Good morning. This is Karen Guzmán, Grupo Energía Bogotá's financing and Investor Relations Officer. Welcome to the third quarter 2024 financial and operating results conference call. Our results reports were published yesterday and are available on GEB's website for your reference. Please note that this conference call is being recorded. Today's agenda starts with an overview of the quarter's results, the main events in the economic and industry environment of the countries where we operate, followed by the group's financial and ESG milestones. At the end of the presentation, a Q&A session will follow. To that end, we invite you to register with your name and the name of the company you represent so we can easily identify you during the session.
On the top right corner of your screens, you will find a question- and- answer section for you to write your questions at any time, or you can raise your hand at the end of the presentation if you would like to ask your questions live. In today's conference call, we will have our CEO, Juan Ricardo Ortega, the CFO, Jorge Tabares, and I, Karen Guzmán. We will start our call with a presentation of our CEO, Juan Ricardo Ortega.
Thank you, Karen , welcome back to our quarterly earnings call. Our quarterly results again demonstrate the stability of our operations, benefiting from diversification. Even though we face challenging weather, regulatory, and market conditions, our diversification across energy and gas chains and geographies has allowed us to maintain the stability of our results. In this regard, I would like to highlight the following points. For this quarter, we obtained a revenue of COP 2 trillion adjusted EBITDA and COP 1 trillion, and a controlled net income of COP 802 billion. For the first nine months of the year, we recorded revenues of COP 5.9 trillion and an adjusted EBITDA of COP 4.2 trillion, and a controlled net income of COP 2.1 trillion. Adjusted EBITDA decreased compared to the same period of 2023.
This drop is mainly due to an 11.7% reduction in EBITDA from associated versus the first nine months of 2023 as a result of a lower dividend declared by Enel due to the 2023 results that were impacted by the impairment of the Windpeshi Wind Farm. However, the diversification of the portfolio allows segments such as energy transmission to support and balance the year-on-year decline in the energy generation segment. Additionally, during the quarter, we had the following highlights. We were included in the ranking of the 25 leading companies in sustainability as revealed by Forbes Colombia. This recognition reflects our strong commitment to a more responsible future, as well as our concrete actions in favor of the environment and social welfare. Fitch Ratings affirmed the group's credit rating, BBB International and AAA National, with a stable outlook.
The rating agency highlighted the stable cash flow generation, diversification, and strong business position, as well as the company's adequate liquidity levels. Finally, we commemorated two important milestones by celebrating the 128th year anniversary of the Grupo Energía Bogotá, reaffirming our commitment to the development of Colombia and Latin America through a strategy focused on sustainability and energy transition. Second, 20 years of Cálidda, highlighting its commitment to bring clean energy that's transforming the lives of more than 8 million people in Lima, Callao. Regarding the macro context, the current environment of the Colombian energy sector is facing important challenges, with the water deficit and delays of new generation capacity and transmission projects as a growing concern, uncertainty in gas supplies, and the financial and operational crisis of the distribution company Air-e in the Caribbean coast.
As a regulatory response in the past months, for the first time in history, the CREG has activated the statute to manage shortages and prioritize the thermal generation over hydro generation in order to preserve water in reservoirs for the coming months at the beginning of next year, which has led to unprecedented increase in energy prices in the stock market. Additionally, measures such as Resolution 40494 of 2024, which oblige generators to continue supplying electricity to energy marketeers in crisis, are seen by the sector as a structural change in the functioning of the market, with possible effects in the financial health of some agents. We maintain a constant conversation with the regulators, framed as a call for structural measures to prevent energy marketeers from defaulting on their financial commitments.
In addition, we join the call to the responsible institutions for the prompt and firm appointment of the six commissioners of the Energy and Gas Regulation Commission to provide a stable and continuity to the sector's regulatory agenda. Regarding the gas sector and the expected gas deficit, there have been recommended actions such as the acceleration of exploration and production projects, as well as making the Process for the commercialization and importation of gas more flexible. Improvements in the gas pipeline infrastructure have also been proposed to avoid a greater impact on supply and to maintain an environmentally friendly energy matrix. In Peru, GDP grew by 3.5% year-over-year in August, driven by the dynamism of the non-primary sectors. Annual inflation remains under control, and the Central Reserve Bank of Peru has been reducing its interest rates, currently at 5.25%.
Regarding the energy and gas sector, natural gas production increased by 5.5% in the quarter compared to the same period of 2023. Brazil's Central Bank adjusted upward its GDP growth forecast for 2024 to 3.2%, driven by stronger-than-expected economic dynamism, and increased the SELIC rate to 10.75% to control inflation, with possible future adjustments if indicators so require it. Finally, the Brazilian Government Energy Research Agency, EPE, estimates that Brazil will need to invest approximately BRL 153 billion, about $20.2 billion in energy transmission infrastructure by 2034, considering the growth in sectors such as data centers and green hydrogen. Operational milestones, particularly in the electric power chain, I would like to highlight. The transmission segment at the beginning of the quarter, Enlaza energised 179 km of the lines of the Refuerzo Suroccidental project, the first of three sections for the initial benefit of the southwestern region of Colombia.
The transmission capacity of this project represents about 10% of the installed energy capacity in the country, guaranteeing energy security in the Valle del Cauca and Cali regions. In addition, the National Environmental Licensing Authority granted Enlaza the final environmental license for the development of the Colectora Cuestecita section, thus completing the environmental licensing process of the Colectora. This license permits the construction of the new Colectora 500 kV substation and the associated power lines. The construction already began at the beginning of this month of November. In distribution, Dunas invested close to $4 million between new supplies and renewals as part of a new investment in the distribution project. The objective of this project is to supply demand in a timely manner and provide reliability to the transmission and distribution system. Enel Colombia has also made progress in key projects to improve the service in Bogotá and Cundinamarca.
The modernization of the Techo Electric Substation located in the south of Bogotá is 80% complete, increasing its capacity from 90 MW to 110 MW and benefiting more than 500,000 customers. In addition, the Tren de Occidente Electric Substation in Facatativá is 80% complete and with a capacity of 80 MW, and will be crucial for the Regiotram de Occidente, benefiting 226,000 inhabitants. In the generation segment, Enel Colombia, through Enel Green Power, completed the installation of 820,600 solar panels in the Guayepo I & II Solar Park, the largest in the country, located in Atlántico. The park is already supplying electricity to the national interconnected system in tests, and is expected to start commercial operation in the last quarter of the year.
Once operational, it will generate approximately 1,030 GWh, contributing new electricity to the system, which contributes to the solution required by the country, in particular to the Caribbean coast. Likewise, Enel is also making progress in the construction of the Guayepo III Solar Farm in Ponedera, Atlántico, with a capacity of 200 MW. This park will be able to supply more than 670,000 people and will add to the Guayepo I & II parks. Regarding our operation in the gas chain, I would like to highlight that transportation, TGI, the entry into operation of the directionality project of the Ballena Barrancabermeja gas pipeline, it was finally declared with the first associated billing last October. Additionally, the expansion projects of capacity increase in the infrastructure of Mariquita Gualanday and Ramal Jamundí. That presents physical progress of 49% and 39% respectively.
These projects are due to investment in priority projects of the supply plan in the transportation system defined by the Ministry of Energy and its planning units. In the distribution segment, Cálidda presented in July a new proposal for the extension of its concession in the distribution segment as a result of the process of conversation with the state on the scope of the project and the inclusion of more cities. The project covers seven regions in the Sierra region of Peru, with an estimated investment of between $400 million-$500 million and contemplates the construction of more than 2,400 km of networks and liquefied natural gas regasification plants.
This is expected to meet the demand of more than 3.5 million cubic feet of natural gas per day and benefit more than 170,000 customers in this critical region. Additionally, the number of enabled residential connections in Contugas grew 24% year-on-year compared to the number registered as of September 2023. I will now give the floor to Jorge Tabares, who will present the main financial results of the group. Go ahead, Jorge.
Thank you, Juan Ricardo, and good morning, everyone. In 3Q 2024, operating revenues grew by 81% versus the same period last year. This is mainly explained by higher revenues in the natural gas distribution segment growing by 11%. This is mostly explained by the increase in Cálidda functional currency revenues of 29% due to higher pass-through revenues, as well as an increase in the average natural gas distribution tariff. This was partially offset by lower revenues in functional currency in Contugas due to lower revenues from natural gas massification projects. Higher revenues in the energy transmission segment, which grew 14% year-on-year, mainly driven by the transmission business in Colombia. This increase is mainly due to higher revenues from bids by the regional transmission system and higher revenue from assets per usage, given the conclusion of the measures adopted voluntarily under the tariff pact since October 2023.
This offset a foreign exchange effect, revenues of COP 133 billion negative. Operating costs for the quarter increased by 10% compared to 3Q 2023, mainly due to higher costs in the natural gas distribution segment, growing by 12%, mainly explained by higher pass-through costs in Cálidda. Higher gas transportation costs growing 10% year-on-year due to the increase in other costs due to higher fuel gas prices and higher professional services due to salary increases and collective bargaining agreement benefits in TGI. Higher energy transmission costs increasing 17% year-on-year, mainly due to higher depreciation in Colombia transmission branch, which grew 13% as a result of the increase in the company assets. This was partially offset by 52% annual decrease in cost in the energy distribution segment due to lower cost of services and the FX effect.
Administrative and operating expenses increased 1.5% compared to 3Q 2023, primarily due to higher expenses in the natural gas distribution and transportation segments, due to higher expenses in Cálidda for the expansion of the 12% in new users and an increase in depreciation, amortization, and provisions in TGI, mainly provisions. Operating margins by segment, reflecting operating revenues minus costs and administrative expenses, show a minimal year-over-year variation in natural gas distribution and energy transmission. This contrasts with a year-over-year decrease of 6.2 percentage points in the gas transportation segment given the increase in the segment and administrative expenses, and a growth of 13.8 percentage points in the energy distribution segment given the lower operating cost observed in 3Q 2024. Next, please. Operating income for the quarter grew by 11.3% compared to the third quarter of 2023.
The main variations that explain the net income for the quarter are net financial expense decreased by 8.8% versus the same period of 2023, mainly due to higher interest capitalizations and lower financial expense in TGI. The exchange rate difference increased COP 53 billion due to the appreciation of the Colombian peso. The equity method decreased 12.4% year-over-year due to the lower results recorded in Enel Colombia and Gebbras, as we will be further elaborated. Income taxes decreased by 38.4% year-over-year due to lower taxes in TGI and lower income taxes in the quarter. Consequently, controlled net income for the quarter amounted to COP 802 billion. Next, please. The equity method during the first nine months of the year reached COP 1.7 trillion, experiencing a 0.5% decrease compared to the same period in 2023.
This variation is mainly attributed to a 5.3% drop in Enel's participation, in line with lower profits recorded in this period as a result of the low level of reservoirs and the high energy price in the spot market. This situation is due to the low rainfall caused by El Niño phenomena in the first four months of the year, as well as the low water intake in August and September. In the quarterly view, the equity method closed at COP 574 billion, which decreased 12.4% year-over-year. This was mainly explained by Enel's quarterly results impacted by the aforementioned hydrology challenges and 52% decrease in Gebbras quarterly income due to a tariff review carried out by Enel, which corrected a calculation made in 2020 when the tariff was set.
This adjusted the RAB for two of the SPVs, and decrease in revenue due to lower IPCA adjustment, which on average decreased by 4.5%. Additionally, the CapEx executed so far this year amounted to $328 million equivalent, where 183 correspond to Colombia transmission business and 84 were executed by Cálidda. In transmission Colombia, CapEx was mainly allocated to Colectora, Sogamoso, and Refuerzo Suroccidental projects. The five-year CapEx projection amounts to $1.6 billion, increasing by 14% respect of the guidance shared in the previous quarter. This is due to changes in the estimated CapEx for the Chivor Norte, Membrillal, and Huila transmission projects, as well as increasing the projected CapEx of Cálidda in accordance with commitments acquired with the regulator and the government, and of Transnova, given the update of the investment plan to be remunerated by regulatory tolls. Let's move to EBITDA.
Adjusted EBITDA for the quarter grew 33% compared to the third quarter of 2023, mainly due to increase in EBITDA from associates, driven by dividends from Argo, which reached COP 213 billion. This reflects a materialization of our investments in Brazil and the strategic focus on the expansion in this country. In addition, controlled companies' EBITDA increased by 10% year-over-year, enabled by the increase in EBITDA in the Colombian transmission business, aligned with higher operating profit for the quarter. Controlled EBITDA for the quarter is 83% composed of three companies, TGI, Cálidda, and the transmission business in Colombia.
Quarterly view of the adjusted EBITDA by segment, a growth of 155% year-over-year is evidenced in the energy transmission segment due to the dividends declared by Argo, as mentioned above. Also, the energy distribution segment recorded a 23% year-over-year growth due to higher distribution margins. Finally, i t's worth highlighting that the adjusted EBITDA calculation for the last 12 months amounts to COP 5 trillion, approximately $1.2 billion. I will now give the floor to Karen Guzmán, who will talk about the company's debt portfolio.
Thank you, Jorge. GEB's consolidated indebtedness amounted to $4.7 billion, with a comparable distribution between GEB and its subsidiaries. It should be noted that 37% of this debt is at a fixed rate, while the rest is indexed to SOFR, Colombian IBR, and Colombian CPI. In terms of currency, 67% of the debt is denominated in US dollars, followed by 30% in COP. In terms of leverage indicators, GEB aims to maintain its leverage below four times in the medium term, as part of its strategy to maintain its investment-grade rating. For the third quarter of 2024, the net debt/EBITDA ratio was 3.6x , and the EBITDA over financial expenses ratio was 4.7x . We would like to highlight the following debt developments during the third quarter.
Last September, after obtaining the authorization of the Ministry of Finance and Public Credit, we refinanced $320 million of Contugas with a corporate guarantee of GEB and TGI in proportion to its shareholding, extending the maturity of the obligation in three years and with new conditions of SOFR plus 2.35%. Thanks to its solid cash position, TGI made a new prepayment of COP 112 billion on the club deal subscribed in December last year with local banks. The rate of the club deal with local banks was renegotiated, reducing it from IBR three months plus 4.183% to IBR three months plus 8.75%. Finally, Cálidda disbursed a loan with Nova Scotia for $90 million with a five-year bullet maturity and SOFR plus 2.05%, with a sustainability link of five basis points. Finance CapEx and other corporate purposes. Juan Ricardo will now share the main ESG developments during the quarter.
Thank you, Karen. I would like to highlight the main developments on the quarter in environmental, social, and governance matters. In the environmental dimension, Electrodunas has implemented a circular economy project with the objective of reducing the production of waste, concrete structures, and fittings, transforming them in mirror walls. In addition, the company won the third place in the CR Innovation Award in the decarbonization category, for its resilient substation project, which uses hybrid systems of solar photovoltaic generation and BESS energy storage in the Nazca electricity system. Finally, Enel implemented outstanding innovation in Bogotá, the first power transformer with vegetable oil, an advanced technology that will reduce the risk of contamination and improves fire safety.
In the social dimension, the group has initiated an action plan for the labor inclusion of people with disabilities, and together with Enlaza, celebrated the graduation of 120 participants of the Legacy for the Territories initiative in La Guajira, which includes several training programs. Also, in collaboration with the Instituto Colombiano de Bienestar Familiar, GEB and Enlaza are developing the first nutritional recovery center in Colombia in Agustín Codazzi, particularly focused on the indigenous communities of the Yukpa people, aimed at benefiting children in the region. Finally, Enlaza was awarded the contract for the EnlazaNet, a project that will provide internet communities in La Guajira through the works for tax mechanism.
Finally, regarding the governance of the group, GEB board members were trained on director responsibility in human rights, where the importance of the board's role in the promotion of human rights and the corresponding legal frameworks on the best practices to ensure the respect in the company's operation were all addressed. Likewise, the board received training on the ethics and compliance programs for the regulatory framework. Particularly, there were efforts to put the group at the highest level regarding the Foreign Corrupt Practices Act.
The risk of corruption and the measures implemented for its management were all analyzed. In the same session, the methodology for the evaluation of the board and support committees was presented, which will be conducted by an external consultant in the coming months, including interviews with board members and senior management. Jorge, you have the floor again to close the presentation. Thank you all for your presence today.
Thank you, Juan Ricardo. I'll summarize the highlights for the quarter. The group year-over-year growth in revenues and net income reflect our ability to generate value for all stakeholders in the midst of a complex environment, mainly due to lack of rainfall, energy supply, and regulatory uncertainty. The benefit of having diversified source of income in segments of the energy and gas chain and different Latin American countries has materialized in obtaining neutral results in the current situation. As an example, the activities in our associated Enel Colombia are under pressure due to the current hydrological situation, while the gas transportation distribution segments are benefiting from higher volumes and tariffs updates correspondingly. Debt management efforts have been efficient and proactive in improving rate and term conditions for TGI and Contugas, reinforcing our commitment to maintain a controlled leverage and ensure investment grade.
Receiving COP 213 billion from Argo dividend distribution ratifies our group regional growth focus in geographies such as Brazil. Finally, different recognitions and progress in various environmental and social projects underscore the commitment to improve lives with sustainable and competitive energy. Thank you again for your interest. We'll now move to Q&A. I pass the word to Karen. Thank you.
Your patience today. We're now open to questions. We have a question from Sebastián Gallego. Okay. There you go. Let me unmute you. Now you can unmute yourself, Sebastián. Yes.
Perfectly. Thank you for the presentation. Good morning, everyone. I have several questions. The first one will be on Windpeshi at Enel. If you can please comment any progress on the potential sale of this asset. That would be the first question. The second question is more on the financial side. You show on slide four, the last 12-month ROE, it declined roughly 300 basis points over the last year. I just want to get further color on reasons behind this drop, whether this is a mix kind of thing or whether you have seen any particular pressure on the profitability of any particular segment. The third question will be regarding an extraordinary shareholders meeting that the company will have in the following days. You are calling for refinancing process of subsidiaries in Guatemala.
I would like to understand better what is the purpose of these a specific shareholders meeting. Finally, on TGI and the overall gas supply concerns in Colombia, whether you can share, please, further progress on any possibilities to import gas or any other possibilities that could help in this uncertainty that we're facing right now as a country. Thank you very much.
Okay, Sebastián. Jorge, you would like to start with the inaudible question?
Sure. With Ecopetrol, the President of Ecopetrol has publicly said a few times that they are interested in acquiring the project, there are ongoing negotiations. Of course, details cannot be disclosed, the interest remains, the engagement is quite intense, they are actually making progress in that potential transaction. I think saying more than that is probably not the right thing, as it's a negotiation that could end up anywhere. I'll skip to the general assembly. We have a guarantee loan that matures from the group to the Guatemala businesses, that matures in March of next year. The renewal of that, despite very significant improvements over time in our operations in Guatemala, the company still have very high leverage, they still need guarantee from us.
We cannot wait until the normal assembly next year because the timing will not allow us to roll over that debt on time. That's the reason we are calling for this extraordinary assembly, to get an extension of that guarantee. Furthermore, we are aiming to increase, to also include $70 million of an intercompany loan that is due in 2028, to see if we can also extend that maturity, as we have found banking interest to lend money to the Guatemala operation. That's the answer on the general assembly that was scheduled for later, actually for next week, I think. On TGI, I think the short-term solution that the country overall is finding is, as the rules to sell gas were flexibilized, now it's easier to sell gas for shorter term.
Some gas was found, Ecopetrol is making, I think, an effort, sacrificing to an extent their own consumption to provide gas to the market. They have said recently that they guarantee that the gas is going to be available. That's what the President of Ecopetrol has said recently. Gas is going to be available for the short term, given those measures. Again, the combination is flexibilization of the market rules, some extra gas by Ecopetrol, perhaps even some small fields that are also going to be available. Longer term, the question remains. If no local exploration, no exploration is done in Colombia, as this government has decided not to do further exploration, then imports are required.
There are a lot of different options moving on or being explored by multiple players, from the Atlantic expansion of the spec facility to a new facility, to a facility in the Pacific that could benefit from existing infrastructure that goes through the Cali area. That field to be solved. I think the challenge remains about when which solution could be deployed and when the gas situation will be normalized due to the connectivity with the international markets. Do you want to take on the ROE, Karen?
Yeah. Thank you, Jorge. For that one, we will have the help of Julio Alarcón, our Accounting Manager. Julio, you can unmute yourself. You're muted.
[Non-English content]
Thank you, Julio. Allow me to translate for those who speak in English in our call. The main reason is because it is calculated with the last 12 months net income, and we're including for 2023, Enel and Transmantaro results Which were kind of better when compared to the last nine months. Basically, we're having that impact right now for the way that it's going to be calculated in this last quarter. I guess with that, we answered your question, Sebastián. Do you have any other question? You can lower your hand, please.
No. Thank you so much.
You're so welcome. We don't have any further questions. We would like to thank you all for your presence today. No, wait, Andres, you can let me unmute you. You can ask your questions. Andres, you can unmute yourself now.
Hello.
Morning.
Okay, I have three questions. Thank you for taking my questions, of course, and congratulations for those results. The first question has to do with Brazil. Can you please explain the reasons for the RAP decreasing on Gebbras after an Enel adjustment? That's the first question. The second one has to do with Enel Colombia's results, and specifically, what's your current view or Enel's current views on the next year's performance in Colombia, of course? Finally, I wanted to know what are you expecting from Brazil next year in terms of growth opportunities for the company? Thank you.
Thank you.
Thank you, Andres. On Gebbras, there was a one-off situation by which Enel, in 2020, made the tariff calculations for the 2020-2025 period. This year in July, they identified a mistake in their calculation. Basically, they were overestimating the RAP, because they were not excluding certain tax benefits of the CapEx infrastructure construction. Once they corrected that in July, the regulatory asset base went down, and that will be affecting this five-year period ending in 2025, and of course, the base for the following period. The revenue associated with that, we are having an impact for the remaining of the year, and we made an adjustment for the first six months. We'll split evenly the retroactive impact of the first four years of that calculation or extra revenue that was received because the Enel mistake in their calculation.
No change in the regulatory framework, no change in the interpretation. It was just a mistake that Enel discovered, and that it was 2020, so difficult to know exactly what happened at the time. We have not identified that at the Gebbras level. That's one. Enel, the next year performance. We had extraordinary times in the hydrology in Colombia during 2024. April, August, September were extremely dry years. As a consequence, as Juan Ricardo mentioned, there was this intervention of the market, according to the rules that were established back in 2014. For the first time, the rules were applied, had not been tested. In our view, Enel's view, and many industry players, the rules do not comply with the objective. They don't deliver on the objective of increasing thermal capacity generation. They do generate very significant spot prices.
Remember, a spot price only affects part of the total mix. As we have, Enel has published and we include in this report, Enel nine-month results are not heavily impacted. The EBITDA is going down by about 6%, 7%, and the net income is almost flat. This location of the market and the higher spot prices that we have seen in Colombian history, which happened over the last three weeks or so, today, the spot price is below the scarcity price. Just with three or four days of very heavy rain and good contributions to the reservoirs, the spot price lower significantly, like almost half of what it was over the last week. That should normalize and minimize the overall impact of Enel. It is an ongoing conversation, too early to tell you what the impact is.
What we know so far is that part of Enel reservoirs is committed to the mechanism that the statute of restrictions calls for, which is water in the reservoir, but already sold. It was sold at a high price because no company wanted to have that water actually in the reservoir, but not being allowed to administer it by themselves. Nonetheless, some of it was actually included in that EBE, E-B-E, calculation and was then sold, but not yet delivered to the market. Too early to say, to tell you a more concrete answer. Things may be normalizing now, but we will probably have an impact of about five or six weeks of very extraordinary conditions in the market.
In terms of growth opportunities in Brazil, Andres, it's a very dynamic market. We continue seeing opportunities, very interested in the market opportunities. I would say that nothing will be closing here in the near term. Given the stage of the maturity of the potential transactions, it's unlikely that we'll be able to close something in the next three months or even in the first quarter of 2025. We're confident that we can continue growing, but it's not going to be in the near term. Karen.
Thank you, Jorge. We don't have any more questions. We would like to thank you all for your presence today. As a reminder, the IR team is always available at any time to resolve any of your questions. We hope you have a great day. Thank you very much for joining us.
Thank you