Good morning. This is Karen Guzmán, Grupo Energía Bogotá's Investor Relations and Financing Officer. Welcome to Grupo Energía Bogotá first quarter 2024 Financial and Operating Results conference call. The results report were published yesterday and are available on our website for your reference. Please note that this conference call is being recorded. As per the proposed format for our calls, we will start with an overview of the quarter's results and the main developments in the economic and industry environment of the countries where we operate, followed by the group's financial and sustainability milestones. At the end of the presentation, a Q&A session will follow. We invite you to register with your name and the name of the company you represent so we can identify you during this session.
In the top right-hand 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 session if you would like to ask your question live. The management team that will join us today is composed of GEB CEO, Juan Ricardo Ortega, our CFO, Jorge Tabares, and our Sustainability Director, Eduardo Uribe, and myself. Juan Ricardo, you may begin.
Good morning. It is a pleasure to have you here at the Grupo Energía Bogotá first quarter 2024 remarks. Thank you, Karen, and everybody, you're most welcome back. Grupo Energía Bogotá continues to have significant results. We are extremely positive on what has been accomplished, I want to briefly give you some facts on how the group is performing so far. We generated COP 1.9 trillion in revenues, adjusted EBITDA of COP 2.1 trillion, A total net income of COP 788 billion. The general shareholders meeting, held on March 26th, had the representation of 96% of the company shareholders. Among other items, the assembly approved the distribution of COP 2.3 trillion in dividends, corresponding to COP 251 per share. The adjusted EBITDA for the quarter showed a decrease of 17.6% versus the same period in 2023.
This is mostly explained by Enel's 25% decrease in EBITDA, That was presented last year, and is mostly due to Windpeshi impairment and the loss of a lawsuit in Costa Rica. This has already been mentioned in previous presentations. In terms of sustainability and corporate governance, there are some positive news. I would like to highlight the following points. The shareholders assembly approved the election of new members of the board of directors, ratifying three members and electing six new members. This guarantees a continuity in the strategic plan, It shows the strength of the group's corporate governance. As a new member, we have the new secretary of finance, The district is demonstrating its responsibility in the management of the company and its commitment to its corporate governance. We have good news from the point of view of our social responsibility.
We launched the Enel EnlazaNet pilot program. It is an initiative to bring fiber-optic internet through the ingenious use of the available infrastructure, that allows us to provide internet approximately to 4,000 children, 60 teachers, from 10 educational institutions in the area of Riohacha. This is going to be continued further. We just got the news yesterday that we're going to be using the government's program taxes per projects and continue the growth of EnlazaNet in La Guajira. We also obtained a score of four out of four. That is outstanding maturity level achievement, the highest results in general consolidated sustainability levels according to the annual measurements made by Corficolombiana. We also announced the inauguration of a new solar generation plant of our subsidiary in Electrodunas. This is going to be in Llipata, Peru. It is small, just a capacity of half a megawatt.
It has already tracker systems that automatically redirects the 268 panels towards the sun and maximizing solar energy collection. The radiation has been higher than expected, which clearly shows the potential for the growth of solar generation in the south of Peru. The project represents also an approximately annual reduction of 214 tons of CO2 as part of our commitments in sustainability, and is equivalent of planting almost 10,000 trees. On the next slide, we want to give some good news regarding El Niño. The issue has been finally normalized. The Ministry of Mines and Energy declared that the phenomenon has been overcome. The Institute of Hydrology, Meteorology, and Environmental Studies in Colombia has announced the gradual increase in rainfall which is expected during the months of May and June, in the departments where the reservoirs of electricity had been significantly diminished.
In Colombia, the situation of El Niño is reflected in the rebound in the demand of natural gas. That is good news for our subsidiary TGI, with an increase of 31% year-over-year, as well as an increase of around 85% in the energy spot prices when comparing with average prices in 2024 versus 2023. In this regard, I would like to point out that the group's exposure through its not controlled subsidiary, Enel, has already caused an impact on Enel's results, due to the higher prices that they had to pay in the month of April, and the lack of water for them to generate electricity in those months. Water reserves, fortunately, are increasing significantly after standing at 31.5% at the end of the quarter.
They are already close to 36%, which clearly shows the El Niño is over. We need those rains to continue in order to guarantee there is no other crisis in the future. There is expectation of La Niña, that most likely is not going to be the case. In terms of regulation, we've been lacking a full operational CREG, that has been one of the main concerns in the sector. There is a legal lawsuit that was forcing the government to appoint those members. The Council of State upheld that lawsuit. The government has the mandate to appoint the six members of the CREG on a permanent basis. That is absolutely critical for the group because there is a lot of regulation that is being stuck for the last year.
In line with the suggestions and alerts from the Nacional de Despacho Centro, the government implemented some temporary actions to deal with El Niño, as of today, some of those interventions, although maintained, are not going to have any impact because of the remaining rainfall patterns. We're still finding it challenging the environment in the sector, with all the news about the risk of an intervention and with the limited functioning of the CREG, this added to the critical delay in the energy infrastructure. This is going to be more relevant in the coming future. On the average, only 6 MW out of 10 MW from previous auctions allocations came in line, and less than 3 MW out of 10 MW came in line in schedule time.
The same is happening to the transmission projects, that because of delays in the licensing and social opposition, have not been concluded. The company's regulatory team, in coordination with our subsidiary Enlaza, is in constant active conversation with the government, I'm included, and other agents in the energy chain. We're mostly concerned about how to guarantee energy supply from 2026 in the area of Bogotá, its north, and western parts of the city. Regarding the other countries, in Peru, there is some impact. Because of El Niño, there is a decrease in thermoelectric generation of around 140%. This is in line with the behavior of El Niño. This phenomenon is characterized by higher rainfall in the northern region, therefore higher operation of the hydroelectric dam.
In this sense, the average production of natural gas in the first quarter of 2024 decreased 7.1% compared to that recorded in 2023. The Peruvian Multi-Sectoral Commission for the National Study of El Niño reported the beginning of April that the phenomenon had weakened, so its status has changed to not active. Neutral conditions are expected until May, followed by weak fall conditions between June and July. The monthly economic activity indicators in Peru grew 2.8%, little improvement over last year. The fishing sector, which is critical for Contugas, contracted 31%, given the slower progress of the second anchovy fishing season. This is going to be obviously a concern for the revenues of Contugas, that had an impact of 2.1% decrease on the quarter. In Brazil, the GDP is performing better, close to 2.09% as well.
The national broad consumer price index continues at a low level, with an accumulated in April of 1.8%, and a 3.69% annually. The Selic, which is the main instrument for the central bank, has been left at 10.5%, but we expect some reductions that could bring some positive results if it reaches around 9% towards the end of the year. In Brazil, the transmission sector continues to grow significantly, 15 lots were awarded in the auction for BRL 18.1 trillion, that is going to continue to be growing given the commitment of Brazil to electrification of the country. Eletrobras continues leading with four awarded blocks. The next slide, we will talk about some operational milestones that will give you an idea of how our companies are performing.
In transmission, the Colombian Mining and Energy Planning Unit, UPME, awarded GEB the project for the construction, operation, and maintenance of a new transformer that will include the reliability of the electric power service in the department of Bolívar. If you remember the previous quarter, we won one in Huila, we continue to perform quite well in the UPME's invitations. Additionally, our subsidiary, Conecta, was certified under ISO 22301, and more importantly, our substation, Modesto Méndez, going to be inaugurated on the 1st of June, and it's already been electrified, improving the income base for Conecta in Guatemala. In terms of distribution, Electrodunas completed as well the construction of Chiribamba. The substation that it was implemented on a new non-bank financing business. Chiribamba.
We also implemented the new non-bank financing business line, [Payuna], which at the end of the quarter, reported 278 new loans for a total amount of over PEN 1 million. It's a new line of income for Dunas that we expect to grow significantly in the coming years. Additionally, there is an increase of 2.9% compared to the same period in the previous year, we recorded energy demand growing in Colombia, in Enel's customer base. In generation, during the first quarter of the year, Enel Colombia inaugurated the largest solar farm of the country, La Loma. This is close to 200 MW and started commercial operation of El Paso, which is a solar farm that is being installed for over a year and has a capacity of 86.2 MW. It recorded 84% availability of its energy generation plants.
In the operations in the gas chain, although El Niño clearly improved the results for TGI, it increased 0.9% versus the first quarter in 2023, and it's because of the intensive use of the thermoelectric generation in the first quarter. The biggest contrast is the decrease in the average volume. We've been losing participation, and it's mostly due because of the imports by SPEC. Were investors in Promigas. SPEC is a subsidiary of Promigas. Most of the generation by gas is in the northern part of Colombia, and most of it was done with imported gas. The gas deficit is going to be a main concern in the coming years for Colombia. In distribution, Contugas accelerated the pace of the residential connections. This is quite positive and will reach 5,358 as of March. In Cálidda, 50,206 new connections were made, reaching 2,786 connections this year.
Almost 800,000 new users in the past 12 months. Here you have a brief presentation of the overall results of the group. Now let's hear Jorge Tabares on all the financial details regarding our performance this first quarter. Thank you, Jorge. The floor is yours.
Thank you, Juan Ricardo. In the first quarter of 2024, our operating income decreased by 10%. This compared to the same quarter in the previous year, mainly explained by lower revenues in the natural gas division segment, which decreased 18% due to FX effect during the aforementioned revaluation of the Colombian peso that explained 195 of the variation. In the functional currencies, Cálidda revenue decreased by 2.2% and Contugas increased by 36%. There was also lower revenues in the consolidated pesos statement in the power transmission segment, decreasing 11% due to FX conversion, and lower revenues in the energy distribution segment due to the FX conversion, given the revaluation of the Colombian peso, in this case, against the PEN, of approximately 16%. This was partially offset by a 6.2% annual increase in revenues in the natural gas transportation segment.
Operating costs for the quarter decreased by 15% compared to the same period of the previous year, mainly thanks to lower cost in the natural gas distribution segment, decreasing by 21%, which were mainly explained by the appreciation of the currency impact, which accounts for 85% of the decrease. Lower costs in the energy distribution, decreasing by 18%, again, as a result of the FX conversion effect. Accounting for 88% of the decrease. This was partially offset by a 6.4% annual increase in the natural gas transportation cost and a 6.2% increase in transmission costs. Regarding administrative and operating expenses, these decreased by 7%, mainly due to the decrease in expenses in the natural gas distribution segment, given the appreciation of the peso and lower expenses recorded in the corporate center due to lower legal fees.
Operating income for the quarter presented a 2.7% decrease compared to the first quarter of 2023. Additionally, the quarter recorded higher financial expenses, increasing 20% year-over-year, mainly explained by expenses associated with the issuance of the GEB sustainable bond in the fourth quarter of 2023, bonds in local currency, and the new debts subscribed by TGI in the fourth quarter of 2023. Accordingly, controlled net income for the quarter decreased 11% compared to the same period. Next, please. The equity method for the quarter closed at COP 586 billion, growing 1.3%. This variation is mainly explained by a higher contribution from Promigas, with a 39% growth, given higher income as a result of higher volume transport during the quarter, and from Gebbras, with a growth of 19% from higher income in the four joint venture concessions with Eletrobras.
These growths managed to offset the negative variation of 1.5% in Enel participation method, which is in line with the lower earnings recorded in the quarter, and Argo decreasing by 15%, mainly explained by a FX conversion effect due to the peso appreciation versus the BRL, and the annual variation of the inflation in Brazil IPCA. Additionally, the CapEx executed for the quarter amounts to $91 million equivalent, where COP 50 million correspond to Transmission Colombia and COP 22 million in Cálidda. In the Colombian transmission branch, the CapEx was mainly allocated to the Sogamoso, Colectora, and Refuerzo Suroccidental projects. The update of the five-year CapEx projection stands at $1.4 billion, increasing by 8% compared to the previously shared figure, mainly explained by the additional projects in Guatemala associated with the extension of the construction contract that was signed in the last quarter of 2023.
The adjusted EBITDA for the quarter decreased by 18% compared to the 1Q in 2023, mainly due to the decrease in the EBITDA of the associated companies, which decreased 25% year-over-year. This is explained by the lower dividends declared by Enel Colombia, whose figures for 2023 reflected the accounting impact of Windpeshi and the elimination of the Chucás receivable in Costa Rica. Additionally, the EBITDA of controlled companies, which for this quarter represents 43%, decreased by 6% compared to the previous quarter last year. This is mainly to the adjustments made to the EBITDA calculation, which now includes the operating taxes, as we shared in the fourth quarter of 2023 earnings call. There was also a decrease as a result of revaluation of the peso against all currencies of the group portfolio of companies.
The controlled EBITDA for the quarter is made up 86% by three companies: TGI, Cálidda, and our transmission business in Colombia. Looking by segment, a decrease of 57% year-over-year in the energy generation segment, which represents 85% of the annual variation of this metric. This is, again, due to lower dividend declared by Enel Colombia, which is in line with the profits accounted in 2023. Finally, it's worth highlighting that the adjusted EBITDA calculation for the last 12 months amounts to COP 4.7 trillion, approximately $1.2 billion. Now I give the floor to Karen Guzmán, who will talk about the portfolio of debt and the actions we're taking to secure new debt. Go ahead, Karen.
Thanks, Jorge. GEB's consolidated debt amounts to $4.8 billion, with a similar distribution between GEB and its subsidiaries. It is highlighted that 37% of our debt, it has a fixed interest rate, while the remaining is indexed to SOFR, CPI, and IBR. Regarding the distribution by currency of origin, 65% of the debt is denominated in US dollars, followed by 33% in Colombian pesos, mainly explained by TGI's club deal for COP 1.5 trillion and TGI cross-currency swap on its 2028 bonds as a result of the company's strategy to reduce its exposure to dollars. Regarding GEB's leverage ratios, our objective is to maintain sustainable leverage in the medium term below four times as part of a strategic commitment to maintain our investment gradx. In this regard, for the first quarter of 2024, our net debt to EBITDA was 3.5x and 4.7x EBITDA on financial expenses.
As we have previously reported, we continue to prioritize our refinancing of 2024 maturities, specifically COP 320 million owed by Contugas with the corporate guarantee of GEB and TGI. Finally, we would like to highlight that during this first quarter, TGI, GEB, and Contugas made partial capital payments on the following obligations. COP 370 billion for local bonds of GEB, COP 200 billion from TGI club deal, and $25 million from the syndicated credit of Contugas. Let's now continue with our sustainability director, Eduardo Uribe, who will share the main advances in sustainability for the quarter.
Thank you, Karen. In relation to the main sustainability milestones for the first quarter of the year 2024, we highlight the inclusion of GEB and TGI in the Standard & Poor's Global Sustainability Yearbook. GEB received this recognition for the third consecutive year, being positioned in the top five of the gas utilities industry for its high performance in environmental, social, and governance issues. TGI ranks first in the oil and gas transportation and storage industry. In terms of social performance, GEB and Atenea launched the last call for the Todos a la U program that will benefit more than 1,500 people with training in technology and digital sector soft skills and energy transition. TGI completed the delivery of 42 interactive solar classrooms in the departments of Antioquia, Bolívar, Cesar, and Valle del Cauca.
This will benefit more than 20,000 children, it was carried out under the work for taxes mechanism with an investment of nearly COP 17,000 million. Enlaza on its part, agreed on more than 300 social investment initiatives within the communities in the Colectora project in La Guajira, Colombia. This will benefit more than 23,000 people for 199 indigenous communities. Finally, the social investment of GEB and its subsidiaries amounted to nearly $1.6 million and benefited more than 29,000 people. The group was able to leverage resources for social projects for about $300,000. In relation to environmental performance, we highlight the publication of the climate change management report of GEB and its controlled subsidiaries following the recommendation of the Task Force on Climate-related Financial Disclosures framework.
The IDB financed Cálidda for the development of a pilot project to explore the viability of biogas in the Norte Chico area in Lima. We highlight the investment of GEB and subsidiaries in environmental projects for nearly $1.27 million. Having said this, I give the floor back to my colleague, Mr. Jorge Tabares, for the final remarks of this presentation.
Thanks, Eduardo. Before moving to Q&A, I just want to summarize our commitment to the end. Important actions that demonstrate our leadership in sustainability and corporate governance, from which I highlight the election of the board of directors, which includes new members of top quality and that I'm positive are going to help us move the strategy forward. The launch of a very innovative EnlazaNet pilot program, which will allow our transmission company to deliver internet to communities in La Guajira. Our adaptation to a challenging operating environment, not just the El Niño phenomena that is already gone, but also our regulatory environment in Colombia, which is posing significant challenges and in which we are engaged with all the stakeholders, of course, including the government and the regulators, to try to find ways to move forward the energy agenda of the country.
Finally, our debt management and our actions on securing new indebtedness and maintaining the leverage level at healthy levels that we have had for the last few years. Pass it to Karen then for Q&A.
Thank you, Jorge, and thank you, everyone for joining us today. I don't see any questions on the chat, but we invite you to type them in our chat, or you can raise your hand if you have a question. There we go. We have a question from Andrés Duarte. Let me unmute you. You can unmute yourself, Andrés.
Hello. Thank you for taking my questions, and the best of luck for this year's results. I have three questions. The first one is related to future gas imports from Venezuela, the second one with power distribution, and the third one with the share of currencies in income and EBITDA. The first one is, assuming a repaired Antonio Ricaurte pipeline, what role, if any, would TGI have on the transportation of this gas? The second question is, please explain or repeat the explanation that Juan Ricardo gave on what explains the impressive increase in operating income coming from electricity or power distribution with respect to the previous Q. The third question, the one related to the share of currencies in income and EBITDA, is that after the next Q, TGI would have completed a whole year with whole operating income denominated in pesos.
This would imply a decrease in USD-denominated income from around 65%-55%, as far as I can tell. I wanted to know if this is accurate, and, in terms of EBITDA, what distribution are you expecting for the whole year? Thank you.
Thanks, Andrés. I think I can take the first one. In terms of potential imports from Venezuela, same position as we have maintained in the past. We were not dealing with Venezuela government. This is a government-to-government interaction. If they manage to both negotiate commercial terms and resolve the technical issues on the Ricaurte pipeline, the only way to get this gas to market in the center of the country of Colombia is the TGI system. We see an upside for TGI if gas is imported from Venezuela. Clear concerns about reliability, about cost. In any case, if something comes to Colombia, it will have to use our system. I got a difficulty understanding the second point. I don't know if Karen has that and the third question either. I couldn't get that very well.
The second one is that there's around 26%, as far as I can remember, of an increase with respect to the previous quarter in operating income coming from power distribution. I wanted to know what explains that increase, if possible.
The third one?
The third one has to do with the share of income and EBITDA in terms of the different currencies, specifically U.S. dollars and pesos, after a whole year is completed with TGI having the whole operating income in pesos.
Okay, the third one.
Okay.
TGI being in pesos since June of last year, as you point, is going to be a peso-dominated company throughout 2024. When we account our total EBITDA of 48%, we expect to be U.S. dollar-based. This is coming down significantly from the more than 60%, around 60% that we used to have. We also adjusted our balance sheet and now have much less U.S. dollar exposure in our debt. TGI, when pesified to minimize foreign exchange risk, they hedged the 2028 bond, what was left, about $500 million. Also, there used to be an intercompany loan for U.S. dollars that was prepaid to GEB, and the pesos were secured in the local market from banks in order to have the balance sheet of TGI not exposed to U.S. dollars. The 26% increase in the distribution business in revenue. I don't have an answer.
With respect to the previous quarter. It's okay. I'll ask by email later. Whatever.
I'm just thinking here, and I don't know if somebody in the team has a quick answer for that.
Okay. Thank you.
Thank you. We're checking, and we'll come back to you through email.
There is an impact on El Niño. Prices during the quarter were higher prices, especially because they account for prices of the peak of El Niño back in November, December, January. A significant portion of that is associated with higher spot prices that were translated into the cost to the customers and secured in revenue by the companies. It's a one-time, it's not sustainable and does not add margin as that part of the cost is a passthrough. It just has a delay in bringing. The second portion of it is that Enel was able to recoup part of that exposure. Let me explain in details.
When the generation price goes up, as happened during El Niño, there is a lag of about two months between the moment that the distributor pays for higher cost of generation and the moment in which it recoups the money from the clients. At the end of last year, Enel had an exposure that impacted our revenue negatively in the last quarter on the distribution business. Now, during the first quarter, it was able to recoup that because the spot price went lower than what it had been during the last quarter. That also is recorded as additional revenue and explains part of the distribution business result.
Great. Thank you.
Karen.
Thank you, Andrés. I'm going to allow one last question from BTG. You can unmute yourself, Juan.
Hi, Karen and Jorge. Thank you for the presentation. Just a couple of questions here. The first one is related to Enel's dividends for the next year, considering the decline in the dividends decree this year. How do you see, or your expectations for the next year, considering the impacts of El Niño phenomenon on Enel Colombia's financials? That's the first one. The second question is related to the financial expenses that grew 20% year-over-year. Do you see those levels as the new normal, or we should see a decline in the following quarters? The third one is, if you could give us a quick update on the Colectora project. Those are my questions, thank you for the presentation.
Thank you, Juan. Enel dividends for 2024 are given the new shareholder agreement, which is now two years old, we had a payout of 90%. It's not an ongoing conversation with Enel Américas, but it's a given number, because there is a table in our shareholder agreement that if the leverage of Enel Colombia is lower than 1.5x net debt to EBITDA, the dividend payout is 90%. That is what the company declare, has announced, we will receive that between July and December of this year. In terms of dividends for next year, we do expect the 90% payout to remain in place. Just from the budget perspective, the company has projected a significant improvement over last year, given that the year 2023 was impacted by the two non-recurring items that we have described extensively.
You have read in the media that Ecopetrol's president has openly said that the Windpeshi negotiations are going very well, that they are committed to close that transaction. We expect that to happen, and that should allow Ecopetrol to continue the Windpeshi project and finalize that. With that, the budget and all the projections that the company has are most likely to be met, as Ricardo signaled April was challenging because of El Niño. El Niño is gone, and we go all now back to normal businesses. The spot price today is COP 188 per kilowatt hour. On terms of financial expenses, we do expect interest rates going down. The good news is that the banking system is acting faster than the central bank, and this is not by any means a critique to the central bank.
I don't get involved into their dynamic. Clearly, the IBR, in general, despite some volatility associated with the international rates, the IBR is going down. We expect the financial expenses at the end of the year to adjust, as Karen mentioned, only about 32% of the debt is fixed. The rest of it is going to be adjusting during the year, especially the new loan at the TGI level that mentioned. That's a significant portion. Although it paid down COP 200 billion, still COP 1.2 billion, that is going to reprice every quarter here as we move along, and our debt also will be repricing. The CPI is also going down continuously now for 13 months. That also, when we reprice the inflation index debt, will help us on the financial expenses. Colectora.
We are expecting the environmental license for Colectora in the next few days, if not weeks. We have submitted all the information required after the announced closing of the 235 previous consultations. On the south part of the Colectora project, we're making progress very fast. I think it's more than 45% complete by now and going at full speed. As soon as we get the license, we will start the construction of the north part of the project, and move forward that. We will announce, of course, as soon as we get the environmental license in the next few days.
Thank you, Jorge. We have a question from [Thepalina] from Ebly. "Hello. Thank you for taking my question. Do you have some net debt EBITDA target range? I think it was mentioned in the call already, but I missed it. Thank you.
No. Yes. We value being investment grade. We are committed, and we think that given our shareholder base and the city being a main owner of the company, maintaining investment grade is what give us more flexibility and to secure debt, and also, to have it on an efficient cost. We combine that conservative view with the rating agencies' views, and we think it's sustainable for us, maintaining the ratings we have, the investment grade rating, if we have a net debt to EBITDA below 4x, or at most 4x on a sustained basis. If we go up or down from that, or at least if we go up from that, we will adjust very quickly. Today, at 3.5x, we have about $600 million of firepower to acquire companies and keep implementing our non-organic strategy. Karen.
Thank you, Jorge. We have a couple question from Sebastián Gallego from Ashmore. "Hello. Thanks for the presentation. First, can you elaborate on the expectations of dividends to be received by subsidiaries in 2024? How about the dividends expected to come from Brazil mentioned in the prior call?" That's the first one, if you want to take that one.
The first one is dividends received from subsidiaries.
Yes. Expected in 2024. I can help you with the number. We're expecting COP 1.9 trillion. Even though right now there's only been COP 1.2 trillion being declared by the subsidiaries. Regarding Brazil, dividends there haven't been already declared, but we're expecting some dividends from Argo as well next year.
The dividends from Brazil, that has evolved recently. The company, Argo, has a good CapEx position. Given the CapEx profile and the CapEx needs that the company has, which is a very low CapEx profile, we are expecting to have the board of directors of Argo, and we have already agreed with Redeia, our partner, to advance a dividend that we have been talking about for next year. For GEB, I will expect around $50 million equivalent to be received from Argo during 2024, which was not in our original budget, and that's a positive development. Karen mentioned the dividends we are planning to receive from subsidiaries. The only one, I think there is only one subsidiary left to approve internally the dividends. In general, we're maximizing the dividends that we can receive based on the net profit of the companies.
All of them are able to pay significant portion of the net income. The only case in which we were conservative was at TGI. I think at the end, we distributed about less than 60% of the net income, and that's because some of the net income of TGI was associated with a non-cash event, the non-recurring non-cash event associated with exchange rate profits. We conservatively did not distribute that as part of our cash dividend.
Thank you, Jorge. The second question from [Theocanis]. "Can you provide an update on the company's appetite for M&A this year?
Sure. We continue, as I mentioned, we think we have financial capabilities. Fortunately, in this business, we see a lot of potential opportunities. Currently, we are actually considering three potential acquisitions in the countries in which we operate, maintaining the same businesses in which we are. We cannot provide more details in order to make sure that we can execute smoothly, the transactions. I don't think anything is gonna be announced in the next couple of months, given the maturity, the stage at which the acquisitions are. A couple of them are moderate in size. There may be one that be bigger in size, and more relevant, more material for us. Nothing that we can say now that is 100% sure.
We maintain discipline in the way we evaluate the potential targets. Just to confirm that, yes, we are seeing some interesting opportunities that we're working on. Karen.
Thank you, Jorge. The last question from Sebastián is: What is the outlook for regulation in Colombia following the peak of El Niño? When can we expect final solution for pending matters at TGI?
Thank you, Sebastián. That's very critical. I think it cannot pass without being highlighted the strength of the power generation system in Colombia. El Niño was not a mild Niño. It was a relatively strong Niño, and the system responded, and energy was there, and no blackouts or constraints were impacted significantly or at all the market. That's a very good outcome. Of course, every few years, in a hydro-based energy matrix, you're gonna see spot prices going up. That only impacts about 20% of the final cost to customers, which is a moderate impact. Despite of how much publicity the spot price gets, that does not have such a huge impact. The energy matrix responded very positively to a demand of the energy system, which is not just associated with less rain, but as we have seen, with a very important increase in demand.
When in the Niño season, there are higher temperatures, and demands for electricity to make people more comfortable and to facilitate their lives, gets higher. The regulatory agenda is the most challenging issue we are facing. As you point, TGI is the more exposed. The fact, as Juan Ricardo mentioned, that the CREG has not operated as institutionally defined is very critical for the industry, because that's where the key technical decisions are made. It is a very bad recipe for have an energy system operating based on political decisions and not technical decisions. We saw the Consejo de Estado, Council of State, confirming a decree by the Tribunal Administrativo de Cundinamarca, a state high court, that required the president to appoint the six board members on a firm basis, not on a temporary basis. That confirmation just demonstrates the institutions working.
Originally, the Tribunal Administrativo had given 30 days for that decision for the president to act. We are just waiting to see that time pass and what the president reaction to forming the CREG is going to be. For us, it is frustrating because, as we have repeatedly communicated to markets, we do have the pending resolution of our TGI 175 resolution being fixed. We draft resolutions out for comment, but the fact that the CREG is not evolving the normal agenda in a technical way makes life more difficult.
Also, El Niño created some, I now can call it distractions, and the CREG, although quite late, got into the energy optimization and into how the energy matrix was managed during the peak El Niño season, associated with trying to avoid a potential blackout that could have materialized if rainfall would have not appeared or if any plant would have come out of operation for unexpected reasons. We hope that with the normalization of El Niño and with the decree by the Consejo de Estado, we can go back to normal operations of the CREG and resolve the issues that we have on a technical manner. Karen.
Thank you, Jorge. We have a last question from Diego Galván. "Congratulations on the result. My questions: Do you have a long-term target on the FX debt exposure ratio COP versus U.S. dollars for the group overall? Can you elaborate on the policy in that regard?" That's the first one, and we have another one that we can
Sure, Diego.
Thank you.
I think it can be seen in two ways. For the Colombian financial markets, we are too big, there is no way we can secure $5 billion in the local market. In fact, about 19% of our current debt portfolio is funded locally. We need international markets, the more efficient way of securing money in the international markets is U.S. dollar debt. We will continue to secure U.S. dollar debt, as we are doing currently in the Contugas rollover of the $320 million that Karen mentioned. The point is, how to manage FX exposure. We do have a higher FX exposure because of the U.S. dollar debt associated with the pesificación of TGI. We do have a policy that, or the way we manage that FX risk is with the international investments, or with U.S. dollar investments in the portfolio.
TGI now, it's not U.S. dollar, it was a sizable part of that investment portfolio. We are exploring ways of managing that additional FX risk that we have, that likely will have to be to just cross-currency swaps to hedge part of the U.S. dollar debt. We do not have a target on how much U.S. dollar debt we get. If we get above our threshold that we think is, or that we define as our risk appetite, we will hedge the rest of it, there is a market out there for hedging, that's not a problem. That's it. Second?
The second one is, pipeline for new projects and investments. Can you give us some color on the prospects for new investments in Colombia or the region?
Investments in Colombia, given that we have Enel, and Enel is the one doing all the generation. They are very active in pursuing more solar projects in different parts of the country, including the Atlántico cluster has proven to be quite successful for them. They have the Guayepo I, Guayepo II, and Guayepo III. There is a potential project called Atlántico, which account for more than 1,000 MW of new capacity. Enel is pursuing a lot of projects. Enel secure about 25% of the reliability charge auction for 2027, 2028 that the government put out for auction a few months back. That's another important portion of the generation portfolio that Enel is pursuing. What is left then is, for us, transmission. We're focusing on moving forward our transmission projects. This and next year are peak projects in terms of our CapEx profile.
Really challenging in terms of securing all the environmental permits and all the clearing up the ability for us to continue transmission lines that have been in construction for a long time or are long delayed and are badly needed for the Bogotá area. Bogotá has an energy deficit in terms of the generation area, so we need to import electricity from the rest of the country, but we do not have enough transmission lines to bring all the electricity required by the region. We're not allowed to continue the projects at a regular project pace, due to some constraints, mostly from the environmental licensing perspective or approvals perspective in general, not just environmental license, but others. Besides that, we participate and have participated in the UPME auctions. We secured our last one, which is a small project that will add $1.2 million in revenue when we complete it.
A transformer that was auctioned, an expansion of a substation, basically. We are interested, and we continue to be interested if the UPME puts more auctions into play for us to participate. A few non-material private projects that we are pursuing also. That's our project portfolio in Colombia. The project pipeline is going down. If you look three years further out, our CapEx demand is much lower. That reinforces our strategy of acquiring companies to make sure that we continue growing and having cash flow to our portfolio. Karen?
Thank you, Jorge. We don't have any more questions, but I would like to answer Andrés' question regarding distribution of energy. Just to give you the data. There was an increase of 26% regarding the prior quarter, and it's mostly because of higher volumes of electricity sales in Electrodunas, our company of power distribution in Peru.
Thank you.
You are so welcome. We don't have any more questions. We would like to thank you once again for your presence here today. As a reminder, our IR team is always available to resolve any of your questions. We hope you have a nice day. Thank you very much.