This is Eduardo San Miguel. Welcome to this first half 2021 results presentation that will be conducted by our Chairman, Juan Lladó. You can pose your questions after the speech. Now I give the floor to Mr. Juan Lladó.
Hi. A very good morning to you. I've been talking to all of you for 3 x a year and many years, two or 4 times a year and many years. This is probably not an easy one. I'll try to put up the best of myself to explain where are we and where we're going. In this first slide. First of all, we're going to talk about what we're calling challenging environment. Today, the real challenging environment means losses. Real losses, because we had COVID losses on the first quarter, and now we've taken extraordinary provisions of $60 million. Challenging environment because obviously the COVID Delta variant is affecting us seriously in the progress of our jobs, more so in the Middle East, far more. Also, as running a business, the market is moving forward, and I move into immediate awards.
On the previous presentations, I announced you that we were getting awards, and in some of those awards, I could not declare who the customers were. I think now we can be far more transparent. The market is moving forward, and TR is being retained for a large, healthy, and diversified backlog of new contracts. Finally, in these situations, which I call transition situations of managing COVID, that we've been doing over the last two years. New awards. Why awards? This is signified that we have the support of the Spanish government within dollar terms, give or take $350 million for four years. I'm just going to focus the presentations on those three things. Losses, which means that we've taken provisions, that we have a healthy underlying business.
Second, awards, which means that if we do have a healthy underlying business, means that we are delivering correctly and customers awards to TR close to $3 billion year to date. A strengthening of financial support to deliver what we've got and continue growing as the market is picking up. This is the introduction with these first slides. On the second slide, challenging environment, I think I've covered already by the presentation. If it's okay with you, I'll move forward because I've already covered the whole thing in my introduction. Why are we being impacted by COVID? Maybe some other competitors not. It very much has to do with what are we doing, how is our backlog structure, and where are we. It is true that COVID cases, since I talked to you the very beginning of May, has increased in the Gulf by 70%.
Everybody thought ourselves, our customers, our suppliers, our subcontractors, in January and February, we're in extremely good mood. We were very much picking up a good rate of progress. The Delta variant has changed the whole picture. It has changed the whole picture if we look into this next slide. Where are these variants really affecting the most? Obviously, everybody knows, it's not new to anyone, that India and Pakistan are probably the two countries more hardly hit. Obviously, Indonesia and Philippines, they're having today similar problems. The rate of dependency that Gulf countries, Middle Eastern countries, where we have the large percentage of our backlog, and we are executing correctly in extremely good terms with our customers, are being seriously affected. We have to readapt again to new health requirements. We have to readapt again to mobility. We have to agree with customers' new action plans.
Very important, we don't have access to the traditional workforce that Middle East depends on, which most of them come from either Philippines, Pakistan, and India. Obviously, we have good workers there. They're good workers there. The rate of efficiency after that, obviously, is understandable, but it's not the same. It's putting a lot of pressure between us, subcontractors, and customers to have the correct process. If you analyze again how our backlog is structured, which very much has to do with the progress of our revenues and the progress of having less revenues or less accrued revenues than we had expected, and that we had planned at the very beginning of the year. You realize that 54% of our backlog, which is a good and healthy backlog, has been reprogrammed.
We have explained, and I don't want to get into detail, was reprogrammed towards the end of 2020. It was reprogrammed to the last quarter and of 2022. Well, it has the good and bad. The bad is we cannot accrue sales, and therefore we cannot accrue margins. The good things is that we will have a healthier execution. We have the backlog. We haven't lost the jobs. The good news is the market has picked up, and we have 27% of the year-to-date backlog, which is engineering. They just started. We have what we call, which is launching the engineering just right now. We're launching early works, not full engineering. We have the jobs, we have the backlog, and we have the future. It doesn't represent neither sales nor margins in today's accounts.
It would represent very little into 2021 accounts. Only around 20% of the backlog is projects that are being executed under COVID, and they're being executed today with a very large percentage, and I'll talk to you afterwards, have to do in the Middle East. Let me tell you, Middle East is not easy place to work, but there are sound and reliable customers with whom we have the experience of having worked before. We have to manage with them probably a crisis that is much worse today than we had expected 6 months ago. If we do a further analysis of the backlog, or not of the backlog, the jobs that are under execution, and why we are not progressing accruing revenues.
The first analysis, you see that we have close to EUR 7 billion, a little more than EUR 7 billion of projects that are being commissioned. That are being commissioned, in this case, successfully, very slowly. In Talara, Peru, we are 99% our part. The full plant is at 95%. It's a good plant. It has been nominated as one of the best and most sophisticated refining jobs, best built in the world. It allow us to move very slowly. With bits and pieces of extra costs. None of them material, bits and pieces of extra cost. Anything that delays has extra cost. Most of the time, many times, it can be reverted to customers, not always. When you have many, you have to be cautious. Al Zour, obviously, is Kuwait. Kuwait has been there for a long time.
We were way ahead of time of the offsite utilities, tankage, and other services. Obviously, we are commissioning. It's very difficult to commission when borders close again, and we cannot get specialists to commission and approve the startup of the units. Our relationship with customer is best. We're working surely, but slowly. GT5 is exactly the same thing. It is one of the largest gas plants in Kuwait and in the world. Again, we are on commissioning stage, and we're working far slower than we had expected. We have many acceleration plans we have not been able to come into force because of COVID, and affect our revenue. Not very material, but also has little impact on cost. Everything has little impact on cost. None of them are material, but it has impact, and we have to be realistic.
The same thing in Ras Tanura. We're working shoulder to shoulder in order to start up Ras Tanura. Ras Tanura is a large plant for clean fuels. For Saudi Aramco, we want to start. We're having issues and problems with resources, but we should have been finished two, three months ago, and we'll be finishing in the next two months. This translates in very little revenue and marginal extra cost, but good service. I think we haven't got a problem with none of them. The remaining contributors to sales, as you see, all of them, with some exceptions, happen to be in the Middle East. Our backlog is there, and our backlog is under construction. Being under construction in the Middle East with this new Delta variant has hit us far more stronger than we could have ever expected.
Therefore, it has forced us, and I think it was the healthiest thing to do for a manager, to take extra provisions for provisional disputes, none of them material, that we have sometimes with customers. I'm not talking arbitration, I'm talking disputes. Sometimes subcontractors, sometimes with a specialist that has to come and deliver and work with us in order to continue working at a faster pace than we are doing today. All of this backlog, this execution translates into a EBIT that is obviously not too good. Not too good because as a manager, using the term of adjusted, as a manager and as a shareholder, you have to realize that a shareholder looks for real, transparent EBIT and not adjusted EBIT.
The fact that we have an adjusted EBIT, if we were able to do the analysis that said if nothing would have happened, if there had not been COVID, obviously, and even accruing only 30% less than we had planned for, if we have an adjusted 3% EBIT, that means that the underlying business is healthy. That's the message that I want to do. The real number, not adjusted, is that we are starting with an EBIT loss of $145 million to what you have to add up the $61 million provision, the U.K. hit, COVID hit with Teesside, and the 25 direct, very much direct extra cost on COVID that we're having.
The message here is that we're very much focused in the Middle East, and it's very much focused on extraordinary events that has to do in this 2021 that we've already said is a difficult year, far more difficult than we had expected. It is definitely a year of transition. When we close the semester, probably one of the ways to show the health of the backlog is that we have good customers, and we have good customers. That means we are progressing at a slower pace, but we're getting paid. We get paid, and we progress. We have been able to end it up with a net positive cash of EUR 94 million, despite our Teesside outflow, and obviously, a slower cash flow due to COVID. Slower pace of advance.
I was going to take it away, but I wanted to come out with the full raw number here. Sales, EUR 1.422 billion . Low figure, much lower than expected. Not because we're selling less, just because we are accruing less. A real EBIT of EUR -148. Adjusted, if you take away all the impact that we consider extraordinary and only having to do with 2021 of EUR 44 million, which comes out to an adjusted EBIT of EUR 33.1 and a net cash of EUR 44 million. In blue before, probably the good news. The good news is the market has picked up, and it is picking up, and we have already announced, and we are announcing healthy, close to EUR 3 billion of new awards.
If you're in this business, you need healthy awards that reflect that you have the resources, human resources, the engineers, the know-how, the customers, and the credibility. We have all of that, which translates into a year-to-date backlog of EUR 3.1 billion. Why do we have awards? We do have the awards because the market is there. The market is there, and the pipeline that we've always talked about is more real than ever. It's been little by little translating in awards. Obviously, I don't want to talk about oil prices or gas prices, but yes, demand. The market is there, and it's picking up. Not at the pace that everybody thought two years ago, but the market is definitely picking up, and it's picking up because the real demand is there.
That allows to look at the market quite positively for the end of the year and to 2022. Very often, in some other presentations, you were asking me whether I was able to get order intakes at the same level of sales. I said that. Last presentation, I said that I could reach EUR 4 billion. Today, what I have to say is that an order intake in 2021 of EUR 4 billion is not anymore a challenge. Let me go with you with the awards. I think in these awards, two message. Diversification, petrochemical and the third, and most important, de-risk. First of all, we have the SASA, the SASA investor in Turkey. An investor in Turkey awards a job to TR, not because we were there and we placed a very low price. This is a cost-plus.
Probably in Turkey, we're one of the companies that have delivered the jobs the largest and the jobs with more quality than any of our competitors. SASA trusted TR to develop petrochemical plants in Turkey. It's a PTA, and with a structure fast-track on a cost-plus basis. It's very much de-risk. We're working quite nicely with the customer and the customer team. That was the first award that we had at the very beginning of the year. The second award comes in Central Europe, comes in Amsterdam by GI Dynamics. GI Dynamics trusted TR to develop under an open book basis. Again, de-risk a bioethanol plant based on industrial waste. This is very close.
The process is the closest thing to energy transition, which when some of you wonder where is TR in energy transition, we're not that far because at the very beginning of the year, an important investor trusted us as we're working together how to make a model of this plant and that can be replied in different parts, in different cities in Europe. We continue. We continue with ORLEN in Poland. This was already announced without disclosing the investor, ORLEN. ORLEN, last year, in the middle, when we were all confined, awarded us under competitive basis. We were competing with other teams, a competitive FEED to develop a large olefins plant that had to be built in Poland. We say Płock, but I think it's pronounced very differently. I don't think the L is pronounced, but I mean And well, we won. What does it mean?
That means that for nine months, we have worked very close together, telematic with a customer, designing a front-end design that had to be efficient, constructable, and good on OpEx and good in CapEx. We won, which is, again, when you work this way, a way of de-risking the execution of the job. Now I'm happy to say that this job has been signed and came into force. On my previous presentation, I also said that in Northeast Europe, a customer has selected TR for what we call clean energy plant. I couldn't give fuel. I couldn't give very much many hints. Some weeks later, Gazprom, which was the customer behind, which I could not announce, made public, so we did. That either with award us a delayed coker under a scheme that is EP plus construction management. Again, we de-risking in Russia the construction risk.
We've done the front-end design. That's the first way of de-risking the job. We understand the business quite well. We're one of the leaders of the world that have designed and built more coker units around the world. Here we have designed the job, and now we're going to do all the engineering and procurement and support Gazprom on the construction with running the construction risk is not under our scope. Quite recently, today, we're having the kickoff meeting. Here I cannot announce the customer. Customer has the right to announce it first. Today, we're working with GE on the kickoff meeting. GE wanted to work with us, EUR 300 million is our scope, to again develop a sophisticated combined cycle in Eastern Europe. Everybody knows that with GE, we have a long life of success stories.
We were successful in Holland, obviously in Spain, with many combined cycles in France. We have been extremely successful in Mexico. We are being very successful in Emirates, and now we're being very successful in Colombia. This is the beginning, together with GE, of another success. Today, the kickoff meeting and launch of the job is taking place. Here, this is undisclosed. Again, it's a petrochemical plant, but it's a FEED. It's a FEED with the customer that we have worked before. That we have worked before not only developing FEEDs, but also developing FEEDs and then rolling over to an EPC. One we have been able to de-risk and structure the job, very successful. It's a good customer.
We know each other quite well. We cannot announce, as obviously customers have the right to announce it first, and he has not announced it yet. He has sent us a letter of award. We're going to be working with them under a competitive bid of a new propellant plant in Europe, with a final investment budget that we'll try to improve. As I said, FEED has to focus on both OpEx and CapEx for the best job, which I'm sure we'll finalize doing with them and for them in Europe, in Northeast Europe. It has been awarded quite recently. This is the last one. This is Middle East again. This is the only one in the Middle East. Used to be many. This is the only one in the Middle East. We have been selected as disclosed.
We're negotiating the bits and pieces of the contract. We cannot disclose the customer. It has to do with the big natural gas in the Middle East that we have to put very close together now in a few months as we start the job, 150 engineers. Probably the size of the job over six months will have to increase, as there are many optionals that have to be decided by the customer. If we take into account this last award, which we cannot been able to disclose the customer, it adds up that year to date, we have been awarded EUR 2.9 billion. Which shows that definitely 2021 is a year of transition.
We're having our issues and problems U.K. side, managing COVID in the Middle East. At the same time, we're delivering successfully, slowly but successfully all the jobs, and we're getting awards, as I do believe we are one of the most reliable engineering and construction shops in Europe. If you look through all of them, you see they're diversified, very much focused on petrochemical, very much focused on gas, with some color on transition energy, and very important, quite de-risked. When I said before that I didn't feel uncomfortable of reaching this year EUR 4 billion ordering intake, and we are close to EUR 3 billion, it is because, as I placed and as I said and explained to you in my previous presentation, and I used exactly the same slide but with different colors as some of the transparent, non-colorful jobs have already been awarded.
What I'm trying to explain to you, we have presented already tenders. We have presented offers for more than $6 billion, in which, in all of them, we're very well-positioned. In some of them, we're negotiating contracts. In others, we're competing but very well-positioned. It doesn't mean we're going to get all of them. It would be unlikely. You don't get all of them. The likelihood is that some of those jobs that we have already presented. There are others that we are not as well-positioned in these ones. We have all offers in the market. Here, I'm just summarizing the ones that we are either negotiating or either we have more than 50% chances of being awarded. Somehow it strengthens my view that awards of this year are going to be good and that the market is recover.
This 2021 is a difficult but a transition year. Talking about transition, I think let's talk a little bit about energy transition. Everybody is focused, what is TR in energy transition? A year ago, everybody was wondering that energy transition was going to be something negative for the energy service companies. The message is, it's not. It is positive. What are our natural markets? clean fuels, petrochemicals, natural gas, hydrogen. We have already done studies years ago on carbon capture, and we've already developed bioenergies. All of those technologies, all of those markets, is something that our energy services, TR and others, feel comfortable about. Who are going to be investing in this transition? In many cases, our customers. Our customers, what do they want? Our services.
They want the task force that we're really able to put together, the methodology to put together large, complex investments, the methodology to innovate, the methodology to escalate, the methodology to develop technologies and ways to improve what some other bright guys in technology and licensors are developing. There's hundreds of process engineers that know how to work together to really translate those investments and these energy transitions into a reality. Energy transition definitely is not a challenge, it's an opportunity. It's a big opportunity. It's an opportunity that definitely is not going to translate into P&L this year. Marginal P&L, the P&Cs on engineering, is not going to be important, but it positions ourselves extremely well towards the end of 2022 and 2023. It's a good opportunity. It's a good opportunity that is already happening. I mean, the picture on the left is not a picture.
The picture on the left is the digital model of the plant that we are designing together in Amsterdam for the methanol plant. We're working there, trying to look and trying to design the most efficient and constructable plant. Obviously, we're working with Repsol, how to develop the different technologies of hydrogen and decarbonization, and it's a customer with whom we have worked before. We already have a contract with Enagás. We already have a serious agreement that we have announced with Acerinox of how to develop and decarbonize. We're going to start in Spain, and then going to move forward to the different plants that they have around the world. Over the last 12 months, we have made a big step forward and this very important wave, which is important for Spain, but is very important for Europe.
It is today, but it's definitely going to be part of TR revenue and backlog, probably sooner than later. Finally, let's talk about the third term. I mean, challenging environment with bad results, simple as that. Let's not hide it with optimistic terms. Immediate awards, that's a reality. It has happened, I already told you. With both together, we have the opportunity of a strengthening of our financial profile with the support of our government. Why do we like to have the support of our government? We have been working for our government since we started. I mean, our government supported us to go to China with the soft loans, has supported us to go to Latin America with export credit loans, has supported us to grow as we merge and bought and support then the buy of Initec. We've always been very close to the government.
The government would have never been allowed to support companies the way they're doing today. Today, Europe and Spain, Europe and all the member states, are putting together the mechanisms to support companies. Companies that are healthy, companies that have future, companies that are strategic, but they are being seriously impacted by COVID. Well, that happens to be TR. Obviously, we've been impacted by COVID. We haven't been hiding in 2021, and it's been reflected in our accounts. It is also true that we are a strategic company for Spain. I mean, we are an industrial leader. We're an exporter. We probably have one of the most valuable Spanish technology hubs. I mean, we have 4,000 engineers here in Madrid, where I'm sitting right now.
Therefore, we can become, and I think we are, a differentiated platform if we work together to decarbonize, I mean, the industry. To get support from the government, it has to be a promising environment. I mean, a promising investment. We have a promising environment, and it's a promising investment. This is not forever. This is to support us to manage the COVID. This is to support us to manage the COVID and to put us in a situation where we can compete face-to-face and in equal terms to some of our competitors that happen to be public or happen to have a very strong support of their governments. I think as a manager and as a shareholder, having the opportunity to have the Spanish government with $350 million as a partner, it's an opportunity.
It's an opportunity that is offered to you, provided that you have been impacted, provided that you are strategic, and provided that you're a good investment. I think those three requirements are more than filled. What does support mean? I've already announced it. It means that we're going to be getting $150 million of a hybrid loan, which obviously it strengthens our equity. It's a hybrid equity, but banking-wise, it strengthen our equity. For four years. Another $100 million of extraordinary loan. We could have gone for other terms, but I think this is the healthiest way and the best way to strengthen TR and capture the market is this timing. It is for a year. We are moving into August. It's expected that this disbursement, that we will get paid on the fourth quarter of the year.
We have to go through the approvals and protocols of the Spanish government. Technically, it's moving forward extremely successful. Obviously, to comply with the government, we have to be a company very much focused on sustainability and energy transition. We are. Obviously, we have to grow, and we will grow, being efficient and in a de-risk backlog. We have to be a profitable company. We are the three of them. We are a profitable company despite of 2021. We've been profitable, and we've come back to profitability, in 2022 right away. We'll come back with value, for the shareholders and obviously for the Spanish economy. Let me finish with my guidance. Sales is going to be very difficult, that they'll be much higher than $3 billion.
We are already in end of July. It has to do with the rhythm of accrual of the existing backlog. Out of the full backlog, only 20% is being accrued. The remaining is either new or reprogrammed to 2022, 2023. It is very difficult. We maintain an adjusted margin of 3%. That's very important. We're in a business of getting awards and deliver and retaining the trust of our customers. We've got the quality. That quality is being translated in awards. It's not very challenging, as I said before, to end it up this year with awards of more than EUR 4 billion. Those are the three big numbers that I wanted to finish my presentation with. Thank you very much.
Thank you. We are now going to the question-and-answer session. If you have a question, you have to press 01 on the telephone keypad, zero and one on your telephone keypad. We have the first question from Alejandro Vigil from Bestinver Securities. Please go ahead.
Hello, Juan. Thank you for taking my questions. I'll have two to start. One is about the visibility for the next quarters. You think that after this provision you carry out in the first half, you have enough visibility for the next quarters in terms of the profitability of the business? Is the backlog already clean of additional negative surprises or additional profit warnings? That would be the first question. The second question is about the SEPI financial support, the conditions. If you can give us some color about the cost of this funding. second, when are you expecting to replace particularly the participative loan or the hybrid equity? Are you expecting at some point to issue new equity to replace this loan? Thank you.
Let me see if I can answer you, if not, come back to me. If I can answer you correctly. I think obviously it's not an easy decision to take a provision, but if we take a provision, it's because we have a good expectation of having more visibility on the second part of the year. We've been badly hit on bits and pieces. Nothing serious, but bits and pieces in all the jobs, most of them in the Middle East. Some disputes here, some extra costs there, some COVID costs that we have doubt that we can get back from our customers. We decided to do it once for all. I think it's a management decision. It's not easy, but I think it's for the sake of the best management of the business.
Having more visibility for both shareholders and also the government that is going to be somehow an indirect shareholder. It has to be done with both. We have to show this is where we are. We don't want surprises. We're managing a good business, but we're managing a good business that is running through problems that were definitely very much unexpected, as has happened with many other businesses. That's the first question. The second question, the conditions of the SEPI. I think in the presentation that I gave you, I don't know. I think the condition of the SEPI, I think I have Eduardo with me, and I think he's going to be definitely far more precise than I am.
Unfortunately, I cannot be that precise because conditions are not still closed. First we have to go through a due diligence process that is about to be completed. Within one month it will be ready, then we will close the conditions. I would say there are two facts that are relevant. First one, there are market conditions. You will not see a relevant impact in our financial expenses because of this financing. Second, the cost of this financing is smaller in the first years, and it grows through the life of the loan. As I told you, still they are not fixed, within the next month they will be fixed. Well, market conditions, as I said.
Okay. Let me, Alejandro. Now let's focus on the third question. Now we have to focus on two things. First of all, come back to profitability and grow. Grow to the size that we were before, which is being reflected already with the number of awards. We have to grow to the plans that we had in 2019, which is having a turnover closer to $5 billion and not $3 billion, and having a profitable backlog and a healthy revenue. I think having a participative loan and having a direct loan from the government, it help us in two ways. It help us because it give us equity strength and liquidity strength for the institution. It help us because it gives to our customers a high level of comfort. Our government is a partner, which is very important.
Quite recently, I'm going to give you a good example. We've awarded a job to Spanish company that was supported by a government. It's a company that we had trusted and we had worked with before many years, and we had quit working with them because of a financial situation. Once the government supported them or gave signs of support, we awarded a job. Not only us, our customer allowed us to award the jobs. Having the support of the government and being partnered with the government signified far more than having $300 million in cash with you. It put us in a very similar situation than some of our competitors. That's why in the conversations that we had with the Spanish government that started very early spring, at the very beginning, it had nothing to do with TR.
It had to do with other companies that the government was thinking of us supporting. It had to do of supporting a company, buying things from them for one of our activities. We have an ongoing relationship with our government. I think progress, mid-May, with the unfortunate event of U.K. and the development of this Delta variant, we worked with the government, and I said, "We like to have you as partner." Having you as partner is hybrid plus direct loan. If we grow, and we want to grow, if we come back, and we will, back to a real profitable situation. When I say real, that's because I hate the term of adjustment. When I say hate the term of adjustment, because I like to have real EBITs and then real dividends, as there is no such a thing as adjusted dividends. Then we'll see.
It may very well happen that we replace it with a capital increase, or it may not even be necessary. If we grow at our planned pace, you've seen it before and you have to go back to 2010, and from 2010 to 2015, in our business, equity gets strengthened quite rapidly. It might not be necessary. It might be reduced, and we might negotiate with them to stay with us at a lower As here, one of the clauses is you can repay them whenever and when you can. Each party is very flexible. We can talk to the government and say, "Okay, we don't need as much as EUR 150 because we have already strengthened our balance sheet, but we'll be very comfortable if you keep EUR 50 with us." Why?
I like to be in this business competing with some other European competitors that have the real support of the government and competing with Asian competitors that have the real support of the government. It's healthy and comfortable to have the support of our government. That's it.
Okay. Thank you, Juan.
Sure, Alejandro.
Thank you. Next question from Francisco Ruiz from Exane . Go ahead.
Hello. Good morning. I have two questions. The first one is, given the delays that you are having on the sales due to the COVID in 2021, what are your expectations on 2022? I think you gave us some side guidance at the beginning of the year that there will be some recovery on that, or something like around EUR 3.6 billion sales in 2022. Are you still comfortable with this figure for next year? Second question is just a data, if you could give us the level of prepayments that you have in your net debt at the end of the first half. Thank you.
Francisco, I have a very clear your first question, but I missed the second one. Can you please rephrase it, Francisco?
The second one is regarding the prepayments, which are included in the net debt at the end of first half.
Okay. First of all, delays in 2020, if I have a sense to recover them, obviously, a very part of the delays of 2021 has to do with reprogram. Most of the reprogram jobs will come at the end of 2022. They're real jobs. They're jobs in Singapore, they're jobs in Canada, and they're jobs, obviously, in the Middle East. Secondly, our delays in 2021 have very much to do with the pandemic. Everybody is hitting very hard the Middle East. I think all of us trust that the situation is going to be far more better on 2022. We will, together with the reprogram jobs and the better rate of vaccination, we'll come back to the new jobs.
All three things together, I think the recovery of 2022, again, is not very much a challenge. We're planning for a good recovery of 2022. The second question, when you're talking on prepayments, you're talking prepayments on advance payments on customers or prepayments on debt?
That's correct, yes. On the customers.
We haven't had any, and we'll expect to have one having to do with ORLEN. That's going to be in 30 days or in 45 days. I don't know the payment terms now by heart. The ORLEN job was signed in May, but it was on the 22, if I remember well, that they sent us the notice to proceed. Once they send us the notice to proceed, we can bill them the first payment. We'll be having a prepayment somewhere at the end of August or first weeks of September. That would be the only one. We might be expecting prepayments or early payments towards the fourth quarter of this year. We haven't got anything right now.
Okay. Thanks.
Same question from Robert Jackson from Banco Santander. Go ahead.
Hi. Good morning, gentlemen. First question is related to the renegotiations you've carried out. Have you considered the extraordinary cost of materials over the last six to nine months? Have those been priced in these renegotiations? Or is that still pending? Can you give us a bit of visibility regarding those issues? That'll be my first question.
Yes. Definitely raw materials is an issue. It's an issue. I don't know if it's going to last forever, but we're treating them as if they were going to last forever. We don't want to speculate with raw materials. That's a must. I personally believe that they're not going to last as high as they are for a very long time, but we're managing the business as if they were. How we're doing that? First of all, if you realize, a very large percentage of the backlog is the new fresh backlog that is being awarded, and it's coming to force right now, and it's being priced and translated into the contract. That's a way of taking the risk or managing the risk. That's one part. Some others, the jobs, they're under construction already, and we have a real imbalance.
For this case, we're fortunate because we have a really imbalanced backlog. We have a very large part of the backlog, which is under construction. All the materials are bought, and they're on the site. In some of the cases, for instance, SASA, it's fully de-risked because it's cost-plus. Extra cost, material cost, equipment costs, is 100% translated to the customer. We're running some risk, it is true, in some of the reprogrammed jobs. Some of the reprogrammed jobs, some of the equipment has been bought, which material and equipment goes together. Some other equipment is not. Main equipment is bought, that's for sure.
Some other equipment is bought, and there we have to find a way either to negotiate with the customer, but at the same time, it's been somehow offset because the construction terms that we get in the reprogrammed jobs, as we are agreeing, and we have agreed with the customer to construct in a different way, model by model, in a slower pace, with lower construction. We have lower construction fees, lower construction contracts, which somehow offset some of the risk of the material, which is not a big part. It's a small part that we have not already bought, and we obviously negotiating with the customer. There, in a very small percentage, we do have a risk. It's a risk that we're facing it.
Okay, thank you. The second question is related to the energy transition. Are you finding a lot of competition in looking at projects? I guess you have a lot of opportunities in Spain, so competition is lower. Elsewhere, I guess there's a lot of competition. How is Técnicas going to differentiate itself outside, for example, in Latin America, in the energy transition projects?
To be honest with you, right now, what we'll have to do is organize ourselves because we're getting demands from small companies, big companies, do this, do that, do a study together with this for very little money, try to develop this with that. To be honest with you, we've been driven a bit crazy. They're not join us because let's see if we together, that's another company in Latin America, we can have access to the government funds for this hydrogen plant. We have to organize ourselves. We have a team. We have a team that is managing, both in coordination with commercial and production, all the energy, centralizing all the energy transition, say, projects, initiatives, and agreements that you have seen. We have agreement with Repsol, with Enagás, with AMA in Amsterdam, with Acerinox recently.
What we're doing is we're sitting with customers, helping them to put together real jobs. As I have the impression that some of them, they want to do things. They're in big industrial companies. They have the money. They want to have access to the funds. They have to do something, but they don't know how. We have to find a way to make that profitable for them, obviously, because they have to do it, but also for us. Quite often they come to us and for practically very little money say, "Let's work together and develop this and develop that and do this and do that." Sometimes they drive a bit crazy. The good thing is that the market or many of our customers realize that are working together with us, we can put together projects that are real.
The world is a bit unorganized with this, let's face it. There is the ambition to develop it. There is the budget to develop it. There is the commitment of our governments to develop it. Together, service companies and investors, we have to find a way how. There is not enough competition, very little competition.
Okay. My final question is related to the SEPI resources. Looking ahead, could you leverage off their financial support helping other potential clients to develop projects? Could that be a source of or an incentive for new projects in the future?
In this business, I never want to name competitors. In this business, many of our competitors, some of them are in Asia, in different countries. They have gone through extremely difficult situations, much worse. The worst idea you can imagine is they've always had support of the governments. They have been refinanced by the governments, they have continued the business as if nothing has happened. I think having the support of the Spanish government obviously gives us the cash, which is very important, but also gives the credibility that we are. Because it's a must to have the support of the government, it's a must of Europe, that we are a strategic company for the Spanish government. Being strategic, having the resources that we do, the human resources that we do, having the know-how, it would definitely strengthen our capacity to get new jobs.
That's one of the reasons that when I was talking to the government and we started to explore, because nobody was using it. Only companies that were in a terrible situation were going to them, and they were not very happy. I thought that it'd be very good for TR, for TR employees, for shareholders, and it would give a high level of certainty and comfort to our customers.
Do you have any peers or any companies related in the sector also negotiating with SEPI, do you know of, which could collaborate a bit your negotiations and your position with SEPI, rather than considering yourselves as a distressed company such as a couple of other companies which have asked for access to SEPI resources?
The thing is, in this sector, we never compete with Spanish companies. For better or worse, our competitors, they are European, Japanese, sometimes American, and very often Korean. Some of the European companies, I don't want to get into details, they already have the support of their own governments. Some others, they happen to be public. All the Asian companies, one way or another, they can go belly up 3x or 4 x, they'll always come back with the support of the governments. That's the way, because they happen to be strategic for the industry. That's the way this industry works. Here in Spain, we're the only one. We've been unique.
We've been by ourselves with a good relationship with our government, because you know very well that when we needed the support of export finance, we've always had the support of export finance of our government. When we had needed the support of a special line of finance, small for a customer, we have got it. Today we just got the approval of a small one for a customer that is developing. We've always been very close to the government, and we've been quite strategic for the Spanish industry. We don't know of anyone close to us accessing those funds just because there is none.
Okay. Thank you very much for your illustrative answers. Thank you.
Thank you. Next question from Kévin Roger from Kepler Cheuvreux. Please go ahead.
Yes. Good morning. Thanks for taking my questions. The first one is related basically to your cash flow expectations. If you can give us a bit of information on what you expect for the coming quarters, because from here it's not understand the fact that you need such big support from the government. On that side, sorry for this stupid question, can you explain me the impact of the participative loan on the board, on the number of shares, if there is any, things like that, if you will have a diluted number of shares, et cetera? Sorry for this one. Questions related to the recent contract in the Middle East. In your contract presentation, in your Q1 presentation, you underlined as an opportunity a contract in the Middle East related to gas. It was, let's say, written with a contract value above EUR 1 billion.
You say today that you have secured a contract in the Middle East, gas-related, so I guess this is the one, but the contract value is at EUR 550 million +. Am I mistaken when I'm saying that this is the same, or can you explain us the change in scope of this contract? What happened and why the contract value is, let's say, half of what you expected? The last question is related to the power division revenue from the power division. Revenue are negative in H1, so you have basically removed more than EUR 50 million revenue this quarter. Can you explain me what happened on that side? Because if you put the cost on this side, now we have a consolidation of revenue. What happened on the power division this quarter?
Okay, Kévin. Thank you very much. I have four questions. Let me see if I get them right. Let me start telling you, please, there's no such a thing as stupid questions. Because, and please, if I answer you not correctly, don't think that I'm giving you stupid answers. Here, I'm going to try my best to answer one by one. Let me start with the last one. The power division revenue are negative. Are negative because we took the wrong strategic decision to move into businesses that were not power. We took the initiative to move with investors to businesses that were new, and that were very close, and with the ambition to become the leaders in biomass and energy transition. With the technology ambition, the ambition was purely technological. We had had an extremely bad experience.
That the traditional power division, the power division that we're doing with GE, the power business we're doing with Mitsubishi, the power business, it has been and is a profitable business. The hits that we've got, they're very serious, and it should have never happened. It is my fault as I do thought that with the power division, we could move forward into the new renewable biomass, clean fuels, whatever, business. Yet we have not been successful. That's history. Tough history, a lost battle, but a bad history. The third question. Let's start by the third question. Obviously, if it's undisclosed, it's undisclosed. I cannot tell you what it is the undisclosed that you want to know whether it is disclosed or not. All I can tell you is that we are being selected, and we cannot disclose the name.
That at the final number from now to six months, once we make it public, it's going to be more than EUR 500 million, because there are many optionals that have to be added. I can tell you that it's gas, and I can tell you that it's in the Middle East. If customer is not allowing us to disclose anything, I cannot disclose it. I'll have to wait to disclose it. I'm dying to do it, and you're going to have to wait to get it. The impact of the participative loan on your accounts. I think Eduardo, which is sitting right by me, can answer that. He knows far more about balance sheet and accounting than I do.
Hi, Kévin. Well, the participative loan cannot be booked as a pure equity. You won't see it as a part of the equity. It's financing. Obviously, it's not an ordinary, it's not a subordinated ordinary financing. It will be separated, because if the company is liquidated at the end, the participative loan is considered as an equity. That's the point from a legal standpoint. You won't see it as an equity. You will see it as an external financing. All right. You mean the first one?
Yes.
Regarding the expectation of the forthcoming quarters, we are living stress in terms of cash. The new wave of awards are coming. The act has a lot to do with how good the evolution of the awards arrive. If we are successful collecting these down payments from clients early in the fourth quarter, I think we will have an easy quarter. If not, we will still be as stressed as we have been throughout the year. I think that's the answer.
One thing, Kévin, because now I have second doubts on the question you're asking me on the Middle East. We are being selected in the Middle East. I cannot disclose the customer. The number that is there, it is what we are signing now. It doesn't mean that we are dump pricing anything. Within the next six months, as this is the utility part, tanks, and whatever of the investment, customer has to include in the contract, which has to decide and has very much to do with how developed the process units, the 300, 400 of different units, which are the optionals that it's up to the customer, and the development of the process units. This is the award of, let's say, the first tranche, and then all the additionals will come afterwards. It has nothing to do with crazy down pricing. Don't get that impression.
Okay. I understand. Thanks. Sorry for that, but I struggled to understand the magnitude of the financial support that you're asking if you, let's say, are not so worried about the cash expectations because you are an asset-light company, so CapEx requirements are limited. I struggled to understand the magnitude of the financing that you are asking to the government.
We are a business. Obviously, we haven't got fixed assets, but we have bills to receive and bills to pay. After having recognized a loss of $150 million, the picture of our balance sheet is weaker. It's as simple as that. It is weaker. We've been growing very successfully with very little equity. This is not a business that is equity-intensive. We don't have to invest in yards, in vessels, or in big assets. Everything that we've got, and that's our strategy, it has to be the closest thing to variable cost. Also we have to give the image to our customers and also shareholders that we are strong. We are in a competitive environment. Having a support, serious cash support from your government, it allows first of all, to manage the business better.
We have to treat well our suppliers and give comfort to our customers. That's what the size of the support is as big as it is.
Okay. Thanks a lot for that. Have a good day.
Thank you. Last question from Alejandro Demichelis from Nau Securities. Please go ahead.
Yes. Good morning, gentlemen. Thank you very much for taking my questions. Couple of questions just to follow up. The first one is on the SEPI support and the strengthening of the balance sheet. Probably for Eduardo, I guess. Could you please tell us how the covenants of your performance bonds are being impacted by this? The question is, would you need additional equity in order to keep getting the awards in the Middle East that you are talking about, putting the performance bond on top on that. How are you seeing that evolution? Probably the second question, Juan, is just to follow up on what you were saying, that you're actually being paid by your customers, and you're seeing that as positive and so on.
When I actually look at your receivables since the beginning of the year, they have gone up by almost EUR 100 million, but your revenues have come down as you have been pointing out. There seems to be a lengthening of the days of payments. The question there is, are all of these kind of increases in the receivables just because of COVID, or are there some kind of disputed amount that we have to take into consideration, those could come into operation later on?
Alejandro, good talking to you. I haven't talked to you in a long time. You were one of our preferred analysts for many years. Good having you back. Let me ask you the second question, as the first one is for Eduardo to answer. Obviously, receivables, as we have not been able to accrue, and we have not been able to grow and accrue and deliver, have revenues at the agreed pace, and the agreed pace that we had agreed with our customers, and our contracts are based on milestones, a very large percentage. We are accruing. We're spending money. We're accruing slowly, but we're not reaching those milestones, and that translates in receivables. It could be, in some of the cases, a smaller amount of a dispute, but most of it has to do with the milestones that have not been reached.
You have to realize that the size of the jobs that are under execution are very big.
Okay. That's clear. Thank you.
Alejandro, regarding the first question. First, well, yes, there are covenants regarding the size of the equity compared to the volume of assets. There are two elements, assets and equity. The size of the assets today, as you have mentioned in your question, is probably a bit big. We expect to see it smaller in the short future. Hopefully, by the end of the year, we will see a different figure. That's first. Second, it's a fact that for the last two years, our equity is not that big. By definition, year after year, I'm asking banks to provide me a waiver. For the time being, I have not seen any difficulty to obtain it. I do not foresee the need to increase the equity because of that fact. Yeah.
Obviously, still I have room to negotiate with banks because we are still to see how SEPI affects this equity. It's a fact, as I told you, that accounting-wise, it's not equity. In the end, it provides a good comfort. We are adding at least EUR 150 million, which is not pure financing. It's something different. It's para equity, I would say. Hopefully assets will reduce, so I don't have that problem with the covenant. Second, the equity, we will see with the banks how we consider this SEPI hybrid loan. Third, if I have a problem, I have obtained waivers during the last two years. It's not an issue.
Okay. The waiver, you are comfortable to get that even if, say, you go into negative equity or if you cannot recover the tax credits that you're talking about, yeah? Now also the tax credits have gone up. You're still losing money, so those tax credits look difficult to be recovered, yeah?
The annual tax credit has to do with my ability to recover this tax credit in the future, in the next years, in the forthcoming 10 years. When I analyze what is the impact on my capacity, I cannot consider what's happening in this very extraordinary and specific year, 2021. I have to see if my backlog produces profits enough in the future to compensate my tax credit, but it has no impact what happens this year, 2021. As you say, it's a fact. I am missing the opportunity to compensate partially this tax credit this year, 2021, because of the specific situation. Come on, what we do is to analyze if the future produces profit enough to compensate the existing tax credit. The numbers we are doing today gives us some comfort.
By the end of the year, we will do a more accurate analysis about the situation because we will have full comfort about the forthcoming backlog, about the pipeline, then we will redo the analysis. We've been audited, as you know, in June, one of the main facts or main elements that the auditors cover is the recovery of the tax credit. For the time being, they are not telling us there is any specific problem regarding this tax credit. When you talk about future, it's always something open, we feel comfortable with this asset today. I do not foresee to be, going back to the question, in a negative equity because of the removal of this tax credit. That's not in my mind today.
Okay. That's great. Thank you.
Thank you. We don't have any more questions. Back to you for the conclusion.
Thank you. Thank you all. This time it has taken a bit longer than expected, probably because it took me longer to make the presentation. I think the occasion was important, so it took me longer to present results than I did other times, that I did it in 20 minutes. I do really appreciate you being here. I do appreciate your questions, and I'm looking forward to talking to you i n November.
November.
It will be, at the end of the next quarter. Thank you very much, all of you.