Good day, ladies and gentlemen and welcome to the Enel Chile 9M 2020 Results Conference Call. My name is Tania and I will be your operator for today. [Operator Instructions] Please be advised that today's conference is being recorded.

During this conference call, we may make statements that constitute forward-looking statements within the meaning of the Private Securities Litigation Reform Act of 1995. Such forward-looking statements reflect only in our current expectations, are not guarantees of future performance and involve risks and uncertainties.

Actual results may differ materially from those anticipated in forward-looking statements as a result of various factors. These factors are described in Enel Chile's press release reporting in 9M 2020 results, the presentation accompanying this conference call and Enel Chile's annual report on Form 20-F, including under Risk Factors.

You may access our 9M 2020 results press release and presentation on our website, www.enel.cl, and our 20-F on the SEC's website, www.sec.gov. Readers are cautioned not to place undue reliance on those forward-looking statements, which speak only as of their date.

Enel Chile undertakes no obligation to update these forward-looking statements or to disclose any development, as a result of which forward-looking statements become inaccurate, except as required by law. I would now like to turn the presentation over to Mrs. Isabela Klemes, Head of Investor Relations of Enel Chile. Please proceed..

Good morning, ladies and gentlemen and welcome to Enel Chile's third quarter 2020 results presentation. Thanks to all joining us today. I hope this finds you and your family is doing well and stay healthy. I am Isabela Klemes, Head of Investor Relations.

Our presentation and related financial information are available on our website www.enel.cl at the Investor section. A replay of the call will also be available. There will be an opportunity to ask questions after the presentation via phone or via the chat through the link Ask A Question.

Joining me today are CEO Paolo Pallotti; and our CFO Giuseppe Turchiarelli. Paolo will open the presentation with the main highlights and will give us an update on the global situation that we are facing. How the company is actively reporting responding to it and we present some updates in the execution of our strategy.

Then Giuseppe walk you through our financial results and our operational performance. Let me remind you that media participants are connected only on listen-only mode. As always our IR team will continue to be available to provide you with any detailed information you may need with respect to the included information in this presentation.

Thank you all for your presence and let me hand over now to Paolo.

Paolo?.

Thank you, Isabela. Good morning to you all. Let's start by mentioning the highlight of the period on slide two. Over the third quarter, our market contract continued to be under pressure due to neutral looking downturn. Despite this unprecedented extreme scenario, our operational resilience and continue to support our clientele.

All the recognition of our matrix and achieving pricing in developing the new renewable project after industrial calendar. We have recently announced the start of construction of Domeyko, the 204-megawatt solar plant and we are going to disconnect the Bocamina 1 by year end. Within the next days, we will give you more details on the new projects.

Aiming at decrease in city contamination and improving this region into cleaner use of energy. We continue to boost the counter communication [ph] and support our key clients on the new and efficient use of electricity.

Consequently, during this quarter third, we have developed new alliance in public transportation area and in gas service station companies to enhance the development of our plan on electro-mobility to cover the route from Arica to Punta Arenas with 1200 charges it means a charging point only six kilometers.

On that let me mention our initiative on hydrogen. We have recently announced our participation with AME in the prospect partners ENAP, Siemens Energy and Porsche to install a pilot plant for green hydrology production through an electrolyzer fueled by electricity generated by wind.

These pilot projects which would be one of the largest of its kind in Latin America will be located in Magallanes Region in the south of the country. Let's move to Page three. We know the situation of COVID-19 is not over yet.

Still we would like to give you in a nutshell of how our company performed and is performing during the center of crisis, especially when Chile and subordinate region was locked down. 74% of our employees continue to work from home, minimizing the contraction of risk and preventing the disease from spreading.

The ones that are in the field are working with extreme safety measures. One of the percent of our plants and network are fully operational which ensure our services continuity. These results derived from the combination of technology procedures and our people and suppliers strong commitment.

Finally but not least, we extended our compromise with our clients. Over this year, we have made available more option to access our company services and increase the numbers of digital payment platforms available to give our clients more flexibility in remote paying. Moving to Slide four. You can see our effort into both the economic recovery.

We strongly believe that an acceleration or the recapitalization process and the development of renewal projects will improve country economic recovery.

Since the beginning of the pandemic, we have been -- understanding the importance of the green economy in our current context, by removing capacity development of the new kind of energy services, providing at the same time competitive electricity price.

During the year, we have created around 3,600 new jobs in different zones of the country where our projects are in construction, promoting local hiring. Over the next month, we will see an increase in this amount considering our construction timeline which might add additional temporary new jobs from the beginning of 2021.

In addition, as a consequence of the conversion to a clear metrics, we are working on job reconversion programs, providing all the required training.

Besides that, let me remind you that we continue our engagement with the local communities to promote share value, education and diversity where we are developing our new renewable projects by the execution of different social programs to exploit entrepreneur and proactive culture.

On slide 5, the country's lockdown has impacted electricity demand in many economic sectors related to the industrial leading commerce.

Several companies has been reduced their operation to minimum levels and to some extent shut down their operation, which resulted in a significant decrease in demand, impacting both generation and distribution business.

This effect started in March 2020 went lower during the lockdown and is easing with the gradual opening of the regions that started in September.

Regulatory demand continue to be the most effective segment in the country despite being using lockdown measures, we expect to see some improvements in the next months considering the commercial and business sector gradual opening. In terms of distribution, household continued to have a flat performance being primary by temperatures.

In our generation business, we still see an increase in our non-regulated clients electricity demand versus last year figures. This is primarily driven by our free market existing portfolio resilience. As for example, the mining companies and by the new PPA secured by our company in the first 9 months of 2020.

On page 6, let's review our distribution business collection. Our effort on digitalization continue to ensure the commitment of our business without compromising our client, employees and suppliers safety. Since the beginning of the outbreak, we have improved our customers' experience by adding new digital channels.

As I said, we are one of the distribution companies with more digital option available. The number of payments made through these channels, continue to be impressive. If compared to the present one, potential ones 77% in the third quarter of this year and 85% of September collection was derived for this channel.

By September 2020, we have executed almost 62,000 agreements with clients to moderate their payments and mitigate the impact on our collection of which 100,000 were the deals with the most vulnerable clients since March 2020 and 12,6000 under basic service built approvals of those.

On average, we have executed more than 1 million contracts with our clients during this quarter through the calls, SMS and other communication channels. Our collection during 2020 reached 96% and 92.4% respectively, [Indiscernible] quarter figures versus historical level around on 99%.

This is mainly due to the current economic and regulatory situation, which reduced the client's payment ability and suspended the cut option for debt payers. Let's go through slide 9 with the summary of our market main regulatory discussions. Starting with distribution.

On the contingency front, last August, the Senate and Congress has approved a new bill of non-basic service bill to benefit the most vulnerable client of essential services.

The loan can identify the cluster of vulnerable clients that have the option to postpone and request the payments of their bill for 90 days from the approval of bill to be paid in full installment without interest.

Moreover, the loans taken they're not capping service or service could be allowed to the cluster of clients including the core household sector. Let me remind that before the rule of this Board, we have already offered on a welfare basis the same kind of agreements to our most vulnerable clients.

Today, we have almost 13,000 clients that as of the scheme under the basic service loan and 11,000 under our regulatory program. A few years ago, presented a new project to modify the basic server law. In order to expand the benefits until April 2021 and fixed installments foreign paid balances. The project is under discussion.

[Indiscernible] Enel Distribution announced to the market that he would call for an extraordinary shareholder meeting to execute all the realization managers to comply with the unbounding mechanism known as Gencos exclusive.

Under this extraordinary meeting, Enel Distribution shareholders will vote to approve the split of all the distribution into two companies, one exclusively for distribution assets and the other solely for [Indiscernible].

Finally, on distribution with regards to this new regulatory period cycle, the government has already hired Penagos Ulta to carry out studies on the new regulatory reference model for the new distribution we over site.

We will share more details on the current framework in the next quarter as expected to release the first surprise on the Board by first half. On slide 8, let's move on the main updates on generation.

On tariff consolidation mechanism according to the preliminary report published this month of October by the Chile Energy Commission, the total balance accrual under the stabilization mechanism totaled $842 million for the entire Chilean market all almost 2020. At the end of September, Enel Chile balance totaled $320 million.

In this study, the CME also published a new estimate of balance of the stabilization mechanism for June 2021 using an average exchange rate of Chilean pesos 800 for $1. According to this estimate of June 2021, the balance would reach $1,169 million. During this quarter, Chilean government presented the more details on markets gradually opening.

On the document presented to the Energy Commission of this chamber some messaging were restated. All clients shall be able to choose the supplier and the market liberalization shall be done on by geographical gradual pace. Regulated auction rules shall be revised by for instance including take-or-pay contracts.

Two new agents shall be created the traders and the information issues. Other than that we believe that the gradual opening of the market -- natural evolution of the sector and of the energy transition. And therefore, an important step for the country that needs to be designed propel and implemented in a clear timely manner.

I expect to have more updates for our next call now. Now, let me recall some key elements of our de-carbonization process on chart 10. We have a strong commitment to the fight against climate change and help carry out different initiatives in line with this commitment. The voluntary full disconnection of our core power plants is part of this plan.

On that we are two months close to the disconnection of Bocamina I and 128-megawatt coal power plant. As I mentioned before, our core facility decommission will be finalized without accessing to the energy strategic reserve. With these achievements we will become the first electric company to phase out our coal fleet by 2022.

We experimented our sustainable strategy transition policy and promoting a simple economy perspective to contribute to develop the areas where the units are located. On page 11, let's see more details on our de-carbonization strategy.

This quarter we have reached 1.3 gigawatts of renewable capacity under construction and 0.7 gigawatts ready to start construction in the following months. In addition to that we had approximately 3.7 gigawatts of renewable capacity in different phases of development.

And other opportunity in the market that represent optionality for the future to continue derisking our generation portfolio from commodities and hydrology. I will give you more color on our future portfolio on our Investor Day planned for early December. Now, let's focus on page 12 on the two new projects announced during this quarter.

As part of our strategy to derisk our Enel energy metrics, we have started the construction of 204-megawatt Domeyko Photovoltaic Park located in the Antofagasta region. The solar plant is due to be completed by 2021. The plant will use a cutting-edge technology that allows greater efficiency in capturing solarization.

Once operational, it will produce around 589 gigawatt-hour per year avoiding the emission of 539,000 tons of CO2 into the atmosphere. On October 2, our subsidiary Enel Green Power Chile announced the plan to execute the first project for green hydrogen production in Chile.

Together with our prospective partners and the undermining and energy corporate and the Chilean oil and gas company Siemens Energy and portion. We install a pilot plant for the green hydrogen production. This project will be located in the south of the country in the region of [Indiscernible] non-international report its wind potential.

Our part in this partnership will be together with Enel supply the energy through a wind farm to the electrolyzer for the green hydrogen production. The downstream activities and exploitation of the green fuel will be in charge of the remaining partners.

This pilot project which is subject to the local authority's approval and the conclusion of the financing structure is expected to be in operation by 2022. This portfolio will be the first of its kind to produce green hydrogen in Chile and potentially one of the largest in Latin America.

Now on page 13, let's take an outlook on the other project under construction. Today we have under construction of 1.3 gigawatts of solar capacity that will be completed between 2021 and 2022. We have different projects in different stage of construction.

Still in north of Chile, Cerro Pabellón continues the expansion with 28 megawatts of additional capacity that we will complete on 2021 consolidating as the only [Indiscernible] plant operating in South America.

Today we are developing an emission growth plan that will consolidate our position as the main renewable player contributing to the fight against the climate change and supporting the economy recovery. In this [Indiscernible] some authorization process might be reviewed to cope with a country ambition under the agreement and the climate change goals.

On slide 14 with reference to our generation business, we are presenting the accumulated rainfall for the most significant river basins, Maule, Bio-Bio, Laja and Rapel. As you can see on the right side of the slide, we recorded a recovery rainfall in the second half of June and July reaching normal levels in most of our basins.

Nevertheless, during most of September, rainfall decreased notably in the country. On the other hand, the weather improvement in the level of no accumulated in the mountains since rain during June and July were accompanied by a colder condition once compared to 2019 figures at lower altitude.

Therefore the accumulated low levels are higher than those of several last year as we can see in the image on the slide left side. Considering the current conditions, we expect the hydro generation for the second semester 2020 to range between 5.8 and 6 terawatt-hour approximate.

We expect the probability of accidents of 70% for the melting season between October and December. So, the year 2020 would be similar to the 2019. Let me remind you that the generation with LNG is currently a natural edge of Enel Chile portfolio to cope with graph as you will see in the following slides.

Still on generation let me go through our main industrial KPIs. The total net production for the nine-month period decreased by 12.1% amounting to 14 terawatt hour. In the period, 61% of our generation came from renewable sources.

The variance between nine months 2020 last year figures came from minus one terawatt-hour of a lower generation in our hydropower plants, reflecting the hydrological formants; minus 0.9 terawatt-hour all lower thermal production mainly in our core fire plants due to the closure of Tarapaca power plant in December 31st, 2019 and the impact of a lower system marginal cost.

In terms of our energy balance, we remain a spot buyer in the market with a purchase of 2.9 terawatt-hour in nine months 2020 plus one terawatt-hour higher plus one terawatt-hour higher than nine months 2020 due to low hydrologic and marginal costs.

On the other hand, our physical energy sales decreased 5.5% or 1 terawatt hour, mainly explained by minus 1.6 terawatt hour of lower demand from distribution companies, primarily relating to the termination of regulatory PPAs with Endesa and Enel secured in 2006 auction.

And the lower energy demand in connection to lockdowns established until August-September in different cities of the country. Partially offset by plus 0.8 terawatt hour of higher free market sales as part of our strategy to capture new clients and the ones that recently migrated to the free market.

Finally, it's worth mentioning that during the first quarter 2020, our physical sales increased by 7.3% or 0.4 terawatt hour when compared to the second quarter 2020 partially reflecting the gradual easing for the lockdown started by the end of August. Slide 16 on distribution.

The lockdown in our concession area in social unrest mostly explains the decrease in the energy distributor in the period. Once compared to the last year's figures. And the performance of the energy losses that moved to 5.2%. Our customer base continued to expand.

In this period, we have got an increase of 53,000 new clients reaching almost 2 million clients.

On the quality of our services, our interruption index in SAIDI performed very well with $26 million better in the period reflecting the investment done in our concession area, despite logistic restriction coming from the social unrest and lastly from the pandemic situation.

As of September 2020, we have reached more than 2,000 telecontrol equipment in our grade. Moving to slide 17, on Enel X and digitalization. We have executed two important strategic agreements to continue to boost Chile electric mobility during this quarter.

The first one was with ANP Capital in which we have created reps focused on massive electric public transportation in which we own the stake of 20%. This agreement -- and if Chile contributed with acquired 435 buses for Transantiago.

The second one was with Shell known in the country Enex to have Enel Enext electric charging station on the Shell facilities. This agreement comes to cope with our goal to add 1,200 charging points in the country. Our company will be responsible not only for installation and maintenance of oil charging units, but also to the customer experience.

During the period, we have also signed an agreement with important manufacturer brands such as Nissan, Volvo, BMW to supply analytics integrated -- vehicle charging solution in both the domestic and public sphere.

Let's recall that during the first half of this year, we secured new project on public lighting aiming to upgrade lighting infrastructure and other services are security and connection bringing more efficient systems and refer them to the local communities and municipalities.

Finally, we continue promoting efficiency and cleaner technology for the mining industry to be reduced electric used buses combined with solar energy and installer changing systems. I will now hand over to Giuseppe for the analysis of the results. .

Thanks, Paolo. Let me start with a summary of our financial highlights, which we'll go through details in the following slides. Before I start, let me explain which adjustment we made in our figures both for 2019 and 2020.

For what concern 2019, we had adjusted EBITDA excluding the PPA in early termination effect and the net impact of impairments of Bocamina 1 impairment.

For the 2020 figures, we have adjusted EBITDA and net income by the effect coming from the anticipation of the closing of Bocamina 1 and Bocamina 2, which details are described in the bottom of the slide. Now moving to the slide 20.

I will explain with more detail how would have been the performance of our EBITDA and MOT online, excluding the COVID effect. Net of COVID impact, our adjusted EBITDA would have been slightly higher versus last year, reaching $866 million, $58 million higher.

The factor associated by $49 million related to the reduction of demand impacting our sales and distribution and generation, net of energy passes in the billion $9 million mainly associated with the higher energy losses, customer care and other OpEx needed to face the contingency and Enel lower activities.

Moving down the P&L, we record a negative impact related to bad debt provision of $13 million driven by temporary expansion of the historical collection period. Therefore, net of COVID, our adjusted net income would have reached $377 million. Now let's go to our CapEx on slide 21.

In the first quarter 2020, our CapEx reached $264 million mainly due to the increase of the CapEx allocated for our development activities. Therefore, our development CapEx totaled $260 million, 94% out of it assigned to the construction of our new renewable facility.

Consequently, our total CapEx for the nine months 2020 amounted to $586 million allocated as follows. Customer CapEx totaled $49 million, 63% higher than September 2019 with significant investments allocated to be connection to new customers.

This investment results from the increase in our client base, particularly, in the first quarter and improving our commercial system to guarantee a better interface with our clients. As Paolo mentioned before, the continuous digitalization of our customer interface and internal commercial processes we continue to be a key factor for our industry.

Asset management CapEx reached $62 million in line with the 2018 figures. AOIBDA was allocated to our distribution activity mainly focused on our low frontline and repairs in some facilities because of the social unrest damages.

Therefore the main impact was allocated to our generation units focusing on maintaining the availability level and investing in digitalization. As of September 2020, development CapEx reached $476 million, a $324 million higher than 2019 driven by renewable projects. It's in line with our decarbonization strategy.

We have also allocated additional $11 million to the development of our distribution business to continue the digitalization of our network. Now Slide 22. Let's start with the third Q adjusted EBITDA breakdown.

As you can see the third Q 2020 adjusted EBITDA was impacted by $24 million by the demand net of any energy practices mainly due to the COVID-19 lockdown measures and integration of clients. Both hydrological condition in the quarter affected our hydro generation by 0.2 terawatt hours or $8 million.

PPA margin effect that includes the impact of commodity, CPI and effects on PPA and spot price, totaled a positive effect of $20 million, minus $11 million coming from LRS that was affected by leasing of 290 buses accounting in 2019 and lower activity in the public lighting business because of the higher depreciation of local currency versus U.S.

dollar, we booked a noncash item of $7 million associated to the translation of loan denominated in U.S. dollars in our book as of our functional currency impact. Negative impact of $4 million coming from energy losses mainly explained by logistic restriction income suspension. Let's now move to accommodated figures and it on Page 23.

As you can see in the slide we regulated to nonrecurring effects related to the early termination of PPA agreement in 2019 and the previously mentioned caused stock impairment in 2020.

Excluding these affects our adjusted EBITDA reduced by 6% due to lockdown measures that affect the demand in network passes of both generation and distribution businesses by $54 million mainly related to the COVID-19. Lower hydro generation impacting our adjusted EBITDA of $48 million.

Sales of 2 LNG cargoes during first half 2019 that wasn't executed this year due to the lower price of commodity in the international market with an impact of $22 million. Net commodity -- negative impact of $9 million mainly due to the expected volatility of commodity intended in the international markets.

Because of higher depreciation of local currency versus U.S. dollar we booked a noncash item of $10 million associated to the translation of loans denominated in U.S. dollar in our books. All these effects were offset by the following items. PPA marking positive effect of $80 million coming from commodity CPI and assets.

Tariff amortization of $23 million and OpEx and other with a positive effect of $24 million mainly due to the transmission -- lower predation costs and insurance enforcement in 2020. In Slide 24, we have a summary of the performance of our generation businesses including Nelson and emerging Power.

I have already explained the main variation embedding in the quarter and accumulated figures between the regions.

So my message here is to highlight that our generation adjusted EBITDA margin despite of all the before mentioned headwinds sustained in a high level reaching 54% in the third Q 2020 and 46% in the 9-month '20 in line with the 2019 figures. Now on distribution current business and as Page 25.

The third quarter 2020 EBITDA reached $44 million or 35% compared with the third Q 2019, EBITDA. Mainly due to on NLX mainly due to the trance on Santiago to leasing and maligning accrued in 2019.

On networks mainly due to lower energy consumption in both regulated and free market clients as a result of the local lockdown measures applied by the government to contain the spread of COVID-19 and higher energy losses due to the cutting logistic restriction.

On the accumulated figures, EBITDA was low by $42 million mainly due to on NLX a negative impact of $10 million mainly due to the impact already mentioned in the quarter. On networks a reduction of $32 million coming through lower demand because of the lockdown restriction and higher energy losses and 2019 energy settlement book this year.

Now on Slide 26. Let's go through the main drivers of group net income D&A and net debt reached $243 million balance of $20 million mainly related to -- $17 million due to the higher bad debt provision mainly to the COVID-19 outbreak.

$13 million higher depreciation in EGP Chile due to the devaluation of Chilean pesos against the dollar in nine months 2020, $7 million higher depreciation and distribution business due to higher investment in the last year, partially offset by the closure of Tarapaca from December 31 last year, and the phase out of Bocamina 1 and Bocamina 2.

The impairment increased by $520 million mainly due to the Bocamina 3 impairment booked in June 2020 related to the power plant are closure planned for May 2022.

Financial results totaled an expense of $111 million a decrease of $24 million mainly due to lower average cost of our debt as a result of the renegotiation of EGP debt with EFI, financial income dollar coming from the accounting impact of the energy stabilization inflow, foreign exchange rate appreciation in nine months 2020 impacting positively in financial receivable in U.S.

dollar. Income tax and minorities reflects the lower results, mainly related to the Bocamina 2 impairment effects and reorganization of Enel Generación [Indiscernible]. As a consequence, the reported nine months 2020 net income results reached in $282 million.

The nine month 2020 adjusted figures totaled $324 million and 16% lower than the nine months 2019 adjusted net income. Moving to cash flow on slide 27.

Our nine month 2020 FFO reached $566 million, strongly impacted by lower collection of $99 million in our distribution business, mainly because of COVID, lower EBITDA in the period and energy stabilization maintenance balance account of $153 million, partially offset by EBITDA sales to the AMP capital, which totaled amount almost $100 million and other net working capital initiatives..

Let's now take a look at the net and gross debt on slide 28.

Our gross debt increased by $570.7 million versus December 2019, amounting to $4.15 billion as of September 2020, as a result of Enel Chile new funding with EFI of $600 million during the first half of the year to go with our CapEx plan and cash needs related to the price stabilization mechanism, partially offset by financial subsidiary debt amortization.

As a result of our constant efforts to optimize our financial expense, our cost of gross debt decreased by 60 basis point with compared figures of December 2019, as a result of the liability management executed during 2019 and new emission during the first half of this year.

All in all, our net debt at September 2020 compared to January 1, 2020 increased by $375 million, mainly explained by our CapEx plan. Finally, on our debt amortization on slide 29, in terms of liquidity, we maintained the level of $1 billion making us able to finance our CapEx plan and be comfortable to face the current economic scenario.

Our debt amortization schedule has $170 million payment forecasted to December 2020 and a very smooth third party debt profile for the following year. Our debt average spend is over six years. Now, I will pass over to Paolo..

Thank you, Giuseppe. As we saw in the presentation the current situation represents a challenging scenario for the sector and our clients. Despite that, with our growth plan we will consolidate our position as the leading renewable player contributing to the fight against climate change to supporting economic recovery.

As you saw today, during our presentation, we continue strongly pushing for our market decarbonization incentivizing the electrification in the country and providing a different solution to our clients. Four of this is based on self awarding our people, business reliability, digitalization and quick reaction to external conditions.

This week, I'm pleased to mention that we have been awarded an important recognition from the Leading Trade and Inter-American Development Bank, and in Chile our -- and other four companies in LatAm from different sectors were recognized by its sustainable standards, work on community development, providing affordable electricity to the weakest areas for the country and reacting rapidly to proposed solutions to our clients since the start of social unrest, to respond and anticipate our client needs is the best way to ensure the quality and reliability of our services tied to continuous improvement of our digital platform.

Finally, the resilience of our business sustaining strategy is supported by the strength of our balance sheet, and by eventual additional liquidity measures to support eventual headwinds from external environment. Thank you for your attention, and let's now open the Q&A section. I will hand over to Isabela..

Thank you for your attention. As we have anticipated we have received questions via phone and chat in the webcast on this occasion. The Q&A section is open. Operator, please you may start..

[Operator Instructions] Your first question is from Sara Piccinini with Mediobanca..

Hello. Good morning, and thanks for taking my questions. I have three. The first one is on the slide where you show the working capital of the $160 million.

Could you please explain, if this is a figure that has been expanded by the bad debt due to the current situation, and if you see this $160 million to increase through the year-end or can be eventually partly restored? Then the second question is on the guidance.

You provided a new guidance during the first half that was at EBITDA $1.2 billion, $1.3 billion.

Do you feel comfortable with these numbers or do you see any potential upside or downside? Any color on this? And then the last question is on the renewable projects that you have, you have a very interesting pipeline and obviously you will provide an update with the new business plan but just on these current projects that you announced, could you please explain the strategy behind them? Are these contracted projects with long term prices? Are these integrated with your client portfolio.

So you see the pricing risk on these projects to be very limited. So this on the price side and on the CapEx side, how much is the CapEx per megawatt that you are spending for this new project? Many thanks..

Okay. Thank you very much for your question, Sarah. I will take the second and the third questions and I leave Giuseppe for the first one on working capital. Regarding guidance, clearly our review of the numbers of course based on the let's say main events that affected this 2020 is the company.

And we think that we can speak to the figures that we released by last July, maybe in the lower end depending on the resolution of the last month and also depending on how the some external effect may evolve in the last two months but we will speak in the numbers that we have announced last July.

Regarding renewables and especially the assets of oil price what we are doing is trying to and we are pushing the recognition our generation markets to have more and more renewable assets. This is because of also the conveniency of the asset the generated electricity and also because of the demand that we are receiving from the clients.

Now especially large free clients are requesting more and more 12 contracts with the renewable energy. We don't have a single asset linked to single receivable clients. We go through a logical portfolio. We have a portfolio of concert that – which amount is in the range of 34, 35 terawatt three years.

And we sell this portfolio of clients optimizing the generation of our fleets. And in some cases buying the stock market where convenient. So we don't see – we don't need and we don't have a single link between one plant and one client.

In terms of CapEx, we are using as we mentioned the cutting-edge technology for the solar plant and the large size we combine in our projects. If we look at the cost of investment it is in the range between 0.7%, 0.8% for the solar plant and 0.1, 0.2 million per megawatt for the wind turbine. .

Sorry, you mean 0.1 – sorry 0.1, 0.2 for….

No 1.1 – between 1.1 and 1.2 for the wind turbine, wind assets and 0.7, 0.8 million per megawatt in the solar plant..

Perfect. Many thanks..

And Giuseppe for the working capital..

Yes. Total amount the working capital I mean the big impact that we had during these nine months are related to the asset rate, the lower collection in distribution business because of COVID that is amounting in $99 million. And the nice stabilization mechanism that will work $153 million..

Sorry.

And do you expect this figure to increase or be reabsorbed by the year-end?.

For energy stabilization mentioned, I mean we expect that we're going to increase in the following quarter because of the mechanism that it work in between. And for what concern the collection and we believe that absolutely we are able to start taking cutting process we believe to recover in a significant part this amount.

Of course, it's difficult to understand how much but I mean the projection is positive..

Many thanks..

You’re welcome..

Thank you. Your next question is from Murilo Riccini with Santander..

Hi, good morning, guys. Hi, Paolo, Giuseppe and Isabela, thanks for the call. This is Murilo Riccini from Santander. I have a couple of questions if I may. First of all, talking about the portability bill that is being discussed in the lower house.

In this case this deal is approved in 2021 or 2022? How are you seeing the migration movement going forward? And what levels of demand do you expect for your regulated PPAs in the coming years? Which kind of mechanism could be implemented in order to ensure the financial balance of the current regulated contracts? And if you see major impacts on your regulated PPAs.

The second one is regarding gas activities. Could you provide more color on the gas sales? And how do you expect this activity to perform going forward please? And the last one is regarding CapEx. How do you expect to end the year compared to the [Indiscernible] released last year. This is all. Thank you..

Thank you for your question. I will answer to the first and third and leave Giuseppe for the second one. Regarding possibility, it's a good question.

Maybe it's too early to be let's say in record mentioned because what we see today is a general proposal for opening of the market, whose let's say process should be quite large because for the time being, at Congress they are discussing the possibility of going through this law.

So we expect that if we such a decision will be taken it will take some time for the discussion at the Congress level then for the approval of the government and then for the definition of the decrees for the over in the market.

So, we see for the time being the information that has been provided to the sector a quite lengthy process that should land between 2022 and 2023.

At the same time, also the -- let's say the rules of the openings are not clear yet because there is a main object of [Indiscernible] of the market to have a full opening of the market, but still there is an option of going through geographical area starting from the most effective from the let's say pollution or from certain let's say condition -- leading condition of the country.

And so, this is quite honest, it's difficult to let's say to the rate in terms of impact. What we see is that, we can say is that the opening of the market is a natural evolution of the sector. So we expect that it will take place. The important element here is to implement it properly and in a timely manner.

I mean rather than going through opening full for geographical areas, we see more in the way a transitional period where the pressure could go lower. So actually for the same time, the gradual transition of the client from the regulated market.

Clear rules on how the clients could be moved, could take the decision from the regulator to the free market.

How the new player because, there are new players that are entering can operate and the condition to be a player in the market, and so to make also a product protection for the existing content that existing contract for the regulator market that could have different conditions.

So taking all these targets into consideration to tell you which could be the impact in terms of margin, it is quite early. What we see is that is something that is going to happen. And it could be let's say for sure positive for the client.

I think, it could be positive also for the players that can act in the sector in the competitive manner with in a competitive way, but today, I cannot tell you which could be the quantitative impact. The postal attention for sure is from implementation and the mechanism for the definition of how the contract quarter over matters will be managed.

Regarding the CapEx, as you have seen we are going -- pushing on the let's say implementation of our new project on renewables. Clearly, the 2020 is not a regular standard year.

We have been affected from one side from the -- let's say the pandemic in some period or the last month, especially between July, end of June and July, some areas where most of the persons have been affected by strong impact of the pandemic.

And so we have to manage also successfully, let's say the continuity of the construction together with the very, very strong measure and permit to go on. We think that we can let's say, maybe that we will not reach the full amount of this year, but we don't see a strong gap.

So, we have continued to invest in going forward in all the projects that we are in the plan.

Giuseppe, for the gas sales?.

Yes. Let me say that the margin that we got last year was rising to the margin that was possible because of the price in the international market in this year. The market is completely different with the decrease of the price of commodity. Of course, we don't have such opportunity.

So for this year, we don't see possibility to add such a margin next year of course and different story. It depends on the market..

Great. Thanks. And a follow-up question if I may.

Are you still negotiating the monetization of both receivables, the one that is being accumulated in the generation unit and also the other one regarding distribution unit?.

Well, what concerns and the receivable coming from the stabilization of methane price methane, yes, we are negotiating with some banks together with the ABID and we believe that we're able to close the deal by the end of the year.

And, basically, since story for what constant distribution, we're going to see how, we're going to handle in the following month. Both factoring will be done at the beginning of December in the first half of December let me say. And, yes, we are going to do it..

Thank you, Giuseppe..

You’re welcome..

At this time, there are no further questions via the telephone. I would like to turn the call back over to Isabela Klemes. .

Thank you. So we have here on the chat, we have some questions. So the first one is coming from Andrew McCarthy from Credicorp. He asking, how high was your dividend payout on 2020 net income, during were you just paying a provisional dividend in January as you did last year.

Paolo or Giuseppe?.

Yes. Regarding the dividend policy, we think to -- clearly, this year is based on capability of the company to generate cash. And we think the same approach that we had last year can be applied.

Last year, as well, we had an impact in terms of accounting and let's say the nominal level of net income, but we decide to distribute dividends on a pro forma basis – there on a pro forma net income basis. So we think that we will apply the same approach and we will decide during the next months.

And, consequently, we will distribute the provision on January based on the approach. .

Perfect. Thank you, Paolo. So we have a second question coming from Andrés Castro also from Credicorp.

He’s asking, could you share details about the reason what explained the drop in generation by source, hydro, thermal and conventional or renewables, should we expect the same for next quarters?.

Okay. Let me say that considering the current condition, we expect the hydro generation around the second semester, same thing, in the range of 5.8, 6 terawatt hour approximately. And we expect the probability of exceedance of 70% for the melting season between October and December.

So in the year 2020 will be the total amount of hydro production will be exceeding to 2019. Usually, the part two is always the best one due to the melting season..

Perfect. Thank you, Giuseppe. So we have another question also from [Indiscernible] on the OpEx of this year. If you can give more details about increasing on other fixed operation cost items in the current statement.

Should we expect to be a new level for coming quarters or is that only a one timer?.

Well, let me say that, basically, one-timer, but of course you have to consider that we are increasing part of our capacity. But as of today, we believe that in the third quarter will be again the regular level. Yes..

Okay. Thank you, Giuseppe. So let me check if we have any more questions here on the webcast. So we don't have any other questions now. So I would like to thank you all for your presence today. And let me say that our team, Investor Relations team will be available for any other further questions you may have, okay? Thank you. Have a nice day. .

Ladies and gentlemen, this concludes today's conference call. Thank you for participating. You may now disconnect..