Ladies and gentlemen, thank you very much for waiting. Welcome to the teleconference of Eletrobras in order to disclose our results regarding the Second Quarter of 2018. We inform you that all participants are only gong to be listening to the presentation.

After that, we are going to have a Q&A session, and then we are going to provide more information. I would like to remind you that this presentation is available in PPT in the part of Investors Relations in our website.

[Operator Instructions] Before we proceed, I’d like to say that any kind of a statement given during the presentations regarding the perspective of the company’s projections, operational goals, they are premises of the Board of Eletrobras, as well as information available for the company.

Any forward-looking statements are not a result and are not assured because they are – they involve uncertainties. Investors should understand the economical conditions and other operating aspects may influence these forward-looking statements. Now, I’d like to give the floor to President, Wilson Ferreira Junior. Mr.

Wilson Ferreira Junior, the floor is yours?.

Good afternoon, everyone. I’d like to thank for the opportunity and for you being [Technical Difficulty] our results of second quarter of 2018. I have a quite large presentation. So let’s start on Page #4, where we have our main highlights – financial highlights regarding this quarter.

And the three main ones, we have an increase of 36% in gross revenue. We had BRL 14 million – more than BRL $14,822 million. We had in terms of CVM EBITDA of BRL $5,293 million, an increase of 96%. And in terms of net income, we had an increase of more than 807% increase regarding the previous period of – the second quarter of 2017.

And we’re going to introduce you the main results, which led to that. So going to Page 5, just to mention some highlights in terms of this analysis.

The first one here that we kept on reducing our in-depthness in the second quarter and we were able to reach 3.4 and we are really close to our master plan of business and management, which is going to be rigid as we go on, especially due to the sales of the SPEs, which are expected to cover them all.

We included more than 814 megawatts into the end of the second quarter. And we added also almost 200 kilometers of transmission in terms of line until 2018, and also, we are going to provide more details afterwards. We’ve had a great highlight on July, 26 which was a privatization of Distribuicao Piaui to Equatorial Energia.

It was discount index of 119%, and we had the payment to the government and specifically the process of capitalization for the life of the company from now onwards.

Another highlight of this quarter was the definition by ANEEL, and we had resolution 24.21, which talks about the resources and now we have a recognition, a bit higher than, a bit lower than BRL 1 billion between 2018, 2019.

And we have investments in this semester, which added almost a BRL 1 billion in terms of corporate pensions and it’s also an investment in SPEs. And then after that we are going to page number 7. We are going to show you the main things in terms of infrastructure.

As you can see here, we in June this year, we had – we have aggregated 814 megawatts and up until the end of the year we’re going to have 1,489 megawatts and with this during the year, we have a highlight in terms of some wind plans. And specifically, before the next month and Sinop until the end of the year.

And during until 2019, we are going to install my machinery and we are going to have Belo Monte next year. So, that’s why we are able to reach Brazil is about 160 megawatts of installed capacity, and we have 48.629 megawatts in terms of total installed capacity of Eletrobras, which represents 20.4% Brazil.

And here in the bottom part, we have a discrimination of them in terms of Belo Monte’s 610 megawatts. We had additional 174 São Manoel. And in the Northeast of the country, we also had an additional aggregation. So, we keep on working hard.

And on the next page we’re going to talk – we have also services and we see can the progress we’ve made in the last 50 years. And how Brazil is now interconnected, especially most of it belongs to Eletrobras. So, we added 194 kilometers of transmission, and we’ve reached it now 71.782 kilometers into transmission lines.

I know you have six station, new transmission lines of 230 voltage and so on. And also, we have transmission lines in Brazilia, and also the 230, which connects two large places. All of this for us to complete the corporate lines in about BRL 24 million.

So, those works which were delayed and they’re now into operation and they’re expected to be completed. Now I’m going to Page 10, and we’re going to detail a bit more the results in terms of economics and financial of Eletrobras. We have all the quarters here and we also have a graph where we show the variation of revenue.

So here in the middle we are detailed and 4% growth in our revenue, and we’re reporting in the mid of the year the price of, an increase of a 36%, compared to last year and gross revenue IFRS. And here, we know that, in the moment the company is also going to really down towards moment.

And this quarter in particular, we’re going to have recognition of the tariff in 1,400, which covers onto all resources, which are the object of financing called [distributors lignarias] from the beginning of August 5, 2016.

We were consolidated our debt with RGN and now they belong to the concessions of distribution, which are now object of privatization. I’d like to remind you that we are privatization and we have the right of concession to the Federal government.

Having made these initial disclaimers, we have the main variations, which took place in this quarter, compared to the same period of 2017. And we highlight specifically in terms of generation in terms of OEM BRL 16 million and we have positive results of Eletronuclear.

We have negative results in terms of better transfer length of BRL 16 million and it’s not really considerable. In terms of transmission the first in terms of exploration of half of ERS in the amount to 85 and the other one as said, BRL 133 million headed to other 52.

In terms of exploration, I mean in exploration regime, we had a drop of BRL 9 million to BRL 1 million and it’s specifically because of this and because of the end of July. We were just making a reference. In terms of exploration regimen, we have BRL 52 for generation for Eletronuclear in the transfer of commercialization of a debut of BRL 31 million.

And now transmission in OEM, a growth of 126 to events – and now you have the object of conclusions we made. In terms of exploration, this negative adjustments is due to the recalculation that we made for all companies.

And now in terms of distribution, we have BRL 484 million, which are positive revenue arising from these tariff adjustments from the ordinals of mining and energy ministry of the second quarter of this year, and also adjustments from last year from Alagoas, Piaui and Amazonas.

So, the combination of this two effects, specifically the first one is what leads to the variation increments of operating net revenue from the distributor. And now in other revenues we have BRL 51 million and this is to in a great extent to the program of conservation of Brazilian Energy, which is operated and led by Eletrobras last year.

It had a result and was given the first quarter and now you’re going to second quarter and maybe in the third one. The main variation of BRL 61 million. Okay. So now you’re going to page 11. And we’re going to – in terms of analyzing our general costs, operating expenses and so on.

In general cost from the first page, we’re going – we had important variation and compared two quarters of 27% and compared this two half years of 11%. Now, the positive aspect is the energy bought for resale. We had a drop, both compared in the first and the second comparison, specifically due to the seasonality.

We expect for the second-half of the year to have a different number from the first-half, and we expect in the second-half to have a higher volume in a better perspective of in terms of price and specifically in terms of TLD.

And we have here two effects in terms of fuel for the production of energy and we’re seeing here is negative, last year and positive and this year. We had a change of procedure. So, we could hardly compare it to volumes, but it’s about we adjusting ourselves in terms of the policies published by the agency.

In terms of tariff cost and on in the second quarter and the first of the last year. And this year the cost of fuel, they have here and take a note as a different item [indiscernible]. Santa Cruz is also here at this moment so that volume difference from the other one. And then we have more tariffs in terms of transmission.

In Amazonas, we have a different number from last year. A positive point here, we have to note is, is exactly this main component. Energy bought for resale. And as I mentioned, it has this characteristic of seasonality. So, we’re awaiting better results for the second-half of the year.

Now, Page 12, we’re going to talk basically about the four components in terms of management of Eletrobras. So, we have a quarter comparison and of a drop of 11.6% in a comparison of the half-year of minus 2.3%. I’d like to show you a drop, in terms of expenses with personnel. We have with them pension plan and the dismissal plan as well.

The good news is that into June it’s important to mention that we had an agreement, a collective agreement in which we had for the first-time adjustment and by adding the adjustment and the year adjustment to the PCA. So, we have 1.69 [ph], plus 1%. In this perspective, it’s for us to have a greater stability with these volumes of resources.

In addition, to other aspects as hazardous pays and so on, which are extraordinary costs. But on the half-year, we saw that lots of people left during this year and this has an impact on the company. On the other hand, we had two extraordinary events this year.

They’re highlighted here specifically to mobilize in terms of material and services accounts. We had in terms of nuclear in Angra 2 and Aparecida thermoelectric. Both of them generation expenses of materials and services, which are higher.

And this is the reason why these accounts are higher, but they are growing due to their activity when compared to last year, when we didn’t have it. So, this is the main reason of the variation for materials and services, both on the pace of the quarter and on the half year, is this activity.

In terms of others, we had a drop of 4% and 19% in terms of half year, specifically, due to the cut of BRL 887 million in terms of Amazonas Distribution, which is a result of the bill. And in order to make the comparison easier, we have the pension plans from last year and the consensus dismissal plan this year.

In specific case, we had some recognitions, specifically, due to the privatization We have a contribution here and we also had an agreement with the municipality of Teresina with the companies of water resources of POE [ph] and these were recognized, were agreed and had a positive result. And on Page 13, we have an impact of the provisions.

We have the six most important of this process. So we have contingent – a variation of BRL 834 million in this quarter. And the main aspect of this are two. Basically, it’s the renegotiation the fiscal that we have of BRL 163 million. It’s the collection of ICMS by Rondônia State Government and we have really favorable conditions for the company.

There are specific characteristics, but also the recognition. The recognition with the debt, the company of waters with Eletrobras. So we had – already had, and we are going to have the next quarter the reversal of this amount due to these really positive agreements we had with this quarter with the state of Rondônia.

We also wanted to highlight that the provision for the classification was approved for Furnas after a lawsuit, really old lawsuit. In terms of compulsory loan, we have reclassification of risk and changes in court decisions. We have BRL 167 million.

And in terms of Cepisa, we had an impact of IFRS 9, which changes the term to assess non-compliance from three months to one-month and now we have BRL 199 million.

And we also have here exactly the topic on reversal of Angra III of BRL 417 million with the constitution of the baseline and also Angra III, which is basically a small offset from distributors. In the second quarter of last year, we had BRL 194 million and this year we have BRL 334 million.

We are going now to Page 14, the analysis of EBITDA regarding this quarter, a really high one and we are using the comparison here. We are reporting a growth of 96%.

When we take out from this comparison the non-recurring events, which added about BRL 3 million last year in terms of pension plans, contingencies, which also have BRL 770 million Onerous contract in terms of BRL 904 million.

We had a number of BRL 1,976 million and we had a drop of 50% and this drop is due to some aspects to be taken into consideration. The first one, we had BRL 314 million, which correspond to the drop of operating – net operating revenue and shareholdings, Madeira Energia from San Antonio.

We also have Jirau, BRL 62 million; and Itaguacu da Bahia Energias, BRL 33 million. So specifically about our shareholdings and, in this case, Madeira Jirau is about 40% comparing these two companies. And now we have a topic related to the operating costs.

Again, we are going – we have allowances, this contract and that acknowledgment only in the second quarter of BRL 459 million. And when we do not conclude this, because there’s the process of the sale and still being debated by the congressmen, it may be withheld.

So that’s why we include this year as possible analysis with its allowances in terms of BRL 176 million. Here, we have from Santa Cruz, we had a variation, a positive variation of costs of managerial PMSO and we have BRL 176 million in provisions and we highlight in case of Cepisa, which certainly is going to be reversed.

There is already a reserve of amount and then we are going to have this BRL 72 million increase of guarantees is going to be a result of negotiation of the subsidy, and we may use it exclusively for the reversal. We would talk about BRL 615 million being reversed from the privatization, from the distributor.

And then we are going to have our EBITDA to BRL 1.650 billion and we are going to be compared to the other one. And remembering that variation, part from this variation in terms of interests and shareholdings. We are going to compare operating EBITDA, which are negative only because of provisions and interests from parent companies.

And then final page, we are going to have the financial income. We have a great contribution for this quarter. We had a really small variation of 1.3%, and we had in other financial results operation with derivatives. We had the indexed contract in terms of Eletronorte, which are positive in the quarter.

In the financial expenses, we have a reduction of – and we had a reduction of indexes of CDI, IPCA, and this had BRL 1 billion for the semester and added about BRL 50 million in this year. So it’s also a really positive result. In the last line on Page 16, we have a variation of the results of 723%, adding 2.832 and a growth of 68%.

And the main component, which determines these results, obviously, it is the tariff asset revenue from this ordinance 301 and the RBSE of BRL 1.2 billion. The reversal of Para Rate that I forgot to mention before. We had also a provision for this and we’ve reversed that.

So the provision for compulsory loan of – the volunteer dismissal plan of BRL 24 million and Cepisa agreement with the municipality and the water companies of BRL 231 million. And this provision for fiscal allowance that I had already mentioned of ICMS from the government of Rondonia. So the result is really positive.

I believe that it fulfills our expectations. I’d like to talk about the analysis of this result both in terms of revenues and expenses and net income on Page 17 by segment. And here, I think it’s important to look into the perspective for Eletrobras. First, I’d like to mention that in generation and transmission, we had tariff adjustment.

In transmission, we had a volume of tradable energy. And we had a drop which was slight of 4% and – 3% in terms of transmission and 4% in generation. And it’s important to mention the effect we have arising from managing personnel, material, service and others. ere, we are pointing in generation a drop of 22%; and in transmission, a drop of 27%.

In terms of operating costs and expenses, a drop of 31%. When we are talking about transmission, we had a drop of – we have an increase of 128%, but this is due to the provision of BRL 173 million. If it weren’t because of this, we would be talking about costs and expenses quite stable.

When comparing the quarters, in the second quarter, the increase on EBITDA is 50% and in transmission is 90% even for this activity. And this ended – and all together adds 34%. This is important variation. It’s a trend of consolidation. We are still not working at our full capacity.

And in terms of financial results and net result – net income, we have a positive result specifically due to reduction of debt and indexers. And we have a net income of generation reaching BRL 1 billion -- BRL 1.1 billion and 32% increase and in transmission of BRL 105 million.

And apart from that, we are going to BRL 1.8 billion, an increase of a great number in percent. And then we have the part of distribution. We are on the course of the privatization process already – which already took place in Cepisa. But we noticed that in the quarter, we had a variation of 156%.

And we look back the financial provision of 506 [ph] per year and this year of POE, and we have this allowance of fuel, which is here in the second line of BRL 500 million – more than BRL 500 million. This adds more to BRL 1 billion and BRL 200 million. And of course, it’s a difficult situation for these companies which had readjustments.

So the company had a write-up problem of cash, but at least, they had a reduction in their adjustments for the consumers and made it to have better economical result. But the financial result was not so good, including with other additional cost.

So vis-à-vis, the results of the distribution and this month is positive due to the BRL 3 billion from the consolidation of the regulatory asset, which is here shown in 75%. But what concern, specifically the costs and operating cost specifically from the disallowance of fuels, but we are on our way.

The recognitions of the regulatory asset should have been done and asked at the same time, and now we obtain this recognition. Let’s go to Page 18, we have the assessment of our leverage. We are – we dropped and now we have a net indebtedness of BRL 17.6 million, that you can see in the graph here.

We had BRL 23.4 billion, almost BRL 6 billion more than we had today and a variation of 2.4. If you look this year, in June 6, it’s a reduction of 8 times. But we are reaching a stability.

And we know that the privatization and the sales of the SPEs are going to contribute definitely for us to reach a healthy level of leverage for the electric companies at Eletrobras. Going to Page 20, we are going to talk about some challenges.

Regarding the PDC, we have 736 consensus dismissal plan, our target regarding the implementation of the SAP in all companies, and we implement simultaneously our shared centers for us to have a potential reduction in about 250 people. Up to now, we reduced 736 people and – which allowed us to have annual savings of BRL 231 million.

From this month, we have our master plan of business and management, corresponds to the recognition and our discussion. We reported an economy and savings in terms of extra time and dangerous work on-call of BRL 25 million.

The shared centers when – are working ready since July 18 in the four regions, Rio de Janeiro, Florianopolis, Recife and Brasilia. They are working simultaneously with SAF – SAP. And also, regarding – we have some about Angra. We have a group of work which is aiming at establishing within 60 days a balanced tariff.

For Brazil, it’s really important to have the thermonuclear. And this would be the lowest tariff in the country. Besides the benefits of us having an investment already made of more than 60%, I think it’s an important attitude, and I – hopefully in the next month, we are going to have a definition regarding this.

Regarding financial discipline, we have 3.4. The highlights of the quarter, we have the sale of shares of Eletropaulo from the public offer created by the union. We sold BRL 95 million. The privatization of distributors, we are going to talk a little bit more afterwards. But from August on, we are going to have another stage of this auction.

We are going to be talking about the auction of the SPEs. And I think it’s important to highlight our commitment of completing the work regarding the main places here. Regarding the results of last year, we have a reduction of material weaknesses. We also had an important reduction of 80% in terms of significant debt.

And we established the statutory audit committee and the participation of [indiscernible], which are already independent assessment of 200 directors in the company. And that’s why we’re going to have independent assessment of 200 directors and officers of Eletrobras companies.

We are going to have something similar in our – with our 190 directors I appointed in SPEs and affiliates. We’re going to have a policy to select our directors. We’re going to follow them up and monitor them. And this year, we’re going to certify each of them and assess them.

So this is something that somehow we are going to recognize the work that you’re doing in terms of governance. We had to know only the recognition, but also the highest note from FAS. Next page, we’re going to report our investments in the first semester BRL 1.800 billion, about 30% of our goal, BRL 1 million in the last semester and half-year.

We’re well set in terms of our investments and we’re going to continue with PMNG to the level of BRL 3.5 billion to close the cycle of five years. Page 22 are the highlights here.

On September 27, it’s going to be the auction of our 7 to 1 interest in SPEs, and we have 59 and 1,605 megawatts in generating and 12 transmission lines, 200.9, 910 kilometers, and the minimum price is going to be of BRL 3.1 billion. We’re going to divide them into 18 lots, eight of generation lots and 10 of transmission lots.

I believe it’s really important work we’re interacting a lot with our Board and the audit committee with the Minister of Planning, with the federal accounting court, and this is going to be essential. We’re going to have incoming revenues. And after disruption, we’re going to see that we can reach the indicator of leverage we want.

And this is going to allow us the target. It’s a company focused in generation and transmission of its four subsidiaries, Eletrosul, Furnas, Chesf and Eletronorte, in the participation of Eletropar and the research center. And apart from these four operations, we have more details of them.

The main works of generation Eletrobras participants of each 32 participations and transmission of 18 of them specifically delta of 500 KV. At Belo Monte, all of them they have an important participation of Eletrobras and we have 50 SPEs. And we have a book value of BRL 20.5 million. Privatization of Cepisa.

We have a tariff reduction of 8.5% which is a grant of BRL 95 million. And then to October, we’re going to have assumption of Eletrobras debt, the contract execution, new utility companies capital increase and concession agreement execution, all of this related to this schedule. Apart from this, we have important milestones.

On August 23, we have a meeting with the distributors. We’re going to have four of them. We’re analyzing sale. We’re analyzing the topic, which is due to the –depends on a result from the Supreme Court between the state and federal government. We have to respect this, but on the 30, it’s gong to be the auction.

The auction means that the four concessionaires. And then on next page, we’re going to have a little bit of the analysis of whatever is going to happen, because one of the auction of POE, everybody had questions about it. So I’d like to mention this to make it easier for you. Each of them, they have a 100% of discount.

And here in terms of POE, we have a 19% of discount and 19 times BRL 5 million, which is equivalent to the grant equals BRL 95 million every 8% is 1.5% of Acre, Alagoas, Rondônia 1.5. So this is going to be made if the new openings offer more than a 100% discount in the tariff of the stabilization.

Devoting capital from capital acquired of almost 90% for each of the company, that’s why we have 90% of BRL 5 million. We have about BRL 45,000. And for each of them we have an obligation of capital disbursement of BRL 721 million for POE, BRL 239 Acre, BRL 546 Alagoas, BRL 591 Amazonas, BRL 254 Rondônia and BRL 176 million Roraima.

So the assessment the minimum considered regarding the base of the compensation, the set of treatments related to this allowance. We’re talking about of concessions between 2.2 or 3.2 and 2.8 in terms of POE 2.8 times. Finally on page 27, what is the amount noticed from these distributors? You can see that in far of them, it’s reversed.

What is the debt is going to be assumed to utilize? And we have to mention them. And what is the contribution? And on the right-hand side, we have the remaining debt of Eletrobras for these companies, and we also have the possibility of interest of 30%. We have a debt – we don’t have a debt higher than we had to convert debt into capital.

And just to remind you, on Page 28, we have the reason why we understand these privatizations are attractive. So we have the reference here from the company from [indiscernible] and another one from the northern part of the country to see what is the remuneration basis in terms of reais for this company, in terms of supplied energy.

So as you can see our reference company, we have 0.55 megawatts per hour and all other companies here are being sold. So they produce to Eletrobras and amount much lower than we have here. The lowest one is 0.11 megawatts per hour.

And there’s no possibility – extraordinary possibility of improving this result, for regulation of losses, improvement of services. This is why Cepisa is half of the benchmark. That’s why it explains the effect. And now to complete the presentation and highlighting that the U.S.

we have three topics in terms of investors with the North America authorities. We have an agreement of the close action of $14 million. And we have this exception of announcing here with the interaction of the companies with the U.S. authorities. So then Department of Justice of the U.S.

declined to prosecute Eletrobras related to the Foreign Corrupt Practice Act and to impose the sanction did not impose conditions nor determined the indication of monitoring. So I believe that everything all the numbers we’ve rendered helped us to reach this result. Due to both decisions, which the next one to be analyzed in Eletrobras.

So I’d like to apologize, because my presentation was long, but I needed to talk about all the topics, the many things we have ongoing, especially I’m available to answer any questions you might have..

Now we’re going to start a Q&A session [Operator Instructions] Our first question comes from Andre Sampaio from Santander..

Hello, I’d like to ask two questions. The first one regarding our decision to have this CVA book.

I’d like to understand what is the rationale specifically regarding the retroactive regarding December 2016? Could you explain why you decided to make this provision? I’m sorry this book recording? And also I’d like to ask about the possibility of converting this debt after the privatization of the company.

Could you provide more details? Would you have interest in converting this, looking at this strategic part of the company?.

I will start from the second one, and afterwards, Armando is going to address the first one. This models is inspired in the privatization itself from [indiscernible]. At that time, Eletrobras had 32% of the company.

I wouldn’t – I would say that is one of the best investment we made in the company BRL 1 of conversion of debt created and many billions of reais in terms of dividends. So these companies may operate in a better way if they have this leverage.

So the option we – that we have debt in all of them for us to have a conversion for 30% inspired on this case. If you remember, we have a term – a period of time to do this. The law establishes that we have up to six months to acknowledge the business terms of the operator into – put into place what is established here.

So at this moment, I cannot tell you anything in advance. I cannot any – make any forecast. I see they have a really positive experience from the past. And – but we’re going to analyze on a case by case basis and we’re going to disclose anytime we have an information..

Hello, Andre, good afternoon. The retroactive CVA comes from the beginning of the designation period We have RGR, which is about a 111% of [indiscernible] and we’re recording this in liability on our balance sheet, the counterpart of our revenues. We consulted ANEEL and the same recognition of this asset.

And then after this was ratified by the Minister of Mining and Energy by the ordinance 301. And then we had the opportunity of registering. It is almost BRL 4 billion, which were already in the liability first to have the corresponding counterpart.

Reminding you that inside the privatization process, the same counterpart amount is diluted and recognized in the tariff when the CVM by the same controller. And now even though we’re in designation period, we’re going to have this recognition.

This was positive for the company, because we were recording a liability in our balance sheet and that was comprising our leveraging levels. So that was even more positive as long as we keep on being service providers during the period of designation.

Now we’re going to have a book keeping of this record in terms of the finances we had for them designation period, which now were extended to December 31, 2018 until December 31..

Just to compliment, I think it was a critical year. But I’d like to confirm that there’s still no recognition related to the possibility of what do you mention in terms of the ordinance from August 2018 to December 2018.

You would have a complete control of the agreement, so we didn’t do that, right? It’s just related to RGR, right?.

Yes, just related to RGR that was allocated already..

Okay. Thank you..

Our next question comes from Maria Carolina Carneiro from Credit Suisse..

Good afternoon, everyone, and thank you for the call. I also have two questions. First one, regarding the privatization process.

Just for us to understand what is the step by step of the company, given that now the bill is going to be logic in terms of time, we should know when it’s going to approve? I’d like to know how do you see this agenda in terms of privatization? And if – do you share the idea that this is not going to prevent the process for most distributors? Are you going to continue what was already started with Cepisa? I would like to know your opinion and views of the other companies? How do you see the process? And the second question is talking a little bit about the results just for me to be sure, what is left from PDC to be executed this year, the consensus dismissal plan? Would you have a relevant amount, or do you think – or did you consider that you have already implemented this and it’s already done? Just for us to have an idea what is expected in terms of PDC for the company?.

Okay. Regarding privatization, which is the first question, I just would like to remind you that we mentioned 11.2 in terms of capitalization of the company regarding the debt with Petrobras. Apart from that, we have BRL 18.8 billion of additional debt with credits which are coming from PL, of course, the company has to analyze it.

This change can go forward, because the credit is going to be remain with the company, with Eletrobras. So the company is going to have an analysis exclusively of risk of execution of this credit. I think everybody recognizes that. All of them are already recognized by ANEEL from the PL to have the budget. But the contracts, we already provide energy.

And of course, the perspective of normalizing the agreement of Petrobras from Amazonas GT, these are absolutely necessary operations. They did not take place yet. But different from what was shown on the news, there were no increases and we have to return it as ANEEL itself said. We, in fact, have a normalization of this.

So we are going to keep this cash. We have the perspective of the privatization of the second step on August 30 exclusively from Alagoas. Regarding the remaining PDC, we have authorization to implement it until December. So we opened the first stage. Next month, we move from the headquarters.

We are going to be definitely in one building and we’re going to complement the shared services center. And from this perspective, I see that unfortunately, both in terms of RP, we have a small delay of three to six months of this twos, which demands people but it’s open until the end of the year.

I mean, we have the possibility of opening until the end of the year. We closed for the first session, but we are going to have another additional PDC until the end of the year. At this moment, we already are authorized to open it again.

Both processes, RP and PDC, during this half year are going to be made for us to be able to adjust the company to the processes and to be able to – maybe to not have as many employees. This is going to be informed to the market. At the moment, we are ready for it.

And the provision of the project itself, we have 736 employees participating in it and this represents about one-fourth of our provisions by the subsidiaries of Eletrobras..

Thank you very much..

Our next question comes from Marcelo Sa from UBS..

Good afternoon, Wilson and Armando. My question is regarding the potential exercise of subsidiaries. I didn’t understand properly. Just to understand the mechanism.

Understanding that you decided to appear, it means that in order to buy 30%, you’d have to convert debt or would in six months would have an appraisal report to define what would be the terms of this. It was not really clear for me.

Could you explain me?.

Well, BRL 380 million and we have in the capital BRL 1,063,000 billion. So the debt of this would be reducing BRL 308 million, and that represents 30% of the capital of the company..

Okay, understood now. Thank you..

Our next question comes from Marcelo Britto from Citigroup..

Good afternoon, everyone. Thank you for the call. I have two questions. First, regarding the privatization of CL [ph].

We know it’s suspended due to the determination of the Superior Court, but I’d like to understand what are the steps the company and the federal government is following to eventually to restore this process when this injunction is suspended, because I understand the bill we have today which is being analyzed by the Senate would not prevent the privatization? Also given the privatization of these SPEs, does the company understand, and what is the company doing to suspend the process and to carry out the sales? Because it’s under the same suspension regarding the privatization of CL? And the second question regarding the bill, which is being analyzed.

There’s a highlight, the change of the base stage to determine which distributor from Eletrobras would flexiblize these regulatory penalties in the next two years. We understand that this includes Electro Agri and Rondônia as possible of having these penalties flexiblized.

I’d like to understand the company’s perspective and how does it help or prevent this in terms of the impact if the process is restored? Thank you..

Well, regarding CL, the Supreme Court is conducting it with an injunction. And when we have the works, we see that there will be understanding between the federal and the state government. The topic under – being debated in the case of Cepisa is that at the moment at this company, we’re strategized. They had indemnification rules after the auction.

The auction did not take place and these companies, of course, had their activity changed with the capitalization and so on. And the state government, I understand they have remaining rights on the 40%. They would have rights to 40% as long as they had carried out the auction. There’s a discussion with the federal government.

I understand that we have to wait to this injunction. We are part of this and we have to wait for the term to be established. We have suspended the provision of service. And I believe that looking into the result we had with Cepisa for the consumers, for you – for this discussion, we just have to respect their decision.

Regarding the SPEs, given the law and the powers granted by the institute and by law, they create the subsidiaries and they may constitute subsidiaries, which can be sold. So this was used.

Regarding the PL from the Senate, from the bill, from the Senate, I’ll ask Armando to make the comment in terms of flexibilization of [indiscernible] and Rondônia?.

They have two effects. The bill recognizes that in terms of the reimbursement of CCE, they recognize a period of 10 years, something later and for the effects in terms of deduction. But regarding the recognition of the tariffs, in terms of loans for you to have a positive result in the tariff and the recognition of cost of generation.

Well, this was just normalized. Amazonas and Rondônia already have this instrument..

Do you believe there’s the potential of causing any further delay even if the Senate keeps it? What do you mean about delaying?.

Delaying that maybe they have to change the bidding process, because they are changing the tariff, the total tariff. Well, at this moment, it was not approved yet and you have a session scheduled for August 30. At this moment, if they keep it, they keep the schedule..

Okay. Thank you for answering..

[Operator Instructions] We are going to close now the Q&A session. We are going to turn the floor to Wilson Ferreira Junior, the CEO for his final considerations..

I’d like to thank everyone for their attention for our teleconference of results.

I’d like to emphasize that we are in a really important moment of our master plan of business and management, and this is something that we’ve been discussing for years and years, which corresponds to the process of focus of the company in the relevance sense, generation and transmission and privatization of transmission.

Of course, they do not have advantages in comparison to others and somehow it’s recognized. We are talking a lot about Cepisa, which took place less than one month ago. But I would like to remind you that we have [indiscernible] and with similar results. We are optimists in terms of this process.

I would like to emphasize that the company is in the process of leveraging. And at this moment, it is essential for you to put the mobilization of SPEs, which is going to allow the success, more than BRL 3 million. The company has a net debt about 8. So there would be a possibility of reaching a leveraging area which would be a good result.

And this is what makes sure that the company now can conclude the projects, which were ongoing. Everything – almost everything is within expected. The company has reduced its investments in terms of BRL 50 billion to BRL 20 billion since its operation, but even though we have grown our line transmission and et cetera. So these are important elements.

And in parallel, both of these elements related to corporate activities or to the consolidation and integrity of compliance, dissent of recognition. So I think it’s really important, the agreement with the Congress. In the company program, we are now almost turning a page and starting a new perspective.

For the next quarter, I think it’s going to be significant and I’ll wait you here for the results of the third quarter. Thank you very much..

At this moment, the teleconference from Eletrobras is closed. Thank you very much for your participation. Have a great afternoon..