Good morning, ladies and gentlemen, and welcome to the auto conference call of Equatorial Energia SA to discuss the earnings of the third quarter 2019. Right now, all participants are in listen-only mode. Later on, we'll start the Q&A session when further instructions will be provided. Should any of you need assistance during the call, please press star zero to reach the operator. Now, we are going to turn the call to Mr. Augusto Miranda, CEO, and Leonardo Lucas, CFO and IR Officer. Please, Mr. Miranda and Mr. Lucas, you may go on.
Good afternoon, everyone. First of all, I would like to thank you all for joining us in our third quarter 2019 conference call. Before I start with the results, I would like to talk about some recent news that were published in a recent notice to the market.
You know that Mr. Benigno Sampaio has left the position of chairman in Equatorial Energia, but he remains as a board member. The chairman position is taken by Mr. Carlos Piani, who has already held this position before, between 2020 and 2015, and is a former CEO of the company. Another recent change is Mr. Eduardo Ayres stepping down as CFO and IRO and being appointed as a board member, which should be voted in the general meeting already called for next week. I would like to thank Ayres for the 11 years he dedicated to the group as CFO and IR Officer, and I am happy to know that we should keep this strategic view as a board member. The CFO and IR position is now filled by Mr. Leonardo Lucas, who has been working in the group since 2005 in several different positions within the financial department.
Leo, we are going to continue counting on your competence, and please introduce yourself to the market.
Hello, everyone. Good afternoon. Thank you, Augusto. Well, as Augusto mentioned, I've been in the group since 2005. It's been 14 years. In the beginning of Equatorial Maranhão, at the time, CEMAR, I was responsible for the budgeting department, then took the role of controller, and finally, I stepped up as CFO. In 2012, when we acquired CELPA, I took the role of CFO and IRO in Pará, taking part of the turnaround since the beginning. In 2016, I became the corporate officer of the holding, overseeing, controlling, budgeting, and funding operations for the group as a whole. I'm very motivated with the challenge now, taking the position of the CFO and IRO of the office of the group.
I would also like to thank Ayres and all those years we worked together in several matters, and I'm sure I can keep on counting on his guidance as a board member. We are going to go to the presentation. I'm going to start describing the highlights of the quarter. I will comment on our operating and financial results. I'll give you an update of the transmission project. Finally, we are going to open for the Q&A session. We are going to start on slide number three. In the third quarter 2019, Equatorial's consolidated EBITDA reached BRL 1 billion. This number was affected by the consolidation of Piauí and Alagoas distribution companies, both already posting positive figures for the group. Also, we have the adoption of IFRS 15 for the transmission assets. We'll further disclose those impacts on the next slides.
In Alagoas, we are posting BRL 61 million as OPEX in the third quarter, following several measures taken by the group since we arrived. In Alagoas, we recently received a benefit from Sudene that will last until 2028. In Piauí, the highlight is the drop in losses for the second consecutive quarter. As for our sold volumes, we had growth of 1.6% in the quarter. Basically following the growth posted by three of our four concession areas. As for transmission projects, we've recently received the last environmental license that is necessary for the construction of all of our projects. In SPV 8, we have another section of the assets that has gone online in September, amounting to additional BRL 17 million in annual revenues.
In terms of EBITDA, if we were to consider only the old assets, basically Maranhão and Pará, we would have reached BRL 540 million in the quarter. We are going to move on to slide number five. The combined energy sales from all the four discos in the group grew by 1.6% in the quarter. The 3% growth posted by Maranhão was mainly fueled by the growth in industrial and residential segments. Industrial segment was impacted by the pickup of mining activity in the state. In Pará, we grew by 1.7%, strongly affected by the residential consumption growth and retail sales in the region. Piauí posted a growth of 1.2% in the quarter due to the loss reduction following the loss comeback activities we have already been implementing in that concession.
Alagoas was the only concession to report negative growth in the quarter, with a drop of 0.9% due to increased energy losses in the quarter. On slide six, we show our growth in required energy in all but one of our concessions in this quarter. Consolidated numbers, our combined growth of injected energy reached 2.1% in the third quarter. Maranhão and Pará posted the highest growth within the group, amounting to 3.5% and 2.8% respectively. Both are slightly influenced by better weather conditions in the quarter. In the case of Maranhão, we also had a pickup in industrial activity in the quarter. In Piauí, we believe that despite the slight positive influence of the weather, the main reasons behind the 0.4% drop in the quarter are yet the slow economic activity, as well as the beginning of the loss combat initiatives.
Alagoas posted a 0.9% growth in the quarter, which we believe is due to some economic activity pickup, especially considering the activities in the oil and gas segment. Finally, we would like to highlight that in this quarter, all distribution companies showed an increase in consumers registered as low income due to the campaigns made by the group in order to guarantee access to the tariff discount for consumers who are eligible. On slide seven, we show total energy losses in our discos. The level of energy losses in Maranhão and Pará were affected by the more integrated policy of loss combat and collection adopted in this concession since the second half of 2018. In Pará, we believe the effects of this new policy are already accounted for.
In Pará, after the tariff review approved in August, regulatory level of total losses went up to 27.5%, following the increase in the level of technical losses recognized in the company's tariff structure. In Piauí and Alagoas, the level of loss in the companies were basically affected by adjustments in the billing procedure that had to be made when we arrived in these companies. Despite all that, some loss combat initiatives in Piauí are already showing results, reducing the level of losses in the second quarter in a row. In Alagoas, in turn, given that we are concluding hiring, training of teams, and structuring of the loss combat program, we had the energy losses growing by 0.3 percentage points in the quarter. On slide eight, we see that quality indicators for Maranhão and Pará continue to be well below the regulatory target.
As for Piauí, the increase seen in recent quarters is a consequence of the adjustment in the measurements we've made after our arrival in quality indicators. This change should continue to affect the indicator until the fourth quarter, since it's calculated as a 12-month moving window. In Alagoas, there was a similar adjustment in the calculation, but with a much smaller impact in the final figure. Moving to slide number nine. As for SAIFI, we are below the regulatory targets in all our discos, even considering recently acquired companies, Piauí and Alagoas. Moving now to slide number 11. Here we show the evolution of our manageable expenses in the discos. Maranhão's operational expenses amounted to BRL 125 million in the quarter, up by 16%, mainly due to the increases in third-party services connected to loss combat and collection expenses.
In Pará, operational expenses had a drop of 3% due to the internal redesign of some activities within the company. In Piauí and Alagoas, we had significant reductions in OPEX in the quarter of roughly 30%. It's always important to remember that in the early stages of a turnaround process, we should expect some volatility in such expenses. Moving on now to slide number 12. Maranhão posted a 13% drop in EBITDA in the quarter. The main reasons behind the figure are difference in the unbilled revenues between quarters, higher OPEX, as explained earlier, and lower financial asset updates. The EBITDA in Pará dropped by 2% in the quarter due to a reduction of BRL 22 million in the financial asset update. If we are to disregard this effect, EBITDA would have grown by 6.5% in the quarter.
In Piauí, for the third quarter in a row, the EBITDA figure is positive, reaching BRL 75 million in the quarter. A strong number even before completing a year controlling the company and before the company's extraordinary tariff review. In Alagoas, already in the second quarter, we are consolidating results. The recurring EBITDA amounted to BRL 15 million, following the ongoing restructuring in OPEX at the company. On slide 13 now. We show the consolidated EBITDA for Equatorial. In the third quarter 2019, we posted an adjusted EBITDA of BRL 1 billion, results that benefits from the consolidation of transmission assets and the newly acquired discos. For comparison purposes, we exclude the results of the new assets, that is Piauí, Alagoas, Transmissão, and Intesa. In this case, the consolidated EBITDA would have reached BRL 550 million, a drop of 6% year-on-year.
If we disregard the total decrease of the BRL 32 million of the financial asset update at Maranhão and Pará, the EBITDA drop would have been just 1%. As of the next quarter, I would like to highlight, we are going to have the full impact of Pará's tariff review. Moving on to slide 14. Slide 14 will show the amortization schedule and leverage for the company. Equatorial's leverage, considering the full consolidation of its assets, reaches 3.4 times in the quarter, following the consolidation of the numbers of Piauí and Alagoas, and accumulated CapEx deployment in the transmission assets construction. Remember that when we calculate leverage, it is different from the calculation of covenants in Equatorial, as it considers the last 12 months of the results from any new assets acquired in the group in the period.
The group ended the quarter with almost BRL 4.7 billion in cash position, which is enough to cover more than the next two years of debt maturity. Additionally, the recent conclusion of the preferred shares issuance in Equatorial Distribuição added recently this week, BRL 1 billion to the company's cash balance, thereby improving leverage and reducing the consolidated numbers. We believe that we have a very comfortable debt structure to accommodate the cash needs of Piauí and Alagoas, as well as the future CapEx for transmission projects, considering the long-term debt that we have secured for the group. We'll now move on to slide 15. Here we show the main investments made by Equatorial in recent quarters. As you can see, the investments in the transmission segment have picked up in recent quarters and have reached BRL 1 billion in the third quarter 2019.
Given that all the eight projects are with ongoing construction. Since the beginning of the development of transmission projects, we have already spent approximately BRL 3.3 billion. We are moving on to slide 17. We have already obtained the construction environmental license for all of our projects, including the last session of SPV 7 that was pending. All the eight projects are under construction. I would like to highlight the evolution of all our SPVs, particularly SPV 8, the second largest in our portfolio and also the last to be acquired. It has already reached 95% progress as of the end of October. SPVs 1 and 2 should also be mentioned, as they are almost reaching 90% completion. SPV 4, our biggest individual line, is above 50% built. On slide 18.
As we start to have bigger CapEx disbursements following the start of the construction of the lines, here we show the long-term funding status for each SPV. This was the result of a three-year long fundraising effort from four different sources: BNDES, the Federal Development for the Northeast Region, the Amazon Development Fund, and also complemented by infrastructure ventures. We have already secured 100% of our long-term debt at a very competitive cost. This should translate into significant boost returns and reduction of risks, not only in terms of liquidity, but also in terms of volatility. As all our long-term financing are indexed to the IPCA, which is the same index of our revenues. Out of the BRL 4.1 billion in financing signed, BRL 2.7 billion or about 67% have already been disbursed. We'll now open for your questions. Ladies and gentlemen, we'll now start the Q&A session.
If you have a question, please press star one. To withdraw your question from the list, press star two. Our first question comes from Thiago Silva from Santander. Please, Mr. Silva, you may go on.
Good afternoon, everyone. Thanks for taking my question. Thanks for the call. I have two questions. First, about the extraordinary review. I would like to ask if you could give us a bit of an overview of all the appeals that you've had, and also what were the terms, because I know that you recently had an agreement with Itaú Bank, and within this agreement, I know there are some terms in terms of a buy option. I would like to know if you could give us a bit more color on cost terms and et cetera.
Good afternoon, Thiago. Thanks for your question.
The first portion of your question, you talked about Cerum and Eletroacre. Perhaps you are referring to POE. Yes. I'm sorry. Yes, that's exactly that. Okay. With regard to POE, we had the process denied, and we already appealed in an administrative suit. We are very confident about the quality of our claim that was built, and we believe that some discussions are going on. We are quite confident with the quality of appeal that we made, and we believe that our asset base for POE is the base that is the best consolidated in the group. Of course, as we know that it is a matter of time. We have to break down the whole base. I think that with a bit more time for discussion, we are going to successfully close this issue. As for Alagoas, the process is flowing regularly.
We try to accelerate times, and we are watching out for any additional information that is required for POE to be implemented in Alagoas as well. As for Itaú, you are quite right. We do have a buy option in this operation. This is a term that is established in contract. I don't know if I answered your question. Yes. For the last question, do you have any information that you could give us in terms of cost and time for this agreement with Itaú Bank? Well, this buy option is corrected by CDI index, and we have a seven years time to make the option. Okay. Thank you very much. Our next question comes from Marcelo Sá from Itaú. Please, Mr. Sá, you may go on. Hello, everyone. Just as a follow-up for the question before.
Could you give us an estimate of time to complete the process with CEPISA? Do you think you're going to close that by the first quarter 2020? As for Itaú, do you have a sell option for Itaú? That is, does Itaú have a sell option? The second question that I would like to understand is the company's PDD policy. I know in CEMAR it was quite low. I know there were non-recurring effects that took place, but they were not very well described in the release. In CEPISA there was a reversal, and in CEAL it was 0.4%, which seemed to be too low. As CEAL does not have much of a history with eletrogramas, we couldn't understand what would be its normalized level. If you could explain the dynamics for these four areas, I would appreciate it. Well, thank you very much.
I'm going to start with the review. Well, we thought that it had to do with time and for the discussion, basically our claim was to close the subject until March, this is what we are working. As for the PDD, sometimes we have a bit more volatility in quarters. Especially now in this quarter when you have an impact of the readjustment. It is natural that it is slightly lower percentage-wise in this quarter. For you to think of PDD because of volatility, I think that you should think of a longer time, the last 12 months. When you talk about POE and Alagoas, we have been implementing several turnaround options, including fighting against delinquency, we are having very, very high collection levels above 100%. Perhaps we can even intensify this volatility. This is about PDD. That is the provision for bad credits.
As for the agreement with Itaú, we just have the buy option. They don't have the sell option. Could you think of a provision for bad credit in CEAL that would be a bit more normalized just for us to project the model from now on? I understand that in the short term you have a lot of volatility, but perhaps we could have a reasonable number to consider in the long term, both for Cetesb and CEAL. Well, in the case of Cetesb and CEAL, we are implementing a series of actions and the level of collection is very high. While the level is high, we tend to have a lower provision for bad credit. The level is only going to be clearer as time goes by.
We have had, and we probably continue to have, a higher collection level in these companies given the opportunities of accounts receivable that we have.
Okay, perfect. Thank you very much.
As a reminder, if you have a question, just press star one. Our next question comes from Liliana Young from HSBC. Please, Ms. Young, you may go on.
Hello. Thanks for the opportunity. I had two questions. One is about the growth of volumes in the market. In your areas, it's still below the average of Brazil. Could you comment a bit on that? Perhaps contextualize how you are changing your billing process to account better the part of loss and delinquency. The second question, and congratulations on your new role.
Do you have an idea about what can be different from now on in terms of management, or do you think that your management is going to be more or less in line with the previous management? Thank you very much.
Good afternoon, Liliana. Well, first, with regard to volumes. We are seeing slightly higher volumes, stronger volumes in Maranhão in the residential market and again, the pickup of the industrial market. We do see a scenario of a somewhat recovery, particularly in Maranhão. In Pará, we do see the recovery, not as strong. In POE, we are still with negative numbers. It seems that the scenario in Piauí is a bit more deteriorated than in Pará and Maranhão. Also because our loss combat program is going on, probably we are having some reaction of consumers holding up a bit of consumption.
In August, a bit lower than the others in terms of the level of activity. With our loss combat program that is about to be completed, has not yet yielded effects in Piauí. Generally, what happens in our concessions, especially in Maranhão and Pará, which are places that we are a bit more acquainted with, is that crisis takes a bit longer to hit the states, but also takes a bit longer to leave the states. This is something that we have already observed, at least in Maranhão and Pará. As for indicators, we have a quite well-consolidated program in terms of indicators, metrics, how to break down the metrics and monitor business performance. Not only monitoring business performance from top-down but also how they affect all the levels of the organization.
As we implement action in new companies, those initiatives have been an accelerator of our turnaround. The members of Piauí and Alagoas are starting to show these results.
Thank you very much. As a reminder, if you have a question, just press star one. Since there are no further questions, we are now closing the Q&A session. We would like to invite Mr. Augusto Miranda to proceed with his closing remarks. Please, Mr. Miranda, you may go on.
To close, I would like to reinforce our commitment in delivering a differentiated appreciation to our shareholders through exceptional financial and operating results. I'd like to highlight our adherence to the highest level of transparency and corporate governance, and reassure that both me and our investor relations team are available to help you with any questions you may have.
Thank you again for taking part of our 3Q conference call. Have a good day. The conference call of Equatorial Energia SA is now closed. We thank you very much for attending. Have a good day. Thanks for using Chorus Call .