internal models, I was considering profitability with regulatory work, of course. But in our hurdle rate, with the best ways to use regulatory works, this is the easiest way for us to think. Of course, we always [indiscernible] feasibility of the investment. When you produce a business plan, it has to be ensuring regulatory work. As for gas, that would be for the regulated market. As Paulo mentioned, the bulk of our investment is going to the free market. And it will definitely not be in gas. And then we have to make a decision if we think that there is a sustainability commitment. There was a point, I remember we [indiscernible] consortium, and we left that, we left it. We have just exited. So it's a new day, evidence of how important this is in our day to day. Of course, when we have the auction in the regulated market and we make the distribution, well, in the [indiscernible], we decided to exit. Yes, and recently we have the thermal plant. This is a potential project. And as we mentioned, our priorities in photovoltaic and wind projects. In the technical opportunity, we are doing a technical assessment. We are paying attention to these opportunities, this specific project for [ Piramal ] and for them to operate a system as largest in the Brazilian with renewables, you have to have a foundation of base energy. And so it's normally hydro or thermal. And for hydroelectric, it's very hard to expand and to have reservoirs today. I mean, even in the government plants, this is more difficult. So that's a thermal plant, can be a solution who will allow for operations. It's a very complex technical point that has been very much discussed by operations department. But we're looking into this. But you saw those first projects, they are more in wind and photovoltaic sources. But of course, a thermal might be a need and it might be an opportunity. They might be also required technically to sustain adequate operation of the system.

So going back to my first question, out of all the assets on the threshold of the ideal returns that can be divested, can we expect transactions happening up to 2022? Or do you think the timing is further on can we expect anything now in the beginning? You don't need to go over the asset, but just the delivery in the short term.

Yes, yes, you can expect that. We expect to be successful in more than one of those assets.

Thank you, Lily, for your questions. Well, we are already over our schedule. We have over 3 hours of event. We have 300 people connected. That shows the interest on our event and on Cemig. And so this time, we may have lunch here. So Mr. Reynaldo, our CEO, please, I'll turn the floor to you for your final remarks.

Well, I just would like to thank you all very much for your participation. And I should say that for us, the Cemig Day is an event that brings together all the efforts we are making to provide guidelines and strategy to our company. So this is a result of a huge work that we developed putting together strategic planning. This was very much discussed. We see every one already fully believing in these objectives, we also discussed the figures a lot. So this is a moment where we have our strategic planning. We have the product rationale, we have the culture change, and we count on your support. We are being as transparent as possible. We are disclosing all our figures. And this is a way of telling you, this is the way to go. This is the path that we are following. And you can come back and check on us. So I hope we are all united. We are together in order to meet our objectives. And we do count on your support, and we are very happy to be able to come talk to you on the Cemig today. Thank you very much. Take care. I hope you and your families are doing well. We wish you all a lot of health. And whenever possible, stay at home. Thank you very much. Thank you all.

Thank you all, and have a nice afternoon. [Statements in English on this transcript were spoken by an interpreter present on the live call.]