Companhia Energética de Minas Gerais (NYSE:CIG) Q2 2023 Earnings Call Transcript

Leonardo George de Magalhaes: Hello, Andre. Thank you for your question. Yes, GASMIG is a company in the group that has very relevant and important results. Since last year, it is bringing consistent results in EBITDA and profit. The company has low leverage. I just went through the tariff review and it has some special aspects, differently from the electric sector. All the regulatory payments for the electric sectors are posted in the balance sheet. For GASMIG, they are off balance. And when you have a tariff review, that’s when they are integrated into tariff review in the tariff and all these offsets that are off balance. And GASMIG, it has had a very important tariff review, this year 15%, and that’s a way of bringing into this balance, the offset of these regulatory balances.

That explains the results. Last year already, we had good results, but this year, it is even more significant. And maybe this is one of the explanations because it is over the regulatory limit. So this is a company that has low delinquency levels, and we understand that these are consistent results. Of course, that, as I mentioned, because the regulatory assets are off balance and you have adjustments. This ends up affecting the results. And we might have a period when the results are much higher than the regulatory. But in the long term, these are consistent results. The company is fully within the regulatory limits. And so we are very optimistic about GASMIG’s results in the future. It was another good quarter in terms of results, it already was good in first quarter.

But in this quarter, the adjustment of 15% and the rates improved the results for GASMIG in this quarter and the semester of 2023.

Carolina Senna: Thank you, Leonardo. Our next question is from Marcelo Sa, sell-side analyst from Itau. Our officer for generation and transmission will answer that. I will open the microphone.

Marcelo Sa: Hello, everyone., Thank you very much for the call. I have two questions. The first one is to try to understand what is the company’s position as far as Argentina exports are concerned. The current role is to be able to export. But my question is, can you also export this extra investment in the future? So maybe you need to convince the government that makes sense to be done. So I would like to understand your position about that. Second question about the plans. So you will request to the renewal for the quota system. It’s not going to be a renewal with control sale that would have to go through the government or the state government’s administration, right?

Thadeu Carneiro da Silva: Okay. About the first question, yes, trading makes sense for that energy, whether when it’s being turned or transformed or in the future, we know that the reservoirs have high levels right now. And with — they tend to end the dry period also at a high level. So it is possible that we see new transformations in the near future. So we believe that this makes sense and we are part of the group that is trying to work on that possibility. Now about concessions, Cemig is working with all possibilities of renewal and they include the request to renew per quotas, also the renewal by selling the plants or transferring the control of the mother company. So what we are working on today are all opportunities. And obviously, that depends on the granting power and for us to see which one will happen. So we’re not leaving anything on the table, but we are not choosing one for the other. No. We are looking at all the alternatives right now.

Carolina Senna: Thank you, Thadeu. Okay, Marcelo, go ahead.

Marcelo Sa: About exports, I understand that — but how is the negotiation going with the government? Do you have already a method on how this is going to happen? In a thermal dispatch in order to compensate for it, is this something that is going to be defined in the next few months or is this something that is going to take a long.