Hello everybody, welcome to this phone call for the presentation of the Preliminary Financial Statements for 2023, unaudited. I take this opportunity to extend Mr. Ion Sterian's greetings. He wishes you all a good year in order for us to be able to conduct our business and have success and perform. Thank you for being beside us. Thank you for being with us. Thank you for your input, which helped us improve our activity if needed. I take this opportunity to introduce the Transgaz team to you, our Chief Financial Officer, Mr. Marius Lupean. Hello everybody. I have here with me Mr. Cătălin Țuță, Director of the Investor Relations and Sustainability Unit, a new structure within Transgaz which was established to improve the relationships with our investors and financial analysts as Transgaz activities developed to a great extent.
In order to be able to come to you and to discuss with you in a transparent manner, we established this unit. Starting from this phone conference, this activity in terms of the relationship with the investors will be coordinated by Mr. Cătălin Țuță as well. Lăcrămioara Ciolpan, Head of Investor Relations Department this year. You are Ana Florea, our colleague from the same department, and Stoica Gabriela, dealing with communication. I take this opportunity to give the floor to our Chief Financial Officer, Mr. Marius Lupean, to present the financial statements. Then later on, we will be here to answer your questions, if any.
Thank you so much, Marius. Thank you. Hello everybody. I will start by presenting the Preliminary Financial Statements for 2023. The second part of this phone conference will be dedicated to questions and answers.
The financial results as of 31 December 2023 are better than as budgeted for 2023. We also have a presentation for the evolutions of the results as opposed to the budgeted values. On the other hand, the results compared to the previous year recorded a decrease of 55% of the profits before tax as opposed to the previous year. We will present the factors triggering this decrease. Mainly, this decrease was caused by the decrease of the financial revenues, which are non-cash revenues, recorded at a superior level in 2023 and at a reduced level at a higher level in 2022 and a reduced level for 2023. We will enter into details for each revenue and expense element. Revenues from operating increased an increase by 9% as opposed to 2022, a value of RON 137 million.
The revenues were mainly influenced by the revenues obtained from the capacity booking higher, determined by the higher capacity booking tariff with a positive influence of RON 123 million, a higher capacity with a positive influence of 6,000, capacity overrun of about 45,000, but the revenue from the auction premium lower by RON 94,000 as opposed to the previous year. I would take this opportunity to explain that the transmission tariffs were adjusted only starting with 1 October 2023. For the first nine months of 2023, we used the same transmission tariffs as approved for 2021 and 2022. This is mainly one of the factors impacting the increase, not to an expected level of the financial results of our company, but as you could see, the results were improved in the fourth quarter as opposed to the previous year.
As we mentioned, the transmission revenue for 2023-2024 increased by about 60% as opposed to the last revenue for transmission regulated revenue approved two years ago. The revenues from the commodity component are higher due to the higher transmission tariff. As regards to the transmission revenues, international transmission revenues, they are higher, RON 42 million as opposed to the previous year. The revenues based on the termination agreement concluded with Gazprom Export. But this increase in the transmission from international transmission did not improve the financial results as Gazprom Export failed to pay its obligations towards Transgaz from October 2022. Therefore, such amounts were provisioned 100%. Arbitral proceedings are ongoing regarding this dispute with Gazprom. A decrease of RON 550 million due to a decrease in the trading price per megawatt. The balancing activity is a neutral activity for Transgaz. The impact is neutral.
The impact of this activity is neutral. As regards the activity, the construction activity, the revenue is lower by RON 129,000. This activity does not have any impact on the financial results, and such revenues are compensated by the decrease in expenses. As regards to financial revenue, they had a negative influence of RON 228,000, mainly due to the recording of the regulated assets discounts with inflation rates of 6.61% at 31 December 2023 compared to 16.37% as of 31 December 2022. Regarding the costs, the operating cost recording an increase of 14% compared to last year, their level being higher by RON 200 million. There were savings at technological consumptions based on the quantity used as technological consumption with a positive influence of RON 25 million. The share of technological consumption in circulated gas is 0.45%, decreasing as compared to the previous year.
This year, we have even a better percent, 0.45% regarding the exceeding costs. The main were for oil royalty. The 0.4%, which was valid until September, was changed due to the law. Starting with 30 October, the royalty is 20.5% from the transmission revenue, which is higher as compared to the 0.4%. This percent is not in the revenue approved for the current period but will be found in the regulated transmission tariff starting from 1 October 2024, so for the next gas year. Another important category of costs is the recording of provisions for the depreciation of the trade receivables. They were fully provisioned, the debts from Gazprom Export, the debt value amounting to RON 120 million. Transgaz will not record additional receivables starting from 2024 because the contract with Gazprom Export was valid until the end of 2023.
In general, these are the main factors that determine the results recorded by Transgaz at the end of December 2023 compared to the previous years. I'd like to propose to the questions and answers session. Maybe it would be better to state the results as compared to the budget, of course. We have a slide prepared with the results compared to the budget. As you can see, compared to the budgeted values, the net profit is 3 times higher. It's the same thing for the gross result. The transmission service increased, mainly based on the book capacity, which was higher, and on the diminished tariff. The international transmission tariff revenue, higher, which was provisioned in full, this increase is netted by the cost of the provisions recorded for the depreciations of the debts with Gazprom. The balancing activity is a neutral activity, as mentioned before.
The same decrease was recorded for the cost of balancing activity. The savings compared to the budget were RON 270 million and with exceedings of RON 160 million, mainly determined by the increase of the royalty, which was not new at the moment of the budgeting. We also had increases with costs for the Gazprom debts registration. As we mentioned at the beginning, the results are better. But the drivers or the activity during 2023 was influenced in a negative way by certain drivers, which led to the decrease of the results compared to 2022. This reduction is determined by a non-cash revenue, which was higher in the previous year compared to the current year. Mr. Cristian Petre, ask the questions, comments regarding the budget for 2024. Yes, the budget for 2024 is higher as opposed to the results. It was estimated a better result than the estimated for 2023.
The main expenses categories, increasing as opposed to 2023, are related to the royalty. As I mentioned, the royalty increased as opposed to the 0.4 in the previous year. It is a budget based on investments. You will see it is a high investment effort for the following three years, mainly determined by the construction of the Black Sea - Podișor project and not only, and related to the connection of the CCTG and the extensions of our national gas transmission system to allow for the connection of the distribution systems to the gas network. The revenues from international transmission were not budgeted, and they will no longer exist as this agreement with Gazprom Export we provided for in the financial statements for 2023 was terminated.
Other expenses which were budgeted, taking into account the inflation and programs, accurately substantiated by Transgaz relevant departments. Ms. Ioana Andrei would also like to ask a question.
Hello? Yes? I have several questions. I would like to continue the discussions regarding the budget. In your budget, you mentioned the request to recognize in advance the Tuzla - Podișor project. Do you see it achievable? Do you think it could be achieved in this gas year, 2024-2025, a transit year? We requested two years ago. We suggested the advance recognition, but it was not recognized. Our regulator recognizes, even if it doesn't recognize it in advance, it recognizes by 30 September. I can tell you this considering the past experience. The project started, the Black Sea - Podișor project started. The works commencement order was issued last year on 16 June. And the first invoices started to be issued at the end of 2023.
In order to be able to provide you an answer, an accurate answer, well, we do not expect our regulator to recognize it fully, but partially, yes. What amount or what percentage do you have in mind by 30 September 2024? Yes. You have to take into account that the advance recognition, according to the tariff setting methodology, means the recognition of the profit. Talking about RON 100 million, you have to take into account the fact that it is about RON 100-200 million. It is an impact, but it is a lower impact, lower than the royalty, I dare say. Regarding the tariffs for the following gas year, 2024-2025, which I know that you submit, I mean, the substantiation which you submit early, what corrections do you expect to have?
Yes, we submitted the substantiation. We submitted last month.
We expect to have corrections in terms of the royalty, I may say. The royalty, which was not recognized starting with 30 September, it should be recognized as a pass-through cost in the regulated revenue. It is an amount which is not a low amount. For the rest, we do not expect much. We expect only normal things to happen. In the budget, you provided for an increase in the volumes, a considerable increase. Could you explain where it comes from, or is it substantiated in the draft tariff project? It is substantiated by our operation division based on the contracts which were concluded in July and mainly based on the estimations. There are certain estimations based on, for example, the start of the Azomureș complex, which hasn't been started until now. So these are the basis of the estimations made by the operation division.
Could you also tell us there wasn't good visibility regarding the activity in the Republic of Moldova? Could you tell us more regarding your expectations in terms of the results for this year, maybe a value for the regulated assets?
For 2023, the preliminary results also provide, I mean, the consolidated results. We also provided for Vestmoldtransgaz. For 2024, I suppose that there is a budget for the activity in the Republic of Moldova, of course. For the activity conducted in Moldova, tariffs were approved, transmission tariffs were approved in November. Based on such tariffs, on the rectified tariffs, the result was of RON 12 million equivalent. We submitted a substantiation, a tariff substantiation for 2024. In the Republic of Moldova, things are different.
Tariffs are not approved before the start of the gas year, but within the gas year, which will change in the near future as they will be aligned with the European regulations. Yes, we budgeted. We budgeted a profit for safety reasons for the activity of Vestmoldtransgaz, which starting from 19 September is the only, the sole operator of the Republic of Moldova. But unfortunately, the regulator of the Republic of Moldova, it could be possible to publish the regulated revenue and the regulated asset base to see if it's possible to do such presentations for Vestmoldtransgaz as well. I cannot provide you additional information for this moment.
Thank you. I also have some other questions, but I would like to allow my colleagues to also ask questions.
I wanted to ask you about the monopoly tax. What are the outlooks at the moment? I know that at present, it is valid until 2025. Are there discussions regarding what happens after this period? No, I didn't hear any discussion. But it was established in 2013, and the application of this monopoly tax was extended. We presented to the ANRE regulator the idea that this monopoly tax is a pass-through cost which should be recognized in the regulated revenue because it is not under the control of the transmission operator. They understood. And it's possible that starting with the 1st of October 2024, it is recognized as a pass-through cost, which will mean that it will remain neutral for Transgaz. What was the reason for which the ANRE regulator excluded it from the pass-through costs? And why would it change its position?
This is based on our exchanges with the ANRE regulator, and it will be in 2019, the methodology was modified. We didn't understand why the monopoly tax was taken out because until 2019 was part of the regulated revenue. From 2013 until 2019, the monopoly tax was part of the regulated revenue. From 2019, the ANRE regulator changed the methodology, and we don't understand why it is treated as such, but because we will have a new regulatory period starting or a transition year. It's possible, but we don't have a guarantee. It's possible that it will be reincluded in the regulated revenue. Please, if you have further questions. Hello.
Thank you for the presentation. I would like to ask you a few questions regarding this investment project. You have at page 23 a summary.
Those with a final decision appears only Tuzla - Podișor with a final investment decision. What would be the others with a final investment decision? Tuzla - Podișor is in progress under construction. The total at the end of the table is 677. I didn't find in the table another project with a final investment decision. Moldova New Developments. I can tell you that Black Sea - Podișor is clearly the project at which we are working. And we are in the auctioning phase for the connection of the power plants. But they are not presented here. Are they not financed from those connecting fees? No, we talk about extensions of the transmission system for the connection, the expansions. Could you tell us what power plants are we talking about? We are talking about Ișalnița and Turceni and about Mintia.
Has the final investment decision been taken for these projects? For Ișalnița and Turceni, we submitted for financing from the Modernization Fund an application. It was postponed, and we were reapplied in January this year. Those power plants received financing and investment decision, but they will not function if they don't have gas. What CAPEX do we speak about for Ișalnița and Turceni? The CAPEX is EUR 24 million for Mintia. It is a little lower. Thank you very much. Regarding those projects not having this final investment decision, their completion is quite near. When do you expect to receive the final investment decision? The same is for BRUA Phase II, which should go in parallel with Tuzla - Podișor. The development plan, the 10-year development plan, is revised every year once, every two years. And those deadlines are adjusted if the case.
Probably you heard in the media that we have an incremental capacity process together with our neighboring operators in Bulgaria, Hungary, and Ukraine. The result of this incremental capacity process will be in the binding phase. Once the annual capacity auction is performed in the first day of July, the successful completion of the capacity level for Csanád-Palota, for example, the interconnection point with the Hungarian transmission operator will determine the operation. And the final investment decision for this project, BRUA Phase II , because this capacity increase offered this incremental capacity at the Csanád-Palota point, is also connected to this line, BRUA Phase II. And Transit 2, I suppose, depends on the auction with Ukraine, right? I don't know what pipeline you refer to. I refer to Transit 2 with directional flow on Line 2. Yes, indeed, it is connected to the open season for incremental capacity.
We have, with Ukraine, the pipeline T1, which is connected and operational. For T2 and T3, we are under negotiations with them for an interconnection agreement for the same regime regarding T3, which is no longer under contract with Gazprom. It meets all the conditions to be included together with the other transit lines in an interconnection agreement to increase the transmission capacity at the entry point with Ukraine. Is it possible to have a decision now on the 1st of July also for these projects? It is possible to have a decision for BRUA Phase II at the 1st of July for modernization of the national transmission system during the year. Thank you very much. I don't have any other questions. I also checked the value of the transmission pipeline for supplying Mintia. It's about EUR 50 million.
I also have some questions related to what my colleagues asked before regarding the recognition in the regulated revenues for the following years of Tuzla - Podișor. What does it refer to? Is it a return on the investment, return on the CAPEX which was already achieved?
This is what I wanted to ask you. No, it is the return for other investments. So not 100, 120. You said it could be possible to include only the already achieved investments. If this is the case, we are talking about a much lower amount depending on the achieved investments. What investments do you expect to achieve until then? We will achieve investments. I told you the site is active. We will have investments, but they will not be implemented, completed by then. What is the CAPEX for this project? EUR 1 billion for 2024.
The CAPEX for Black Sea - Podișor is EUR 1 billion. EUR 1 billion multiplied by 6.39 as the depreciation is not included, only the return. Regarding the corrections we mentioned, for the fourth quarter, capacity overruns and auction premiums quite high, above RON 80 million for the fourth quarter. I guess corrections could be made starting with the following gas year here. Yes, any revenue achieved above the approved one is adjusted. Regarding the fourth quarter of 2024, what other corrections are there? For 2024, we estimated in the regulated revenue a delta because the submission was in February, a delta VT total RON 160 million. It is based on what? Is it based on other amounts? It is based all adjusted or adjustments of VT, delta VT, and the amounts before this gas year. Yes, all of them, including the previous year.
As you know, each year, there is an estimation for the previous year and for two years ago. This RON 160 million includes the RON 80 million achieved. Did you also take into account overruns for January and September? Yes, we also took into account the surplus for the nine months. In the submitted substantiation, the submitted substantiation for 2024-2025, we also included the royalty, which is not included in this RON 160 million. No, this is only the Delta VT. The rest are all positive amounts. Only this is negative. What overruns did you take into account? We have the regulated revenue for the entire period, we know, but I was curious. What did you take into account for the nine months, January, September, 2024? In May, the regulated revenue will be published, including its structure, and you will be able to see all its elements.
Yes, but we will have a Delta VT. I was just curious to see what is the amount related to 2024. The fact that if a positive Delta VT of RON 20 million is achieved, it doesn't mean that it could be higher or lower. It depends on the achievements of the other months. Yes, this is why I was curious to see what you took into account for the next year. Detailing for the previous year, for 2023, we took into account RON 60 million. And for 2023-2024, RON 105 million. This is what I expected.
Thank you. Regarding the rest of the expense increase in 2024, what happened in the fourth quarter? I guess it's not only about Gazprom, but you also had other elements into account, other receivables. What happened? Because the amounts are quite high. Mainly, we are talking about the provisions, but for what? What other provisions did you establish?
So for Gazprom, obviously for Gazprom, there were other provisions related to the inventory. I couldn't say they were significant. And that's about all. That's it. No other expenses increased. So the financial results with all the relevant details will be available on the week starting with 20th March by the end of this week. And you could see all the details there. Yes, but I was only curious to see what happened. We can see some increases regarding provisions and other expenses. It is a considerable increase in expenses. This is why I wanted to know what else happened. Maybe you made other provisions. I guess you also have a provision for employees. Yes, the employees share into profit. Yes, but this provision is made proportional, pro rata every month. This is what I wanted to ask to explain this considerable increase.
You mentioned something about Moldova and RON 12 million. For what period? In 2023, was this the profit for 2023?
Yes? Actually, for the period, for the fourth quarter. It is the result achieved by Vestmoldtransgaz in 2023. But indeed, its activity started into 2018, 2019. As a transmission operator for the entire gas transmission system of the Republic of Moldova, starting with the 19th of September, I can say that the considerable revenue started in September last year. So it is influenced by the revenues recorded starting with September last year. If we talk about RON 12 million, mainly related to this period, 19th of September, 31st of December, of course, in 2024, the profit would be much higher. Of course, of course, this is the answer. What about this monopoly tax? What amount is it? I do not remember the exact amount. RON 60 million-RON 70 million.
0.15 Lei per megawatt hour. It is the equivalent of RON 60 million- RON 70 million. Thank you so much. Ms. Daniela Popov asked a question in the chat section in the budget. What inflation rate do you use for the regulated assets? I do not have the exact amount, but the inflation rate estimated is 4.6%, the inflation rate published to be taken into account in the budget for 2024. When do you publish the tariffs? They are published in May, two months before the auction. At the beginning of May, they should be published. We will also immediately publish the substantiation because we know it is topical information for the market for you. Ms. Laura Simion keeps her hand raised. Would you like to ask a question? Are there any other questions? If not, thank you so much. You're welcome. Ms. Ghidiu?
Hello, I'm Cătălin Țuță. Ms. Ghidiu is not here. There's nothing from our side.
Okay, we would like to thank you for attending this phone conference. We look forward to meeting you again for the publication of the financial results. Thank you so much. Goodbye, bye-bye.