Centrais Elétricas Brasileiras S.A. – Eletrobrás (NYSE:EBR) Q3 2022 Earnings Conference Call November 10, 2022 12:30 PM ET
Company Participants
Wilson Ferreira Jr. – President and CEO
Elvira Baracuhy Presta – Chief Financial and Investor Relations Officer
Rodrigo Limp Nascimento – Director of Regulation and Institutional Relations
Pedro de Oliveira Jatobá – Director of Generation
Camila Gualdo Araújo – Governance, Risk and Compliance Director
Conference Call Participants
Maria Carolina – Credit Suisse
Andre Sampaio – Santander
Henrique Peretti – JPMorgan
Marcelo Sá – Itau Corretora
Operator
Ladies and gentlemen, thank you for waiting. Welcome to the conference call to present the results of the third quarter of 2022 of Eletrobrás.
Introducing the Eletrobrás team, we have the presence of Mr. Wilson Ferreira Jr., the new President of Eletrobrás; Ms. Elvira Presta, Chief Financial and Investor Relations Officer; Mr. Camila Gualdo Araújo, Governance, Risk and Compliance Director. Mr. Pedro de Oliveira Jatobá, Director of Generation; and Mr. Rodrigo Limp, Director of Regulation and Institutional Relations. We would like to inform you that this conference call is being recorded and will be available on the company’s IR website, where the presentation will be published in Portuguese and English.
For those who need simultaneous translation, we have this feature available as you click on the globe icon named interpretation located in the lowest center of the screen. Please select your language of preference, Portuguese or English. For those listening to the video conference in English, you can mute the original Portuguese audio by selecting the option mute original audio.
For the Q&A session, the questions shall be sent via the Q&A icon on the bottom of your screen. During this session, your names will be announced so that you can ask your question live. At the moment, I request to activate your microphone, will appear on your screen. As a disclaimer, we would like to clarify that any statements made during this conference regarding the company’s business prospects, projections operation and financial goals constitute the beliefs and expectations of the Eletrobrás management team as well as information which are currently available to the company. Forward-looking statements are not a guarantee of performance as they involve risks and uncertainties and therefore, depend on circumstances that may or may not occur.
Investors should understand that general economic conditions and other operating factors might influence the results of such forward-looking statements.
Now I would like to give the floor to Mr. Wilson Ferreira, President of Eletrobrás to start the presentation. Mr. Ferreira, please.
Wilson Ferreira Jr.
Good afternoon, everyone, all the analysts and investors that are present here for this results presentation for the third quarter of 2022. I’d like to thank all the trust that you have. In my return, I’m very happy to return to Eletrobrás in the second office, concluding this work that we have started 6 years ago. So I’m very happy to return to this company, together with the Board of Directors, our fellow directors and all the staff of the company to establish a new journey to generate value to all the publics that we interact with. So we have a presentation here.
I’d like to show you some highlights. So I’m going to present that, along with Elvira, the CFO. So let’s talk about the main highlights of the company in this third quarter. We launched this voluntary dismissal plan that comprehend 2,312 employees that are retired and retirees and its estimated cost is about BRL 1 billion. So we have an 11.2 months payback. And we had since the launch of the program, more than 1,200 employees subscribed. So this plan is offered to all the retired and retirees, and it becomes a right to the employees. So we expect a big adherence for — because all the staff, they can adhere to the program because it’s their rights. So we are going to start the dismissal — dismissals in December 2022 up to April 2023. And of course, we are considering retention of knowledge for us to be able to perform this transition and keep all the standards of productivity and the quality that our company is famous for. So as a relevant information we had the 183rd extraordinary meeting in which we approved our new bylaws that incorporated — bylaws that are in line with the best practice of governance in the market.
So it — the new bylaws have been approved. And in this quarter, we also had the appointment of the new Board of Directors. And with my appointment at the beginning of August and some other facts relating to SPEs and affiliated, we had the sale of — all the stocks of CELPE so with a cash inflow of BRL 49 million. And we concluded the transference of Amapari for almost BRL 18 million.
And it’s also a highlight for this quarter, the operation with in SAESA which we increased our equity stake to 72%. So from July on, we started to have the effective control of the company, including the President and the consolidation of the accounts. So this is included in our balance sheet for the third quarter. And the main highlight for this new journey is the transformation office, the TMO that was created after I start in my second term with partnerships, national and international partnerships to help us in this important journey of transformation. I’m going to talk more about that in the next slide.
So this is the TMO that I mentioned. It’s like this little house that you can see. It has been structured to coordinate this transformation process. So the objective here is to centralize the management and follow up weekly all the initiatives of transformation and organize all the business, new areas, promoting efficiency and velocity in the execution.
So you can see in this little house, the set of initiatives that we have in course, it’s important to highlight to you that we have identified consulting with the Board of Directors, the holding and the affiliates and a group of analysts and investors. We have identified the main measures that we should perform and we prioritized 40 of those initiatives. And we expect to conclude 80% of those initiatives up to the first semester of 2023. So we have 20 initiatives that have been mapped and they’re going to start from 2023 on. So our TMO is already in place.
So we have put Camila, our Governance Director — Governance Risk and Compliance Director to lead this business front. And as you can see in this board, we have 3 initiatives connected to strategies and those, 11 initiatives connected to businesses, 9 initiatives connected to organizational transformation, 8 initiatives regarding optimization of costs and expenses. And regarding financial strategy and advisory, we have 9 initiatives. So this office is already working and we are going to conclude 80% of those initiatives in the first 6 months of 2023.
We do that in a centralized way to acquire value to meet the deadlines. And all of those initiatives, they have costs. For instance, our dismissal plan is 1 of those 4 initiatives. And for us to maximize velocity of capture. So this TMO, this transformation management office, is central in this transformation process.
So obviously, in this journey alongside with our Board of Directors and advisers, we established seven principles that guide this strategic reflection of Eletrobrás. First, we are the largest company in generation and transmission of electricity in Brazil. But it’s important that we are also leaders in operational efficiency, escalating the business with margin expansion and a comprehensive transformation that makes the use of digital solutions. So for us to evolve our productivity beyond what we had before, it’s paramount that we have this transformation of our processes using digital solutions for us to move on, move forward with our productivity.
And we have to refund our culture because we have completed — we have turned 60 years of existence. So we have to change the mindset, focused on results, the normal mindset. And maybe that’s the correct time to talk about it. We have today 153,000 shareholders, about 142,000 natural persons and other corporate entities, legal entities, too. And one of those legal entities is the FGTS fund that has 370,000 people.
So we have more than 500,000 shareholders following the company and over 10,000 legal entities that are interested in the results of the company. So for sure, management and governance, this owner mindset needs to provoke this acquisition of value and be able to attract and have some talent retention. We have this plan for older people, but we need to attract young talents for this new journey. So we need to have excellence in the capital discipline. So it’s critical that we have — that we are the company that has the least cost of capital in the area. And we need to be a market benchmark for governance, organization, agility and ESG agenda.
And we have to be a major player in the reduction of the emissions of the productive chains through continuous innovation of products, services and business models. We have to be excellent in the commercialization of the area since we are exiting the Cotas system modality. So we need to enter this B2B market, the major consumers. And from 2024 on, all the consumers, residential from 2020 — 2026 on, we established a new [indiscernible] of the Eletrobrás brand with those audiences. So crowning all those previous 6 principles, the seventh is a company with a long-term vision as a green major, connected to renewable sources of energy, combining growth and value acquisition associated to sustainable solutions.
So all those seven principles are guiding our strategic reflection with the advisers, with the Board of Directors. And of course, with the help and support of a set of investors and analysts that we consider a lot at this moment.
So next slide, please. So we move from — we are already a green major. We are one of the world leaders of renewable sources of energy, and we have the lowest levels of emission in the industry. So we can see the intensity of emissions in this graph, the vertical axis. We are compared — comparing ourselves with like international benchmarks.
We have Statkraft that has the least emissions levels, only 24 carbon tons by megawatt hour, and Eletrobrás is the second in this criteria. And we have a set of measures like trying to decommission thermal plants that are major emitters of greenhouse gases, and we aim to lower the emission of those gases. And we will be one of the lowest companies responsible for those emissions.
And in the horizontal axis, you have the installed renewable capacity in the world, and we are the second in this ranking, and we lose only — to be our second only to Enel in a very close way. So we are one of the biggest, one of the largest companies in the world and one of the most efficient relating to the green majors. So it’s important to have a Brazilian company that is a benchmark in the world. So now we have one of the main objectives of impact that may be met in the short term. And here, we talk about some actions that will be executed up to the first semester of next year.
First is efficiency. We aim to have the lowest unitary in cost of generation and transmission versus peers in Brazil up to the end of 2023. We have multiple initiatives in execution in the TMO, aiming to reduce costs with people and MSO material services and others, purchasing, processes. And it’s a set of initiatives to guarantee that the company ends next year as the largest, but with the lowest unitary cost to generate and transmit energy in Brazil.
Second one is regarding the capital cost. We aim to have the lowest cost of capital in the field. And we are aiming that up to the first semester of 2023. The actions are quite simple. We have to renegotiate some debts and try to settle then, but we have to optimize our structure of capital in the holding and subsidiaries.
What’s the optimal structures of capital for any — all of the subsidiaries considering their liabilities, what is the structure and tax incentives. So we have been doing that with a consultancy support, and we hope to accomplish that in the first semester of 2023. And I had the opportunity to talk a lot about that with many analysts regarding the reduction of liabilities. The contingent liabilities of our company have been responsible for this volatile set of results that we have been presenting. So we need to change that completely, that perspective completely.
And for that, beyond our agreement policy, we need to settle the agreements. And the state-owned company from the past, which main goal was to take out the lawsuit up to the highest courts since we were — we had a limited cash. Now we want to settle that. We will take those long-term agreements for lowering the debt. And we have some law firms that have been helping us to start new strategies, new judicial strategies to win in short term whenever it’s possible. So one of our first actions was to create a legal staff, which is [Pedro de Jatobá] who is an expert.
He was a former prosecutor, the previous attorney general, like big expertise. So we have the support of a very good team, and we will use that expertise to have better deals.
And regarding ESG, we see absolute leadership in emissions between — among peers, global peers and social indicators and governance in Brazil. So we want to decommission inefficient thermal plants. So we have some coal and natural gas operations in minor and inefficient systems. So we want to reduce investments and we want to evolve the relationship with the communities, the neighboring communities, considering our capacity of relationship with those communities. So we have a lot of work here.
And finally, regarding governance, one of our targets and our short-term goal is to migrate to this new market that would generate additional evolution regarding governance that have been approved in our bylaws recently.
So we will have many resources here. And the first one is the rationalization of SPEs. We have currently 75 SPEs. We had 178 in the past. I’m going to enter into details later.
But the main point here is that we still have operations to be sold and many operations in which we can reduce cross ownership. We have 24 operations with 10 partners. Maybe we can seek control and lose equity stake in some of them. We have some closures to make in 7 SPEs at least, 6 to be incorporated into our current businesses and 13 under evaluation. We have a deadline with the Board to present a final perspective regarding that.
And in respect of participations and affiliates in like equity stake in other companies, we have been — we had some compulsory loans as guarantees that we are exchanging those guarantees. So we have a possibility to sell those equity stakes for over BRL 4.4 billion, especially in participations that are not strategic and they are out of our scope.
And last, but not least, we need to be a reference to be a benchmark for safety and operational quality in the electric — electricity generating and transmission sectors. We need to be robust and reliable with turndowns and increase safety for our staff. So those milestones will be achieved and the investors and the shareholders will always be proud of us. And those actions, all of those generate impact in this first quarter of 2023. So here, we have some milestones that were defined for the TMO.
So we have some important dates here. Up to November 30, a new model and organization structure of the holding will be validated with our Board and all the subscriptions, all the enrollments for our voluntary dismissal program. And we will start dismissing those employees that adhere to the program. And the other milestone is December 15, in which we’ll share the strategic vision and goals that were defined are like compensation compatible with the market to align the interest of the shareholders, with the management of the company. We need to have a set of goals defined and we will do that up to December 15.
The other milestone is up to December 31, and we will migrate to this new market at B3 approved in this extraordinary meeting. And the road map for optimizing the SPEs, what I had showed in the previous slide, it will be validated for the Board first to share with you what’s our final goal for the SPEs. A new platform for performance management for all SPEs. So we had opportunity to establish benchmarks and best practices and share among all the SPEs. It’s going to be done.
We hired — we contracted a system that allows us to do that up to December 31 to establish all the goals and action plans for each one of those directors and advisers that are part of those SPEs. And along the first — the month of December, we have the first group of the dismissals, the first set of dismissals of our voluntary dismissal plan of 2022 up to January 15, 2023, we’ll have the optimal headcount to restructure the organization and management of our companies that we control, all the processes that are — that happened in those companies in the shared services. So we have a target, quantity for all the actions that will perform. And after that, it will generate the necessity of attracting talents and our optimal headcount.
And in this new model of structure and precification and there is a team of consultants that are helping us to rationalize this important management instrument that generates productivity, generates automation opportunities, and we will have that quantified up to January 15. And January, the 30, we have the strategic plan and the strategic master plan updated up to January — at the end of January. And up to April 30, we’ll have the budget for 2023 reviewed, incorporating this OBZ perspective and all the gains validated. So the first milestones that our TMO set are those. So here, just for you to see why the rationalization of SPEs is important.
So we completed 103 SPEs. We brought in 103 billion in sales. And up to 2022, we will close Baguari and we will incorporate TGO, Famosa, and we will sell at [Livramento] that adds to 6. So we will end this year with 64 SPs. So those 64 SPEs, 16 in the transmission area and 48 in the generation area.
So we have an NOI a little higher than BRL 19 billion. The participation is about 9.8. The EBITDA is almost BRL 14.6 billion. The indebtedness is BRL 73 billion. And the proportion is something close to BRL 39 billion.
And the book value is about 19.6%. So we have over 14,000 kilometers, and our installed capacity is up to 25,000 millions — megawatts, sorry. So this EBITDA recurring over BRL 14 billion, those are data from 2021, in which we have a stake about 40%, 42%. So we think that the market doesn’t pricefy us correctly. So that’s the reason we have prospective actions in the reduction of cross ownerships with those 10 partners and closing operations that are not interesting for us anymore, 2 incorporations and 23 sales of assets in which we have a minor participation.
And we have 13 SPEs under evaluation. So we will conclude that this year to share with the market, but we have a big perspective and a good perspective from reduction of cross ownership and consolidation of EBITDA. And we have a simplified operation, a more efficient operation, governance-wise and using synergy and some management staffing shared services, and we can add value to those operations since we can have the control of them.
Next slide, and am concluding my part. So we have this strategic effort, of course, being discussed with the Board of Directors. And there’s a very important observation to the market here. We have been meeting weekly. So we have been working a lot with the Board of Directors.
And our focus is to grant implementation of those 4 initiatives in short term, preparate the company for robust and coherent opportunities of growth, do that with proper care and discipline, a set of initiatives that are being evaluated under the light of value acquisition and risk mitigation on the other hand, and it will lead us to approve a new strategic planning. And in our meeting of directors that will be carried out in March 2023, we will — we have this deadline to approve the results of 2022. So we are happy to give the market and investors and analysts this perspective.
So it’s important to state, we have many important acknowledgments here. The first one is to be third place in this January of Epoch Negócios, 1 of the 10 companies that received this with the revenue over BRL 20 billion. We have been in this ranking for the last years. It’s very important, the transparency award, and we have the golden seal for the GHG protocol. So we are under the ODS system, the agenda for the millennium and we are 1 of the 3 companies that better communicate with the press according to 25,000 journalists.
And we have the certificates of renewable energy. Furnas has 1 bidding to provide more than 500,000 certificates of renewable energy to compensate 100% of the indirect emissions of greenhouse gases.
So this is a big acknowledgment, big recognition from the market in areas in which we are very proud of governance, environment, transparence and greenhouse gas mitigations. So I’m going — I would give the word to Elvira, but she reminded me. So just for you to understand, this is the generation business. So this is the performance of our businesses. We have 42.5 gigawatts installed, around 23% of the capacity installed in Brazil.
We generate around 30% of the energy in Brazil. And we had an increase in revenue around BRL 1 billion, an increase of around 2.5%. So now we have a revenue of BRL 6.72 billion (sic) [BRL 6.75 billion] and generated energy, reached [137,000 gigawatts], and we have a capacity installed of 42.5 gigawatts. It’s a reduction compared to the private — the previous installed capacity, but it’s due to the privatization since Itaipu and Electronuclear left Eletrobrás.
So under this optics of perspective, we have the — the beginning of the operation of UTE Santa Cruz, a thermal electrode unit of Santa Cruz that has 150 megawatts of installed capacity. And here, we have the context in which those actions were carried out. You can compare GSF compared with 2021. And the settlement — different settlement price, PLD is around 60-megawatt hour. And we have the breakdown of the generation revenues.
We have 4 types of energy that we sell. The Cotas system in green, the energy that are within the Cotas system, it had a readjustment of 15%. So we had BRL 1.25 billion. And in yellow, you have the regulated market. So we increased around 35% to — up to BRL 2.43 billion, 20 to 25-megawatt hour average.
And we have the third set, that is the free market operations in blue, in which we had an increase of 27% to reaching BRL 2.93 billion. Operating in average 190-megawatt hour, and we had a very small amount of energy that were closed of — decommissioned of — just a minor participation. And we have SAESA that brings in almost BRL 1.2 billion and BRL 243 million lost in PLD. So regarding the energy mix here, we have 47% Cotas system, 13.5% regulated market, 38.7% in the free market and 0.8% of unhired and contracted energy.
Here, we have the transmission business. So we have 74,000 kilometers of transmission lines. That is around 40% of Brazil. So we have 154 with a RAP of BRL 737 million. So those enterprises of big scale, they have a deadline of implementation, they have been approved by the Energy Agency.
And here, we have a table for you to see what we have been aggregating every year. So up to 2025, that is very, very soon. We will incorporate a lot of the BRL 735 million (sic) [BRL 737 million]. And we have 3,431 MVAs of transformation.
So we had an RAP aggregation that was very important, an increase of 19% of the regulatory RAP that went from BRL 11.4 billion to BRL 13.7 billion in the cycle of ’22, ’23. And is this due to the readjustment of the tariff in this quarter. And I think I finished my part Elvira. So I’ll give the floor to Ms. Elvira.
And I thank you for your attention, and let’s talk about the financial performance of Eletrobrás. Please, Elvira.
Elvira Baracuhy Presta
Thank you, Wilson. Good afternoon, everyone, who are attending this event. So let’s talk about the financial highlights of this quarter. As we do in the conference calls, we will detail the main events in the area in the profit and losses statement.
So I’d like to start talking that in this quarter, we had some new events that hadn’t happened in the previous quarters that had a big impact. The economic — without compromising the cash of the company. But among those new events, the first one is one that Wilson said that is the consolidation of Santo Antonio form the client that aggregated revenue, but aggregated some costs and expenses naturally and indebtedness and financial expenses. And another very important event that we had in this quarter was the deflation, we lived in Brazil in both IPCA and IGPM indexes that had an impact in our revenue in transmission. So we had a decrease of net revenue of 13%. It’s due to this effect.
This update brings this impact. Although as Wilson has showed, in the cash of the company, we don’t have any impact. For the next cycle, we have an increase of 19%. Another event that was very important that happened this quarter is the impacts of the obligations that came with the capitalization. We know that the exit of the Cotas system will bring new revenue, but we have to register to account all the mandatory, obligations of CDE and the investments of — the recovery of the bases and the [leo] Amazon.
So those events made us have an EBITDA of — a decrease of 54% and our net profit was practically 0. But among the highlights on the right, it’s always good to emphasize that our cash flow is solid. We ended the semester with almost BRL 17 billion by using cash. And most of those events are from — of economic nature. So we carried out our CapEx and this deflation, reduced our revenue in BRL 1.9 billion.
So the impacts of all the obligations that came with the capitalization, we’re about BRL 760 million and we had the provision for the PCLD of Amazonas Energia that we will talk more later, and we had some provisions with Chesf, one of the controlled companies and some expenses that came from Santo Antonio Energia.
So next slide, please here. We have our results statement. Just a summary. So the first column with the report in IFRS and the second one on the right, with the recurring data. As mentioned previously, the revenue — the main event that impacted revenue.
One that was positive that was the increase of revenue of generation and the negative one is the effect of the deflation on our assets, especially in transmission. Regarding PMSO, we had an increase of 27%. We had some events, especially regarding ACT. So we will talk a little more about the evolution of the PMSO. So we have a slide talking about provisions in which we will comment on the main events in this quarter.
And we had a reduction in costs because we imported energy a little less from Uruguay than the previous quarter. And the financial result and the main highlight we have here since we consolidated Santo Antonio Energia. We increased the indebtedness charges, and we had those expenses that I mentioned before regarding the capitalization obligations.
So moving to the next slide. Let’s present the valuations of the gross revenue. So looking at the blue columns in the center, the dark blue colors, you have a variation of 8% due to 2 effects that I had mentioned before. BRL 1 billion of increase in the revenue of generation coming from Santo Antonio consolidation and the negative effect that is the red column, almost BRL 1.9 billion. That is the effect of deflation in the transmission assets.
Moving to the next slide. We have the gross revenue on the generation in all the markets in which we sell energy. So the prices are low in this quarter, almost baseline. And the main events here and revenues, the first line in which you can see the dark blue line, it’s the regulated market.
We had an increase, especially regarding consolidation of Santo Antonio. And an increase of the average price. So we had a 35% variation. So the Cotas system or hydroelectric is just a tariff readjustment, and the bilateral contracts besides Santo Antonio Energia that we had mentioned before, we had a very important effect in Candiota, that this quarter exported energy and in CCEE, we had a variance of 61% because last semester we have imported energy from Uruguay, what didn’t happen this year. So let’s analyze the evolution of PMSO that the ride about 27%, 28% compared to the same quarter of last year.
So the [P calculus] is our most representative one, it’s almost half of the PMSO. So this semester, we have the collective bargaining conclusion. It starts in May — started in May, and we had concluded that in the third quarter. So we had to launch that in the books this year — this quarter. So it has this big impact of BRL 178 million that are highlighted the right column. And Chesf in the previous year reverted part of this profit sharing that they had provided before. So it had BRL 62 million of reversion compared to last year and that’s the reason of this variance we had the consolidation of SAESA, Furnas to the personnel area and the other highlight is in Serviços.
We had the effects due to the consolidation of Santo Antonio this year and regarding others, we had some effects regarding — regarding the cost of security, the funding retirement plan of Chesf. And those are the main effects that we highlight.
Moving to the next slide, we’d like to comment on the operational provisions. In this quarter, we had BRL 1.5 billion in provisions, starting from disputes provisions, BRL 766 million especially by Chesf, and we had reported that to the market 15 days ago because we had a non-favorable decision against Chesf, and we had a technical discussion with our auditors regarding the accountable rules to categorize risk.
And we are sure that since we had to classify this risk as probable, but our view is that we will appeal to the higher courts, and we are very solid in our defense argument, and we don’t expect to have losses here. We had a judicial agreement that’s regarding Eletronorte, that it was a very old provision and an lawsuit and the company decided to agree to settle an agreement. As Mr. Wilson Ferreira said to reduce some provisions. So this was one of the agreements that we concluded this semester.
And we had also an arbitration result in CGT Eletrosul that was not favorable to the company. We didn’t have any highlights regarding compulsory loans, but we’d like to highlight that we could — since because of our favorable results. Regarding the process called [indiscernible], we could reclassify the risk of almost BRL 14.4 billion that were reclassified for potential possible. And now we have reclassified it, we labeled that as remote. And regarding the PCLD, we had the provisions of Amazonas Energia with Eletronorte.
It’s important to highlight that since May this year, after a provision of the mining and energy department that allows CC for Amazonas, we didn’t have the default of the current as we had before. But there are some due amounts that according to our provision bylaws. After some time, I have to complement. So it had to aggregate BRL 486 million in this quarter. The next Board brings a breakdown for the PCLD of Amazonas Energia and its indebtedness.
So we have around BRL 7.4 billion using credits receivables and BRL 1.7 billion approximately, regarding sue credits, BRL 650 million form the holding EUR 1.04 billion with Eletronorte. And we have this provided almost BRL 4.7 billion, that adds up to 63% of the total indebtedness. And here, we can differentiate holding and Eletronorte. The current debt of Eletronorte has been paid, but we had to have this provision because of the past that was not settled. So the next one, we have the summary of everything I have explained here.
Why we had this EBITDA reduction. So let’s start with the dark blue columns. That is our recurring basis EBITDA. We had almost BRL 4.9 billion last quarter and this quarter, BRL 3.1 billion.
The main event is the decrease of revenue regarding the impact of deflation in transmission. And our equity stake recurring equity participation. We had the reduction because last year, we have the conclusion of the law of GSF that impacted this result. Because last year, we had a reversion and the increase of the extension of the concession deadlines due to GSF. So we had this entry that was a reduction of costs.
And the same happened with the SPEs that we brought for equivalents. But in the cost basis is — that we imported less energy from Uruguay and the PMSO recurrent, all those effects regarding the collective bargaining that I mentioned before. So as a nonrecurring event, we highlighted this provision we had to make for Chesf.
And this next slide is the evolution of the net profit. So it was practically 0. But under recurring basis, we’re talking about BRL 1.1 billion against BRL 3.3 billion last year. The main variation as we have been talking in this train of thought regarding the decrease in EBITDA and we have some impacts of the consolidation of SAESA, Santo Antonio Energia that were entered this semester and all the expenses regarding the capitalization obligations.
So now we have our indebtedness/EBITDA, our net debt/EBITDA. And up to the last quarter, as we anticipated before, with the consolidation, with of the indebtedness of Santo Antonio, this index would increase. So you can see in this graph, 1.8% in the green area. So we aggregated around BRL 19 billion from Santo Antonio Energia. And on the right, now you have the net debt of the company that is around — our gross debt is BRL 54.5 billion.
So we have here — the cash of the company is almost BRL 17 billion and financing receivables BRL 3.9 billion, and it adds up to BRL 33.5 billion. So we have this ratio of 1.8%.
The last slide before giving the word back to the President is the investments performed. As I said at the beginning, we have been speeding up this performance of investments in this quarter, starting on the first line that corporate of generation we realized BRL 311 million, 50% of what was predicted for the period. Under transmission, our performance has been very positive.
We invest over BRL 534 million in the semester, almost 90%. And under SPEs, the highlights, it was the capital allocation in Santo Antonio Energia that shows us BRL 1.6 billion, and this is the investment that we made in Santo Antonio Energia. And we segregated Electronuclear because it’s not a company that we control anymore. And on the right, you have some highlights for generation. So we have the wind parks in Coxilha Negra as Wilson mentioned, we have the combined cycle in Santa Cruz and Chesf has concluded some works regarding transmission and under the SPEs.
Besides the investment in Santo Antonio Energia, we had some minor events related to Chapada Piauí and TNE.
So that being said, I conclude the financial highlights and give back the word to Mr. Wilson, the CEO to talk about the next steps.
Wilson Ferreira Jr.
So the next step is just for me to conclude what we have, things that we need to share with the market for the next 2 months. Of course, the conclusion of the voluntary dismissal plan, PDV, and we have up to November 18 to finish inscriptions, and we have the schedule of dismissal of people, and it will be pushed at the end of the year. So, we’ll carry on with the review of the strategic plan of the company. So we will bring to the market, at the end of the first quarter, this migration to the new market, and we want to perform this meeting up to the end of this year. And obviously, since the volume of energy because we exited the Cotas system.
So we have been acting on that. And we have to be state of art in commercialization of energy for all markets and this restructuring of the holding and subsidiaries, especially regarding our organizational structure and the idea here is to approve this new structure of holding as subsidiaries and all the [fluxograms] and the organograms for those entities.
And we started an assessment to understand the qualification of the personnel under this new structure. And then from that on, we can attract new talents and new leaders for our businesses. And as I said before, something that you will see as a recurrent measure for this company because we have over BRL 30 billion in liabilities, and we are worth. So the subsidiaries are worth almost EUR 30 billion each.
Our holding is almost a new company. So we need to reduce volatility. So it’s — we’re being very pragmatic and objective to look for agreements that are favorable for our parts, both parts — parties and to present the other party, some solution. And for us, reducing the debt. It’s not only a transaction.
We have to strengthen the processes to not incur a new liabilities and I hope we have finally a very active company regarding the reduction of its liabilities. I think it’s a big set of activities. I tried to put the major 6 activities that we work. But we have 4 initiatives with names, surname, responsible and deadlines to address the issues and create, generate value for this company.
So I appreciate your attention, and now we start with the Q&A.
Question-and-Answer Session
Operator
Now we’ll start the Q&A session. [Operator Instructions] We kindly ask you to formulate all the questions at once, waiting for the company’s response. Please remember to send your questions through the Q&A icon at the bottom of your screen. During the session, your names will be announced, so you can ask your questions live. At this point, a prompt to activate your microphone will appear on your screen.
Our first question is from Maria Carolina, Analyst of sell-side of Credit Suisse. We will send you the prompt for you to ask your question. Please, Maria.
Maria Carolina
I have two questions. First is about commercialization of energy, more precisely regarding the energy balance in this quarter. We could see that you updated the energy mix with a balance for unhired contracts for 2023, 2024 compared with the latest balance sheet, we had some commercialization in 2023, 2024. I just want to confirm if there was any negotiation and if you could enter into more details. If you can confirm regarding deadlines and prices of those contracts? And the second question is about Amazonas distribution. So we have a new provision referring the liability of that company with you guys. So I’d like to see if you can solve that in definitely involving the regulator with the current controller of the company, maybe find a solution that might involve a new shareholder to create like some robustness to honor the contract. Or from your side, do you have any format that makes sense to you for us to see a solution that is a little more definitely in long term. For us, to have more predictability regarding this payable.
Wilson Ferreira Jr.
Carlo, I think it would be interesting to start with Amazonas with Limp and Jatoba will answer the second — the first question. Limp, if you can start, please.
Rodrigo Limp Nascimento
Thank you, Wilson. Thank you, Carolina. Good afternoon. Thank you for your question. This topic regarding Amazonas is not simple. It has been recurrent. We have presented that same issue. The latest results, the default that generated provisions, but we have observed along 2022, some good improvements. As Elvira said, we had an evolution regarding regulation of the department that allowed Amazonas received the values of CCC, and it made it possible to Amazonas to honor the values. Since May, and it’s important to highlight that all the current energy provisions — energy contracts were paid by the distributor, but we have previous debt that are in the fall.
So we have talked to the regulator constantly and the regulator has a shared view with the status of this distributor that we have an economic problem in the distributor. And you know it’s a debt that is around BRL 8 billion. That’s a very big indebtedness for the distributor. And [indiscernible] has supervised that along the distributor to require an action plan of the distributor to solve this question. Eletrobrás, since it’s one of the most important creditors of this distributor is interested and will participate in the solution. We haven’t defined what. But we believe that soon, we will have a definite solution for the distributing company. Now giving the floor to Jatoba.
Pedro de Oliveira Jatobá
Thank you, Maria Carolina for your questions. Regarding the increase of sales in the horizon of 2023, 2024, you’re correct in your observation. This is due to the effort that we have been done to optimize this strategy of the company, and we seek to increase the aggregated value of our product to the clients, and this is incited. Regarding deadlines and prices, this is part of our strategy to advance the sale. And prices and deadlines are connected to the prices of the products that the clients demand. So we are following this strategy to aggregate value to the clients and the prices will follow as we achieve this objective. So we can’t share with the market with the — the future prices with the market. In this Slide #15, present. You have the values that we practiced the last quarter. So we can state for the success of this strategy.
Operator
Our next question from Andre Sampaio sell-side analysts from Santander.
Andre Sampaio
I’d like just to complement one of the questions of Carolina regarding Amazonas. I’d like to understand the rationale behind the provision or nonprovision of those amounts not yet provisioned. So Amazonas couldn’t adjust the tariff last quarter. And what lead to the decession of not provisioning the whole amount? And if you could comment in some deadlines, it will be amazing for us.
Wilson Ferreira Jr.
Maybe Felipe?
Elvira Baracuhy Presta
So if I could start, Andre, thanks for your question. The decision of not doing the PCLD total, This quarter was related to what Limp explained. The improvements that we could have because of the regulator has been doing a good job, and we debated with our auditors that this assessment will be made next quarter when we finish the annual report.
Rodrigo Limp Nascimento
We have objective criteria to talk about provisioning, as you said, Enel approved the readjustment of the tariff. But it is connected to the payment certificate and Eletronorte. Put Amazonas distributor in the fall because of the preliminary injection that prevented Eletronorte to put them in the fall, but they won another administrative proceeding with Enel. So Enel, we try to give them a good payer certificate that will allow them to receive resources and since the judicial sentences did not comprehend all the resources. So this readjustment was in dispute and we think that the distributor has worked for the judicial ruling to contemplate this readjustment. Because for us, Eletrobrás, it’s interesting for us that the readjustment is supplied because otherwise, it’s going to worsen.
Andre Sampaio
If I could only add to my question to see if I understood that correctly. I had understood that Amazon didn’t paid the overhead?
UnidentifiedCompany Representative
When the distributor is in the fall, they can’t have the good payer certificate issued by Enel. But in this case, even being in the fall, they could have a luminar decision that made Enel to issue them the certificate for them to be able to have the readjustment. So it was not that comprehensive before, not consider all the resources, but the distributor has sought to have an injunction to have the right to this readjustment. And we believe that it will be applied soon.
Operator
Our next question comes from Antonio Francisco, sell-side analyst of [indiscernible].
Unidentified Analyst
I have two questions. One, regarding ESG. We talked about some goals and purposes, in short term and including the commissioning of thermal units. And my question is regarding the emission of carbon dioxide. If you have anything connected to the [Paris] agreement.
And my second question is regarding the voluntary dismissal program. What’s the expectation of impact in the payroll for the next three years?
Wilson Ferreira Jr.
Thank you, Antonio. First, regarding ESG, yes. Part of our strategic plan. We have the commitment to — at zero — Scope 1, 2 and 3. Certainly, the 3 is for 2050, 1 and 2, maybe we can implement in shorter term. It’s important to highlight, and I should describe to you because we have been talking at Eletrobrás in an international scale to be the second better company in benchmarking and in best practices for emissions and renewable sources of energy, but there are still improvements to be done regarding the emission of some like coal plants or natural gas plants. So we see a potential for optimization. And in our vehicle — vehicles that are used in company since we — if you look at the scope #3, you have like lost energy in transmission lines, and we are assessing that.
The next enterprise we are getting involved with the Trans North Energy that connects Manaus to Boa Vista. This unit will — when made available, we’ll eliminate over major amount of emissions from thermal units in this kilometers. So the company will commit itself with the [Paris Agreement] in scopes, number 1, 2 and our actions will be followed by the market.
Regarding the dismissal plan, we have the inscription up to November 18. So we believe that we will have a massive adherence. So up to the end of December, we will have this reference board because maybe it’s important to share with you, we haven’t done any kind of admission exam. So the newest employee has over 36 years old. So we will have new opportunities to bring new talent, young people from the market to be part of this staff, the staff of the company that is a little more seasoned and we will reduce our experience.
We have many people over 65 years old, and we will refresh our staff and it will be made available by the TMO. We will share that with you and so there’s a possibility for a major reduction here. Remind you that the oldest personnel, people have — that have been working with us for a longer time. They receive bigger salaries. And that’s the reason we have an 11.2 months payback planned. We have over BRL 1.5 billion reductions of costs if the employee adhere to this program.
And we will share the results with you. And clearly, we will have the reduction of costs. We know that. So we had like some automation improvements. We started to operate remotely in more systems, and we have robotizations.
And we have some robots in the administrative process. We will implement 150 more to rationalize the shared services of the company. And we also have naturally — we had that before when we defined this board before some optimizations and modernizations that established, exceeding number of 600 people approximately. So we have a very effective cost reduction action. Even if we hire new talents for the company, young talents for the company to have this age diversity in the company.
Operator
Our next question made by Henrique Peretti, sell-side analyst of JPMorgan. Please, Henrique, you can move on.
Henrique Peretti
If I could humbly add something. I’d like to — could you publish the regulatory report and IFRS is not cash generated. So we have this volatility compared to the inflation. So it’s not good for us to understand the EBITDA of the company. So if you could publish that, it would help us in sell-side very much. I have two questions. The first one is about Furnas. Company had purchased about BRL 200 million, BRL 300 million. And now in the third quarter, it came to BRL 850 million in energy purchasing. And according to some comments, Santo Antonio would be BRL 230.
So we have a gap of BRL 500 million as a gap in Furnas. Where did it come from? This recurrent, it’s — so I’d like to understand that better. What can we expect regarding energy purchasing for the next quarters. And my second question is about Angra-3 and Electronuclear, and we know that you have a shareholders’ agreement with ENBPar for building the Angra-3.
So what will you invest in that? What would be the cash flow when Angra-3 is concluded? Sorry about the long question.
Wilson Ferreira Jr.
Don’t worry. So we thank your request for the regulatory results statement report and we will be very transparent about that, and we will consider the suggestion. Thank you very much. So we’ll make that available. And regarding Angra 3, maybe Camila Gualdo, can answer that question since she’s the Governance Director. But some comments of Elvira and then we can give the word to Jatoba to talk about Furnas.
Elvira Baracuhy Presta
Wilson, just a second. We do not publish the regulatory statement, but we have an adjustment if we have adjusted the EBITDA with the regulatory revenue. So in Page #24, you can get this readjustment of the transmission revenue by the regulatory. Now regarding Andra, Camila.
Camila Gualdo Araújo
I ask you kindly to repeat the question of Andra 3.
Henrique Peretti
My question is if Eletrobrás will need to — as a major shareholder of Electronuclear, if you would need to invest proportionally for the conclusion of Andra 3, since Andra 3 was excluded. So the CapEx is not there anymore. But after the conclusion of this critical way and to resume — the resumption of the building of the plant, if Eletrobrás will invest prepay and how would it affect the cash flow of the company.
Camila Gualdo Araújo
In reality, our investment proportion are limited to the results of the studies of BNDES that are being concluded as we speak. So it depends on the conclusion. The tariff studies that will be approved by CNPE. Once this is concluded, we have the CapEx defined, and how can I say a financing strategy and participation by Electronuclear by capturing this financing and funding to conclude the building that they works, the building of Andra 3. What we needed to invest, we had invested before.
And now we just monitor as a shareholder of the company, all the movements of Electronuclear seeking for financing and funding. So we are waiting for BNDES to deliver these studies, to check how it’s going to be structured for the next years.
Elvira Baracuhy Presta
Thank you, Henrique. What Camila has just said, what was agreed is that our responsibility is defined by the participation of the voting — of the voting capital, not the total capital stock. But the tariff as defined by law. It must be sufficient to pay this CapEx and to pay for the investments that you reminded us that was the critical way. All the investments that we have made from 2020 on, they must be paid. So we are waiting for the BNDES studies for the CNPE to approve the tariffs, that will cover the CapEx, that will be defined. And our responsibility from now on is limited to our participation in the voting capital.
Wilson Ferreira Jr.
Just to be clear, Elvira, it’s not predicted at first that we need to invest more capital beyond the critical way investments, right? The second is the tariff that will be approved by CNPE after the studies of BNDES. There will be a guarantee for the investments for the conclusion of those commissioning or this commissioning. [PNBR], ENBPar, we offer collateral for those financing proportional to the voting capital. So Eletrobrás is limited in 35% of the voting capital. So after this explanation, I give the floor to Jatoba to talk a little about Furnas.
Pedro de Oliveira Jatobá
Thank you Henrique for the question. This is the seasonality strategy of the company. It’s important to remember that Furnas organized an auction for incentive energy that will be in force from 2024 on, and it will accommodate their clients’ portfolio. And obviously, now that the commercialization process will be unified. We will review that strategy to limit the purchases under what’s predicted. It was what was scheduled.
Wilson Ferreira Jr.
Just a final comment, if I may. Theoretically, Furnas would not need to purchase energy anymore because it’s going to reduce investments due to the exit of the Cotas system. The purchase of — what Furnas had, it was incentive energy. So it was the PPA in which sales to the consumer. So they went after that to make the projects viable to issue the PPAs. So we have a longer contract for the purchase of incentive energy that will meet the sale to the final consumer of incentive energy or subside energy.
Operator
Our next question comes from Marcelo Sa, sell-side analyst of Itau.
Marcelo Sá
I have a question regarding commercialization. Jatoba commented that you couldn’t give some guidance of prices. But when you get the balance sheet of the second or the third quarter, you have this average price about BRL 200 million. It flattened the curve, but it might, if I’m right, indicate that the price of sale is next to BRL 200 million. But as we look, the market before in July, this price looks a little too high, and I’d like to understand that better. So if you look at the balance sheet, you had sales happening from ’23 to ’25, and in ’26, you had decommissioning. So my question is, did you have any kind of swap and maybe that’s why the price was better in the short term? And why you have this investment? And my second question regarding commercialization is to — are you planning to buy a commercializing company or just hire new personnel?
Camila Gualdo Araújo
So I’ll answer your last question. We consider this possibility to buy commercializer, but we have to understand that we have 4 areas of commercialization. And we have qualified personnel. We have always been big, and now we’re just getting bigger. So that was thinking about opportunities because that kind of business became expensive. We will consider that. But the natural strategy would be to establish an effective process of coordination at the holding to establish a strategy of product and markets and clients and bring in people from the market to strengthen this area, attracting talent alongside qualified personnel that are already working in our group coming from the 4 companies that we have worked with. So we do not eliminate the possibility to have a commercializer, but we prefer the idea of building an internal team senior and expert team at the holding to coordinate the commercialization process in all the companies.
Regarding the key observations that you made, they are correct. We had some swaps that allowed us, among other operations — allowed us to increase the price for the ’23, ’24, ’25. In ’26, we had a reduction of investments. Regarding some special consumers that are covered by law — the special law, and they have the right to do that in ’26? So since 2026 is the longest deadline. It impacts a little more in 2026. But it’s within normality of commercialization.
Marcelo Sá
Regarding the price for ’23, ’24, ’25, to assume that the price is close to [BRL 200]. And how was that possible if in July, the price was like far from that?
Camila Gualdo Araújo
That’s what I tried to explain. Our strategy is to diversify the products and have different terms — contracts of different terms. And that’s the strategy that we have been using. So the projected price reflects the current price that are in the baseline. So we have long-term clients and we try to aggregate value since the trust, the reliability, the fact that it’s clean certified energy. So the strategy aggregate values and that’s what we seek because we want to increase our portfolio and this is like we have new opportunities in this market. And obviously, this aggregated value will impact the price. This is our strategy.
Operator
So we end at this moment the Q&A session. And we return the floor to the CEO, Mr. Wilson Ferreira for his final comments. Mr. Ferreira, please.
Wilson Ferreira Jr.
I’d like to thank you, all the analysts and investors once again. We’re glad to be back to the company and lead this excellent team and to thank your trust, the shareholders, the investors and the directors here because the most important role here is to formulate this strategy. And we will try to be more transparent because we have this commitment. And we have the commitment to share the strategy that generates value with the market, with investors. We’re very optimistic. We have a big journey full of activities, but I believe that for the next months, we will be able to share and feed you guys with — you all with new — and we have moved forward and I think we have room to grow even more. And that’s what we have been discussing with the Board of Directors for us to be able to implement those initiatives and deliver very quickly those values. And I think we will be able to surprise you with the perspectives in course. And I thank my whole team, and I invite them to keep fighting this big battle, but we are going to prevail. Thank you very much. Have a good day.
Operator
At this moment, I declare this conference call closed. We thank you all for your participation and wish you a good day.
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