Light Sa S/Adr

Good afternoon everyone and welcome to the webinar of results of the fourth quarter of 2020 at Light. My name is Rodrigo Villela, I am responsible for the RI and I will also be the host of this event. Today's event will be held in Portuguese and translated simultaneously into English. To do so, just select the language desired on the interpretation button located at the bottom of the screen. So, for our non-Portuguese speaker audience, this event has been simultaneously translated to English. So, please click the preferred language by clicking the button interpretation, which is located at the bottom of the screen. Bem, voltando agora para o português, a apresentação e comentários dos resultados serão realizados pelo diretor de Finanças e de Relações com Investidores, Roberto Barroso. Conosco também está o nosso CEO, Nonato Castro, que se junta a nós nesse evento pela primeira vez, e também o Firmino Sampaio, presidente do Conselho de Administração. A apresentação que será realizada já está disponível para download no nosso site de RI, mas também será possível acompanhá-la aqui pelo próprio Zoom. I would like to remind you that at this moment all participants are connected only as listeners. After the end of the presentations, in the Q&A session, I will detail the instructions for those who wish to ask questions. and this webinar is being recorded and its audio will be available on the DRI website. And as usual, we have here our disclaimer. We clarify that any statements that are made during this presentation, relating to the company's business prospects, projections and operational and financial goals, are based on beliefs and premises of the Light Board, as well as on information currently available to the company. Future considerations are not guarantees of performance and involve risks, uncertainties and premises. These refer to future events and, therefore, depend on circumstances that may or may not occur. Investors must understand that general economic conditions, industry conditions and other operational factors can affect the company's future results and can lead to results that materially differ from those expressed in such future considerations. Well, having made the proper legal warnings, I would now like to pass the word to Nonato Castro.

Nonato, please. Good afternoon everyone.

I am Nonato Castro, I am the current president of Light. We started the work here, I was in Rio since October, but I was affected by Covid, I passed... more than approximately 15 days hospitalized, and we took over here in December only. I want to tell you that I am an electrician engineer, I started my career in the energy sector in Coelba in 1986, we spent 10 years in Coelba, I was also a professor and then a director of education at the IFE, the Federal Institute in Petrolina, in parallel with the work I did at Coelba. Then I went to Equatorial, and at Equatorial I had the opportunity to work in São Luís, in the former Semar, today Equatorial Maranhão, then in Pará two years, and finally in Piauí, in the old CEPISA, also for two years. In Pará it was six years. In São Luís, also approximately six years. And in Piauí, two years working there in Piauí. We have experience in the energy area, but it is logical that all the result, all the construction of management and results in the electricity sector or in any company is linked to the team, the team. So we had the opportunity to bring professionals, mainly in one of the problems, a big problem of the company, which is losses, who experienced and with great experience in the area of combating energy waste. They are already working, we are training people, enabling them to develop in the best possible way the capacity acquired during years of work. They are people with field experience who are doing training to change this methodology of combating losses, which I understand is a specificity of the sector that requires knowledge and a differentiated specialization. It is this work that we are implementing here When we reached the like, obviously, we also found professionals, qualified, committed people, and that are totally within this new project that we are establishing. We are currently with the Falcone training. The Falcone Foundation is here with us, the management model, the definition of the goals. all this training of subsidies for the generation of action plans, follow-up, all the structure of management with the support of a company recognized worldwide, which is the Falcone Foundation. And we see, for example, from what we have already experienced, life experience, professional experience, que temos a possibilidade de fazer uma transformação na atuação no Rio de Janeiro by the experience we have, by the learning. We understand that it is a differentiated complexity, I have no doubt, the population has knowledge, but we understand that with the professionals we meet, with the will and motivation of all of us, with the training and training of professionals who already have knowledge in one of the areas that most compromise the result of our company, which is losses, we can build a new moment and rescue it. From the moment that we are going to do and work together with the more complex areas, and we are going to do a differentiated work. And for that, we have a very large approach in our management model with all the important entities of a state of importance in Rio de Janeiro. And where we go, for example, contact with the public ministry, with the public defense, with... the Governor, Cláudio Castro, with the Mayor Eduardo Paes, we have already had a meeting with all of them and we are going to make a project with the participation of several important institutions of the State. This is how we believe and it is a project of transformation, of support also to the communities that have a huge absence of public power. This work that we are doing, structuring, training, it is obvious that this pandemic affected everyone in the country, companies have even changed their way of working a little, videoconferencing, this is also a little difficult, by the absence of people, but that technology also allows us to overcome this difficulty and make the implementation of this new management model happen as quickly as possible. And we have this thing of believing that our concession has enormous potential. There is a possibility, yes, and we believe. If we didn't believe, we wouldn't be here, we wouldn't accept this challenge. which is important, but mainly because we have already learned that in all places, in all companies, from Acre to the Northeast, to any state in Brazil, any company, you will find good professionals and committed professionals. I believe in people. e eu acredito ainda mais na capacitação das pessoas, na capacidade das pessoas em transformar, na capacidade das pessoas em construir. Eu acredito nas pessoas e é por isso que eu acredito nesse projeto. Sabemos da imensa dificuldade, sabemos do tamanho do desafio, mas profissionais com conhecimento with experience, with experience, together with a team of the company that also wants, anxious to transform, to grow professionally, that our goals will be achieved in due time, that learning, technology, training, appear in the work, in the activities, so that we can achieve the desired results. So, we believe in this project because of the team, because of the people. They are the people who transform. This is the truth in any situation, in life and in companies.

I want to now invite Barroso, who is the Director of Institutional Relations and Finance.

Barroso, please.

Good afternoon everyone. I will share with you the presentation so we can Seguindo na apresentação dos resultados do quarto trimestre de 2020. Obrigado, Nonato, pela apresentação inicial, a primeira oportunidade de falar com o mercado. E passando para o slide número dois... A gente traz aqui o resumo da diretoria, que foi a diretoria formada pelo Nonato para seguir nesse desafio. Eu sigo na liderança da área financeira, relações com investidores e novos negócios. Débora is still leading the legal and institutional relations area. Alessandra Amaral is leading the regulation, energy and commercialization. Nonato brought, from December to February, four new executives to compose Light's executive directorate. Carla Medrado entered in November, leading the people and management area. Daniel Negreiros was already in the company in the last four years and now he is the director who will lead the distribution. Thiago Guti came to lead the commercial area. And recently, in February, he joined our team, Gizomar Marinho, to lead the administrative and control department. Moving on to slide number three, A gente trouxe aqui a estrutura da companhia, a estrutura acionária, antes da oferta e depois da oferta de follow-on de janeiro de 2021. Nesse ano, a gente inaugurou o mercado de capitais brasileiro e conseguimos... Só um minuto que está dando um problema no celular. Sorry for the technical problem, but following the presentation, we managed to conclude the disinvestment of CEMIG within the company and attract new investors, where we thank the trust of the largest shareholders of the company who exercised their right of preference in the offer and also the new shareholders who believe in the company's management. The new shareholder composition is led by the Samambaia Fund, with 20% of participation, managed by Ronaldo Cesar Coelho. The second largest shareholder now is Santander PB FIA 1, which was the investment where Beto Cicupira entered the company, Atmos Capital with 6.26% and the rest of the shareholders have a participation of 63.57%, which consolidates Light as a true corporation. Moving on to slide number 4, A gente traz também o resumo do reajuste tarifário da Light aprovado pela ANEL no último dia 9. Se a gente observar na primeira coluna, a gente tem o impacto dos itens financeiros Thank you. but we did have the increase in the cost of energy purchase, led mainly by the increase in the costs of Taipu, which is in dollars, and also by the costs of Norte Fluminense. We also had an important cost increase in the repassage of transmitters by the cost of RBSE, which impacted this adjustment of almost 4 percentage points. of the CDE account relative to the Covid account within sectoral orders with an impact of 4.2 percentage points, and what is left for the company is 1.7%, being that in reais they represent 171 million of B portion and also an increase in irrecoverable receipts of the order of 18 million reais. In this adjustment, also understanding the moment of the pandemic, we proposed to ANEEL the repayment of 3.5% of the tariff reduction of the tax credits of PIS and COFINS already provided relative to the last 10 years. referring to the portion that we managed to compensate between the months of April 2020 and January 2021, which means an increase of R$ 374 million for consumers over the next 12 months. All this composition impacted an average tariff increase of 6.75% this year. Moving on to slide number 5, we have a summary of some financial highlights of our fourth quarter of 2020. In relation to total losses, we achieved a reduction of 90 GWh this quarter. In relation to the year 2020, we achieved an accumulated reduction of 744 GB. Since the focus until then was in the conventional treatment area, a reduction of 1,260 GB. Also, in relation to the reduction of costs with judicial contingencies, we had a reduction in the quarter of R$ 41 million, totaling almost R$ 200 million a year. We continue firmly in the reduction of costs, the cost with staff, materials and services. We reduced R$ 12 million this quarter, totaling R$ 62 million a year. In relation to recurring EBITDA, we announced R$ 974 million this quarter, positively impacted by the recognition of GSF in Light Energy and also by some positive impacts on the distributor, as I mentioned earlier, the cost of PMSO, the cost of contingencies and also the recognition of VNR em um volume maior em função do aumento da inflação nesse trimestre. Em relação à dívida líquida EBITDA, conseguimos fechar com 1,73 vezes, bem abaixo do limite dos covenants da maioria dos contratos, que é de 3,75 vezes. Fechamos o ano de 2020 com uma posição de caixa da ordem de R$ 3 bilhões e tivemos agora em janeiro alguns eventos Subsequent important, with emphasis on the follow-on and the sequence of liability management that I will highlight in some slides later. We closed the fourth quarter of 2020 with recurring liquid profit of R$ 235 million versus a recurring loss of R$ 48 million in the fourth quarter of 2019. This year, the annual liquid profit reported at CVM was R$ 692 million. Moving on to slide number 6, we have the evolution of the wire load. We had a reduction of 2.9% in the fourth quarter of 2020 compared to the fourth quarter of 2019 and a reduction of 2.6% in the turnover market. This reduction was impacted mainly by the reduction in the market of dealerships. A redução no mercado de concessionárias da companhia foi de 241 GW nesse trimestre. Quando a gente observa no gráfico à direita, a gente tem alguns comportamentos distintos. O nosso mercado residencial, tivemos uma recuperação um aumento de 6,8% no quarto trimestre de 2020, quando comparado com o mesmo período de 2019, principalmente impactado pela maior temperatura no quarto trimestre de 2020, cerca de 1°C a mais da temperatura média do que no trimestre anterior. No mercado industrial também conseguimos uma elevação de 5,6%, Muito em função pela recuperação do nosso segmento da siderurgia, que teve uma evolução grande nesse ano de 2020, principalmente pelo aumento do preço desse mercado de commodities nesse ano de 2020. However, the commercial segment is the company's segment that has had a slower recovery. We reached a drop of more than 20% in the second TRI of 2020. In the fourth TRI, we reduced this drop to close to 5.8%. Moving on to slide number 7, we demonstrate the evolution of the company's energy losses. conseguimos reduzir 95 GB nesse trimestre, principalmente em função da implementação da resolução 863, onde a gente mediu todos os clientes industriais e comerciais relevantes do grupo A até o final do mês anterior. from December 30, 2020. This impacted the generated energy and reduced the non-generated energy. When we observe in percentage terms, we had a drop of 0.7 percentage points in this quarter compared to the previous quarter. Ainda impactado pela redução do mercado nesse período de Covid. Quando a gente observa o mercado faturado ao longo do ano de 2020, tivemos uma queda de 7% no ano. Moving on to slide number 8, we have the evolution of losses in the conventional treatment area. In the conventional area, where the focus of the company was throughout 2020, we managed to reduce 1,260 GB per year. We had a year with a temperature below the average, but we also managed to advance in our initiatives, both in energy incorporation and energy recovery throughout this year. Looking at percentage terms, the reduction in the last 12 months was 2.4 percentage points. Looking specifically at non-technical losses, we had a reduction a little higher than 70 GB in the last quarter, when compared to the 12-month period ended in the third quarter of 2020. The drop in percentage was a little better in relation to this period, mainly due to the residential market, which grew more than 6% in this period. However, we know the challenge we have in the area of special treatment. It was an area that evolved in terms of gigawatt-hours in the period. We had an increase of more than 400 gigas over the last four quarters, and because of that, we are setting up a special plan for us to be able to advance in the reduction of losses, also in the areas of special treatment, not only in the conventional areas. Bringing a little more detail about the loss plan carried out throughout 2020, we highlight the volumes of energy incorporation, mainly in our project called Legal Client, where we focused on normalizing a large volume of clients that were cut in 2019. So, we worked on this project throughout 2020 And we also advanced in customer inspections throughout this year, especially in periods where we had an energy cut impediment. In the graph below, talking a little bit about PCLD and HOB, this basically reflects the company's collection period throughout 2020. We closed the year with a 95% collection, 0.01 percentage points above the end of the third quarter of 2020, and now we have reinforced our PDD provision to 3.9% in the December 2020 period. We will also focus on the year 2021, In order to improve our collection even more, in order to reduce the PCLD over the year 2021. We have a very well-banked client base, where we had, over the year 2020, an increase of 10 percentage points no percentual de clientes do varejo que pagam suas contas de energia em pagamentos eletrônicos. Fechamos o ano com 87% do valor arrecadado nos últimos meses de 2020 por meio de internet banking, caixa eletrônico ou débito automático. Moving on to slide number 11, we have the evolution of the quality indicators of energy, both the duration of interruptions and the frequency of interruptions. In relation to the duration of interruptions, we are in fourth place in the best companies of this indicator in Brazil, we closed in 7.04 hours, mais de 20% de melhoria em relação ao número encerrado em 2019. Tivemos um ajuste na metodologia de cálculo definido pela ANEL, já fizemos esse ajuste e reprocessamos todos os anos anteriores conforme demonstrado nessa apresentação. In relation to the frequency of interruptions, we also achieved a great evolution in the year and closed at 14% below the limit of our concession contract. Moving on to slide number 12, we also have the evolution of the company EBITDA. Observing the recurring EBITDA, we achieved an increase of almost 110%. no quarto tri de 2020, comparado com o mesmo período do ano passado, com destaque, como eu mencionei, pelo reconhecimento do GSF, do ativo intangível, de 434 milhões, e também pelo melhor desempenho na distribuidora nesse período, puxada pela redução de provisões de contingências, que é um dos nossos grandes focos, e também pelo controle de custos gerenciáveis dentro da companhia. Tivemos um sucesso no acordo com o processo de furnas, que nos deu um item não recorrente, caixa, onde recebemos, no dia 28 de dezembro, R$ 336 milhões como a primeira parcela desse acordo. Ainda temos R$ 40 milhões para recebermos caixa no final de dezembro desse ano e mais R$ 120 milhões para recebermos em ativos elétricos. It is also important to note that in the fourth quarter of 2020, we still had the impact of the pandemic. We estimated this impact in 63 million reais, being 15 million in function of the reduction of the turnover market of 2.6% and 48 million in function of the increase in our rate of receiving the accounts. Moving on to slide number 13, we also open this evolution of 510 million in EBITDA per segment, observing this elevation, it concentrates mainly on the generator with the recognition of the GSF of 434 million, e uma melhoria de quase 50 milhões adicionais também no EBITDA, observando tanto a Light Energia quanto a Lightcom somados. Na distribuidora, a elevação nesse período foi de 30 milhões de reais. Passando para o slide número 14, We also have the evolution of the reduction of contingencies. In this period, the reduction was of the order of R$ 40 million, and in the year we managed to reduce almost 50% of civil contingency expenses and civil special court contingencies. Focusing on the civil special court, we observe in the green column um incremento de 8 mil novos processos judiciais nesse período, 8,9 mil novos processos, que é o menor índice quando comparado tanto no primeiro trimestre de 2020 quanto no quarto trimestre de 2019. Estamos com os indicadores bem controlados, reflexo não apenas da melhoria operacional, tivemos também um efeito positivo for the judiciary to have been closed for a period, but we are convinced that we adopted a series of measures that were correct, such as, for example, the continuity of customer reading during periods of greatest circulation restriction in the pandemic, where we had, in 2020, a real reading index, even higher than the real reading index we had in 2019. Moving on to slide number 15, we also have an evolution of the company's liquid profit. We reported a loss of R$ 48 million recurring in the fourth quarter of 2019. We had this strong EBITDA improvement in the fourth quarter of 2020. and a somewhat negative impact related to the financial result, coming from the update of the GSF, which is by the IGPM indicator. The IGPM, just to remind you, closed at an index of 28% in 2020. We also had an improvement in the patrimonial equivalence when we look at our investments in participations. Moving on to slide number 16, we presented this same chart as a result of the second and third quarter. We present the impacts of the company's operational improvement in the distributor, both in terms of loss reduction, cost reduction of staff, materials and services, and also in terms of contingency reduction. During this year, we achieved 264 million in progress. However, the impacts estimated exclusively from the pandemic still weighed a lot on the distributor's result. There are 168 million in relation... to the impact estimate in the increase of the PCLD and R$ 163 million of impact estimate, both in Parcel B and in the non-technical loss rate related to the reduction of the market in this period, which totals R$ 331 million. This issue is still in public consultation at ANEL, the EACP35 is in the third phase, e a gente espera avançar nesse aspecto nos próximos meses. In slide number 17, we present the cash position closed in December 2020, in the amount of R$ 3.9 billion, and also the debt profile for the next few years. The average debt term is 2.4 years, and the amount of amortization forecast for 2021 is R$ 2.3 billion. The cost of the debt has been reduced year after year. We ended 2020 with a nominal cost of 6.87% and a real cost of 2.45%. We were able to reduce the company's leverage de 2,98 vezes em dezembro de 2019 para 1,73 vezes agora em dezembro de 2020. Do ponto de vista do perfil da dívida, aproximadamente 60% é indexado ao CDI e 40% indexado ao IPCA. A gente segue o nosso trabalho de liability management, fizemos a... the capture of R$ 360 million of the 21st debenture emission, now in February, at a CDI cost of 2.6% per year, on a 4-year deadline, to amortize a debt that had a cost of PCA of 5.74% per year. We also did, after the entry of the follow-on resources, the anticipated amortization of all the debt of BNDES in Light Cesar, in the distributor, of the order of R$ 300 million, which had an average cost of IPCA of 5.11% per year. Just to finish this part of the presentation of the results of the fourth TRI, we would like to reinforce three messages that the management continues to be committed to generating results for the company. We are doing a lot of work to review processes to leverage operational improvement. We will now be even more focused on the customer in all lines of business, which is how we will build the Light of the future. I would like to thank everyone for following the presentation and I will pass the word to Rodrigo for us to open for the Q&A session. Thank you very much.

Thank you, Barroso. Let's now start the Q&A session. So, those who wish to ask a question, use the Raise Hand feature, which is located at the bottom of the screen, so that your microphone is enabled. And also those who wish to send written questions can click on the Q&A button, also located at the bottom of the screen. Once the question is received, we will answer live here. Henrique, you can go on, please.

Hi, guys, how are you? Henrique, from Apollo Capital. Thank you for the presentation, Barroso. I wanted to ask a question. At Investor Day, at the end of 2019, you talked about some initiatives. You divided Rio de Janeiro in some areas of attack in relation to the loss issue. I wanted to get an idea from you How are you dealing with it? If the strategy has changed, is it still the same thing? How is the issue of network shielding? I noticed that you are doing a replacement of labor, right? You are thirding less labor. So I wanted to understand a little more about you. How is it? Has the plan changed? And the second question is, if you see that there is a lot of fat to burn in the possible areas, how far can this loss reach in the possible areas? Is there fat to burn in this sector? So, those would be the two questions. Thank you.

Henrique, thank you for the question. At Investors Day 2019, we presented Light Segregated in five regions and demonstrated at that moment that the company's focus in 2020 would be to advance in conventional treatment areas, in areas that we called possible areas. And that was exactly what was followed throughout 2020. We prioritized looking for clients who were cut off and we managed to bring to our base throughout 2020 We also focus on some areas of certain regions, a pilot program for armored vehicles, a pilot program also for the replacement of old meters, and with focus, trying to seek as assertively as possible clientele maiores em relação à inspeção de fraude ou algum tipo de irregularidade. Então isso foi o que foi seguido ao longo do ano de 2020 e por isso a gente conseguiu reduzir esses 1.260 GB in conventional areas. However, we also observed, throughout 2020, an increase of almost 500 GB in areas that we previously called risk areas, and now we have the name of Special Treatment Area. In the context of all this, with the arrival of Nonato and Thiago, we are revisiting our way of acting. We will now work together with the leadership of certain communities work together with the population of certain communities and also with the public power in order to try to advance even more in these areas so that we can reduce losses in these areas. Today, we observe that of the non-technical losses, approximately a third is in the conventional areas and two-thirds is in the special areas. We do believe that there is still fat in the conventional areas. The new team that arrived has been able to identify some frauds that are still relevant throughout this first quarter. So we understand that we still have fat in the conventional area and we will continue throughout 2021 advancing on both fronts, okay?

Barroso, just one more quick question. Oh, no, Nath, sorry to interrupt you.

No, no problem. Just to add, you talked about fat in the sector, we have found hotels, restaurants, houses in the noble area with a feature of embedded deviation, the deviation that happens inside the construction, on the wall, it is internalized. So, as Barroso just said, we believe that there is potential to be explored, in addition to this work that will be done in the communities that is being very well structured, with the participation of the community and the leadership of the community.

And then to finish, I wanted to understand more about this liability management project that you are doing. We recently saw some companies rolling bonds, managing to put some bonds at more compressed rates. And we have seen that there has been a lot of demand. And then my question is in the sense that you have a bond winning in 23, with a coupon of 7.25. This bond is not bothering you? You don't see an open market for you to try to reduce this passive cost?

Henrique, thank you for the question again. We are attentive, not only in the international market, but also in the local market. After the follow-on in January, A gente já fez a amortização integral do BNDES agora no finalzinho de fevereiro, fizemos essa debênture. A gente... Estamos, sim, atentos. Pode ser uma oportunidade, mas a gente... First, we have to discuss internally, and as soon as there is any evolution, we communicate with the market. But the company is still attentive to all opportunities to reduce our debt rate. The company had a capital structure, less balanced than our peers. After the 2019 follow-on, we amortized the company's most expensive debts, but we still have a average cost debt above our peers. So, be sure that we are super attentive to any opportunity that comes to reduce the average cost of the debt and lengthen the duration of the debt, which will be our goal now as well.

Rodrigo, thank you also for

for sharing this question that we received. We continue to use the Piscofins credits to compensate with all federal taxes, so we are using these credits de 6,2 bilhões de reais que conseguimos o trânsito em julgado em agosto de 2019, habilitamos o crédito na Receita Federal Integral em abril de 2020 e temos utilizado para compensar com o Imposto de Renda e Contribuição Social, também com o PIS-COFINS, e com qualquer tipo de retenção na fonte de tributos federais. Conseguimos utilizar até agora de tributos recorrentes da ordem de 650 milhões até janeiro, por isso a gente propôs the immediate repassage of 374 million in the tariff, and as we continue to use it month after month, we will make our control and the idea is to repassage to consumers as soon as the discussion with the regulator is finished. do que do crédito que a gente já provisionou relativo aos últimos 10 anos. Então, a gente segue fazendo a compensação integral dos créditos e à medida que a gente evolua com a regulamentação do repasto que já está provisionado, a gente avança na sequência.

Ok, obrigado, Barroso.

Passar a palavra agora ao Marcelo Sado e então ao BBA. Marcelo, just take it out of the world and go on, please.

Thank you for the call. I have two questions, so I think a little on the question of Piscofins, I understand that the review you put on the rate is referring to the gain of the last 10 years, keeping the gain that exceeds 10 years in the company's cash, If you think we will still have a definition of the ring in the first semester about how to deal with it, from what I understood at the last meeting of the ring, the ring was with a tone more that all this benefit would be from the consumer, so much so that the ring said several times that this would have an impact of 50 billion in tariff reduction, that is, this amount is a total amount and not this amount only of 10 years, so I wanted to understand if these discussions evolved in relation to this, the first point. And the other point in relation to inadimplency, I think you showed in that graph that it shows inadimplency almost around 3.5%. And I think we saw other companies, for example, having an inadimplency reduction after the COVID peak has risen. Some companies even had a reversal in the fourth quarter. And in your case, it seems a more stabilized level, as if it were a normal new one. So, just to understand what is the perspective of Nadine Plen, looking forward in your view, if it continues at this level of PDD, or do you think it can start to fall in the next few months? Thank you.

Marcelo, thank you for the two questions. Starting with the Piscofins, ANEL approved the opening of public consultation number 5 of 2021, where This deadline is open to receive contributions not only from all distribution agents, but also from the entire society. We will fulfill this deadline so that we can send our contribution uh uh in the technical note that subsidizes the public consultation. So, we hope that the necessary period is taken so that the agency can evaluate with due care all aspects of this subject, which is super relevant. Talking a little about the collection issue, we had a practically flat collection in retail in the fourth quarter of 2020 compared to the third quarter of 2020. We had a stronger turnover in the fourth quarter of 2020 As I mentioned, a residential growth of 6.8%. It was a period with almost a degree above the period of last year. So, we have this peculiarity in our area of concession. However, in relation to the large clients, we managed to advance with the collection in two percentage points. And in relation to the public power, we managed to advance in 0.7 percentage points. You who follow us there, in a recurring way and very close, you will remember that in the fourth TRI of 2019 we made an additional PDD of 525 million, we mentioned in that opportunity that we would not make another type of extraordinary PDD provision, so we have been conservative too, in provisioning what we actually do not expect to collect, so that's why a gente continuou com o nosso critério aqui cauteloso em relação à recuperação. A gente está bastante focado em melhorar a forma de acesso aos nossos clientes, temos buscado fazer parcelamentos, temos buscado atender e estar mais próximo, sim, dos nossos clientes, de forma que a gente consiga melhorar ainda mais a performance de arrecadação nos próximos trimestres.

Obrigado, Barroso. Vocês conseguem, por exemplo, separar quanto vocês acham que desse aumento aí of GDP as a result of the pandemic, how much would be the most normalized number? Do you have any idea of this dimension? I know that NEO is still now in the question of defining what will be that economic compensation that companies will have. And then, obviously, you have to wait for a longer time to be able to make this measurement to see what you can get in compensation, but you can eventually have this separation. And just to understand a little the dimension, if I'm not mistaken, this gap in the press in the house of 300 million in regulatory relations, only if you can also confirm if this order of magnitude is correct. Thank you.

Perfect, Marcelo. Let's go there. In terms of numbers, today we closed at 3.9% of PCLD in 2020. What is in the rate is 1.38%. So, we are saying that we closed... em aproximadamente 2,5 pontos percentuais acima do que está na tarifa. Isso representa mais de 400 milhões de reais de gap, dos quais a gente estima que aproximadamente um ponto percentual seja o impacto exclusivamente relacionado à pandemia. Foi o número que a gente colocou na nossa apresentação de resultados, que ele é da ordem de... R$ 168 million. So, this is our best estimate for the volume of PDD related exclusively to the pandemic. We already expected that the 2020 PCLD would be a little above the 2019 PCLD, without pandemic, due to our loss strategy that we announced at Investors Day, as remembered by Henrique, where we mentioned that we would bring to our billing base customers who were cut. So, we already expected that we would have an increase in the PCLD in relation to the year 2019, but with the arrival of the pandemic, we had these 168 million additional for our best estimate.

Great, thank you very much. Thank you, Marcelo.

A question that came here from our Q&A. An update on the conversations with ANEEL regarding the loss calculation methodology for the new regulatory cycle and a little more visibility on the continuity of reducing the manageable costs of PMSO and contingencies now for the year 2021.

Rodrigo, first in relation to the loss methodology, we are also in the period of analysis by the agency, after sending Light's contributions to the methodology, we already had two meetings with the director and the rapporteur, for us to present in even more detail our contribution, so we have had good conversations with ANEL, and ANEL is analyzing this topic in the best possible way, and this should be concluded over the next few months. Regarding... the continuity of cost reduction and contingency reduction. We continue to be firm within the company. In the 2019 follow-on, we had already passed an expectation that we would be able to advance by at least R$ 50 million in PMSO reduction throughout 2020. conseguiu reduzir 62 milhões de custos de pessoal, material e serviços, a gente espera sim mais uma redução ao longo do ano de 2021. Da mesma forma, em relação às contingências we have sought to act in the best possible way in an integration between the legal and operational areas, not only the commercial area, but also the company's distribution area, where we has been seeking to act in a way to reduce the number of processes against the company by our clients. So, we are still very focused on reducing this volume of contingencies, not only from GEC, but also from Civil Mass.

Thank you, Barroso. I will now pass the floor to Gabriel Lima, from Mergent Variant. Gabriel, just open the microphone and you can continue, please.

Thank you, Rodrigo. Good afternoon, guys. Well, now that it's been two months of the year, and there have been some evolutions with regard to the pandemic, I wanted to understand from you, I know you've already asked some questions to losses, but I wanted to understand what you have in mind for losses as a specific target for the year 2021 and 2022. What do you expect and what number can we look at to follow this evolution?

Gabriel, thank you for the question. We are with Thiago's team, along with the entire new team that joined the company with a lot of experience in losses. At this moment, the team is drawing all the plans in more detail so that we can have a better visibility of this new plan that we will focus not only on the conventional area, but also on the special area for the next few months. As soon as we have a better visibility, we intend to mark an Investors Day, and detail the plan as we did at the end of 2019.

I want to take the moment to say that we are, as I said initially, training and already acting. It is also a training that is already having the opportunity to practice. Loss today is treated in Brazil, it has become, the professionals who work in the fight against loss, a specialization. So we managed to have here, in our team, people who lived through this whole process of evolution in the area of losses for 19 years, 20 years, these professionals are here helping us to this transformation and doing training, I mean, we are working, localizing and doing training and the change, we are with Falcone, so this demands for you to get to the result and start, it demands a time as it shows the whole history of the companies that we live in to start to reduce efficiency definitely lost. So I know about everyone's anxiety, but the story is there, the companies that were successful, things don't happen overnight. There is a training process, an adaptation process, a process of knowing the region that is. Now we already realize that we are advancing and detecting things and deviations that were not so common before. We are already realizing and believing that we will advance more every day, bringing this result better. But we need time to train, to raise awareness and to cover this immense area of the state of Rio.

Great, thank you. Now, a curiosity. I think I have a little anxiety on my part, but I wanted to understand this diagnosis, Nonato and Barroso. When you expect... I understand that the company is new to you, it's complex, but this diagnosis, do you believe it's ready? In what period?

Go ahead. Look, the diagnosis is being made. We already have a diagnosis, but it happens that as you expand the action and get to know more, this diagnosis expands. It grows, it redirects. So, if you look at companies for an accentuated descendants of loss, a significant evolution, look at the history of the best companies. four years, five years, that's what you see. Although the work starts to appear in the first year, but for a significant drop that the market expects, you need a longer time, but you will see the sign of this work start to appear. Year by year. Now, a significant drop, as we all want, very significant, leaving the company below the regulatory, you need time, four years, five years, that's what we're working to do. But this evolution will happen every year. The first year you arrive, you have to correct a series of things and you bring to the base a series of dirt that sometimes seems to increase a little, you did not improve in the loss, but you absorbed a series of things that had no support. It was there, but it could have become PDD or it didn't do it with care and using the right technique to make it a result. We need to be careful with that.

That's great. Thank you and good afternoon.

Thank you, Gabriel. Uma pergunta aqui sobre estratégia de liability management, é um pouco o racional para fazer a quitação do pagamento com o BNDES, a pergunta também é complementada, se não seria mais interessante fazer a antecipação de dívidas que tem um spread de 7% em vez de 5%.

Thank you for the question, Rodrigo, that came in our Q&A. The reason is the following, the debt that has a cost of IPCA plus 7.44 will be amortized in October 2022. It was an infrastructure debenture, 5 years bullet, issued in 2017. So, we can't make the anticipated payment of this debt. So, this is the reason for us to have selected the debt of BNDES, it was the debt today that had the highest cost, This was... The main amortized debt had a monthly payment, had receivables also given in guarantee to this debt of the BNDES, so you remove the entire limit of receivables, you also remove the costs of keeping accounts linked that were given in guarantee to this debt. The other debenture, which has a course of IPCA plus 7.44, it is a clean debt, it only has the light SA value, e não tem nenhum outros custos adicionais, a gente vai amortizar ela no seu vencimento, que é em outubro de 2022.

Obrigado, Barroso. Passar a palavra para o Matheus Soares, da Mogno. Pronto, Matheus, é só liberar o seu microfone, por favor.

Good afternoon, everyone. Thank you for taking my question. Congratulations on the result. Thinking a little bit about the losses in the areas of special treatment, I know that you are still structuring the project, the process, but I want to understand if there will be any focus, besides repression to the cut, clearly, will there be any focus on energy efficiency to reduce consumption? and incorporate energy, in general, create a model for you to increase the company's consumption base, because that also ends up helping the regulatory percentage.

Good afternoon, thank you for the question. There is no doubt that this new project will involve not only the direct relationship with the communities, energy efficiency, let's work with energy efficiency, but also with areas, with support, with partnership, with SENAI, with SENAC, allow training for people in computer science, for children with disabilities, training in the area of electricians, in the area of tourist law, because in this project we also have the perspective of job creation, Notice that we have difficulties here, it is reported that when people are going to do reading in the community, they have difficulty getting the addresses right, finding the addresses. There is nothing better than training, preparing people and the work of the community, because they know. So that's why we are in our project, that we are elaborating, all community leaders are participating in this elaboration. We are talking to them to know the reality, to know the need. It is a broad project, it is a project that involves many organizations that provide service to Brazil as a whole, to Rio de Janeiro, to the whole country. So this project is really differentiated and will act with all these aspects that have been mentioned, energy efficiency, but also employment generation, but also training, the possibility of citizenship in this area as well, which the public power has abandoned a little, but we are also in partnership with the public power, for the few to come back with respect, listening to people. And obviously, we can't charge that energy all the time. This is sent. We want to regularize from this moment on. That's why this project is being very well structured and elaborated by various hands, with the participation of the community and also with the participation of organizations that will be with us in this new modeling of working in the communities.

Thank you. So, just to complement, we can expect an incorporation in the process of social tariff, for example, to improve. Because it's not a P&D verb that every distributor ends up having together with NEL, it can be very well used to help in this. I'm just on the right path.

Perfect. That's it.

Obrigado, gente.

Well, then, once again, I would like to thank you for your participation. We had an expressive number of participants today and more than an hour of call. We will see each other opportunely in the next disclosure of results. And we are all here at your disposal to clarify any questions you may have. Thank you very much and see you next time, folks.