Pampa Energia S.A.

Please contact us whether through the platform or email. Before proceeding, please read the disclaimer that is located in the second page of our presentation. Let me mention that forward-looking statements are based on the beliefs and assumptions of companies that we see as management and on information currently available to the company. They involve risks, uncertainties, and assumptions because they relate to future events and they are far different from circumstances that may or may not occur in the future. Investors should understand that general economic conditions, industry conditions, and other operating factors could also affect the future results of Pampa Energia and could cause results to differ materially from those expressed in such forward-looking statements. Now I'll turn the video conference over to Lida Wang, our Investor Relations and Sustainability Officer of Pampa Energia. Lida, you may begin the video conference.

Thank you, Margarita. Hello, everyone, and thank you for joining our conference call. I hope you all are safe and well. For the interest of time, I will make a brief summary of the quarter's key figures, the impact of COVID-19, and the latest events since our last call. We will focus on power and EMP, as TGS and ANR already held their calls earlier this week. Our CEO Gustavo Mariani and CFO Gabriel Cohen are both here and joining us for Q&A. Before we begin, let me remind you that compass figures follow U.S. dollar as functional currency. In the case of peso links of theory, such as our utilities, their figures are adjusted by inflation and shown in dollars at the end of each reporting period effects. You also can see in this slide which businesses are included when we talk about Pampa Consolidated and Pampa Restricted Group, a definition we use for covenant purposes. Compared to last quarter, Q3 has not been so active as the lockdown is easing up and the economy rebounded, readily improving but still not back to pre-COVID-19 levels. During Q3, the Argentine economy is estimated to have fallen by around 11% year-on-year, better than 19% recorded in Q2. We expect the normalization to keep coming along as the country is entering into a more flexible quarantine phase. CompaChief robust figures this quarter as a result of higher pricing due to winter peak season, solid operational performance across all our businesses, and the contribution from our new CDGT at Genelva, which is billing a 15-year PPA. Because of uncertain environment at Upstream, culmination of expansionary investment cycle at Power Generation, OPEC's discipline, and Higher Sales, our operating cash flow boosted during Q3 2020, helping to keep buybacks and offset the payment delays from CAMESA experiencing the quarter. And finally, a few weeks ago, the government announced a new gas incentive scheme to foster investments for domestic production, although the official regulation has not been released yet. Beforehand, we believe this should be equated to our upstream business. So let's start commending the quarter's key takeaways. As shown on slide five, revenues increased 5% year-on-year to $689 million, mainly contributed by Hemelba's new PPA and because of the strong real devaluation in Q3 last year, affecting our utility businesses. Partially upset by lower fuel sub-supply, as Camisa took over most of the grid's fuel consumption, lower prices and volumes of oil and gas sold at lesser spot prices and dispatch. In Q320, around 45% of our sales were dollar-linked, but roughly 70% in EVVA terms. mainly coming from our core businesses, PPA, power capacity, followed by EMP. Adjusted EVDA maintained stable by only reduces 3% year-on-year amounting to $234 million for the quarter, mainly explained by lower EMP price and volume, carry space of utilities and lesser legacy of power generation. Partially upset by Geneva PPA, lower EMP OPEX, and royalties related to activity downturn, and the dilution of the peso-denominated costs because of depreciation. Quarter on quarter, EVDA almost doubled thanks to Geneva's CCGT PPA, the peak season having higher spot prices for power and gas, and increased sales at EDENO. As we show on right below, electricity takes 71% of the consolidated adjusted VDA, mostly led by power generation, while oil and gas exposure takes 29% driven by gas and DGS. Moreover, as shown in the chart left below, in the first quarter of this year, our cap has decreased significantly compared to last year. mainly because of drilling and completion activities at Yampi are on standby due to the uncertain pricing environment compared to the shale activities in Q3 last year. And also because we finished Geneva Plus expansion project. Eden North CapEx increased year on year due to the steep yield evaluation in Q3 2019, partially upset by the lockdown restrictions, tariff freeze, and higher bad debts impacting Eden North CapEx. On slide seven, during Q3, the lockdown effect diluted over the Argentine power grid thanks to the winter season. The average demand reached 15 gigawatts, two to 3% lower than previous years, but better than other sectors of the energy industry or GDP. Industries are still the most impacted by quarantine, especially now in Seychelles. While these goals were hit because of the collapse of the SMEs' consumption, but partially upset by residential demand due to the stay-at-home order and colder weather. As we are entering spring, electricity demand is expected to give in. Moving to power generation segment, as seen on slide 7, during the third quarter of 2020, we posted an EVPA of 132 million dollars. Very similar to the adjusted VGA of Q3 last year, mainly given by Canela Plus CCGT contribution, higher B2B renewal sales, as well as lower costs related to lower energy purchases, and the devolved impact on our peso-nominated expenses. These effects were partially offset mainly by the reduction and pacification of spot prices as from February 2020 without any inflation adjustment. Quarter-on-quarter peak pricing for spot energy and higher dispatch in Q320 contributed to the 39% increase in ABDA. While spot energy comprises 59% of our capacity operated, only 18% of our power generation ABDA represented by spot market in the quarter and will keep shrinking Once Ensenada Barragán expansion is online and inflation keeps not happening. Generation in 2020 was 3% lower year-on-year in line with the lower electricity demand in the national grid. Our free combined cycles at Loma and Genelva, as well as our wind farms, achieved high levels of low factor, but the thermal units that solely depend on gas, such as Tierra Buena, the northwestern units, were mostly not required. in addition to lower generation of our hydro units. Because of the winter and hence reduced gas supply for power generation, our efficient dual fuel units of Parque Pilar and Ingeniero White were highly requested. Quarter on quarter, power generation raised by 16% mainly because of the seasonality. Despite the demand contraction with this in the country, The power generation business model relies on capacity payment, so lower dispatch does not much impact on the revenue making, as long as the availability is outstanding, especially for PPA-based energy. The availability rate in G3 2020 reached 98.6% with an installed capacity of 5 gigawatts operated by Pampa, very similar to year-on-year and quarter-on-quarter performance. Regarding our remaining expansions in the pipeline, our key project now is the closing to CCGT at Ensenada Barragán thermal power plant, as you can see on slide eight. This is a 280 megawatt CCGT project at the south of Greater Buenos Aires, which is critical infrastructure for Argentina's grid. We've already placed the purchase order for the cooling tower, so currently we are working on cementing We are also finishing the turbines building, installing the main pipelines and preparing all remaining equipment. 250 people are right now at the site working at the strictest protocols in place to minimize circulation of COVID. National gas consumption rebounded as expected because of the winter. but domestic production is severely depleting due to weak investment landscape that began about a year and a half ago. The graph we see in the slide shows the evolution of production and the dependency on gas imports and liquids to fulfill the demand, which are more inefficient, paid with hard currency, way more expensive than local gas, et cetera. As domestic production increased, Import reliance shrank until 2020. In Q3, the production fell 10% year-on-year, covering demand deficits with liquid fuels, as LNG and Bolivian gas were taken at maximum capacity. Should this situation prevail, depletion will come along, and the country will need to restore the LNG facility that was dismissed in 2018, plus increased liquid consumption. all in detriment of reserves, subsidies, and GDP. However, the implementation of Plan Gas 4 should be soon and reverse this trend. So moving on to the results of EMP, as you can see on the slide 10, in Q3 2020, we posted an adjusted VBA of $36 million, 31% lower than the Q3 2019, mainly because of lower prices and to a less extent production volume, Partially upset by lesser cost and royalty. In terms of operating efficiency, we recorded $23 million of lifting costs, 44% improvement compared to Q3 last year, mainly driven by devaluation, efficiency, and lower activity at less competitive loss, given the current market's prices. Measured by units, we reached a lifting cost of $5.50 per BOE produced. Contributed by their outstanding productivity at the Marluxo block. Should we become more active as we did this quarter? Lifting costs may go higher, but most of the savings are efficiencies gained to this segment.

Despite the tough environment,

Our oil and gas production decreased only 6% year-on-year, but increased 7% quarter-on-quarter in Q3 2020, reaching 47,000 barrels of oil equivalent per day, of which 91% is composed by natural gas. The quarter-on-quarter rebound is explained by seasonality. On the oil side, which represented almost 20% of our segment revenue in the quarter, Bodensol decreased 11% year-on-year to 4.2 thousand barrels per day, mainly due to the decline in demand and prices because of the lockdown, resulting in activity standby partially upset by conventional production from Chirete Blanc, which last month was granted to Pampa and Jailac a 25-year exploitation concession in Los Blancos field. During Q3 2020, crude oil prices decreased by 18% year-on-year, reaching to $40 per barrel, bouncing back from the fall caused by COVID-19 in Q2. Despite domestic demand collapse due to the lockdown, Tampa was able to export almost 75% of its production at a discounted price on rent. 53% of our oil production is escalante heavy oil, which is sweet and given the current wind fuel trend is pricing premium. However, last September local markets started to recover and we resumed sales. Regarding gas, as we can see on slide 11, Q320 reached an average of 264 million cubic feet per day of volume sold. 15% lower year-on-year, mainly due to lower trading and, to a lesser extent, 5% interannual decrease on production. Compared to last quarter, volume sold recovered 4% as a production rate to attend the winter demand despite challenging prices. Lower pricing impacts negatively on the rate-given equation, Thus, producers respond with a lesser drilling rate and higher depletion takes place. And because of that, production was lower at our gas-bearing blocks, but we're partially upset by increases at El Mangrucho block with outstanding productivity, purely owned and operated by us. In Q3 2020, El Mangrucho reached 174 million cubic feet per day of gas production, 14% higher than Q319 and contributed close to 70% of our overall gas, ranked the 4 largest gas producing block at Miltina Basin. Moreover, 6% of our production was shale gas from the completion of two horizontal wells at El Mangruxo block last year. As we are not connecting more wells, shale production will keep diluting. 2020, our average price of gas was $2.5 per million BTU, 25% less than Q3 2019, explained by the sharp reduction on CAMESA's winter reference price for gas fired at the power plants, also affecting the industrial and stock prices. Though CAMESA prices during Q3 2020 were around 2.5, reflecting the high demand due to the winter season. Since October, with spring season, prices are roughly $2 less, back again to the lowest in years, and barely covering the replacement cost, impacting the investment horizon. Also, as you can see right below, our production year today is skewed towards CAMESA, but placing an increase for vertical integration as we've been procuring own gas for Genelva Plus CCGT Dispatch, rising from the last call's 14% sale share to 22% sale share. The exports to Chile ended on mid-May, and we are awaiting Secretary of Energy clearance to resume. Due to primarily uncertainties in gas prices, we reassessed Our activities with no drilling and completion registered in Q320, in line with the sector. Moving on the bottom line of the P&L, Pampa reported a consolidated gain of $78 million in the first quarter of 2020, whereas in the same period of 2019, $116 million was reported, mainly explained by Edenor and PowerLegacy's credit and liability realization agreement, and lower operating in Oil and Gas, operating margin in Oil and Gas, partially offset by higher profit in our equity income. Finally, moving on to slide 13, our sound balance sheet grants us some degrees of freedom during this challenging environment. In this slide, we show the layers of the company from restricted group to consolidated figures, but for covenant purposes, let's focus on the restricted group that is primarily and Pampa Parent Company. We continue optimizing every aspect of our inductness, highlighting that during Q3 2020, Pampa engaged in all-page incremental borrowing of $64 million, including default effect. We also repurchased bonds for $34 million value, Therefore, the restricted group gross debt recorded $1.6 billion in September, similar to last June. The gross debt is 87% denominated in U.S. dollars, which was 89% in June 2020, bearing an average interest rate of 7.7%. Average life decreased from 5.3 years to 4.9 years. The cash amounted to $352 million, which is 11% lower than the $393 million in June 2020, mainly due to buybacks and deterioration of the working capital as PSO reached to 92 days combined with higher billing, offset by positive cooperating cash flow and net peso borrowing. The restricted groups Net debt remained similar to last quarter, below $1.3 billion, and net leverage ratio stayed at 2.8 times. After Q3, we paid a maturity of $23 million of pay-per-debt, in addition to $8 million of pay value bond buybacks, and some share buybacks. It is worth highlighting that the community maturities from now until 2022 included amount to $249 million. of which 92% is denominated in pesos. Tampa consolidated with affiliates recorded on a net debt of $1.5 billion, two times net leverage ratio, similar to last June. After Q3, Eleanor paid the last amortization of $13 million. Barragán redeemed $130 million of securities and amended its amortization schedule which once approved will ease its maturity profile for the next two years. Regarding share buybacks, next month we are holding a shareholders meeting to ask to cancel treasury shares up to 6.4 million ADRs. As of today, we hold 5.6 million ADRs in treasury, thus our outstanding capital amounts to 58.2 million ADRs. Also, the board approved a new program for up to $30 million, with a price cap of $12 per ADR. So this concludes my presentation. We are going back to Margarita, so we can cast all our Q&A. Please cast it through the platform. This is the game that we have from COVID. We can do everything online.

Thank you. Thank you for waiting. The floor is now open for questions. If you have a question, you can send it through the platform. If you have any problems, should any participants need assistance or have any problems, send us a message or raise your hand and we will contact you. Please hold while we poll for questions.

All right, here we are. The first question is coming from Ricardo Resende from JP Morgan.

Hi Ricardo, Tampa bought back shares and debt during Q3 and that continues on the current quarter. What should we think about capital allocation in the current quarter?

Hi Ricardo. Going forward, we plan to continue with share repurchases as long as the share price drops below the limit that we set in the last repurchase program that was $12 per ADR. So that's the basic part of the answer. Now I hear myself. On the matter, sir, as long as Palma continues producing free cash flow, as it has been doing and we plan to continue doing, and we don't see other opportunities to deploy cash and our debt levels are in order and conservative and we feel comfortable about that, We plan to continue with the share repurchases and eventually with buybacks, always depending on the market price and the situation, monitoring the cash flow generation of the company as we see in the near future. Are there any more questions?

Our next question comes from Mary Ramiz. The first question is about the planned gas. Could you give us more color on planned gas and the role of Penta that will play? Maybe the timing, prices, and details.

I think as Lida explained, the details have not been officially published. So we are waiting for those details. There's been several conversations with the industry, with the government officials that give us an idea of what will be published. So what is in the media is more or less the same that we know. Price around $3.50. For the production, in order to participate, you need to at least commit to produce as much gas as you were producing in the first quarter of this year. We expect it to come out any time now. I think now it's a matter of weeks. Before it is published, as you know, the president announced the program about a month ago. So we think now they have also mentioned that it should be, we will start to collect the new price in December so that the auction will be done in the following weeks before December. So that's why we expect to be imminent the publishing of the new plant gas. And what it means for Pampa is basically going back to last year production levels, so around 7.5 million cubic meters of natural gas per day in average. The plant will also contemplate an increase and an incentive for winter gas that we are evaluating, but we don't know whether we will use that opportunity or not. So what we are thinking now is basically to go back to the production of last year that is slightly higher than what the plan will require from us. and basically developing in El Mangrucho block, tight gas at the Mangrucho block, which is our most efficient basin area that we have in the Neuquina basin and probably some wells as well in Sierra Chata, which are the two, those two are operated by by Pampa, and an increase of production also in Rio Neuquén, which is operated by YPF, and where we have one-third, YPF and Petrobras being our partners. But most of our increase in production will come from El Mangrucho and Sierra Chata. Anything else to ask?

Okay. Our next question comes from Paolo Villas-Piquin.

Hello, Gabriel Cohen speaking. As Gustavo was mentioning before, and it's a recurrent question in previous calls, we are buying both Thank you, Larry. Our next question comes from Bruno Montanari and Morgan Stout.

The first question is about, is it encouraging to see positive cash flows, but at the expense of very low capital, including zero in upstream? I was wondering how long this low capital environment is sustainable without affecting the integrity of the reservoirs in upstream.

I'm not an expert in reservoirs and unfortunately Horacio Turri is not here. Maybe Lida can give us more light. I don't think this can be maintained for a long time despite the integrity of the reservoir. We don't require much capital in order to take good care of the integrity of the reservoir. And that will also include... Maintainance of the reservoir. Lida, I don't know, anything else to add?

Yeah, so basically we are this year doing only maintenance. The maintainability of the reservoirs are preserved, but nothing like drilling and completing. This year the maintenance cap is around 30 million, 30 to 35 million. Should we have any signaling at all, which is not what is expected with the plant gas, it should be the same for next year. But if plant gas happens, the capex rebounds significantly. In order to maintain the production that we achieved this year, we expect to, instead of diverse production, Diversing $35 million next year to $100 million. The second question?

Yes. The second question from Bruno is about the option cost, which has declined substantially. Should we expect them to increase that to more normal levels as the company increases activity levels? What is the more normalized lifting cost level for the company?

It's a very good question. I don't think it's going to go lower than what we saw. The lowest was Q2, and Q2 was quite paralyzed, but we still delivered. We still produced. We didn't give in much. In Q3, of course, because of the winter, we recovered, but I don't see much more FHG in Efficiencies to be gained, especially because this year has been a very strange year. Salaries, wages only increased by inflation or a little bit less than that, and devaluation was big this year. So next year we could expect inflation in dollars, for example.

Thank you. Our next question comes from Daniel Guardiola from BPG. The first question is about the cash. What portion of your total cash is denominated in pesos and in dollars? Gabby, would you like to answer the question?

Yes, hello. In respect of our breakdown, it's essentially three quarters dollar or dollar liquidated and one quarter is direct in pesos.

Thank you. Our second question from Daniel is about the plant gas that was mostly explained by Lida. But the additional question he's asking is will this plant cover 100% of their production or only 70% as initially mentioned?

The government is going to auction Thank you very much. The contracts of the 17 million block are obliged to produce another 30 million in order to supply basically the industry, which is the free market portion of the business of the market. So, Those who participate in the auction will be producing in total 100 million cubic meters of natural gas per day. 70% of that will be under contract with CAMESA and the distribution companies. And 30%, we will have to sell it to the industry.

Thank you. Our next final question from Daniel Guardiola is related to the risk to the PPA. What is the current situation and what colors can you share with us from your conversations with the government?

Regarding PPAs? There are no conversations at all with the government regarding the PPAs. So I think that is a short answer to the question. Again, we... As we have always been saying, I think that government understands how important it is to maintain the rules, keep those contracts without any renegotiation, which is something that we share as well. Doing that will have significant impact in the medium and long term. So the government understands that and tries to avoid even any discussion with the industry regarding the PPAs. Obviously, that is as long as the macroeconomic situation remains in a controlled situation. If macro... If macro conditions deteriorate significantly, so we will be in another ballgame. But as long as, obviously, for Argentine standards, things are under control, we do not expect any change on the PPAs. Thank you, Guus.

Our next question. In the fourth question of Daniel, it's about are you considering to divest assets or reduce your exposure somewhere in the Okinawa Basin?

No, not at all. We are not studying any divestiture in the Okinawa Basin.

The last question from Daniel Guardiola is about the existing transportation capacity from Neuquén to Buenos Aires. Is that enough to fully satisfy gas demand? Any thoughts on the much expected literal gas pipeline?

Sorry, can you repeat the question?

Yes, so the question is about the current transportation capacity from Neuquén to Buenos Aires and the transportation expansion that is under evaluation for lethal effects.

Okay, the transportation capacity from Neuquén to Buenos Aires was almost at full capacity On the previous winter, in the winter of 2019, the evacuation capacity of the Neuquena Basin was at full. As Lida explained during her speech, this year, because the industry has not been drilling or connecting new wells, Production has fallen significantly and from the Neuquena Basin it has fallen close to 15 million cubic meters of natural gas per day in the winter of 2020 vis-a-vis the winter of 2019. So that is spare capacity in the pipeline from Neuquena to Buenos Aires, which the government is aiming to fulfill with this new plan gas. I'm not that optimistic that it will be fully fulfilled in 2021, but probably in the following years, hopefully the capacity will be fulfilled. Regarding the pipeline from, the new pipeline from the littoral pipeline The New Pipeline from the Neuquina Basin to Buenos Aires. Unfortunately, in the current financial conditions, that is a project, that is a $2 billion project that is unthinkable at this moment. So, first, Argentina needs to focus in tackling the problems The economic situation normalized and put the yields on the sovereign bonds on reasonable levels before a project of that magnitude is feasible in the country. So I think that unfortunately we will have to wait until that happens.

Thank you both. Our next question comes from Alejandro Benichelli, and it's about the EMT business that was already explained by Lida. Could you please indicate your plans for drilling, capex, and production in the oil and gas program for next year? That is the first question.

Yeah, so it's, again, next year, if nothing happens, it's basically what we've been doing this year. If nothing happens, it's what we've been doing this year. It's basically $35 million of CAPEX. It's maintenance of infrastructure, facilities infrastructure. If not, if plant gas happens and we expect to do, if we expect so, it's instead of $35, we have around $100 million just to maintain the production and going a little bit higher than this year.

Thank you, Lida. And the second question from Alejandro de Michelis is about the electricity tariffs. What are the expectations for electricity tariff increases for next year and payments from CAMESA?

We expect that, you know, that for, in the case of the PPAs, they are dollar-based. And in the case of... Old Energy, Spotted Energy, it's under what we call Resolution 31, that when it was published in February of this year, it was published with a monthly inflation adjustment, which unfortunately, it didn't last not even one month, so before the first month, it was concurrent with the The explosion of the COVID crisis in Argentina and the lockdown and a tremendous moment for the world economy and for Argentina's economy even more. So it was not put in place. And the Secretary of Energy instructed Gamesa to suspend the application of the monthly increase until... In the past, you know, we live in a high inflation environment. Probably we will be this year in the neighborhood of 35% to 40% inflation. So the industry is beginning to suffer that adjustment in our costs. The industry needs the inflation adjustment to be put in place very soon. So, otherwise, the availability of the system deteriorates, and at the end, that is most costly for the system than doing the proper maintenance. So we expect that next year they will resume with inflation adjustment in some way. I cannot give you no assurance on the magnitude or in the timing. But I think that it is needed. The industry is needing that already. And it should come hopefully soon.

Thank you, Bobby. There are another question from Nadia Castacino. It's about the cash disclosure in U.S. dollar. There was another question from Mariel Abreu about the bond buyback and share buyback already answered. Another question from Andres Cardona regarding the tariff increases, which was also answered. And there was another question from Matias Wessena from IR Partners, more color of the EMP business, which was also answered. And from Alejandra Andrade from JP Morgan about the capital from EMP business and the cash disclosure in US dollar, but already answered. So let's move to the question of Marielle Abreu. Does the restricted group liquidity include the repurchased Pampa Bonds?

Hi, Marielle. The restricted group liquidity does not include the repurchased Pampa Bonds. Pampa Bonds are offset for the debt. Okay, so if you see our financial statements and our debt profile, for example, in the 23 bonds, we are already reducing by the share of face value that we already bought back.

Thank you, Lida. Our next question was from Andres Cardona from Citibank. And when do you expect final resolution for flangas? We are also waiting for it. Has something changed since Mr. Fernandez beat the announcement at Neuquén some weeks ago?

Hi, Andres. So there has been some changes since last week. So last week they say it was three years plus one. And now we gather to know that it's going to be finally four years, GSA, gas supply agreement. Compared to the last draft, they also add some kind of like commitments, CAPEC commitment, and that will be reviewed from time to time by a committee Composed by their different stakeholders. And the price, it's 3.7. They didn't change that, the 3.7 non-vino for Neuquina Basin. But pretty much it, it's basic. And then they said about something about access to official effects, but that's, we need more clarification from the CV, right? Regarding the fiscal credits, tax credits, that in case that we are not paid, we can use them. We also need more clarification and final clearance from the Argentine IRS. So basically, in summary, instead of three years plus one is four. Offshore, which is not our case, but offshore, instead of three plus five is four plus four. Price has been ratified 3.7 nominal. and we need to do a CapEx commitment.

Thank you, Lida. Our next question comes from Anne Milne. Good morning. Could you comment on how you will address short-term debt, either repay or refinance in local markets and follow up on this? That is the first question.

Yes. Hello. Well, as you know, Most of our short-term debt is peso-denominated. The local market is quite liquid, so we feel pretty confident that we can either refinance either with banks or with local capital markets, or we can also manage our liquidity depending on how we see rates and and we may also cancel and re-borrow. So we feel quite confident about basically all our cash position backs our short-term debt and our bonds are quite in the medium and long-term. So that's the first part of the question and I think there is something else, right?

Yes. There seems to be some positive developments on the policy front with the government in recent days. How do you see effect restrictions going forward?

Well, it's just personal opinion, but I would expect that as long as microeconomic variables start to recover and get some equilibrium, I would expect at some point to be a relief in those restrictions, although I don't see in the short term any... I think we will be still living and running our business with those restrictions. Maybe we would expect at some point that there will be more relief, but I think it will depend clearly on how the economy develops and IMF and basically... The whole environment. Yes, clearly the reserves, but that's what I was thinking about in macro stability. Clearly we need to recover reserves and basically what we need is that the country needs to start growing again at some pace. I think that's the basic signal that we need in order to expect a relief in those restrictions.

Thank you, Gabby. Our next question comes from Alejandra Aranda. Could you give us more color on the evolution of the negotiations with the government regarding the tariffs?

Sorry, I was muted. I cannot say that there are negotiations. Regarding electricity tariffs that consumers pay, the government has been in the last few weeks through several speakers, some of them from the Ministry of Economy, some of them or somebody like the Secretary of Energy himself mentioned that the freezing of tariffs is about to end at the end of the year. I think that is completely in line with the fiscal needs of the country. They perfectly understand that maintaining the freeze of tariffs means higher Fiscal deficit through subsidies to the industry or to the consumer and that is something that especially in order to agree with the IMF they need to tackle. So they are not discussions with the industry but they are aware that they need to move forward in order to tackle the macroeconomic issues of of Argentina. And regarding the prices for power generation, I already answered the PPAs. There are no talks, discussion, or anything about the PPAs. And regarding the spot price, it's at the verge of In some cases, and some old equipment of being below the break-even point, so that in the medium term means that the equipment is not properly maintained, will be not properly maintained, will begin to suffer in terms of availability, and that is very bad for the system. So I think that the officials, the Secretary of Energy and CAMESA are aware of that. And I hope that together with the de-freezing of consumer tariffs, we will have some relief of power generators.

Thank you, Gab. Thank you, Guls. Please hold while we pose our questions. Our next question comes from Andres Cardona from Citibank. What is your view on spot prices for gas?

Once plant gas is in place.

Okay. I think that the spot prices, spot prices meaning what the producer sells to the industry, I think they will converge Today they are much lower in line with what Gamesa is paying for gas. But I think that everything will come, every price of gas in Argentina will in a way converge towards the price of the option of the plant gas. So I think it will be in the future. $3.50 per million BTU area. That is our expectation.

Thank you. Our next question comes... Please wait for a second. Our next question comes from Alejandro Garbublia. Hello, my name is Alejandro Garbublia. I would like to know if you are going to distribute DVDs.

Ineficiente, impositivamente.

Hi Alejandro, how are you? We do not have a policy of distribution of dividends, though we do, but so far for many years we haven't distributed any dividends, but we are buying back our shares. It's a form of dividend.

Thank you, Lidia. Our next question comes from Andres Engler, does the company plan to take debt from the Argentine market? Yes.

Hello. Yes, as we pointed out before, yes, it's within our plans. And the market is quite liquid, both on bank side and on the local capital market side. So, clearly, it's our first funding alternative.

Thank you. Daddy, please hold while we pull for more questions. So, this concludes the question and answer section. I'll turn to Lida for a final remark.

Okay. Okay, thank you so much. Okay, everybody, thank you so much for joining our call. Sorry for a little bit of intravenous. We changed providers. Now it's Zoom. But I hope it was helpful. We are going to pass a poll. Any question that has not been answered, please just contact us. For the interest of time, we wanted to make it one hour. But anything you may need, just contact us. We are always more than available for you. I hope you have a good day and have a nice weekend.

So this concludes today's presentation. Thank you for joining. You may disconnect at this time. Goodbye.