Good morning, and welcome to our second quarter results conference call. I am Karen Guzmán from the IR and financing team at Grupo Energía Bogotá. This conference is being recorded. The information you will see today is uploaded in the investor section at GEB's webpage. In the right corner of your screens, you can ask questions at any time in the Q&A section, or you can raise your hand and we will allow your question live in the order. When doing so, please state your full name and the company you represent so we can easily identify you. Let's welcome Jorge Tabares, GEB CFO, who will lead the call today. Good morning, Jorge.
Thank you, Karen. Good morning, everyone, and thank you for the interest in the second quarter results for Grupo Energía Bogotá. We'll follow the same format and the same agenda as in the previous call. Please go to next page. The snapshot and the key message here is that businesses continue to do well, and the results are highly positive. In this case, the currency impact and the business diversification in Colombia support the solid results. On the left, you see the EBITDA. These figures are in billion Colombian peso . The COP 882 billion of EBITDA during the quarter represents almost a 20% growth. The major business lines, gas transportation, gas distribution, and energy all show very healthy growth in EBITDA terms. By geography, as this quarter, the EBITDA represents basically the operational results, as we did not receive any major dividend during the quarter.
That is incorporated in our adjusted EBITDA. Colombian businesses drive that growth, growing 25% and representing, in this case, Colombia 62% of the total EBITDA for the quarter. In the middle, the net debt to EBITDA at 3.3x shows a robust leverage, and that is lower than in the previous quarter, mainly associated with the currency variations of the Colombian peso. I'll talk later about the ROE and ROA. You see in the bottom part, revenues growing mostly in line with the EBITDA growth at 19%. Very healthy operating income growing at 40%. If I go to the control net income, that shows a reduced growth rate and mainly impacted by one-offs of non-controlled entities and also by financial expenses that have been higher given the macro environment that we're going through.
We invested during the quarter $167 million equivalent, that's a slight reduction. This is mainly associated with the natural pace of investment in Cálidda, in which we have a mature portfolio of CapEx development. On the top right, I highlight both the PPI in Colombia and the U.S. have moderated significantly, which put us in a more normal macro environment than what we saw in the previous few quarters. The currency during the quarter had an appreciation of 13% of the currency. Go to next page, please. In terms of milestones, some of them we have extensively published. Our Colectora project, which is one of the two main transmission projects we are pursuing in Colombia, completed a very significant milestone, reaching agreement with 235 ethnical communities in the La Guajira area.
We will start the construction of a lower piece of the transmission line, which is Cuestecitas-La Loma. We already initiated that construction. It took us about four years to complete the prior consultations process. We think the way we manage the process and the cultural engagement with the communities should give us a good foundation to go to the next stages of the project. Licensing on one side, and then when we start construction on the field. I think the foundation we have built over many years should help us to complete the project successfully. The Minister of Mines and Energy published Decree 929. Effectively we see it as the alternative that the government took as the presidential intent of getting the powers of the CREG, of the Regulatory Commission. That intent failed, the government moved towards the Decree 929.
It is important to note that most of what it incorporates is within the regime, the regulatory framework in Colombia, and mostly gives the CREG guidelines for them to use as they actually enact any further regulation in the future. That is positive, I think there was a change in Minister of Mines and Energy, and the new Minister, in the initial public remarks, mentioned that he planned to appoint on a firm basis, the CREG members, the commissioners, which we think is a positive step towards maintaining the independence of the technical body, which is the CREG. Moving to the top right. For those of you who did not participate in the TGI conference call yesterday, there was a change in the currency of the company. The revenues are now, since June 1st, in COP, as opposed to USD.
Another regulatory piece was enacted that increases the WACC of the remuneration to 1188%. That is more than 100 basis points above what we had before, and is clearly a positive for the company. With that pesificación of the company, we executed successfully hedges for all the currency exposure as the company debt was basically all of it in U.S. dollar. The result of that execution gives us COP interest rates variable, which should moderate in the next few quarters. Currently, the rate is high given the macro environment in Colombia. We are pending a final CREG resolution that will allow the company to recoup some of the hedge costs via tariffs, via cost recovery, and that should clear the regulatory path for TGI, which has been in the works for about 18 months now, almost two years. We launched a roadmap for natural gas in Colombia.
I think the highlight of that is that the company has, or gas has a very significant role to play in the supply of energy for the Colombian economy. At the same time, contributing to energy transition. We had a contingency in an area called Cerro Bravo in the center of the country that was already solved and had a limited impact on TGI, basically associated with cutting the service to its clients in the south of the country as a precautionary measure to protect the asset. It is now reestablished, and the situation is determined to have been solved by now. In Cálidda, we see a few upsides associated with the government, with President Dina Boluarte intent to reactivate or dynamize the economy. We are part of the Plan Con Punche Perú, and are going to make an investment of $36 million in support of that.
In addition to helping clients and citizens with service, it allow us to make some moderate margin. Most importantly, I think, is to align with the government gas massification intent in which we can play a significant role through Cálidda. The volumes were higher for the quarter, and this is mainly associated with natural gas and power plants and the money that the government entity is putting to accelerate the conversion of natural gas vehicles, which helps the quality of air of the Lima area, which badly needs it, and which ratified our rating. Finally, on the bottom, Enel. Enel announced the suspension of the Windpeshi project in La Guajira. This is a wind power plant, 204 MW.
It is a signal of the difficulties to access the site, actually, to execute the project, and an assessment that even if we manage to construct the project, operating it will have been difficult, given the instability of accessing of the roads, of transiting of the roads to access the project. It is not a general decision by Enel of not pursuing renewal projects in Colombia, as they keep advancing and constructing 800 MW of projects in areas different than Guajira, and have actually an ample portfolio to continue growing the generation business and supporting, at the same time, the energy transition.
The company decided also announce the sale of that thermal plant in the north of Colombia, and that's associated with the decarbonization strategy and is very good news because the company was in the brinks of having to invest money to dismantle the facility, and a new player will continue operating it. That's kind of the key milestones. In terms of performance, at the top left, the operating income, as mentioned, growing at 41%. This is mostly associated with the additional revenues, and additional revenues are a combination of higher tariffs, higher volumes in many of the businesses also, and a moderation of the administrative expenses, which we continue to try to moderate and are running an austerity plan, to ensure that every penny we invest, we expand, is in support of the businesses.
In the operating income in the bottom, you see all businesses are growing at healthy rates. When we break down that growth of COP 307 billion, it's a combination of operating income and the FX conversion of the U.S. dollar-based businesses associated with the movements in the exchange rates, which is part of the diversification and the portfolio we have built over time. Also, Elecnorte is showing a full quarter of contribution, which we did not have in the same quarter in 2022. This is the company we acquired, the transmission company assets, operating assets we acquired in the north of Colombia, as some of you may recall. Bottom right, the operating cost increasing is slightly higher than the operating income, but in terms of current nominal amounts, increasing by COP 178 billion, which is much lower than the COP 307 billion increase in the operating income.
That delta is reflected in the increase of the operating income during the quarter. You see some high numbers also on the operating cost, some of those are associated with the purely operational expenses, gas that we buy to sell, that's why in both cases you see high double-digit numbers in both cases, meaning operating income and operating costs. An FX effect, which is much lower than the income FX effect. In the administrative expenses, you see a moderation in most of the material businesses, again, a reflection of the cost consciousness that we are operating, the environment we have created, and a culture of taking care of all expenses. Go to the next page, please. Consolidated EBITDA, as I mentioned, this quarter is mostly operating. We did not receive material dividends.
How gas transportation and power transmission drive that 19.5% growth in the consolidated EBITDA. By company, you also see the main contributors showing very healthy growth rates. When you look at the consolidated EBITDA by business in the bottom, you see the energy transmission having a 27% increase in the consolidated EBITDA, which is part of the strategy, and that captures the Elecnorte asset acquisition that is, again, part of the business strategy. Go to the next. Here, there are a few important movements that I will explain. The net income increases moderately by 4.8%. That's below inflation, which stands about 12% in Colombia, impacted by one-offs and higher interest rates. Also, we have some positives that are one-offs associated with the TGI operations.
In financial revenue, we have an increase Or a contribution rather of COP 116, part of it is the repurchase of TGI bonds. We did an open market transaction on the TGI 2028 bonds, this was the strategy to reduce the hedging cost, that we acquired those bonds about 97% of the price, and that is reflected in that additional financial revenue. Of course, higher interest rates that we continue seeing during the quarter. Higher financial expenses, you see a delta of about COP 100 over the higher financial revenue, and that is what, to some extent, moderates the increase in net income. In the FX difference, we had a one-off positive. The TGI pesificación started in June 1st, 2023, it took us a few weeks to actually execute the hedging, which is now completely done.
In that time frame is where the Colombian political crisis broke up, and there was a currency appreciation during that time. That help us to monetize some positives in that currency exposure we had due to the starting point of the pesification. On the equity method, we had a negative 13%, that's mainly associated with non-cash situations, both in Enel and situation also in Argo that I will explain in a minute. On overall taxes, we had an increase, mostly is not expected to be cash payment taxes in the near future, as some of that is related to deferred tax. The combination of that is what leads to 4.8%. Lower growth rate than the EBITDA, but mostly as associated with the bottom part of the equation, which is the equity method.
The Enel Colombia situation is the most significant one, in which we had a reduction from COP 340 to COP 237, and the key driver there was a write-off that the company had to do of COP 285, because they lost legal action against the ICE in Costa Rica. The company expected in the accounts, they expected to win some of the expectations of that legal action. Say that when we did the transaction with Enel and incorporated these Central American assets, we put zero value on that legal action that they had. We did not pay for the expectation that was in their accounting books, which ended up being a negative outcome for them, and that's what drove that write-off. In Argo, the COP 80, the base is affected by an accounting recategorization or adjustment that we had in 2022.
That's why you see a reduction from COP 80 to COP 47, and part of it is associated, but a third of that difference that you see there with the IPCA in Brazil that was lower by about half between 2022 and 2023. If you were to look at the equity method for the six months, all these figures are quarterly, but for the six months, the Argo outcome is basically flat, and it's not as lower as you see in this one-off. On the bottom right, you see others is mainly Gebbras and the contribution of the assets we acquired there. Again, 4.8% growth, mainly impacted negatively by those one-offs in the bottom and with the positive of the TGI, also couple of one-offs that we saw. Next. Not much changes in the level of indebtedness.
We are now on the top left, about to finalize after the quarter ended, all the LIBOR loans were converted to SOFR, we'll see from now on about 36% of the debt linked to SOFR. Increased debt cost. The COP debt is at 15%. In June of last year, it was 11.78, and the U.S. dollar debt at 5.8 is also an increase from 4.41. At the end of the second quarter of last year. In terms of currency, you start seeing in 2023, a couple of new sections here, the COP hedge and the U.S. hedge. Now we have more debt in Colombian pesos due to the hedging of the TGI debt. It now accounts for 31% of total COP debt. Again, that 13%, as I mentioned, is variable.
On the top right, the 3.3x net debt to EBITDA, which again, give us ample space to pursue further acquisitions, which is our key strategy. In the cash balance, you see a slightly higher cash balance than normal. After this quarter ended, the first payment of the dividends, which is about $250 million, to our shareholders. Finally, we have very moderate cash pressure for our maturities of the portfolio. The 2023 are basically addressed now, which part was in Cálidda, part is in Guatemala, loans that have been agreed and are in the final. Cálidda was disbursed, and the Guatemala is in the process of approval by the Ministry of Finance in Colombia. We are actively prioritizing the advance renewal or rollover of those two, $319 million and $355 million syndicated loans that are due in 2024.
Next. In terms of CapEx, we're seeing an expectation of COP 427 million in Colombia. You see energy transmission, which is the key component of the 2024 CapEx and the following years. We're building more than 2,000 km of transmission lines in Colombia, from which Colectora, that I mentioned, is a key project. Refuerzo Sur Occidente, that reinforces the transmission system in the center and south of the country. Another very important project there. You see how, as I mentioned, Cálidda reduces the CapEx profile as we stand now. We are seeing some growth opportunities in Cálidda that could change this, and are very actively engaged with the Peruvian Government to support the gas massification. Finally, the slight increase in ROE and the reduction in ROA in part is due to the dividend.
We had extra cash at the end of the quarter that was dragging down slightly the ROA at the end of the quarter. That is what we had in terms of the overall summary of the operation. Again, positive results in all segments. I did not mention, for example, in Guatemala, which we are very actively trying to reduce the gap between the advancement of the project and the advancement of the revenues. We had, in U.S. currency, a 16% increase in the revenues because of the new energization of an asset that allow us to get more revenue for the company. We continue to manage costs and to find this balance between the growth of the revenue and the growth of the cost that we are seeing. For example, in TGI, we're seeing some cost pressures.
We executed the hedging strategy in TGI. We are now in the process of being engaged with the CREG and pursuing the final publication of the cost recovery Resolution, the 702 Resolution. Finally, we are proactively managing the 2024 maturities. With that, Karen, I open to Q&A. You can post the questions there in the chat, or I think raise the hand also.
Thank you, Jorge. We have no questions on our chat. However, we have a question from Rahul Bhatt. Rahul, we are going to unmute your microphone. Then you can unmute yourself. Okay?
Hi, Jorge. Hi, Karen. Thank you for the call. I have the few usual questions. Probably to start with, Jorge, can you remind us what impact do you expect from El Niño this year? Both on Enel Colombia and TGI business, because I think you will get impacted mainly from those two, if I'm not mistaken.
Thank you, Rahul.
Do you want me to go one by one, or ?
Yes, please.
Okay. The other ones were basically on TGI, for the new contracts, a lot of TGI's contracts are expiring in 2024. I think last quarter, the guidance was there was going to be some new contracts signed, in second quarter. I don't see any update on that. Could you please give some color on that? And then also the intercompany debt that you have with TGI, what is the plan? How is TGI going to refinance that? Or is GEB going to just push the maturity on that?
Great, Rahul, and with Juan Ricardo, also our CEO, that is attending the call. In terms of El Niño, actually the diversification also helps us there, because we have the El Niño, which is a drought season in the north of the continent. In Peru actually is the opposite. We had some kind of a hedging there. If I start from the south, what we saw so far is less rain in the center of the country of Peru, where the main hydropower plants are. That has had a positive impact in Cálidda as we have sold more gas to power plants in Peru. In Colombia, which of course, is where the major impact is, it's difficult to forecast the intensity of El Niño.
It is a given now that we're going to have El Niño, what that typically, just in the energy sector, means is higher electricity cost because of the scarcity of the resource. It should have a positive impact on the portion of the Enel generation that is sold on the spot market. Overall, it's probably not a huge positive impact given that most of the energy is sold in advance. The clients are going to, overall in Colombia, the users of electricity are going to probably suffer because of higher prices. That's where we are acting with TGI to try to ensure that the power plants that can be run on fuel or on natural gas are running natural gas. The cost spike moderates, and the citizens don't have to pay as much. That actually creates, if that materializes, that creates an upside for TGI.
During the last El Niño, the system was able to ship a peak about 200 MMcf/d to supply those power plants in the center of the country. That creates an upside, a temporary upside, in which TGI can monetize the El Niño while helping the country. If you go farther north, in Panama, we also have seen less rain already, which has impacted the generation ability of the hydropower plants that Enel has, especially in Panama and Costa Rica. Mostly in Panama is the higher impact. Overall, the El Niño, I expect to have a moderate impact on our business, but tends to be positive. Of course, for the economy overall, there are much more consequences than just electricity, as water scarcity, agriculture, and crops. Those are important impacts for the economy, but do not impact us significantly.
If I may?
Juan Ricardo? Yeah, go ahead.
Okay. One thing that you should keep in mind is this, the El Niño, where we have the most water, we had a really great rainy season. Guavio is almost to the top, the same as Guatape, which are the two main hydros. In that sense, the offer of electricity is going to be better than usual. We are trying not to allow prices to go too high, given the political environment. Enel has been proposing for a sort of option, so most distributors have long-term contracts instead of being exposed to the spot, because that is key to moderate the spot prices in order to keep a political environment that is stable. On the hand of electricity, we don't see much of an upside. Gas wise, although there used to be a huge upside for TGI, there is not enough supply of gas.
Unless the supply of gas is resolved and the connection between Promigas and TGI in the north increases its capacity, because it needs the investment of a compressor by Promigas in order to be able to use the regasificadora. I don't know how you say that in English, but the equipment that Promigas has to import gas into the Colombian market, you need to improve the transportation from the north to the center. Otherwise, they will need to use diesel fuels if there is a scarcity of gas. That is going to limit TGI's upside.
Overall, it should be positive, with the exception of Panama, where the needs of water for the canal is clearly constraining the generation of the Fortuna hydropower, and we are exposed to high electricity in the spot market there. That is the reason the Enel results are not so positive this time. It's just that. Go ahead.
Typically in the center, there are kind of two rain patterns in Colombia. The Niño has had typically less impact on the center, which is where most of Enel assets. It appears that the fact that Guatape, which is the highest reservoir in Colombia, has so much water, and much more water than in the previous Niño, I think is the impact of Ituango. As EPM has been able to generate with the 600 MW that are operating, that has helped them to save water, and that is most likely to have a positive impact overall in Colombia. On the TGI contract, I think the overall view is gas supply and gas shipment has been slightly lower than in the previous quarter of last year. No new findings have been announced or no new production is coming online.
The actual shipments on TGI had a relative stable profile. The clients don't have the need to secure capacity and to sign firm contracts, even paying slightly higher prices for interruptible capacity in some cases. I think, in general, there's no new information or no development that could change materially the TGI contracting profile. In the intercompany then, it's $370 million are due in December. Those are hedged already, so the company has no FX exposure. We're taking a group approach, TGI is pursuing some financing options in order to pay part of that debt. The final definition will be made with the group overall context. If the money is too expensive, we probably will just renew the intercompany, and if not, we will take some money off the market.
I highlight that TGI has bought back $202 million of the bonds. The leverage of the company currently is much lower. I think it's 2.3 x EBITDA. It's significantly under-levered, compared to what we have seen a few quarters back.
Thank you, Jorge. We have a question. Excuse me, Rahul, do you have any other question?
Sorry, I just had a follow-up. Firstly, for Juan Ricardo on El Niño for Promigas, is it the SPEC LNG capacity that has to increase, or is it something on the pipeline that needs to come?
It's on the pipeline.
It's on the pipeline. Okay.
You need more compressors. You can only get 50 MMcf on the interconnection between Promigas and TGI in Ballena or in Guajira. You need a compressor in order to be able to increase that capacity to 200 MMcf or 150 MMcf.
Understood. For Jorge, in 2024 when these TGI contracts expire, what do you think is the financial impact going to be for the company, in the sense, and because it's such a material part of your EBITDA as well. Do you think basically revenues and EBITDA are going to stay stable or it declines because of the contracts expiring, similar to we saw in 2021, I think?
Even the contracts-
It's not.
Go ahead, Jorge.
No, no, go ahead. Juan Ricardo is the Chairman of the Board of TGI, so go ahead.
No, at the moment, we're not expecting significant changes. Most of the contracts, it is gas that is being demanded, so we don't see that as a risk at the moment. Actually, we are pushing for an increase in the consumption of gas. It makes a lot of sense as part of the energy transition and the government policies to be more committed to increase gas consumption. We're going to be pushing on that side. That's not a concern at the moment.
It will not be a change as drastic as 2021, as you pointed, Rahul. The contract expiration is spread out in time, but also the volumes. I think the key is the volumes are flowing and will continue flowing. Even if the clients don't pay for the reservation and they don't use take-or-pay, the flow and the revenue will continue coming to the company. We won't see a significant impact there.
Understood. Okay. Thank you.
You're welcome. We have a question for Lucas Howard Noguera from LarrainVial. "Hello. What is your view about Resolution 101 and spot prices formation dominant position?"
We have studied it in detail, it is perhaps a well-intended resolution or decree. Every expert we have spoken with, it's very difficult for government to demonstrate manipulation of prices or collusion between the players. We think it's important to have that market operating as transparently as possible, in that sense, it's perhaps a well-intended resolution. The possibility of it having a meaningful impact, it is technically very difficult to have. I have to say, it's not the first attempt in Colombia to try to monitor the market players closely. It's not an issue of this new government. It's a worry of the regulatory bodies for a long time in Colombia.
Great. Thank you, Jorge. We have also a question from Juan José Muñoz from BTG Pactual. "Could you please provide more color on TGI's WACC change? What do you think will be the impact on the company's financials? What's your feeling about current price composition, and what are the first impressions of the new Minister of Mines and Energy?"
What was the second part? I'm sorry.
No worries. What's the feeling about [crosstalk]
The feeling about current [crosstalk] No, the previous one.
Price composition? "Could you please provide more color on TGI's WACC change."
Yeah?
"Will be the impact on the financials?"
The first point is the reason of the change is quite constructive. I think is a concrete regulatory action that is technically sound, and important to highlight as such. The macro environment has changed. The CREG updated the calculations, that led to an increase in the regulatory WACC, which is a positive overall for how the system operates, how the commission is operating. Of course, it's a positive change as we were expecting. The forecast we had before were with about 100 basis points lower WACC than we had. We are in the process of updating the whole model in TGI, as a few things have changed. The Resolution 175 and the changes that were incorporated and what we are expecting from 702. The overall impact on TGI, we don't know it yet.
As we evolve in the projections, we will share some of the key highlights with you. The CREG composition, the names we see, the people acting on the CREG are technically knowledgeable. The fact that they are not appointed on a long-term basis as the commission is set up for is perhaps not ideal. As I mentioned, the new minister has signaled that in two months, he will be appointing the CREG commissioners on a firm basis, which we see as a constructive signal towards the independence of the CREG. In terms of first impressions, I think the profile and the studies of the minister, his training, should be positive for his capacity to act.
We are trying to engage, as always, to be constructive with any minister that comes, in order to show the reality of the system and what the needs are in order to have reliable electricity and as cost-effective as possible.
If I may add, concerning the new minister, so far, everybody that has met him and has talked to him has a very positive impression. Extremely constructive, really listening, and trying to be helpful. I have a meeting with him next week. He's been very generous on his agenda. He's willing to look at all the issues in detail, mostly concerned to try to get things done. We are actually on a very positive side, hoping to be able to work together as we did with Rene, getting some things solved. He has a pretty clear understanding of how the system works, it's going to be easier on that regard. Actually, we'll say we're quite positive on the new minister hoping to establish a close working relationship.
Thank you, Juan Ricardo.
In some areas, perhaps beyond the electricity system, some of the signals, some of the commentary he has made publicly tend to be not to show continuity of what Minister Vélez was pursuing. It appears that he's not intending to have continuity of all previous policies.
Particularly the exploration of gas and oil. I think it's going to work out. We're positive about it.
Thank you both. We have a live question from Florencia Mayorga, from MetLife. We will unmute your microphone, and then you can unmute yourself, please, Florencia.
Hey, can you hear me?
Yes.
Yeah, we can hear you.
Hey, Jorge. Thanks for taking my question. I have a couple of questions. One, regarding after results of Enel Colombia, are you expecting a lower contribution this year in dividends, and potentially next year from this subsidiary? I understand that has been one of the largest dividend contributor for the group historically. This is my first question.
Florencia, hi. There are challenges as a company, despite higher spot prices in Colombia, lower generation in Central America is having an impact. On the non-cash basis, in terms of net profit, losing the legal action with the ICE is going to have an impact this year. The company is updating the plans. We don't have yet a complete forecast of what the expectation is because some things have gone up, some things have gone down, and the overall impact is not seen.
I will guess that perhaps we will see a slightly lower dividend next year. But the 2024 results that will lead to the 2025 dividend should normalize fairly quickly. The supply of electricity in Colombia is not coming as expected, and when you have about a quarter of the generation capacity of the country, that inevitably will help you capture some higher prices. This balance, that stretching, that reduction in the extra capacity of generation in the country should help the players that generate electricity.
Perfect, thank you. I have a follow-up regarding TGI contract. It could be the case that are you expecting that to continue be recontracted at the lower tier of the contracts, a trend that we have seen in the market the last year with contracts of near two-year, but the average life has been reduced to below four years from five years, I guess that two years ago. This is the trend that we should expect to see in the near term?
I think-
Not currently. No, that's not exactly what we're seeing. There is a significant upside of the Resolution 99 that updates the prices of all the pipes that have fulfilled their expected utilization life. The numbers that I've seen from TGI actually are on the positive, not on the negative. I will have a board meeting this Friday, but I haven't seen anything on that regard, as you seem to point it out. We are having conversations with Ecopetrol because most of it will depend on how Ecopetrol evolves. We are in conversations with them. I'm expecting to have similar contracts as the ones we had before, not as you seem to believe.
Okay. Perfect. Thank you so much.
Clearly the shift from take-or-pay to actual payment for utilization, which is natural for an asset that is already mature and a gas supply system in Colombia that has reached its peak, will have an impact. The key, I think, is the volumes. The volumes continue flowing, and the projection is to have the volumes increase on a moderate basis in many, many years from now.
The gas supply is going to be the key part.
Thank you. We have a question from Roberto Paniagua from Casa de Bolsa. "Enel, in the generation segment, how much energy is under contract and for what term? The second one is development of a new auction in Brazil. The third one, is GEB thinking in participate in firm energy auction in Colombia? The last one, any news about Pacific regasification plant?"
Okay, Roberto. Enel, the policy has been stable for quite a while, and is to contract only the firm energy that they can supply. That's about 75%-80% of the capacity. That has not changed, and that's where we stand today. From the generation part, that's the internal policy they have. In Colombia, it's relatively short term because it's driven by distributors, and distributors do not have an incentive to buy electricity in the long term. Contracts are one or two years and one or two years in advance. What we are seeing now is that when you put yourself on the distributor side, overall, they don't manage to get all the electricity that they want from generators. Many of the auctions, the process is legally defined, do not find suppliers of electricity.
In terms of the auction in Brazil, we are studying the auction that was just moved to January or February. There may be some interesting assets there, and we are collaborating between the Argo team, the Red Eléctrica team, and the GEB transmission team in order to have the most competitive auction, but also one that, and this is very important, that maintains financial discipline. What we are seeing in Brazil is people in some cycles are very, very aggressive, and it's difficult to create value, to add value to the company. We're not gonna get crazy, I guess, in the auctions, but we're looking at it in a very careful way, and perhaps we participate. In terms of the regas facility, the information is public, the government got one technical proposal, and that is following the regular process.
They need to put a financial offer in the next couple of months, some resolution could be done, or some decision could be made by the government in October, November. TGI is looking in detail. Go ahead, Juan Ricardo.
There is one key issue regarding that. The one offer they received has a clause that asks for a conditionality on the approval, the success on the public consultations, and the capabilities to execute timely. That is not part of the government's proposal. That conditionality, given that it wasn't approved for everybody, will make it very likely that it's not going to be acceptable. We have already presented legal action, just in case, if the government were to consider that would not be an even playing field, because that was not offered for everybody. That is not going to fly, just to put it shortly.
Yeah. Just to follow that informality, it is clearly a proposal of somebody who does not know the Colombian environment. Difficult to pursue. In terms of the firm energy auction, Enel has a very ample portfolio of opportunities b oth in the existing assets and in new assets, they are looking in detail to try to contribute to have more energy for Colombia. We see that as an opportunity, there is a good asset base that could help the company make interesting proposals in that auction.
Yeah, we're quite positive on that auction. It is expected that not that many people is going to participate, there are significant upsides for the companies that are in Colombia and are going to be there for sure. We're going to be one.
Okay, we don't have any more questions. We would like to thank you all for your presence today, as a reminder, the IR team at TGI are always available to resolve your questions. We hope you all have a good day. I don't know if Jorge or Juan Ricardo would like to say a few words.
Yes, just before, Juan Ricardo, we publish a lot of detail, the data pack is very complete, use it. If you want more information, come to us. We would like you to have all the information you need.
Thank you. Thank you, everybody, for your time, we're always available for any questions. Appreciate it.
Bye-bye.