Companhia Energética de Minas Gerais

Good afternoon, ladies and gentlemen. Thank you for waiting. Welcome to CEMIG's fourth quarter 2021 conference call and webinar. We inform that this event has been recorded and it has simultaneous interpreting into English. During this event, all participants will be in the listen-only mode. After that, there will be a Q&A session when further instructions will be given. Now I would like to turn the floor to Carolina Sena, Investor Relations Superintendent. Please, Ms. Sena, you may proceed. Good afternoon, everyone. I'm Carolina Sena, CEMIG's Investor Relations Superintendent. We now start CEMIG's fourth quarter 2021 earnings call and webcast with the following executives. Reynaldo Passanesi Filho, CEO. Demos Costa, Chief Commercial Officer. Eduardo Soares, Chief Legal and Regulatory Officer, Leonardo Jorge de Magalhães, CFO and IR Officer, Marnay Tadeu Antunes, Chief Distribution Officer, Maurício Dallagnese, Chief Participation Strategy, Environmental and Innovation Officer, and Tadeu Carneiro da Silva, Chief Generation and Transmission Officer. Now I turn the floor to the CEO, Reynaldo Passanesi Filho, for the initial remarks. Good afternoon. Good afternoon, everyone. It is a pleasure to be here to bring to you the results of the fourth quarter and the year of 2021. These are historical results. As we mentioned here in the presentation, this is an year of major achievements. We are very happy to see the ability of turnaround and transformation that Semegi has because the results are historical. They are all time high. They prove the resilience and the ability of being sustainable and to overcome difficulties. And whenever we make the right decisions, so this is a summary of our achievements this year. This is thanks to the review of our strategy and a daily effort aiming a best management for this company and also bringing in sustainability. This is the first time. that we have in the distribution area, the fulfillment of all indicators, the main performance indicators in the company. So we met our regulatory OPEX, we met our regulatory losses, therefore we are also meeting our regulatory EBITDA. This is the first time that we are able to meet all these three regulatory targets. So at OPEX, we are almost at 15% lower than the regulatory standards. And not long ago, we were 20% over the regulatory parameters. This adjustment in the regulatory is over 800 million rials a year. This is the adjustment that we are making to place the company within the regulatory OPEX. And obviously, this is a daily effort. And also the regulatory losses, we were way above the regulatory losses level. And we are very proud to say to you today that we are meeting the index for regulatory losses for the first time in this company's history. And of course, that if we match the regulatory OPEX and losses, we are having a better regulatory EBITDA as well. We are 18% above the regulatory EBITDA. And we are able to do that by improving the quality of our service here we bring to you our dec which is the best one in 69 years of history so this is the best dec in 69 years of company 9.46 hours also the best fec the outage indexes And it is the best moment when we have our subsets. That's when we were able to meet the DECs by subsets as well. That shows our huge effort to aim efficiency in the company, to make operating adjustments, and having this company that is healthy operational-wise. And it is this... financial health and this cash generation that you see here, $8 billion in EBITDA. This is the highest nominal EBITDA for CME. And despite of the fact that in 2015, we had lost Almost 3 gigawatts of capacity, 53% in our plans of our installed capacity in 2015. So in spite of a company that has a generation area which is almost half of what it was, we are able to have the highest EBITDA in the company, an increase of 40% year on year. This is what allows us to think about investments. These results allow us to invest and invest in our core businesses and distribution and generation, transmission. You will see on the next page that we are going back to the transmission auctions. We have a strategic planning to grow 1.5 gigawatts and generation, and we are carrying out the largest investment program in distributions history. So in general, we are announcing our investment program of 22.5 billion reals in the next five years. This is almost four times. what we had in terms of investment programs in 2018. So this is a very bold number and this new situation of this company, this is the new scenario instead of investing in stakeholders out of Minas Gerais that unfortunately did not bring us the expected results. We are now generating more cash, and this cash is fully reinvested in Minas Gerais and the state. This is the boldest program. the largest program in the company, 22.5 billion reals, a lot of investments and distribution, more energy, minus three phase, minus LED. I think we already talked about that in our semi-day. So we are going to grow in generation in renewable 1.5 giga and also transmission to be able to go back to auctions. And we are able to do that. I think that we can go to the next page. We are able to do that. And also maintaining our financial health. This is one of the best ratios in the company, and Leo is going to talk about that, but we have a leverage that is close to one time in EBITDA. That's very controlled, the best rating of our history, and we have other topics that are also important. We also worked on structural issues that are very important for the company, such as the adjustment of retirement benefits and adjustment of $415 billion with the adjustment of the retirements regarding life insurance. Also, the exposure of the company to the FX rate we bought back. $500 million of semi GT. And this will also be mentioned. And we have two additional years in extension of concession for Embarcason and Navajo Ponte plants. So I would like to go back to this topic that our aim is to focus in Minas Gerais and grow. And therefore we want to divest other stakes that are not in Minas Gerais. So here we concluded the sale of light stake. This is only for this of 1.3 billion. regarding the 22.6% stake that was sold in January. So now we have concluded our sale of light. So effectively, if we had maintained the same stake, we would have to add capital to light. But now this is a very positive effect. We can use these funds to invest and managerize. Also, we have announced the sale of our stake in Renova. We'll be signing on this very soon, and we move forward with a divestment plan. This is a public plan, and our objective is to move on with its execution with Alianza Taeza and the sale of up to 49% of Gazmeg, Santo Antonio, Belomonte. and the smaller stakes that CEMEGI has such as activas and action. This is a strategic plan, it's strategic for the controlling shareholder and it's strategic for the management so that we can concentrate ourselves in thinking about CEMEGI and growing CEMEGI and its core activities. We also started transferring the commercialization contracts that were under Semiga GT to the holding company. This will allow us to have a clearer view between the own generation businesses and generation. This is positive, we will generate value and Another important topic here, which has to do with bringing in a private mindset, a modern management. And we have that possibility. Up to 40% of the leading professionals at CEMIGI come not necessarily from Semigi. This is a policy that was approved by the board of directors. But what is important here really is to highlight whether these leaders come from Semigi or not. We do have a private mindset that is geared towards results. And I think that's what we are delivering. Single results and unique results in the history of this company. Well, this is what I wanted to bring. And I will turn the floor to Leonardo. And I would like to thank you all very much. This has been a wonderful year. Thank you very much for your support. And thank you who work at Semigi. And you turned the company, a great company, to Bien. Hello, everyone. Thank you very much for your participation in our conference call. Now we are going to point out some highlights. Some of them are already mentioned in the opening of this conference. On page six, we talk a little bit about our investment program. We invested $2.1 billion in 2021. We wanted to invest more, but in the quarter, and I believe that we have talked to you and mentioned how difficult it was, especially the first half of 2021 in the supply chain. We had effects, variation effects, and so investments in the first half of the year were lower than what we were expecting in our planning. We see that the fourth quarter has already been a great quarter. We were able to invest $714 million. Therefore, we ended the year with 2.12 billion, in spite of being a number that was lower than what we expected for the year. If we compare that to the all-time average of the company, it was almost two times more than what we have for 2019. And for 2022, we want to invest around 4 billion in 2022. It's an important year, especially for a distributing company because it is the year prior the tariff review, which will happen in 23. So this is a program of 3.2 billion in investments that if they happen in the year, we will be able to have this already remunerated in a tariff in 2023. So we are focused and working in order to invest successfully, successfully develop this investment plan in 2022. And the next slide, once again, I want to stress our commitment regarding the sale of non-strategic assets. We have already completed sales of light. We are very close to Renova's closing. and this process of sale of Renova. and in line to the strategic planning of the company. Down here, we have some of the main companies in which we intend to sell. They are smaller companies, but we are interested in selling them. Taesa, Alianza, Santo Antonio, Norte Energia. Taesa, since 2021, we already announced that we were interested in selling it. It didn't happen last year, but I stress that we intend to sell our stakes in these assets. especially because we believe this is going to bring us a very positive return and it's going to generate value for our shareholders. Now, moving forward, this was something new and very important. That's an index that we have. That's an achievement that we have to celebrate in this fourth quarter of 2021. We were able to reach and be below the loss standard, the loss parameter, we had total losses of 11.23 and the regulatory coverage for losses is here 11.28. And we have been talking about that every quarter and we are stressing our commitment that thanks to all the actions that we developed throughout the year, we wanted to meet this index or this standard. And we were able to do that by the end of 2021. And on the right side, we can see several actions that have been taken to prove that this is a sustainable effort and this is a sustainable result. And it happened thanks to our efforts. And especially when you compare that to 2020, 2021, because we are able to reduce over 1% in terms of regulatory losses. This is over 200 million EBITDA a year. So it's really a reason to celebrate these results by the end of 2021. Now on the next slide, we have DEC and FEC, our outage indexes. We already had the best DEC in 2020, and we continued to have that objective and the results were great but also we were able to improve service to clients in addition to our good financial results our DEC and FEC are lower than regulatory limits and these are the best results that we have reached in the 69 years of existence. Moving forward, fighting delinquency. Collection, not only the losses came down, the quality of service was maintained very good at the best levels of all time, and also collections did bring great results, 98.66% in terms of Receivables Collection Index in 2021. and possibly one of the best indicators among all the energy distributors in Brazil. Also, thanks to many actions, we increased the number of disconnections, 1.4 million disconnections, probably much higher than what we had in prior years, and we expect to have 1.7 million. Millions Connections in 2020 in order to maintain these levels of collections that we had in 2021. And we expanded the means of payment so that our clients could have the opportunity to be on time with the company. And we were well-succeeded. Not only collection improved, but also we were able to maintain our ADA at very low levels. we had here reviews of some of the criteria, but regardless of these reviews, you can see that the figure is much lower, lower than the 1% of revenue that is usually used as a reference. So you can see that the indexes were, 2020 and 2021, both were very low, and we expect to have something similar for 2022. Moving forward, we have great financial results, and this is a company that historically is recognized by its indicators by the sustainability. Sustainability is in our DNA. We are part of all the main sustainability indexes, both domestic as well as the international ones, and we highlight some of our actions during the COVID pandemic where we analyzed over 400 towns in the state of Minas Gerais, and we offered cold chambers, refrigerators, freezers, and there was a volunteer effort of our employees so that those small towns could keep the vaccines well refrigerated. And that was very important. We are very proud of the support that we were able to provide to the state of Minas Gerais, which is our concession area to these over 400 towns. And the next slide, this is our proposal for allocation of our profit or our net income. We are proposing 52% of payout of that net income to pay dividends. This is a dividend yield of 8.8%. We understand this is very attractive, and so we believe. the company has an attractive dividend and it also allows for a retention of part of this net income to provide sustainability in order to bring in the investment programs and generate more revenue. We believe it is balanced out and it's a very attractive dividend for our shareholders. So now we are going to analyze the results and Carolina will talk about the results of the fourth quarter and also for 2021, and then we'll come back at the end. So moving forward about the main results in 2021 and separating those by companies, the highlights that we have for the CEMIG holding, and we mentioned those in the third quarter, is the transfer and the commercialization contacts from CEMIG's GT to the holding company. And the objective here is to provide greater visibility in the commercialization business. In 2021, we transferred $233 million in EBITDA and $154 million in ad income. We also highlight the significant participation of GASMEG in the consolidated results. In 2021, its EBITDA was up $681 million. And also the adjustment of the retirement benefits for life insurance only in the amount of $415 million and the results. Procemic distribution we already mentioned, but we'd like to stress that we were able to deliver the EBITDA above the regulatory EBITDA and the OPEX below the regulatory OPEX. And also our losses were within the regulatory parameters for CEMIC-GT, we would like to highlight the buyback of $500 million of euro bonds. Also, the GSF renegotiation with an impact of $1.3 billion in the results. And we have a negative adjustment regarding Santo Antonio in the fourth quarter of 2021. Moving on. Here we have the results for the fourth quarter of 2021 for semi-holding. We can see that EBITDA, both IFRS as well as the recurring one, was up. The recurring one for 30.3% and the net income If we remove the non-recurring effects, we had an increase of 68.3% in our income. The main highlight for 2021 of non-recurring, the largest ones are down here in this chart, the negative adjustment for Santo Antonio and the write-off for this life insurance for retired employees. The results for the year, we can see that there was a significant growth in the IFRS of 40.5% in the EBITDA, our CEO already mentioned, R$8 billion, and the recurring result for the EBITDA, 21.7%, reaching R$5.9 billion. And then at income, there was an increase of 31% in the IFRS result, and that of the recurring facts, 49.8% in 2021. We already mentioned the Santo Antonio, the adjustments for the life insurance of retirees, and also the renegotiation of the hydrological risk of GSF. Now for CEMEX GT results for the fourth quarter, we can see and we are now highlighting something that we already mentioned that part of the results of CEMEX GT are being transferred to the holding company. So in the fourth quarter, there was an effect that was transferred 108 million of EBITDA and 71 million in the net income. So analyzing the EBITDA, we can see that the IFRS came down. But if we analyze the recurring EBITDA of the company, we see that there was a significant growth of 27.8%, even with this partial transfer of the commercialization activity to CEMIG-H. Net income under IFRS had posted a negative result of 51 million, but net of the non-recurring effects, there was a growth of 56%. And in the last quarter, we have the negative adjustment of Santo Antonio. Now looking at 2021 for CMYK-GT. Once again, we have the same commercialization strategy being transferred to CEMIGS-H. The effect on the year-to-date is higher. There was an effect of $233 million for EBITDA and an effect of $154 million in the net income. EBITDA IFRS was up almost 37%. Net of the non-recurring effects, the growth was of 2.2%. And remember, the main effect in a non-recurring year is the renegotiation of hydrological risk, which had an effect of $1.3 billion. Net income was down 17.5% in IFRS, but net of non-recurring effects was a positive result of 30.7%, even after transferring part of the commercialization activities to the holding. Even then, semi-GDT had significant results. Now, moving forward. for CEMIG-D, we now see the market. And remember that in the fourth quarter in the state of Minas Gerais, we did have a lot of rainfall, therefore cooler weather. So we had a reduction of the residential and rural volumes. But when we compare quarter on quarter 2021 to 2021, Considering transport and captive market, we see there was an increase of 0.6%, even with the result of added energy distributed generation, which has grown in Minas Gerais. When you compare quarter on quarter, there was a growth of 79.4%, and that represents 4.8% of total market growth. within CEMIC's distribution concession that related to injected energy. Now, in the fourth quarter for CEMIC-D, there was an increase in the EBITDA of 113.6% of IFRS. Now, net of the recurring Effect of the life insurance, we see that the growth was robust, 46.8%. Net income was up 112.5%. And removing that effect of the life insurance, it was up 35.2%. Over 2021, we had a growth of SEMIC-D of 33% in EBITDA and net of the non-recurring effects of 25.4%. For net income, growth was of 41.5%. And recurring was 32.6%. The same effect already mentioned. The main impact here was the life insurance issue. Now moving to OPEX. We already mentioned that our performance is below the regulatory OPEX, and we are delivering more than the regulatory EBITDA. So we see that over 2021, OPEX was below $448 billion, representing almost 15%. And I should highlight here an important reduction in the PMSO. Now, looking at the EBITDA, I am performing higher than the regulatory EBITDA, 473 million, and that represents 18%. That is, CEMIG-D is doing its homework, and it is delivering not only quality energy to its consumers, but also significant and important results to CEMIG's group. Now turning to consolidated operating costs and expenses for the fourth quarter, we can see that there was an increase of costs, but that was because of the energy purchased and that were purchased for distribution, energy bought and transferred to consumers. Now in PMSO, we had a reduction in the fourth quarter of 32.6%. And here the main contribution to this reduction was the life insurance benefit that we mentioned. We also had a reduction of 2.2%. with personnel, with headcount. It's important to mention that. And also there was an effect of $40 million that is regarding to Itaucara. Now the facts over the year of consolidating and operating costs and expenses, we also had a growth in expenses here because of purchase of energy in the fourth quarter and looking at PMSO, there was a reduction of 4.8%. And part of this reduction is also related to the life insurance benefits already mentioned. And we also had third-party expenses. And we say this is good because it brings in an added revenue. This was because we have had an increased number of disconnections. They were higher than 2020. 685,000 in 2020 and over 1.3 million disconnections in 2021. And that extra expense also bring in extra revenue. So it has built in an added value. Also important is the participation of GASMIG in CEMIG's group. Here we show the expansion and growth of GASMIG. We can see that it has had an increase of gas. So of 19.5% for industrial class of 205 for thermal because of the water drought that we had in the second half of the year. We can see in the EBITDA that it increased 57.6% from 432 in 2020 to 681 million in 2021. Now, looking only at the fourth quarter, we can see that EBITDA was up 25.1%, reaching $174 million in the fourth quarter of 2021. Now, moving on, we are going to talk about the debt profile. And I will turn the floor to Leonardo, our CFO. Now, talking about the company's leverage, it's very close to one time to its cash generation. It's measured by... total net debt over EBITDA. It's a very comfortable situation for the company. Looking at the debt profile, we see that in 2024, we have a larger amount of 6 billion. These are the bonds and we are constantly talking about that. We are following up the market and also following up the premium of our securities in the secondary market and the extension for FX protection and all the opportunities and products available in the market so that we can keep on working on our liability management. What we can tell you is that we are following up this topic open closely now the dollar rate is at 470 so it makes it easier because the cost is lower and a possible additional buyback the cost is a little bit lower so we are paying attention to the best opportunities so that we can work on our liability management Now, in terms of cost of debt, those increased by the end of 2021, but that is because of macroeconomic issues. All Brazilian companies had that because interest rates increased and also inflation increased and all of that had affected debt. the cost of that for the company and for all Brazilian companies. So we believe that 2022 will have these high rates. We understand this is temporary if we consider that long-term trajectory that we have of interest rates going down in Brazil. But right now we have higher rates that are more challenging and higher than what we have seen in the past few years. Moving on, we have our cash generation. It's very nice, and it shows our cash generation capacity, which is wonderful, over $6 billion, even with a CVA of $2 billion that we will have in the next tariff adjustment in the distributing company. By the end of May, we are able to amortize $4 billion in payments and loans, and most of them are regarding payments. to the buyback of the 500 million of the bonds. Even with this buyback with the CVA and with the somatization payment, we end the year with cash of almost 3 billion. And I think that's a very comfortable position for the company in order to face its financial obligations now and in the year. We always like to show this slide. I think it's good to bring a type of a balance of all commitments that we have made with our investors and all stakeholders since 2020. are stating that we are committed to this transformation process and taking actions that will generate value to our shareholders. And these are several of our actions that have already been achieved and they are thanks to our efforts and they have good results. You can see that we are bringing consistent results to the market. In our earnings call, you can track that. Here we have several of these actions already achieved. We have here this negotiation of the retirement benefit plans. We were able to make the reversal of almost 400 million, and we were saying that this was something important. It was a structural that demanded a lot of effort, and we were able to show the initial results in this fourth quarter. at this rate of life insurance, but we are committed to reduce these costs also in terms of the pension plans and also healthcare plan. We are still working on that. We are motivated, engaged in the restructuring process for these plants so that we can reduce the actuarial risk for the company and bring benefits in terms of cost reductions, as we were able to do in this fourth quarter regarding the life insurance. And also other ongoing actions. Once again, divestment in Thais, we have already been able to divest from Light and Renova. It's concluded another quarter. actions that are ongoing we are paying attention to growth in retail energy commercialization uh This is an opportunity for the company as we had the free market a few years ago. We understand that this is an opportunity to create value. We have expertise in this topic, also investment in generation from renewable sources and concession renewals. So in a very brief manner, we just brought to you the main highlights for 2021 and the fourth quarter, and we are available to take any additional questions that you might have. Thank you. So now we're going to start the Q&A session. Questions may be asked by clicking in the raise the hand icon, which is available at the bottom of your screen. A request to open your microphone will come up. and you should click to unmute it. To send your question via text, click on the Q&A icon, also available at the bottom of your screen, and then just type your question. English questions should be sent via text only. Please wait while we collect your questions. Good afternoon, everyone. I have two questions. The first one is about GASMIG. If you can comment how the process was for the tariff review and the public hearing, and when do you expect to conclude the process? And the second question, if you can talk more about the next steps for arbitration in Santo Antonio. which is the next step of the company to try to avoid consequences of the first conclusion of this arbitration. These are my first two questions. Thank you. Andrea, good afternoon. This is Mauricio Dallagnese. I am responsible for CEMIG PAR. About tariff review for GASMIG, this is an ongoing process still, but it's already at its final stages. The public hearings have already been carried out, but we are still waiting for the final process. disclosures of the decisions. We already saw a small reduction of around 10% in the rate, but the final result is still yet to be published. The other question was about arbitration in Santo Antonio. Yes, we do have this arbitration. It started in 2014. and it questions events related to the construction works and contracts signed to construct, to build this plant. I think these are contracts for 2009, and this is a topic that has been discussed for a long time. Now, in February, there was a decision by the arbitration that determines some payments, but this has not been concluded yet. So we have requested a more explanations and Santo Antonio is already preparing its arguments to better position the company. This process is confidential in the courts, and we do not have a schedule of when this is going to be concluded. An additional comment, Andrea, thank you very much for your participation in this meeting about the tariff review when the process is concluded. we'll come forward and we'll disclose the process and its conclusion because I think it's important to bring visibility to GASMIG. This is a concession that we have up to 53. It's an important asset for the company and it became relevant to the company within our results. So we will have will disclose the results as soon as they are out. About the arbitration, Mauricio already talked about that. Just to make it clear that in the worst case scenario about the arbitration, and this is still in this process of clarification, but all of that, we are not expecting any other relevant effect related to Santo Antonio in our financial statements, considering that the main impacts are already recorded in the fourth quarter of 2021. This is our expectation. And of course, Santo Antonio's management is working on this topic and with a lot of care because it's how it needs to be tackled. Just a quick follow-up about Santo Antonio. Just in case the arbitration does not come with a positive resolution, are you going to court or are you just going to work with the arbitration? It is possible. I think there are several avenues for the company, but this is still being analyzed. It is too soon to tell you which is going to be our final decision. Well, we are stakeholders in the company. We do not have veto power there. Thank you very much. Now, Antonio from Athena Capital. Please hold while we collect the questions. Next question from Enrique from JPM. We have no sound. I apologize. I have two questions. The first one is about the movement from CEMIG-GT to CEMIG holding. That has to do with the potential of using the tax losses of the holding. If that's the case, what is the size of that and what is your timing to recover it? And second, it's about Taeza sale. We know that this... this isn't the shares are at a good moment because they are a high that would be a good moment to sell your stake in the company so it would be better if you were able if you had been able to conclude the process last year unfortunately it didn't happen is it still possible to sell thais at this year and how are you going to tackle the tax issue if that happens. And Ricky, thank you. Asking about CEMIG's commercialization company. Well, there are two things here. First, we want to provide more visibility to our commercialization business. We always say that we are also a large generation company and commercialization being With generation, sometimes it's difficult to have the right pricing to our commercialization business. And we understand that if commercialization is under semi-holding, at least most of it, we can have a better visibility of that to show how this is relevant for the company and thanks to our expertise. and relevance when compared to the free market, how we can generate value in this business. And we are talking about hundreds of millions every year just for our commercialization business, not talking about a generation's gains. So this is one of the main drivers that will help the market price to make it in a more fair way. And second, considering all the possibilities that we have regarding to tax credits and the holding company, And also interest on equity, which is a possibility, an alternative, and the company can keep using under semi-exholding. So we understand that tax-wise, it makes sense. to have commercialization under the holding company because it's going to add more value to our shareholders because we are able to have a better use of these tax credits and reduce the cash impact because of the interest on equity amortizing the impacts related to possible tax payments. So I can tell you exactly how much of tax credits we are able to offset because obviously in the year you could offset all tax credit with the interest on equity but it is a relevant effect in terms of tax reduction considering that in the holding company with the interest on equity we are able to have this relevant tax benefit for the company. So both things, greater visibility for the business and also tax optimization for the commercialization business. The other question regarding Taísa, I will turn the floor to Reinaldo. I think we already mentioned, and good afternoon, Enrique. Our objective is to move on with our divestment program. Really, I am more and more convinced that we want, I want to move on with this divestment program. And I want questions to be about Semigi. And the questions are about Taeza, about Semigi. And this really proves that we have to concentrate our efforts in Semigi. Our objective is to move on with the divestments program. And we have, yes, positive expectation to conclude TAEZ just like other assets still now in 2022. Thank you very much, Reynaldo. Next question from Danielle from Bucea Investments. Congratulations on the results. Can you give us an update on the pension fund of the company? Hello, Danielle. Thank you for your question. We have been talking about the retirement benefits and that rounding up, we have around $3 billion regarding pension funds and three regarding our healthcare plan. And the company is now discussing with the retirees and employees associations, the possibilities for these plans. About the pension fund specifically, the company aims to restructure this plan. Currently, it has no new participants, but because of the current participants of this plan, we do have relevant financial obligations for the company, therefore we do have actuarial risk and we want to create a financial contribution plan and to allow these participants to a new plan. This is an approach, a methodology that has been used by other companies in Brazil. So we are not doing anything that is new, but it is feasible. And we see that the other companies were successful in the process, and that's what we expected to have as well. And we understand that with this possibility, we'll have two positive effects. In addition to removing the actuarial risk from Semigate, it can also generate positive effects in the obligations already posted to the balance sheet of the company. Considering these are relevant amounts, over $3 billion, Any reduction of 10%, 20%, 30% will be significant values in terms of cost reductions, and that can also apply to health care plans. We have over $3 billion in our balance sheet, and this restructuring process and the health care plan involving the creation of a plan and conditions That will be different, such as more affordable health care plans with less participation of CEMEG in the total share of these obligations. We also will have benefits then. So as I said, in 2021, we have taken an important step. regarding life insurance, and we are very optimistic about the pension funds and also health care plans. Of course, regarding the pension funds, we have a regulatory schedule, but I think that by 2022, 2023, we'll have good news on this topic. Next question from João Vitor Pagundes, Bradesco BBI. Good afternoon. This is Francisco from Bradesco BBI. Can you hear me well? Hello, Francisco. Yes, we can hear you. Great. Thank you very much for the opportunity of taking my question. My question is about CEMIG, and this is a topic that is being discussed, which is the exposure to renewables and incentive-based energy. And which is the exposure that Semigi has? I understand that there is a portfolio of PPAs that you have put together over the years. And so you have an interesting position on incentive-based energy. There is a spread of around 35 reals now, but there are a number of theories saying that this could substantially increase and might even double because of a four clients flow from the regulated to the non-regulated market, creating a demand for these incentive-based assets. And there is a limit, which is March 2026. I would like to hear from you. I believe it is very relevant for all players and generating companies in Brazil. And I don't know if it is very clear for those that follow up SEMIG in terms of the size of this exposure. And now, so the risk in your portfolio, that you have if all the players that are developing these projects will be able to deliver that on time and with no delays and so and what would be the problem if that were to happen very well francisco good afternoon thank you for your question this is demos commercialization officer yes we purchased and leonardo mentioned and also ronaldo talked about that in 2015 we lost over a half of our generation capacity and in order to maintain the leading market and the free market at the time we could make no investments so we chose to buy energy and we purchased around 1.5 giga and this energy is already being delivered this year some of it was delivered early earlier in 2021 of those I can tell you that we had delays and problems of only 20 mega. So we have the performance of all these generators that are ongoing. Some of them already have been concluded and the others are ongoing. About this counter, this is an incentive-based energy and now the main consumers are working mainly with self-production. So In the past few years, we started directing this energy to a more attractive market, which is the A4 group, which is this incentive-based energy. It not only maintains our market, but also we are prepared for the transition, which is going to happen to the retailer commercialization. In terms of the schedule, of course, all this bought, this purchased energy has a discount. And now the legislation changed a little bit, right? Because in the beginning, if you were to submit... the concession request by February would have a discount, but it looks like there was a change in the law. And now it is, if you submit it in the next four years, you will be able to seize the discount. So now from March up to March of 2026, that's a period of time when we could go in. Now we are no longer purchasing energy and now we are investing because of possibilities of investment. We are investing And we are acquiring pipelines and we have some ongoing undertakings. But to meet that 1.5 giga, we are buying pipelines. And within these pipelines, of course, that we are looking for those that already have the concession grant and can purchase. have any possibility of providing discounts i don't know if it is clear yet just to make it clear maybe i have not understand understood you but do you have ppas of 1.5 giga or you sold the equivalent to 1.5 giga and you have to find energy to cover for that no we acquired we purchased There's 1.5 giga and it's 1.40 something. And out of this 1.40 something. And if you consider, you know, the four years from now, five years from now, we have already 80% of our energy. So of course that you do not sell the full, um, all the energy for 20 years. We have, in terms of the PPA, we have around 20% sold. So this is what we are working on it. Every year we add more sale to our portfolio. So we have the energy in our portfolio, but we do not have it all sold. It will be coming in in the next three years. but we'll be selling it and delivering it within a specific schedule. So when we are able to sell it for 10, 15 years, it's wonderful. Okay, Dimas, I think we have, it's a coincidence because it's the same figure. We have 1.5 giga that we bought in PPA last year, and we have 1.5 giga, which is our strategic plan for growth. And that's what was Dimas telling you. And we have a pipeline that, to build another 1.5 gigas. So that's the stake in the market. So it's just a coincidence in the figures. And part of those will be projects that are being developed at CEMIG. And part of that will be from other developers' projects that we'll be purchasing. Thank you. Next, Mauricio Godoy from Canal Energia. I would like to know more about divestments. If there is any perspective of moving forward over 2022, especially regarding the companies that you've already mentioned. Mauricio? Yes, Mauricio, this is our objective. We do intend to conclude these divestments over 2022. As I mentioned here, we want to concentrate ourselves and CEMIGI. Now, William Souza from Estado Agency. Good afternoon. I would like to know if CEMIGI is interested in participating in the transmission auction that will happen in the middle of the year. and if the company can give us more information on that. Yeah, go ahead. Good afternoon. This is Tadeu Silva. I am the officer for generation and transmission. Thank you, William, for your question and the answer. Yes, yes, we will be participating on that auction and in line to our strategic planning. We are going to look for lots here and managerize and looking for synergies with our operating assets, established engineering, both implementation and OEM. And the knowledge that we have about this state, we do have that competitive advantage in the market. Next question from Roberto Campello. Congratulations on the results. Your retained earnings are a little bit higher than your capital. Are you going to distribute dividends on part of this profit? If yes, how? Thank you for your question, Roberto. Well, we do have that information in our financial results. but this is very extensive. And of course, probably, and we'll have to submit to the shareholders assembly, a proposal for bonus share of 30% so that the retained earnings are below our capital stock, but so that we can meet the law. We now end the Q&A session. I would like to turn the floor to Leonardo Jorge de Magalhães for the company's final remarks. I would like to thank you all very much for trusting in our company, for participating in this conference call. And once again, I would like to say that we understand that 2020 was a great year. 2021 was a year of great achievements. And we understand that several of our commitments have been fulfilled. And we are very optimistic about the company's future. 2022 is a year in which we are continually investing in operating efficiency. And of all our investments, commitments, we would never let go of the quality of service within our area. So this is an optimistic message from the whole management, and we hope that in the next quarters, we bring back to you more consistent results. Thank you very much. Samig's webinar has ended. Thank you very much for your participation, and have a nice afternoon.