Ladies and gentlemen, thank you for standing by. The Electrica teleconference is starting now. Thank you.
Hello, I'm Raluca Casapu, Head of Investor Relations Squad, and together with the entire Electrica management team, we'd like to thank you for joining the Electrica conference call for the presentation of H1 results. There's a live webcast, and there are also participants connected online. We are going to present and discuss, as I said, the financial H1 results. Those of you who are connected only by phone, please download the presentation in PDF format, available on our website under the investors results and presentations section. The participants connected online or through phone can address written questions on the live webcast or can intervene live on the Q&A session. Kindly note that since the entire conference is being recorded, all participants will be in a listen-only mode, so the attendees' voices will be disabled.
Should anyone need assistance during the conference, you may signal an operator by pressing star and zero on your telephone. Now we'll begin the presentation, which will be followed by questions and answers session. You will receive instructions from the operator, for those of you who are on the phone. For those of you who are online, you can see the instructions on the screen. I would like to turn the conference over to Mr. Alexandru Chiriță, our Chief Executive Officer, to begin the presentation. Thank you.
Thank you, Raluca. Good afternoon, ladies and gentlemen, and welcome to the conference. Thank you for participating at our presentation of H1 2022 financial results. First, we would like to share the following highlights. The financial results in the second half of H1 2022 demonstrate the group's above-average performance in difficult market conditions and confirms our strategic efforts were well adapted to maintain a top position in the field in which we operate. The volatile energy market has continued to have a major impact on all players' financial results in the first half of this year. For H1 2022, EFSA recorded a good performance with a net profit of RON 213 million and a positive EBITDA of RON 287 million. We identified the best ways to mitigate the negative effects generated by market volatility.
The authorities also started to reimburse the amounts from the support subsidy scheme. At the same time, EFSA continued the process of accelerating the digitalization process, investing in solutions to increase customer satisfaction, meant to optimize, at the same time, the activity at the operational level. As you all are well aware, on the distribution segment, the results are directly affected by the market conditions and the regulatory framework. The good news is that starting with April 1st, 2022, the distribution segment benefited from increased tariffs by 20.3%, through Emergency Ordinance 27, which allowed recovery of the amount of RON 363 million spent for energy acquisition in 2021. The additional amount spent for energy sourcing for grid losses will be recovered in future prices in a period of up to five years after March 31st, 2023.
There continues the ambitious investment program carried out since the beginning of the previous regulatory period, aiming to modernize the network infrastructure and accelerate the expansion of smart metering on a large scale that will lead to reduction of grid losses in line with regulated targets. Taking into consideration the supply area performance above the market expectation and the fact that we started to recover the amounts from the authorities, we are optimistic about the second half of 2022. I would like to turn the presentation over to my colleague, Ștefan, to present the financial results in more detail. Ștefan, please.
Thank you, Alexandru. Good afternoon, everybody. In terms of diving into a deeper analysis, I would like my colleague to go to this slide number three. In terms of numbers, in summary consolidated financials, we have a positive EBITDA of RON 101 million. We have a negative result consolidated of RON 175 million, which is mainly due to the difference of the price for network losses in the distribution segment, where we have a difference of RON 574 million, which will be recuperated according to Ordinance 27 in the period of five years following 31st of March, 2023.
In net debt, of course, we have a significant increase in net debt because we need it in this period to pre-finance the support scheme introduced by Ordinance 118/2021 and then prolonged through Ordinance 27/2022. Now, moving into the analysis of EBITDA net result on the next page. I would like to mention that in terms of consolidated results, we have variation of EBITDA compared with first half of 2021 of RON 256 million, which is mainly due to the negative variation of the energy margin.
The energy margin has a negative component related to the distribution segment and a positive component related to the supply segment, RON 301 million positive component from supply segment and RON 534 million from the distribution segment as a negative impact. The part related to the supply segment is related, of course, to the increase of the receivables and of the revenues from energy and natural gas. Of course, the increase in other operating revenues from subsidies under the support scheme. This far exceeds the increase of the cost of energy purchase for supply.
Basically, this shows that our strategy following these results at the end of last year, our strategy in terms of securing as close as 100% of the energy and of the gas for the contracts for the customers to have it sourced from forward contract is a strategy which was repaying and was bringing results. In the distribution segment, the negative impact of -RON 534 million has two components. There is a positive component related to RON 234 million related to increase of revenues from energy distribution.
Which is mainly due to the fact that starting with first of April, the average distribution tariffs were increased compared with first quarter 2022 by 20%, in order to allow to recuperate the difference from the price for network losses for the year 2021. Then of course there is the negative impact of 754.58 million RON related to increase of expenses with the purchased energy for network losses. This is a result of increasing of the energy price with 115%. There are also some other minor effects. I would mention mostly the negative variation of the operational expenses with 27 million RON.
It's a net impact which is a reduction, and this is despite the fact that of course in terms of utility costs, we do have an increase. We have some positive impact related also to the change in provisions. Of course, a slight decrease in material and maintenance expenses. Moving on the same slide to the net result. The variation of the net result compared with first half 2022 is RON 252 million, which is mainly due to the negative evolution of EBITDA, also of the financial result, which is a negative impact of RON 46 million because we increased the financing and all this financing is bringing a cost and the financing cost is on the increase.
We needed to pre-finance the support scheme on the supply side, and we need to finance the difference for the price for net losses. Of course, there is also a positive impact of RON 56 million from income tax because it's the deferred income tax effect related to the results of last year. Moving to the next slide, moving to the segments. In terms of distribution segment, most of the things were mentioned already. There is a decrease of EBITDA of RON 532 million, which is mostly due to the energy margin. We mentioned already the increase in energy revenues and the decrease related to cost with the net losses.
The net result is mainly due to the negative evolution of EBITDA, to which there is also an impact of the financial result. Negative impact, RON 26 million related to the increased cost to finance the difference of price in CPT. There is the positive impact of the income tax. Now, it should be mentioned that the unfavorable impact on the distribution segment, and this result is mainly due to the fact that we witnessed an increasing cost of network losses and the cost of energy for the network losses. The average purchase price for energy for network losses being 115% higher than the ex-ante value established by the regulator. This generated additional cost of RON 544 million.
This amount, as mentioned before, will be recuperated in a period of up to five years after March 31st 2023, based on Ordinance 27. Moving to the next slide. You have in slide six details about the distribution segment, including some details about some relevant regulatory information related to the fact that in this current regulatory period, we started with a correction related to the meters coming from the previous regulatory period. Also in the next slides, in slide seven and slide eight, we presented some reconciliation in relation with the regulated net results. Because we saw that some of the analysts were focused on that, and we can discuss this also separately in more detail.
In slide seven, you see the impact of the deviation of regulated CPT of RON 574 million that I've mentioned. In slide eght, you see the correction related to meters for the whole year. You see that also in terms of net losses, deferred income, we have -RON 124 million. Basically, out of the RON 450/MW price established by ANRE due to the limitations in regulations methodology, only part of it, roughly RON 400, was given in the tariffs, and the difference was stipulated as deferred revenue. You have the slides related to each of the three regions. As you know, we are in slide nine , Slide 10, and Slide 11.
As you know, we are reporting until the end of this current regulatory period on the three regions, because the three companies that we merged at the end of 2020 are having different set of tariffs, having different history in terms of investments. We are continuing to report until the end of the regulatory period in this format. Moving to the next slide, I would go to Slide 13, where there is an element regarding Electrica Serv. Electrica Serv is basically it's here you have the summary of the energy services segment. It should be mentioned that this is adjusted in the sense that the activities which are delivered for the distribution subsidiaries were taken out and reported above in the distribution segment.
There is a positive impact in terms of contribution to EBITDA. There is basically, in terms of, EBITDA increase compared with last year by RON 5 million, which is mainly related to the increase in demand for photovoltaic systems and the new contracts which are concluded by this, by the company in this activity. Also, there are some elements to be mentioned in terms of benefits from employees. It's a net result, positive result of RON 6 million, which is coming from a mix of results related to provision for restructuring plan of RON 7 million, which was established for this year. Also decrease in employee benefits and decrease in other salary expenses.
There is, as a negative element, there is an increase in the operating expenses of approximately 9 million RON, which is mainly due to the increase of the material costs and utility costs. Moving to the next slide, we have the supply segment of Electrica Furnizare. If you look at the main figures, we have a EBITDA of RON 287 million at six months. Net result, RON 209.13 million . Of course, there is an increase in the debt. The net debt increased to RON 1.425 billion because of the necessity to pre-finance the support scheme related to the system for protecting the end consumers introduced by the Ordinance 118 from 2021, and Ordinance continued by Ordinance 27 from 2022.
In terms of supply segment, it should be mentioned that staying on Slide 14, we explain the evolution of EBITDA. There is an increase compared with the first half of last year with RON 260 million compared to first half of last year, which is mainly due to the evolution of the margin for energy and gas, which exceeded the increase in the revenues from energy and gas and the income related to subsidies. These increases were higher than the increase in purchased energy cost. Also, there is an unfavorable effect of RON 39 million related to trade receivables.
It should be mentioned also in the connection with the slide of trade receivables on the following pages, that basically this is not necessarily the situation of a problem of collection rates. Due to the fact that the support scheme was modified several times, this triggered the need to have modifications in our core systems. This means that there were some situations and some periods in which we're not able to invoice according to the regular schedule. Basically, we invoice with some delay, and this triggered a delay in receivables, but it's not necessarily a matter of collection. Since I've touched this subject related to collection, I should mention that starting first of July, so until June 30th, we were in the impossibility to disconnect the non-paying customers.
I'm speaking about households. Starting with July 1st, there is this limitation is eliminated, so we could start disconnecting. This should trigger improved collection. Also starting, I think July 8, also for the business consumers which were benefiting of the certificate for emergency situation, there was an interdiction of disconnecting, which is now also eliminated. From this point of view, we see a possible improvement. It should be mentioned that in terms of collections, it's not necessarily a problem related to collection. Despite the fact that we were in the interdiction to disconnect the customers, we're still able to do campaigns of collection to them, and we were able to go in court. The ones which were delayed in payment.
Moving further on, I would go to Slide 19 and stay on Slide 19 for a minute in relation to the evolution of the liquidity of the group. Of course, the liquidity of the group was put under pressure by the fact that we needed to pre-finance the support scheme on the supply side, and we needed to pre-finance the net losses on the distribution side. In view of this, we addressed the GMS two times for some ceilings related to concluding financings for the subsidiaries in order to cover this financing need.
You can see that after the result of first quarter of 2022, which was the most, let's say, pressured, we see improvement in terms of liquidity position. This is also related to the fact that on the support scheme, the state is processing the requests and there is a significant amount of money that was collected by us in June and July. Basically on the previous support scheme, which ended on March 31st, we are up to date in terms of collections. For that part, we only need to collect the upside part, which we filed in until July 31st, related to recuperating the P&L effect from the initial scheme.
Now the process is ongoing for processing the repayment requests for the scheme under Ordinance 27. The next slide is about dividend distribution. We have decided to pay our dividend also this year, which is, of course, lower considering the results from last year. We considered that in order to show the resilience of the group and the fact that we do believe that the group will redress financially after the result at the end of last year, and also to give a signal to our shareholders that it was the decision for dividend to be paid and the dividend was paid in June.
Despite, let's say, the liquidity, the need to finance from the liquidity, the pre-finance, the support scheme and the net losses. In summary, this would conclude our main presentation. Of course, you have the appendices related to various other information that we usually present to you. At this moment, I would leave the floor for your questions, and we'll try to answer them as complete as possible. Thank you.
Just one more thing. We'd like to tell you that we convened a GMS yesterday for the October 12th, for the amendment of the articles of association. Now we will take a five-minute break to take in the questions. I would like to ask the operator to give the necessary instructions. You can also send your questions to the email. We will first take the written questions, and then we have people you know through the phone asking the questions. After we answer the written ones, we will take each one as you registered. Thank you. Operator, please.
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Thank you all for the questions and for the very high interest related to our conference, which is shown in the number of questions that you have asked. We'll go through them one by one and together with my colleagues here, we will present the answers. First question, what to expect looking on the supply side, given the new capping scheme applicable starting with Q2, and if we are maintaining the budgeted figure. And what about the budgeted figure at group level? In terms of the supply side, given the capping scheme, we are quite confident that we'll be staying in the budgeted figures. This is shown, I think, also by the results at six months, if you are comparing with our budget, the revised budget that we published in April.
The very important part is we are very hedged to a very large extent in terms of sourcing the energy from forward contracts. The dependence to the day-ahead market is very limited. Looking at the group level in terms of what is in our power, we are confident that we can stick to the budgeted figure. There is this element related to the network losses for the distribution subsidiaries, where you do know that there are some discussions also in the public consultation related to possibility to capitalize the difference related to the price of energy for the network losses.
Of course, since if the regulatory and legislative framework will change and this will generate a significant impact in terms of financial performance compared with the budget, we will revert to you. As also announced in the past, you remember that we initially published a form of the budget and then considering the approval of the Ordinance 27, we came with a revised version of the budget. Regarding price paid for grid losses, can you share it with us? I think we I skipped one, sorry. The next one would be the average acquisition price for the distribution segment and for the supply side. If you can share with us the figures. The average acquisition price for the distribution segment is in the presentation, it's RON 967.
The price for the supply side, I would not really look to give you a figure because it's a competitive market there and but I would assure that we would have been profitable even without the support scheme. Can you provide us some details on the pipeline related to the green energy? We do have project signed for 283 MW , and we are focused on operationalizing them as fast as possible during this year and next year. Probably some capacities, even this year. We are really focused on developing this generation portfolio, the fourth vertical of the group, because I think that validating our strategy from the past, last year showed that, on a long run, supply without generation is difficult to be sustainable.
What is the amount until mid-2022 estimated to be recovered in future years coming from CPT? We mentioned, I think in the presentation it's RON 574 million for six months this year. Have you bought any volumes for 2023? Okay, assets commissioned. Sorry. Assets commissioned by mid-2022 are lower than the plan agreed with the regulator. This is correct. We are doing all the efforts to recuperate in terms of commissioning of investment plan. We are confident because we had this situation also in the past related to some delays, let's say mid-year. That some of them are related to the issues related to availability of meters and, you know, all sorts of supplies.
You know that after the post-pandemic context, we were in the situation of having some delays in delivery of some of the equipments which were needed. Of course, there is also the possibility to recuperate in the first half of next year for part of the plan which was not commissioned. Last but not least, we should mention that there is also some challenge related to what to finance first. Because if we need to finance RON 1 billion for difference of price in CPT or something like this, probably rough estimation for the year, it's more than double than the CapEx plan.
Somehow we are prioritizing them both, and we think that we could be able to update by the first of October in terms of CPT plan for the results at nine months and to show the improvement. Have you bought any volumes for 2023 for distribution CPT? The answer is yes. I would not give a percentage because this is changing from one day or from one week to the other. It's not necessarily that significant, and I don't know whether it will be wise to secure that much considering the public discussions which are considering various kind of solutions for the difference for price for CPT for next year. It might be long-term contracts or different kind of other arrangements. You mentioned an intention to make a bond issuance this year.
Is this an operation ongoing or still subject to a forward decision? You know that in the GMS for the financial results in April, we have received the approval from the shareholders, so for bond issuance. This is something that we are contemplating in relation also with what I've mentioned before, related to the plans of commissioning the green energy project, the generation in the solar and wind. Yeah, we are closely monitoring the market, focused on the diversifying the funding sources. Yes, this is something which we are considering to do this year, depending on the right opportunity. So far, since the ending of second quarter, how much have you cashed in subsidies in the month of July and August?
We have cashed in close to RON 400 million supplementary to what is shown in the results at six months. We are seeing a significant improvement in terms of the mechanism. I think that after the initial, maybe some bureaucratic and, you know, clarification phase, there is a certain fine-tuning of the mechanisms which starts to function. At the end of first quarter 2022, the operator, the distribution operator put investments of 21%. I think this was covered by a question before. Can you detail please the increase in other operational revenues? Yes, of course. The operational revenues are basically including the revenues from subsidies under the support scheme. It represents the values to be recovered.
Because right now, under the support scheme, in relation to the energy that we are providing to a customer, we are invoicing the customer up to the price level, which is the cap under the ordinance, under the support scheme. For the difference above, it's we have filing in for amounts to be recuperated from the authorities. Just a second. Next one is. Did you manage to exceed the RON 72/MW, I guess it's the RON 73/ MW, our regulated margin for supply? What do you expect regarding supply performance in the following quarters? I don't know how I don't understand the conclusion of how did you manage to exceed.
Just to explain that under the previous scheme for quarter one, there was not this element related to the RON 72/ MW supply cost. There was a different way in which the scheme was functioning then. This started from first of April, and RON 72/ MW is the total supply cost, which is covered under the supply scheme for the supplier. Of course, if you are a large supplier and you are able to have economies of scale and you are paying attention to your expenses, you will be able to have a cost which is lower than that. Basically the mechanism of the ordinance is allowing ourselves to keep the savings, basically the efficiency compared with that.
We are confident that the supply performance in the following quarters would continue to remain the same level. We are confident we'll be staying in at least the numbers under the budget. Please explain the 5% rule for imbalances for the government ordinance. The idea is that the monthly costs with the transactions in the balancing market, considering both purchase and sale, which are exceeding 5% of the costs of purchase from contracts, the day-ahead market will not be recognized, and we don't get, you know, from the state budget, the amounts which are exceeding this 5%.
It should be mentioned, however, that for the supply of last resort, so for the customers that we are getting in our portfolio, based on the mechanism of supplier of last resort and for the month of July, we have been supplier of last resort, and we got some customers in the portfolio. So for these customers, there is not this limitation. There is not limitation of 5% for the balancing market. Considering the following quarters, should we expect a steeper decrease in the trade receivables or an increase in impairments, given that you are now able to disconnect those problematic customers? We don't expect a dramatic change. I mean, we're not expecting also in the past, we explained, I think, also in the conference for results of.
At the end of the year or quarter one, even if we are not able to disconnect, this was not really. I mean, yeah, there is an impact, but it's not a dramatic impact in terms of evolution of the receivables. As explained during the presentation, the increase in impairments was also significantly due to the fact that we invoiced with delay because we needed to implement in our systems the changes. The supply scheme was introduced November last year, and then after end of January it was changed, so we needed to change some things in the systems in terms of algorithm and how to invoice, et cetera. At the end of March, starting with April, there was another algorithm, another mechanism.
This meant a delay of invoicing from our side because we needed first to stop the system to make the changes in the system and so on and so forth. Basically, you see the RON 40 million change in impairments there, but this is not really an effect of a real collection issue. What is the share of supply volumes covered by long-term contracts? Roughly, we are fully mitigated until the end of the year in terms of covering the supply business with sourcing from forward contracts. We have a strategy which is looking for more than one year, and we are also purchasing for next year.
It's a strategy which is, I think, aligned with the best practice in the market. I will not go into too much details since this is about a competitive business. I could say that until end of the year, we are really certain that, we'll stick to the budgeted elements and we will not have the, dependency and the risk related to the volatility of the day-ahead market like we had, at the end of last year. What do you mean by capitalizing the grid losses difference? There is this, mechanism which is introduced by the Ordinance 27, but, will need to be, detailed or clarified in more detail in an, amendment probably to, this piece of regulations through which, we are.
The difference of price between the effective price for the network losses and the ex-ante price needs to be would be capitalized, would be considered as a financial asset, basically. As it is set up now, it's only for the part which is financed from loan. For this side, we will get rewarded half of the regulatory rate of return. This is roughly 3.2%. This was the view at the moment of Ordinance 27, that this would cover the financing costs related to financing the difference of price for network losses. Of course, in the meantime, the financing costs have evolved to another level, and this is not really necessarily covering in entirety this, but still it's providing part of the cover.
Of course, there is another discussion in terms of putting these expenses related to the difference of price for network losses as an asset, you know, capitalize them as an asset and having them amortized in several years, in line with the recuperation. This is to be publicly discussed, and it's an idea to be explored in a clarification of Ordinance 27. Okay. I think these are most of them. There is another one, yeah. The last one is there was very low CapEx in the budget for RES development. How soon we should expect to see some of the capacities operating? Can you share more details when, how much? The idea is the following.
It's true that most of the projects will be closer to fruition starting next year. We would be looking to have something operational. We would aim to have something operational also this year. Of course, this depends on various elements related to permitting, related to also availability of the equipment of the solar panels, et cetera. As mentioned, yeah, it would be our aim to have something operationalized this year, but most you'll see next year. This is also reflected in what you've mentioned about the relatively low CapEx in the budget for a green energy development. Okay. I understand we have five more questions on audio.
Operator, can you please start?
Ladies and gentlemen, at this time we'll begin the audio question-and-answer session. Anyone who wishes to ask a question may press star followed by one on their telephone. If you wish to remove yourself from the question queue, then you may press star and two. For those participating in the question-and-answer session, please use your handset when asking your question for better quality. Anyone who has a question may press star and one at this time. One moment for the first question, please. The first question is from the line of Stroilă Alexandru with BT Capital Partners. Please go ahead.
Hello. Thanks for your presentation. The first question is, if you could remind us what is the amount you cashed in in April and June in terms of subsidies, and where we could find this amount in the financial statement?
Ladies and gentlemen, we apologize for the pause. Please hold your line. You will be hearing music until the session resumes.
Geli. Operator.
Yes. Hello. We apologize. You will have to give your answer once again because we could not hear you. Can you please repeat?
Okay. Tell us when to start, please.
You can start now. Thank you. Mr. Stroilă, can you hear us?
Yes. Yes, of course.
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Thanks for your question. Can you hear me?
Yes.
I have understood the question, now I'm following with the answer. We have collected RON 79 million in the first half and then RON 391 million after the end of the first half. This is mentioned in the Subsequent Events note in the financial statements, I think it's Note 20. If you compare with the RON 631 million, which were receivables from subsidies at quarter one, there is a difference which is related to the upside offered by the Ordinance 27 in respect of the P&Ls effect in the initial scheme. If you remember, in the initial scheme, under the three mechanisms, there was a mechanism of capping where we're having a P&L effect. Basically, we are not able to recuperate everything from the state budget.
There was this famous cap of RON 522.25/ MW. Under the ordinance 27, we were offered the possibility to also request for this difference. There is roughly the difference of RON 130 million, which we filed in, and we expect to be collected. This is the composition. In respect of the estimation of receivables that we have put in the financials at the end of the first quarter, there was a difference of 1%, between 1% and 2%, which is immaterial. At that moment, we made an estimation, which was based on what we knew so far without having the files and all the templates and all the metrics for filing into the regulator for the amounts. Not all the details were clarified.
I hope this answers your question.
Okay. How much from this total amount is from the Ministry of Energy, and how much from the Ministry of Labour, if you can share with us?
I don't have the necessary this granularity. I can look for some situations, and we can discuss in more detail. For the new scheme, starting with Ordinance 27, what I should tell you is that basically, it will be the same split in the sense that we file in with the regulator. In terms of payments, the payments for the retail, for the individuals will come from the Ministry of Labour and Social Protection, and the part related to the business customers will come from the Ministry of Energy. Now, looking at the past, from what I remember, we have collected roughly from the Ministry of Labour and Social Protection an amount which is roughly RON 320 million.
Compared with this amount, which was collected from the Ministry of Energy for the rest. It should be mentioned that in the initial scheme, there were three mechanisms there. Therefore, the mechanism of compensation, this was to be recuperated from the, and the amount was roughly RON 320 million. We can discuss separately, and I can give you detailed split.
Okay. As a follow-up, regarding the recent budgetary rectification of the government, I saw that it only allocated RON 2.5 billion for the Ministry of Energy and around RON 7 billion for the Ministry of Labour and Social Protection. Do you think that this is enough so far, considering that only Electrica had RON 1.2 billion in subsidy so far?
I will not go necessarily into commenting this. You know that the budget was revised now, but the country budget can be also revised once more until the end of the year. As you follow, if you follow the public, and for sure you follow the public discussions, there are discussions about whether the support scheme should be amended in a way, change more dramatically in the logic and the mechanism of the scheme, or just have the cap levels changed. You saw that also the IMF had a recommendation regarding the increase of the cap levels. You see that also some other countries in Europe are changing the cap levels. I think that each is not something where there should be a clear statement issued right now.
From our point of view, what we see is when a mechanism starts to function, we start to collect the amounts. We are really pleased after the first part of the year that now things improved also in our liquidity and in our collaboration with the authorities.
Thanks. One last question. From your figures, and correct me if I'm wrong, I understood that the maximum amount that the company can borrow from its bridge loans is RON 2.5 billion. Right now on the balance sheet at the end of the quarter, I saw RON 2.3 billion in bridge loans, meaning that soon it will reach its limit. Looking forward, how do you plan on financing your activity, considering that, you only collected, roughly RON 500 million worth of subsidies from the government?
I think that when you are saying about the ceiling of RON 2.5 billion, basically you are adding the RON 1.7 billion for the supply and RON 0.7 billion for the distribution.
Yes.
Yeah. This relates to loans to be contracted this year. It's corporate governance approval, and it relates to loans to be contracted this year. Now, if you look at the balance sheet, we are also having there some loans which are coming from the past. For example, the loans related to CapEx for the distribution subsidiary is coming from the past. Now, in terms of how do I see the financing for the future? Considering the current situation, the current regulatory framework and legislative framework, we are confident that under these limits, we will be able to function. I think this is also reflected in this financial situation because we saw that the auditors in the limited review, they gave the positive feedback related to the going concern issue and to the liquidity issue.
Of course, if these things are changing, we will need to reconsider. The idea is that the amount for the supply side initially proposed RON 1.5 billion and then increased to RON 1.7 billion was considering the fact that for many months, for several months, we were not getting the repayment from the market. Since this was starting to get repaid, yeah, and we will only need to bridge a couple of months, two, three months. Of course, the needs of financing on the supply side will be diminished.
All these financing lines are considered to be as flexible as possible, and there are lines which can be structured also for letters of guarantee, so I can move and buy more energy for the future period of forward looking and issuing the guarantees to secure these kind of transactions. To summarize, I think that under the current ceilings, we are positive in terms of the evolution for the end of the year. If things will change in terms of regulatory legislative regime or I don't know, possible dramatic changes in terms of the market, this should not affect the supply business, because I mentioned we are sourced from forward contracts covering the need for the year.
There is the element related to the network losses for the distribution subsidiary, where indeed, we are monitoring this and making evaluations related to the evolution of the market and to see how we can cover there. Of course, considering that we also have cash pool scheme at the level of the group, considering that we have good relationship with the banks. At a certain point, if we don't need to pre-finance that much amount for the supply business, we can switch some of the facilities, the distribution subsidiaries for the needs related to network losses.
Understood. Thank you very much.
Thank you.
The next question is from the line of Luliana Ciopraga with Wood & Co. Please go ahead.
Hi. Hello. You just mentioned now, the grid losses again, and I was wondering how well are you covered for the rest of the year via forward contract? I think I also asked, what do you expect in terms of pricing for grid losses in the second half of the year and if you're covered for 2023? I think you said no.
Sorry, I was speaking without the mic on. In terms of network losses, you saw, I mean, the average for this year until now was RON 967/ MW. Of course, looking at the market evolution and considering how much we are covered, depending on the quarters, in any case, more than 50%, when for some quarters even close to 100%. Considering the evolution of the
There are only two quarters left. You're talking until four quarters?
Yeah. I cannot like, give
Okay.
You can imagine that for winter it's more consumption and more energy distributed. Yeah, we are more covered for quarter three and less covered for quarter four. For quarter three, we are looking very well. I think we are more than 90%. For quarter four, there is a challenge related to a difference to be covered and looking at the market prices and looking at the estimations. Probably the average price at the end of the year will be RON 1,000 or more.
It's RON 2,000 now anyway. Okay. Regarding the renewable capacity, I'm not sure I understood. How much do you expect to commission next year in terms of renewable capacity? I mean, I understand that a small part, if any, would be commissioned this year, but what about next year? I mean. Also we haven't seen any CapEx, so that's a bit surprising as well, that you have not included. I guess they're all in permitting stage and that's why you're not including any CapEx, right?
As I've mentioned, the most of the projects are to be commissioned starting from next year. I would really not like to advance now any figures because it's a matter of you know a lot of elements which are depending. There is this geopolitical context which is putting some challenges in terms of sourcing of equipment. There are some challenges then related to getting the permits, getting the ATR and getting the other things. From this point of view, I think we'll properly communicate over time. Now, if you look at the 283 MW, I mentioned that bulk will be probably commissioned next year and starting next year. I will not advance the figure, but our aim would be to have at least something this year.
You can understand from this also in relation with the CapEx figures.
Okay. The bulk you still expect it in 2023. That's quite soon. I mean, that. I mean, I was just trying to find out, but it seems quite soon that you'd be able to deliver 218 MW next year. Okay. Thank you.
Thank you everyone for joining us. If you have any other questions, please feel free to send them to our email at ir@electrica.ro at any time, and we'll get back to you as soon as possible. See you at the next conference call in November. Thank you.
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