Grupo Energía Bogotá S.A. E.S.P. (GEB) Earnings Call Transcript & Summary

Good morning, and welcome to our third quarter results conference call. I am Karen Guzman from the IR and Financing team at Grupo Energía Bogotá. This conference is being recorded. The information you will see today is uploaded in the Investor section at GEB's web page. In the right corner of your screens, you can ask questions at any time in the Q&A section or raise your hand, and we will allow your questions live into order. When doing so, please state your full name and the name of the company your represents so we can easily identify. Now let's welcome Juan Ricardo Ortega, our CEO, who will lead the call today. Good morning, Juan Ricardo.

Good morning, Karen, and good morning, everybody. It's a pleasure for us to be able to present GEB's third quarter results. I can go over a brief presentation, and then we're going to have a Q&A session where you can ask any of your questions. So Karen, if we could begin. We're going to have a very simple presentation; we're going to go through the milestones that we have accomplished this third quarter. Some of the operational and financial performance, facts, and then we'll go into Q&A. So let's start that. Well, I'm Juan Ricardo Ortega, so I'm the CEO of the company, usually it's Jorge, the one making the presentation but for personal reasons, he could not be here today. So I would make my best effort to be able to replace him. We're going to be giving a snapshot and we're continuing with positive results. The success of the company, we believe, is very -- that has allowed us to continue reducing costs. At the same time, we continue to grow the businesses. And you can see the EBITDA shows an increase quarter-to-quarter of close to COP 90 billion, that is about 10%, so we're COP 906 billion for the quarter. If you look at the geography, most of that EBITDA is coming from Colombia, mostly from the operational activity of TGI and Enlaza, and that allows us to continue to show positive results regarding the return on equity of 16%. And if you look at the dividend that we are paying this year, both the regular dividend or the extraordinary one, you would get a 12.5% yield. The results of the company, even though we faced a significant revaluation that impacted our income in dollars, we are still investment grade, AAA / BBB, Baa2 and we just had some new certification by Fitch Ratings. So the company continues to be in very good health with a return on assets of 10% and a coverage net debt EBITDA of 3.1x, and the interest rate coverage is 6.8x with a small reduction from the 7.1x that we were showing in the roadshow. Most of the income is indexed to the IPP, the production price index, and those have slowed down, fortunately, with a reduction of inflation in most countries to a 3.7% year-on-year and 3.6% year-on-year in Colombia. So this just gives you a brief snapshot on the results, which fortunately continue to see positive performance on all the companies that belong to the group. But if we could go into the details, Karen, we're going to go through the income and expenses. But first, we're going to go through some of the milestones. As I just said, Fitch Ratings reaffirm the long-term international credit rating at BBB, the local credit rating AAA, both with a stable outlook. The acquisition of Transnova allows us to strengthen Conecta Guatemala. This is a transmission infrastructure in the North of Guatemala that used to belong to Angel, and we're going to have significant synergies because all the maintenance is in the middle of the line that we built in all that part. So we expect that to strengthen the income of Conecta and allows us to continue investing in the transmission system. There is the end that is of a significant event that we're going to begin to see this month of November. There was the resolution last year of the Tariff pact where there was a reduction because of the significant increase of electricity prices due to the indexation to the IPP that grew at some point at 18%. Last year, there was an agreement to just increase the indexed income to the lowest between inflation and the IPP, and that is ending at the end of -- actually at the end of September. So at the middle of October, we were already beginning to issue tariffs based on the traditional formula. There is a significant concern in the Colombian domestic electricity market because of lack of liquidity on behalf of the distribution regularization sector. The Ministerio de Minas issued resolution 40611, which is a measure that guarantees the sale of electricity, even though there might be cash flow issues at the level of distributors and commercializers. That is significant and continues to be a source of concern. There is a package of loans subsidized at intent that would begin to bring some cash into that segment, but that is going to be something to watch for in the coming future. There is one good news. ISA and Grupo Energía Bogotá, we jointly participated in one of the power transmission in Peru, and we won. And it's going to be a significant project. The largest tender in the last decade probably, and it's going to be CapEx over $800 million. We're going to go 50-50 with ISA continuing the growth of [indiscernible]. Now we approved the sustainability financing framework that is part of our commitment in ESG. And based on that and all the work we've been doing in that regard, we just issued the first Colombian corporate sustainable bond of $400 million. That is going to help us on the payment of the syndicated loan for $390 million that was due next year that totally changes our debt profile and mix the coming years, very manageable. And there is another good news on that regard that the loan buyback in Guatemala, that is about $170 million, we're going to see that a little bit further down in the presentation. We manage all the approval processes at the Ministry of Finance, so that is going to be long-term financing as well. So those 2 payments from early next year and this year from the back have already been financed. Calidda continues performing extremely well. It won a significant portion of the budget assigned by the Governor of Peru that is called Con Punche Peru. Those are 349 kilometers of additional network with an investment of $36 million, and it continues with a very positive growth in the conversion of vehicles to natural gas. That is 30,000 vehicles and over 130 heavy trucks that have been converted. That trend is very significant and is showing a very positive growth in gas consumption with very positive impact on the quality of air in the city of Lima plus about 50% of the emissions reduced by the substituting diesel by gas. Enlaza completed the 220-kilowatt Rio Cordoba-Bonda line, and it also was certified carbon-neutral and it was awarded a substation that is going to be about $17 million in CapEx. It's a 230 kV in Huila, and we're ready way into the construction of Colectora, over 50 towers have already been built. So that project is progressing significantly and that is one of the sources of income that is helping us to keep the performance of the group. On behalf of TGI, there is going to be quite a much longer explanation going down. So it's just a positive outlook at the moment is the one thing to point out to. And with regards to Contugas, which is a more challenging company in Peru, it won the Quantum Award in the excellence in efficiency. The reductions of expenses in Contugas has allowed us to continue to strengthen the company, and there is a very positive news regarding the agreement between Pluspetrol and NIX from Chile that are going to be building quite significant size plant of petrochemicals in Marcona. That is going to be a very positive outcome for Contugas in the coming future. Next. So here, looking at the financial performance, we're going to begin just by operating income, you see an increase of about 13% and mostly comes from an increase of revenues. It's all operational because dividends were already distributed at the beginning of the year. And if you look at the results, what you see is too good new ones on behalf of Enlaza. And Enlaza, is increasing its income, mostly because of Colectora that became being remunerated at the end of last year. So on the quarter-to-quarter, that is a positive result. And on behalf of TGI, the El Nino required a significant increase of the usage of the transportation system because of the thermoelectric. At the same time, there were some aspects of the specification of TGI that increase is positive results. So if you look at the year-to-year, you're going to see on the administrative expenses, some significant increases in electricity transmission and that is because of the higher uses of the electricity system that is 9% from mostly Enlaza, and it's because there is a tax that is paid to the system by the number of kilowatts that are transmitted. You see an increase in gas transportation of 30%, and that's because of the efforts in the reduction of expenses in TGI, where we're conscious of the challenges the company is facing, and there is a very aggressive efficiencies program that is generating positive results, and we are continuing committed in that aspect. In electricity distribution as well, there is a reduction of administrative expenses. And the one that is growing is the holding because we are implementing a whole service hub at the level of hemp that is managing both personnel, procurement, IT, and the management of inventories. That has put some pressure on EV, but we are beginning to show very positive results by being able to manage procurement as a group from all the companies as a whole, and we hope to begin to show the savings that this is generating. On the operational side, gas transport and gas distribution are the ones that have some significant numbers. Gas distribution, the reason that it decreases is the same reason why the income decreases in Calidda, and it's mostly because these are operating income companies in dollar terms, and you see a reduction of about COP 300 on the average dollar price from last year's third quarter to this year's third quarter from COP 4,300 to about COP 4,000, and that is what is impacting the results for Calidda. But if you look at the details that are on the spreadsheet, you see that Calidda is performing extremely well with an increased about $40 million in income and it's very, very likely to reach over the $100 million in net income towards the end of the year. Next. So here we look at the evolution of the EBITDA. And we see that the greatest impact comes from gas transport, that is TGI, both on the income side because of the significant increase in the usage because of El Nino, and the reduction of expenses because of the aggressive cost-cutting plans. And the electricity transmission is not large, but you have 2 projects that came into line or at least recognized by the system to begin to receive income that is Colectora and San Juan. And electricity distribution pretty much remains the same. The only impact that is negative in gas distribution is because Contugas, if you compare last year's third quarter to this year, that was the income of one of the Peruvian government companies that we had a legal suit against them, and we lost it. And that income is not being accounted for anymore. -- gas. So that is the reason of that reduction, but it still shows a positive increase in the EBITDA of about COP 80 billion. And you can see that is all from the controlled companies and all the positive news come mostly from TGI and GEB transmission in Enlaza. And if you look at the adjusted EBITDA, it's pretty much the same quarter-to-quarter. And you see that the big increase is for electricity transmission. So if we go to the next slide, going to Q&A. If we want to look at the financial performance, we still -- although there is a very significant increase in financial expenses, and that comes because of the indebtedness that we called last year in the syndicate loan to buy Quantum in Brazil. The increase in the interest rates and the change from the software that's an impact of COP 359 billion, but that is compensated by the equity method. That is a very positive performance from Enel that helps out with COP 411 billion. And you begin to see Argo, we're going to have on a couple of years from 2025 to begin to see Argo distributing over $100 million in dividends and those are the purchases of all the lines that we've been buying in Brazil. That is the strategy with Energia. So when you look at the evolution from the operating income that is most operational of COP 670 billion, you look at the financial revenue that comes partly because of all the coverage of the data TGI that had some positive accounting numbers. You have the reduction on the financial expenses, and then you have the equity method, well, Enel and Argo and obviously, the companies from ISA allows us to reach a growth in net income of over 1% year quarter-to-quarter to reach COP 764 billion. If we go to the next slide. That this is just the gross debt indicators. As you can see, the composition of the debt has changed. We were managing the 55 fixed interest rate, but we just are going to be paying the syndicate loan that was covered. And what I'm going to go to is just a 38% fixed debt to the total in the miss of $4.4 billion. And if you look at the composition, most of the is operating software 36%. There is still a tiny Libor percentage that we have to fix and some domestic bonds that are indexed to the CPI that one other the sources of an increased cost of debt, Colombia continues to have a large inflation of over 10%, and that has had a significant impact. If you look at the debt by currencies, it continues to be a mix of pesos and dollars because of the specification of TGI, that is the most significant change. There is a 2028 COP 350 billion bond by TGI. We already bought back close to COP 200 billion and the rest was hedged. And that is the reason that you see a significant change in the debt that is denominated in dollars and the debt is denominated in pesos. So you can see how you have a COP of 18%, and COP hedge of 4%, and a U.S. hedge of 4%. We continue to have a healthy cash balance of $342 million, and that is the policy of the company. And if you look at the proactive management of our debt, we were focused on the refinancing of 2024. We already have the money for the syndicate, and we still have the Contugas syndicate towards the end of the year, and that is the one debt that we have to manage going forward. The $189 million that is the back loan that -- because we -- there were quite significant delays in the approvals at the Minister of Finance. We had a short debt financing, but it was just a bridge. So that bridge has already been sold, and we are signing the long-term loan with back for Guatemala. So you can look at the profile, it is pretty flat and it's on '26 and '27 that we are going to have to begin managing in a couple of years. Other than that, if we can go to the next slide, the results on equity and assets, they continue to grow and is mostly because of the effort in reducing costs and continue to grow the business in a way. And if you look at the CapEx commitments, we haven't incorporated the project with ISA. That's going to be $800 million, but it's going to be a couple of years, and that is mostly going to be financed from within the companies in Peru. That the requirements from our side is at the beginning is just fairly a couple of millions of dollars. The biggest CapEx is going to be coming from transmission and it's Enlaza and that is the construction of Colectora and the 2 lines that access Bogota Sogamoso [indiscernible], and the one of the west of Colombia that is called Suroccidente that connects La Virginia to Cali. And that's what we are going to see on '23, '24 and '25, when we are planning to finish all those transmission lines that are absolutely strategic for Colombia. On behalf of Calidda, you see the $110 million that was part of the tariff schedule that was agreed with the government for the new tariff cycle, but that is ending this year. We presented a letter to Peru to consider the extension of the concession, if that were to be approved, there would be $330 million CapEx in the future to provide gas and credit gas network in the states of Cuzco, Junin, and a couple of others in the Highlands in Peru. And TRECSA is finishing the construction of the transmission line in Guatemala with some significant investment this year and next year. There is a TGI CapEx that could come with an agreement with Shell for the infrastructure needed to bring to market the gas of the deepwater well that was found with Ecopetrol, but that is going to take a while. So other than that, that is the TGI $112 million, $120 million for '26 and '27. But that might take a while because of licensing and all the challenges of the development of such a large gas well that requires a lot of investment on behalf of Shell and Ecopetrol. Other than that, that is a CapEx -- that is planned. And at some point, the [indiscernible] Peru Red Transmantaro, $800 million project is going to require those $400 million, that is, as I said, is going to be funded from within those companies. So Karen, I think that we went through the presentation. And for the Q&A, we are more than happy to answer any of your questions.

Yes. So we haven't received any questions on the chat. Or if you like, you can of course raise your hand. We have a question from [ Rahul ].

I have 3 broad questions. I'd probably go one by one, if you don't mind. The first is on the electric sector, and you touched upon this and the start about the Tariff pact and the these comps that are seeing some cash flow issues. Can you help me understand for the next 6 months or the 1 year, and I think you're going to feel the impact mainly from Enel Colombia, but what is the impact that you're seeing already on the distribution business, on the generation business? Is the [ NL ] generation not being paid on time by the distribution business, the distribution business, not getting money on time from the consumers? I assume there's no impact on the transmission business, but if you could confirm that. So just to help understand where are the stress point in the electric system.

Yes. Let me answer that. That is the most challenging question at the moment. There is still quite a bit of uncertainty, Rahul. I don't want to give you a sense that I know exactly what might happen but I will give you some details. The companies that are most challenged are the ones that are owned by the government. Those are the small titers like [indiscernible], which are small states, but they are all government-controlled. If the government were not to fulfill its obligations. The people administering those companies would be facing significant challenges with the control entities and most likely, they would be punished. So it's on the government's hands to capitalize those companies. I don't think they have much room for manner and otherwise. What would happen if they don't do that, they would be taken over by the supervisor, which is the government himself, and then the supervisor will have to run the companies. What kind of consequences that could have? That the supervisor could decide to a kind of like a bankruptcy of the companies and their debts to the systems would be on pay. Also, the companies that have sold energy to those companies would be in trouble, particularly the ones that have contracts. Given that those companies are known not to be well managed, they have no contracts for the medium to long term. So on that regard, Enel has no risk. The ones that would be facing risk would be the one that sold -- but that is a pretty short term. It would be a couple of days, but mostly a week, that would be at risk by the companies that would sell them in the spot market. That's one of the big financial pressures those companies are facing, that they are totally exposed to the spot. Spot at the moment has been pretty low. It reduced its price significantly because there's been quite a bit of rain as of late. But things will be challenging coming April when we believe the Nino is going to be at its highest. Therefore, is when the spot price is going to be around 1,200 on a continued basis. The government offered a COP 1 billion cash line to these companies that might not be enough, but they were committed to increase that. That hasn't happened. But as I said, if things go wrong, it's going to be the government ended paying up for the expenses and the operating of these companies if they fall on its lab. Regarding the private companies in the Caribbean coast, there are 2 companies. Afinia owned by EPM, EPM cannot allow itself to default because they have a cross-default clause. So EPM will have to bear all the costs that Afinia might bring. So in that regard, there is no risk whatsoever. The biggest challenge is Air-e. Air-e is a distribution company that controls Guajira, Cesar, Magdalena, Atlantico; is owned by the Rios family, extremely politically connected, quite powerful. They are like 15% of the market. If they run into trouble, they would lose all the equity invested in that company, and it would be taken over by the government. The last time the government did that they suffer significant losses themselves. So I don't see the government that willing, both politically because of the power of the Rios family and financially because of the expenses that it would bring for. So my guess is -- I began the presentation mentioned in the Minister of Mines a resolution that the company will continue getting electricity even though they could be suffering some challenges paying back. That guide gives you a signal that they don't want either to run into trouble and force the government to take control. The companies that are exposed to Air-e, it would be an Enel and ISA and [indiscernible] mostly. I know they have continuous negotiations and they've been paid, but that is -- that I mentioned of the challenge. They have the income, but the issue is that most of that income is part of what was called the tariff option during the COVID, where some of the consumer payment were postponed and that in the system as a whole, now adds close to COP 6 billion, and Air-e has a significant share over COP 1 billion of that. And if the government finds a way to discount that and to use that as a collateral, and that's what they are trying to do -- think that they could lend the money based on those options that have not been collected and that would provide the cash to Air-e. My belief is that they are going to some accommodation to provide the liquidity to Air-e. It's extremely risky for the government for Air-e to go Bankrupt, particularly on the political side because of how influential the controllers are. I don't know if that gives you an enough accurate picture.

That very good and very comprehensive, help me understand. But just one small follow-up on this one. So if one CREG is not really functioning anymore from what I read. So is that -- does that -- how does that impact the situation? And do -- now that the tariff option has expired, does it stop the problem from getting bigger?

That is something that we have to see is up to the companies to increase tariffs and there is 2 counterbalancing forces. You now have the possibility of increasing the tariff. But on the other hand, that could create a backlash on behalf of the government. To come up with the number that the increase is reasonable. It begins to reduce exposure, but it's not too large that it creates an aggressive reaction on behalf of the public. So these are challenging times. I don't know how the companies are going to play that out. Honestly, I have no idea. In Enel, I'm of the position that we have to be cautious that we have to look at how people's incomes are behaving and employment is behaving and try to have an increase that doesn't increase inflation as a whole. But it's a difficult equilibrium to find, and that's what we are thinking of at the moment but I don't know how other companies are going to manage it. Last year, Afinia from EPM, they went full into the tariffs, probably because of the political close relationship between Mayor Quintero and Petro, the government didn't say anything. But now the politics have changed quite significantly. So it's hard to tell that is going to evolve.

Understood, and CREG?

The CREG is that going to be sold. The minister announced that the series of the few at members who are going to be published today, I'm looking forward to see that, but that is supposed to be sold by next Tuesday. And so we're expecting to have CREG operational again next week.

Okay. Understood. Perfect. So the second broad question I have was on the gas system. And there, from the central Columbia at least the gas fields there, production has been an issue. We had Canacol earlier this year that had some gas issues. How is -- have they canceled a pipeline or a gas contract that they had with the EPM as well? How do you think that impacts DTI and the whole gas system in Colombia? Are you seeing any payment problems from any of your gas companies? Or do you have to rely on offshore gas in the future?

In the short term, the Canacol decision to cancel the EPM contract has been positive to us because that has gotten EPM to sign the contract with TGI for the transport of that gas. The only way for managing to get gas is going to be through our infrastructure that goes to Sebastopol. So in that regard, that has been one of the positive news for TGI. We believe that Canacol hasn't made the information public that the reduction of Canacol reserves is significant and that definitely is a challenge for Colombia, and we don't see the [indiscernible] projects from Ecopetrol coming to markets on the '26 and '27 as they've been portrayed because just the public consultation with indigenous communities in our case, took 5 years if they are blocking, we estimate 3 years. So we see the beginning of the licensing process on the '27 in the best of all scenarios. So those projects are not going to be coming to market anytime sooner than '29, '28 in the best. So that definitely creates a challenge for the supply of gas in Colombia, particularly on the '26 and '27. There is the possibility to increase the regasification and then we will be depending on the international market. From the point of view of TGI, that would be much more significant usage of Barranca [ Agenus ], which is one of the main pipes owned by TGI but that would be an increase of gas price and how that price increases would be a challenge to continue to keep the demand for gas growing, particularly as a substitute for vehicles and industry. So that is going to be a typically room on how much the price can be increased to a formal and dependence in the basket from a significant portion being imported and they need to be able to offer the energy at a competitive price, so it is not substituted. There is a possibility earlier than [indiscernible] that they reached an agreement with Venezuela. If you know, Cardon 4 owned by Vessels and any, I believe, no, and the American one, Chevron, they have Forterra's reserves. They are producing 500 million cubic feet, and they could 1,000. So definitely, there is a source at a much more reasonable price that could be brought into market, but that would require to have a close inspection of how the Antonio recountify that connects Colombia to Venezuela; and how bad shape it is that the last export of Colombian gas to Venezuela was in 2015, and that pipe hasn't been used since. And it goes on the water in the Maracaibo Lake so it's very likely that a significant portion will need to be replaced. That would be like a 100-kilometer project in the worst-case scenario. So it would -- the question is how quickly could that be done and who is willing to have the CapEx and invest in Venezuela on their quaint conditions to bring that gas to market. At the moment, Cardon has an agreement with the government Venezuela that can only sell the gas to [ PDVSA ]. But that is going to be the biggest question mark. There is political interest on both governments to work something out. I know there is a delegation coming to Colombia early December. We will know more then.

Understood. And then third question was probably a more broader question from GEB's perspective, like there was diversification into Brazil. And I guess, from your own perspective, your gas distribution, transmission, electricity distribution, electricity transmission. Is there a portfolio mix that you're going to be comfortable with? Do you want to increase exposure abroad? Do you want to -- is there an ideal like 25-25-25 split between gas distribution transmission? Is that kind -- how do I think of that?

We don't have an exact figure, Rahul, when looking at opportunities. And based on those opportunities and the countries re-diversification and currency diversification, we accommodate each as they come. At the moment, our focus is transmission. And as you can clearly see, we bought Argo, that was close to a $500 million investment at the end of Slide 6. Had you look at what Argo on our behalf, and there is likely to be a Quantum 2 next year that we're definitely consider looking at. You see the 800 million investment in Peru with ISA. And in Colombia, there are 2 significant projects coming up, [indiscernible] for Casanare-Arauca in the East of Colombia. And we're going to be participating. That would be a $300 billion CapEx. And we just won the Huila substation that is a $70 billion CapEx. So all the linear objects projects for investing are transmission. And we see transmission as the flagship. Gas is absolutely critical for Latin America in the energy transition. To look at Latin America, as Europe or the U.S. or China is quite mistaken. The biggest source of CO2 ambitions in Latin America is transport. If you don't look at deforestation, which is 50%. So once you look at land use and forestry, which is the biggest one, and that's where most of the attention should be focused on. The next one is transport. And transport, which is mostly diesel has a huge impact in public health because of the poor quality of the diesel and the vehicles. So being able to shift transport to gas, the best return both [indiscernible] and environmentally for Latin America. And that's why we are a strong supporter of gas. And if Calidda can grow and expand its concession is something that we are highly interested because we believe Calidda is critical to keep energy prices low for the middle to low-income classes and at the same time, have a significant impact. Latin America still depends a lot on wood and cold in people's households. It is sad and worrisome that in Colombia, there are 1.7 million households cooking with wood and coal and in Peru is close to 4 million; and in Guatemala, 50% of the primary energy comes from wood and coal. So in Latin America, to be able to reduce that has huge environmental and health impact. So if we can continue with that concession, that would be and $330 million in CapEx in distribution. I see much more on that regard. But if opportunities come about, we would consider them in this proceed in Brazil, we just want to be focusing on tradition.

We also have a question from Andres Duarte from Corficolombiana.

I have several questions. But let me do 3 or 4 of them here and maybe during the next conference call out of the other ones. So the first one is, please detail a bit what explains the great performance or good performance you obtained in the equity method line. That's the first question. The second question is -- it's actually related to Rahul's and the answers you gave to Rahul. Anyway, let me ask. So are you expecting major gas in imports to begin before Ecopetrol is able to bring offshore gas to our country? The answer is yes, in what year? And especially, does this import requires the regasification plant of Pacific to be functioning? The third question is regardless of...

Andres because my mind is not that great. They cannot restore all the questions. To allow me like the [indiscernible] easier for me. Because I began thinking the answer and then I don't listen to the other questions, and that would be unpolite on my behalf. The [indiscernible] if it were to be ever decided, it would take over 10 years because of the licensing. So there is not a likely chance that we see it anytime soon. And the government hasn't been able to adjust the risk allocations in a way that the delays because of peoples of position and difficulties with environmental licensing do not change the cash flows in case it would -- it is a project finance. If we don't get certainty on the cash flows regardless of the first majeure, nobody is going to build [indiscernible]. So we're going to be mostly dependent on spec. And for sure, I expect growing its capacity, and we can get, if I remember correctly, about 550 million cubic feet per day. That is enough for most of the time and it's going to depend on when Ecopetrol or Venezuela come into market. Imports are needed at this time, and you've seen imports by space of over 330 mostly for the thermoelectric because of El Nino. That is going to continue next year for sure. Once the El Nino is gone if some minor imports will be needed on '25, but for sure, significant import will be needed an '26 and thereafter. Then it's going to be up to Ecopetrol in [indiscernible] because the one that is on the [indiscernible] calls the deepwater well with Shell that – I'm dyslexic so I don't want to say the name because I will get it wrong for sure -- that one is going to take a long time. That requires such a huge investment. That's why I'm quite skeptical on the TGI's CapEx in the '26, '27 timeline. But you need to begin building infrastructure if that is going to go to market, but the prices are going to be so much higher that I haven't been able to get the numbers really makes sense in my mind. So I definitely see [indiscernible], but the licensing given what we went through with Colectora, and they have to go through the same. If they do it in 3 years, it would be amazing. That I would put you at '27 to begin licensing. Licensing going to [indiscernible] then you have to construct. I don't see that before the end of the decade. And holding in the meantime, they are going to be importing as. Unless, and this is the most significant if and it could be on '26, Parex, [indiscernible], Parex could definitely find gas if there is enough trade. I've been told they have to go over the $5 million a year are drilling. And if Parex find gas with the [ Pulte ] usage pipes, you could bring that gas to Cusiana, and that could be in the market as early as '26. But it's going to depend on how much investment is Ecopetrol willing to spend in drilling in [ ElpiMonte ] with Parex. That is the most positive outcome if the government were to decide.

Great. So let me repeat. Thank you for the answer. Let me repeat the first question just for a yes or no because I'm pretty sure that I was mistaken when I read in Americas figures regarding Enel Colombia. So the explanation for the good performance of the equity method is explained basically by Enel Colombia, right?

Yes.

And so I wasn't taking the...

Enel had a very positive quarter because they had water, we've been locking value, and the prices were high. So the generation segment had a very positive quarter.

So the last 2 questions, thank you for those answers, Juan Ricardo. The third question is, you're receiving the revenue coming from Colectora as the case has to be. When are you expecting this line to begin operation -- like what's your latest estimate?

We are already building the segment, La Loma-Cuesticitas over 50 towers have already been built. On that, we are on schedule, that should be next year. Then we are going to be getting the environmental license for the Cuesticitas Colectora, which is the La Guajira at the end of this year that would allow us, and we are actually bringing the contracts for the building of that line at the end of this month, is going to go to the Board. So we hope to begin construction on February. Once you begin construction, we need 18 months if we go full speed. But that means there are not going to be a protest and people's movements that stop working. That is hard to guess what is going to happen. I'm speaking with most authorities trying to find a commitment on their behalf that they are not going to allow for those strategies on behalf of the community to stop the project to increase their bargaining power. If that were to happen, those delays can be of any length, it's impossible to guess. In the case of Enel, they made the project unfeasible, and Enel decided to quit. Most of the projects that have been built between 5 and 6 months. We hope given how critical this is for to La Guajira and the prospects of the Columbian renewables sector as a whole, that the government is going to be extremely committed to make this happen. So by late '25, we hope to finish. But it's going to depend solely on the government's ability and our strong commitment, which is there, to have an open dialogue with the community, so they don't stop the project in order to negotiate whatever new interests arise. There is a tradition in La Guajira for people to split into discussions so they can bargain a bargain and bargain to get a better deal. And I understand that, and we'll be willing to discuss and negotiate, but not under the terms that they sequester the project. But that's hard to anticipate, Andres. I hope Colombia realizes that there is a huge, huge potential for the wind energy in La Guajira. If you look at the wind speeds, they are absolutely superb. When you look at the map the productivity of the wind mills is a cubic function. The more you increase the wind, the power is increased to the power of 3. So 2 kilometers of more wind speed means a growth of 8 in kW being generated, and La Guajira could grow to 6 GW, 7 GW. And when you look at the deals, they just closed in Brazil between Total and the investors in the wind farms, Total made a very strong commitment to invest in wind energy to produce hydrogen for Europe. That in Europe is part of the energy mix they will need. So it would be a shame that Colombia losses opportunity to develop the wind energy La Guajira, but it's going to be totally up to the government. Otherwise, all investors are going to fly away as most of them have already.

Okay. The last question, and thank you for that answer again. This question is related to energy transition, a bit, at least. So what is your posture or what's your expectation with respect to Colombia's vehicle fleet transformation? And then let me explain the question a bit. In what cases should this transformation be done to gas, in what cases to electricity, and in what cases to hydrogen according to what you've been thinking and analyzing?

I don't see hydrogen in transport at all. The costs are huge. The logistics are extremely challenging. The investments on the infrastructure would be very significant for a poor country like Colombia. I don't see hydrogen plain roll older than in exports and for Ecopetrol in order for them to use data as a way for the readoption of sulfur in the refinery process. It makes a lot of sense for Ecopetrol. It's something that they must do. The export market is going to be developed. So the ammonia and methanol is something that only Ecopetrol has the advantage to begin producing because they have [indiscernible] for them to change and invest in the refinery is where it makes the most sense to build a whole new infrastructure for ammonia or methanol is over $4 billion, $5 billion investment. I don't see any of us being able to do that. So you would need to invite significant investments from abroad to develop all that sector. So I see hydrogen as something that could be an expert. It could be a source of foreign direct investment. Colombia has many advantages if that were to be developed. So that's hydrogen. The Colombia energy transition has to go through transport -- and our bet and we're doing it in Peru very successfully is moving transport to gas. All the segment of trucks, taxis, heavy trucks, buses can be shifted to gas and some of them to electricity. Electricity makes a lot of sense for some of them as well. So there should be -- but the thing is that EVs are still too expensive. China is really breaking through in that market. For sure, that is going to be an opportunity as Bogota has shown, buying most of its buses from China. So I see transport achieved to a mix of gas and EVs. The main aspect, other than that and where it will have the highest impact, is in energy efficiency. There should be new construction codes, particularly for the warm areas of Colombia, where you don't use ceilings or you have good isolation, that you have the right windows and doors, that you have energy-efficient electronics; particularly air conditioners, refrigerators, and fridges. Those are huge, huge sources of energy waste. When you look at the consumption, the Canadian cost, they go 270 kWh per month. If you look at your consumption, I bet you it's not over 140 kWh. The reason why it's so high at the cost is because they are very inefficient electronics and horrible construction regulations. And that's what you could really, really improve. There is a lot of literature and knowledge in Singapore on using plants in buildings and shade; being able to plant trees in all places reduces 40% that needs for air conditioning, changing the paints that you use, investing in the quality of the public infrastructure for transport -- there are a lot of opportunities that unfortunately have not been the priority. But if you look at the literature, which I've been really quite carefully, that's where most of the focus should be in Latin America. And that would be a reduction in Q that most for sure, would more than compete an increase in fee. So if people were to be thought had to be efficient consumers, that would be probably the greatest advantage for everybody.

Thank you, Andres. We don't have any more questions so we would like to thank you all for your presence today. And as a reminder, the IR team at GEB are available at any time to resolve your questions. We hope you all have a good day. Thank you very much.

Thank you so much. I appreciate it.