Morning, everyone. Thank you for joining us today. Welcome to the video conference announcing the results of the fourth quarter, 2025 for Companhia de Saneamento do Paraná, Sanepar. For those requiring simultaneous translations, this feature is available on the platform. To access it, simply click the Interpretation button indicated by a globe icon at the bottom of the screen, then select your language of preference, Portuguese or English. For those listening in English, you also have the option to mute the original Portuguese audio by clicking Mute Original Audio. Please note that this video conference is being recorded and will be made available on the company's website, ri.sanepar.com.br, where the full earnings release and presentation materials is accessible. You can download the presentation directly from the chat available in English. During the presentation, all participants will have their microphones muted. The Q&A session will follow the presentation.
To ask questions, click the Q&A icon at the bottom of your screen and type your question into the queue. Once your name is called, a prompt will appear to achieve your microphone, allowing you to ask questions. We recommend submitting all your questions at once for efficiency. If your question is not addressed during the event, please feel free to email ri@sanepar.com.br. Please be aware that the information provided during this presentation, including any forward-looking statements regarding Sanepar's business outlooks, projections, and financial targets, reflect management's current beliefs and assumptions, as well as information available at the time. These statements are subject to risks, uncertainties, and changes in circumstances that could cause actual results to differ materially. Investors should consider general economic conditions, market factors, and other variables that could impact the company's performance and cause actual results to differ from those expressed in forward-looking statements.
I'll hand it over to our Chief Financial and Investor Relations Officer, Abel Demétrio.
Thank you, Rodrigo. Good morning, everyone, for participating. We have our Wilson Bley Lipski, our CEO, our Investment Director, Leura Lucia Conte de Oliveira, our Accounting Director, and our RI team. I will hand it over to our Wilson Bley Lipski for his initial considerations.
Good morning. Good morning, everyone. Very briefly, I would like to contextualize the numbers we will be presenting in this presentation release of fourth quarter last year. We are following. We are moving towards universalization in an accelerated way. We reached 82.4%. If we apply the new ANA resolution using the potentials, we might have additional numbers reaching almost universalization determined for 2023. Our objective is to reach it in 2029.
For that, we need a lot of investment. Last year, we had a record BRL 2.7 billion in works. which adds to the stocks in works ongoing. It shows how robust this company is in terms of being able to translate this in works which are complex, but brings results, especially for social inclusion and public health. Almost 12 million people are being served. Something to highlight is the increase of new economies. There were over 100,000, or around 100,000, in sewage economies and 70,000 in new economies of water. If we compare it, this increase represents the highest average number in Paraná, if we compare with the city of Colombo, with 70,000 people.
We almost brought a new municipality of middle size inside Paraná. This brings and translates an increase in revenue. As you will see, it's quite exponential. We managed to approve the continuity of this universalization, a robust plan of investment in which we have sewage predominantly, but without forgetting the water systems. We are projecting investments of BRL 3.1 billion in the next five years. We might be the few companies in sanitation and mixed companies, so robust for this kind of investments. With a lot of tranquility in terms of receiving in receiving funds for what is projected.
Of course, with all this increase and this new plan, everything that is added to what we already have, the expenditures tend to increase. We are trying to find the right balance between these expenses, these new expenses, within the necessary volume to be able to give way to this increase in revenue and investments that we are making in a very accelerated way. We managed to keep the EBITDA margin close to 40%, which is very traditional within the company, and we are making some concrete actions. We have some workers that agreed to leave the company, and we added new workers, more motivated and with lower values in their income, their compensation.
This is demonstrated by our survey as something very well accepted within the company. Over 80% approved totally, this regime that is established in terms of governance within our company. 80% of our workers approved that. This is very interesting to understand that the more the pack, the more the operational cost, but we are always trying to find this balance to make it reasonable for everyone. Sanepar is going through a big moment, is national and international highlight, especially in what concerns innovation, operation, investment.
We now, recently, we launched the Sanepar 5.0, which is a new version of technology innovation, that in the future will make our cost, operational cost cheaper, bringing the best in the market, what we have in the best in the market, to be part of our day-by-day. These are my initial words. I'm very, I trust the future, and this transparency is very important in this big moment Sanepar is going through.
Thank you, President Rodrigo, we can start our presentation.
Now let's go through the highlights of the year 2025, fourth quarter of 2025. As our investments were records, we've reached on the fourth quarter BRL 789 million in investments.
In 2025, it was BRL 2,000,652, which is an increase for 2024 of 38.8%. Concerning operational efficiency, also, the fall of 0.6%, and it's in line with our regulations. It's very important for this to be contemplated in the tariff of the company. The invoice volume increased 1% compared to 2024, and on the 4th quarter, we increased 1.1% compared to the 4th quarter of 2024. We compared in 2025 - 2025. Concerning sewage, we increased 2.6% and also 2.6% compared to the year of 2024.
Our net revenue increased 6.5% in the fourth quarter 2025, compared to 2024, and 5.2% in the year of 2025 when compared to the year of 2025. The net margin -4.1%, compared to fourth quarter, and +6.3% versus 2024, with a leverage 0.6x EBITDA. Some recognitions and governance, like the Transparency Award, some solidarity seal, an honorable mention, due to our ESG causes, which is extremely... We have the ESG in our DNA. In the next slide, let's go through the operational results. As we saw, in water, we had a volume with an increase of 1%. The volume increased 1% as well, in the invoice volume. The sewage collected in invoice, we increased also, 2.6%.
The number of the connections, we had an increase of 1.3%, which was 46,964 new connections, and 1.6% of increase in sewage economies, with over 6,000 new economies, which shows that despite the company's universalized in terms of water since 2007, we continue with a robust growth. Concerning connections, 2.6%, reflecting the universalization, 66,954 new connections and more than 100,000 sewage economies. What the president said, over 100,000 economies and over 70,000 economies of water, it's around 170,000 new economies in the year 2025. Let's see the reservoir levels. We closed the year of 2025 with 84% of our reservoirs with water.
Iraí, 70%, Passaúna, 90%, Piraquara, 96%, and Piraquara two, 76%. The most updated level, it's in our site, is approximately 87% of the volume, the reservoir levels today. Our service index, the legal framework, which obliges us to serve 90% by 2033, and 90% is switched by 2023. We are moving towards universalization, which is 82.4%. 100% of volume is treated by the company, and we kept the service with a 100% with treated water for the population, the urban population. Next slide, let's go through the financial indicators. We saw the fall in 2025 was 0.6%. In this regard, I highlight that as important as the fall is the level reached in the past three years.
In 2023, we had a reversion of the fall, 2024, the fall of 0.7%, and this year, a little lower, 0.6%, which is important because we know that the waging, the invoices that are not paid, they go back to the tariff. The lower the default, the lower the tariff in the revision of tariffs, because losses per connection, we had a reduction compared to 2024. We closed the year of 2025, with losses of 222.7 liters per connection per day, less than 223.1 recorded in 2024. Margin EBITDA, 41.1%, in line with 2024. ROE, 17.9%, and ROE, both ROE annualized of 12%. In the next slide, let's talk about our quarter results.
We increased in 2025, we increased 5.2%, reaching BRL 7.206 billion in net revenue. We reached an increase 0.9%, reaching BRL 2.964 billion. Our net profit reached BRL 2.080 billion reais, with an increase of 34.6%. The cost and expenses increased 8.4%, with BRL 4.242 billion. Our EBITDA margin, compared to 2024, was 1.8% lower, 41.1%, and the net margin increase reached 28.9% in 2025. Let's go through the quarter results, the main impacts we had. The net revenue increased 6.5% compared to fourth quarter of 2024, a little better than 2024, it increased 4.7%.
The cost and expenses with personnel increased 12.7%, reaching BRL 434.188 million. These 12% are reflected as a result of labor compensations registered in the period, a result of the company's work in terms of judicial settlements. This labor compensate indemnizations, they refer to a reversion of provisions, and we took out from that and launched in the personnel expenses. If taking out this effect, which is close to the result, we would have an increase of 12.56%, excluding these provisions, because as we said, they were recorded in the item of provisions. PPR, -12.5%, this is the profit. Material, a reduction of 9.2%.
The impact was a reduction of 15% of chemical products. It's important for maintenance of our operations, the utilization of these products, and that the prices of these products are accessible. Electricity, we had a reduction of -7.4% compared to the same period of last year. We reached BRL 114 million as a result of migration of the free market. The issue of electricity, as we saw, has been a constant issue in 2025. Of course, this movement is being consolidated. From 2026, we should have stability. When we talk about third-party services, we can open this.
It is the PPPs. We had on the fourth quarter of 2024, we had PPPs of an expense of BRL 12 million in the fourth quarter of 2025, a variation of BRL 25 million that impacted these third-party services. Excluding the PPPs, we have an increase of 16% increase, especially impacted by maintenance services that increase and technical services that increase over 65%, and others have technical services, operational maintenance, which impacted this account. The general and taxes, 7.7% increase in line with the usual expense, inflation, plus expense, judicial provisions and regulations. A more positive result, as I said, because of personnel. We had an increase of launching the indemnizations and reducing the provision, judicial provisions. The number was better.
We have more than BRL 47 million against BRL 13 million of the fourth quarter of 2024. The provisions for the health insurance and health plans, BRL 5,000,975. Expenses and financial revenue, a reduction -35.2%. Other costs and expenses increased 43%, impacted mainly by the issue of PDD done in December, around BRL 48 million. The issue of PDD, which is recommended by our independent audit, it was important in the sense of being adherent to the accounting norms and what the audit required from us. When we see the next slide, accumulated results. In the personnel account, just to review the account, we increased 18%.
We have to remember that the provision for the indemnification of PDD, of all the 500 employees that left, it was a provision in the indemnification of BRL 170 million. The personnel account was impacted because of these people who left voluntarily. In the account of expenses and revenue, we have an adjustment of the asset of BRL 183 million net compared to 2024, due to the increase of the discount rate of interest versus what was actual in 2024. The PDDs, we had BRL 48 million compared to the quarter, in the year, when we compare to the year of 2024, this account of PDD increased BRL 113 million. It impacted in other costs and expenses, an amount quite significant compared to 2024.
When we add up PDD, AVP, this, we have these three items, over BRL 400 million, which were registered and impacted in the results. Besides that, the civil provisions around three big actions recorded in the year in provisions, which were the provisions of the Itaú audit, or the piece of land of Indira Province in Ponta Grossa, and that added in this amount. These are some main points reported in the year of 2025. In the next slide, let's take a look at the CapEx. Last year, we invested in 2024, BRL 1.912 billion, and in 2025, BRL 2.653 billion, over 38.8%.
For this year, we are predicting BRL 2.6 billion again, of investments. The investments were 31% in water, 54% in, and 15% in other. The resources, 65% own resources and 35% third-party resources, of course, with a more robust cash money. We did not have to borrow money because now the Selic is very high, so we did not have the need to look for resources for our investments. The net debt and leverage in the short term, the debts that are due in 2026, over BRL 900 million, it's very in line with 2025. The long-term debt, BRL 6 billion, over BRL 6 billion, and the total, it is just BRL 7,000,000,060 billion.
We had a net debt, BRL 700 billion, 0.6% of EBITDA of the genet division flow, an increase of 154% and a conversion of 238%. The increase of the cost of third party capital is impacting VP, due to the increase of the discount rate reaching 12%. We hope that for 2026, with the stability or the fall of Selic and the level of if the inflation is stabilized, we might stabilize this increase, which we verified in 2025. Our debt breakdown is well distributed among the indicators, with no pressure and one-third, 33% in TR, which is the biggest part on the right side of the graph. IPCA, 27%.
DI, we have around 30%, which is the 27%, which is within DI, but we also have 3% more of gold, around 30% connected to DI. EPC and FIPE, 4%, with no, 4%. It's a predictable debt with indicators, national indicators, all of them very well aligned. Our covenants and our obligation with our creditors. With BNDES, as the finances, with the Votorantim Bank, we have debentures, 4th and 7th issues. The three covenants established are fulfilled, whether it is the debt, that bank, less or equal to three, EBITDA, another, 1.5, other debts, less or equal to one. All of them fulfilled our contracts with CAIXA. We have contracts that foresee some clauses of covenants.
EBITDA, adjusted by, it's one or higher than 1.5, we have 1.7. 0.4 in other debts, 0.3 with EBITDA adjusted. We are quite comfortable here. We issued in 2025 BRL 375 million, which were obtained through Banco do Brasil for investments for the Xisto Sewage Treatment Station. We have a condition of a debt service coverage duration of 1.5, EBITDA adjusted by, Adjusted EBITDA Net Financial Expense, we have 0.4% meeting these indicators. In the... We have the debentures issues, 9th to 13th, also two indicators. The debt is less or equal to three, we have 0.4. The adjusted, we have 128.7.
The contracts KfW, we went through, all what was mentioned before, the level of debt, the limit is 60% of debt. We have 53% by the end of 2025, reaching this clause predicted in the contract. Let's go to our balance sheet, the main variations, positions in 2025. The net debt reached BRL 2,000,045,219. It's made up of cash and cash equivalent, versus the financial investment, versus loans, financial and debentures, and dividends and interest on equity. We had 213.5%, and the issue of loans, financials, that increased 11.5%.
The turnover closed BRL 445,078,000, a decrease of 45.9%, due to receivables lower than 2024 of BRL 1.411 billion-BRL 1.283 billion, a reduction of 9.1%. The stocks increased from BRL 73 million - BRL 97 million, an increase of 32.5%, and the contractors and suppliers from BRL 33 million - BRL 516 million, an increase of 53%. Salaries, an increase of 31.1%. Other assets and liabilities in reduction of 89.3%, due to the liabilities compared to the rates of payment. In this issue, in other assets and liabilities and important accounts, in assets, in the contracts, the ongoing constructions, they increase to BRL 3 billion, increase of 32.7%.
Our net asset was BRL 2 billion, and our turnover, operational turnover was measured in 23 days of the year of 2025, better than the 45 days verified in 2024. The cash flow, what we see, as we saw in the previous slide, an operating activities of BRL 7 billion, 60 million, an increase of 154% due to the net profit adjusted, a decrease of 36%. These are the main reflections of operational. The activities of investments with, we met BRL 2 billion, 615 million, and the activities of financing, consuming our cash flow, BRL 637 million, we received over BRL 400 million, and the loans for finances, BRL 915 million, and other variations, BRL 68.348 million .
There was an increase of BRL 3.8 billion, with an important increase. That was the presentation of the fourth quarter of 2025. We are available for any questions and other clarifications that need to be done. Thank you, Rodrigo.
We will start the question and answer session. To ask questions, we advise you to send them by Q&A icon at the bottom of your screen. By default dynamics, your names will be announced for them to ask their questions live. At this point, a request to activate your microphone will appear on the screen. If you are unable to open your microphone, please write, "No microphone," at the end of the question, and our operator will read it aloud. Our first question is from Ricardo Mello, Banco Safra, and adding to Guilherme Lima, Santander.
Concerning the rates of payment, could you give us an update about the expectation of the company concerning the current dealings and the conclusion of the process?
Could you comment if the tariff process in 2025, we could see an effect due to the devolution of rates of payment, or should we wait for next year?
These are the questions of Guilherme and Ricardo.
Thank you for your question, Ricardo and Guilherme question, too. Concerning the rates of payment, as publication in the Diário Oficial, in the official journal, was communicated to the market, the regulating agency of Paraná. It is, this is analyzing this. It declared that it's analyzing the rates of payment. The company has answered the questions of the agency about the process, and it's awaiting. Right now, we have no definition about this theme.
As I said, this is in charge of this team of work. It is intersectorial, which was constituted by the agency, and the company was authorized by the Administration Council to make adjustments for 2026. This has to be analyzed by the agency by April 17, 2026, because the tariffs, they are, they go until May 17. They are in force until May 17. We don't think the two issues are separate issues. The rates of payment and readjustments are two separate things, I cannot say for sure what is the date when they expect to give us an answer. We depend on the conclusion of the work by the agency, and this depends on the board.
Right now, we cannot give a precise answer, but we understand that this work is quite advanced, and this first semester of 2026, we should have a definition by the agency.
Thank you. Continue our next question by João Vitos, Atena Capital.
About the line of provision for contingencies in DRI, could you clarify if the company is acknowledging only additions and reversions, or if the payments are impacting the results?
João, thank you for your question. In this regard, I will hand over to our accountant, Ozires, for him to be able to answer.
Good morning. Thank you for your questions. I thank on the name of the board to be participating in this event.
Yes, João, the effect in the result is, it is integral, so when we have a provision, because it has a provision, it has a value recorded as a liability contingent, and the moment it is paid, there is a judicial deposit. The effect of this payment is reversed, and the net impact is in the account, whether it's labor or civil or environmental, the impact is integral.
Thank you. Dando continuidade, a próxima pergunta vem do Luis Carlos Ferreira, investidor. The next question is Luis Carlos Ferreira, investment.
The company announced the CapEx for the announced for next year. The sewage universalization will be reached before the deadline. How is the PPPs?
Good morning. Thank you for your question. I hand over to our investment director for her to be able to answer.
Good morning, everyone. Concerning the service, the meeting our targets, we work with very strong planning. The investments, they are not born without projects, without all the technical elements that we need. We have been managing to reach our purpose of reaching almost 100% of what we had planned. Obviously, we have some problems in the middle of the relicensing, environmental licenses that require deep studies by the body to authorize the cut of trees. We have the issuance of tenders in some cases. We have not been successful in the first attempt of tender. Many times, we need to review some technical points. All these issues causes to work, and the more planned, the better. We work strongly with the purpose of reaching universalization before 2033.
It's quite a big volume of work. It's around 600 different initiatives or works in the state. This year, we are working around this number, more than 250 works of high level. In 2025, we had three big works, which are very representative for the company. The conclusion of Miringuava Reservoir, the cut of the trees, the roads, the building of roads to prevent the people that who live in the area, prevent them from having problems accessing their houses. Now, by the end of 2025 and beginning of 2026, we initiated the filling of the reservoir of the lake. This was over BRL 200 million invested, and they will have now an effect both in investment and remuneration of capital.
We had another work, which another reservoir, which had an anchor in terms of judicial adjustments. It was signed in 2018. We managed to reach the net phase of treatment in 2025. We continue with the work, but it is in its a solid phase, the gas phase. That's why I understand that yes, we will be able to reach the universalization before 2033. This is our main goal. Concerning PPPs, Abel might add something. We are working strongly. The beginning is always slow because we have three batches in the countryside with different companies, each one of them getting acquainted with the places, developing projects, approving together with the company, how we are going to serve the population. All of them are ongoing, as we imagined, as we projected.
I believe we have a good prognosis to meet the new framework. I think you mentioned three works, but you mentioned two. Yeah, that's correct. The third work is Estação de Tratamento de Esgoto Siqueira Campos, which is today, it must be around 60% or 70% of it, close to its conclusion. It costs over BRL 350 million, and it will bring significant gain, environmentally speaking and operationally speaking. It's a region that expands its sewage treatment. As we saw in the presentation, we have treated 100% of our sewage. Like a Xisto, it has the same kind of purpose, but no less important.
Dozens of works that are ongoing and that some are coming from 2025, but they are in their phase of implementation for 2026, and others that will start in 2027. Our plan of investment shows that this is a robust investment for many years, still for us to reach universalization. I would like to add something related to PPPs. Remember that in 2025, 3 batches and two micro regions, the micro regions, Center, East, they started being serviced by the PPP's companies. Financially speaking, we received payment, that was a reinforcement. We reached BRL 95.2 million of paid bills in 2025, which reflects the beginning of the activities in the three micro regions where the company may have the tenders for PPPs. Thank you.
Our next question comes from Reinaldo Verissimo, added by Renan Urich, both investors. About 13% increase on personnel, what is possible to be done for the expenses not to increase above the inflation indicators? About PDD, is there any other initiative to reduce costs that in the near future? These are Reinaldo and Renan's questions.
Thank you, Reinaldo. Thank you, Renan. When we look at the personnel costs that increased on the fourth quarter, 12.7%, as I mentioned, one of these aspects of growth was the issue of the labor indemnifications, where we had some provision. The expenses that affected the personnel account, and taking out this effect, it will always have an effect, these are indemnity compensations, labor compensations.
In the period, the increase would be 12.56%. The company in the past few years, due to some actions, the union won a case. There was an increase, the company made some actions. The PDV is one of them. It's more than BRL 174 million paid in compensations, in the sense that, causing this turnover, this necessary turnover for the employees who have been with us for a long time, can leave, and we can bring new employees. This was done, so much so that the number of employees, which was over 6,000 employees, we have 5,000. There was a reduction. This has an impact in the third party's account, because sometimes we have to use the third-party services to make up for the labor.
This is something the company has been looking carefully at the increase of costs in healthcare. This has impacted the companies in the past few years. This, the cost has been increased above in inflation. We've been talking about our social service, that take care of our, that take care of this health insurance. They, they understand the need of looking at it very carefully. We have some initiatives to decrease over time and some actions related personnel. We are taking some actions too, so that this curve of increase in personnel is adherent to the regulatory issues, because this has an impact in what Sanepar grants in terms of tariffs. It grants a tariff that is updated by inflation, so we need to be very aware.
We believe that as of 2026, due to the benefit that PDV must bring, since it was quite a relevant PDV, part of it might be reflected in the year of 2026 and the following years.
Thank you. Our next question comes from Luis Carlos Ferreira, Investor. He brings us two questions.
Yesterday, Sanepar announced that it requested the adjustment for 2026. What was the % requested? Second question: there are two great values in non-recurrent items, BRL 55 million of provision and BRL 51 million of some installments. Could you explain these points?
These are Luis Carlos' questions.
Luis Carlos, thank you for your question. Yesterday, the council board authorized the request for the regulating agency. By our two, based on our methodology, last year we had the tariff review, which was the third review for tariff concluded in 2025. Now we will have three years of IRT. It's an index of adjustment, which are this or ordinary adjustments, which are requested by the company every year. This is an ordinary issue of the company. The company does not announce the % requested, because the decision is up to the regulatory agencies, not Sanepa
r that defines the tariff. In this sense, the company does not create any expectation, because obviously every calculation we send to the agency, the agency will make a calculation, and they will determine the adjustment of the deadline is April 17th, because it needs to publish the results at 30 days in advance, which is May 17th.
Right now, when the agency defines, we will communicate the market, informing the % and whatever the decision was concerning our request. Concerning our second question, I will hand over to Ozires, so that he can add your, to your question.
Thank you, Luis Carlos, for your question. You mentioned two amounts if a non-recurrent effect, where that we showed BRL 75.9 million in a line of provisions. Actually, this is a complement of our regulatory receivable, related to the amount we have recorded. We had, we added something for this amount to be reconstituted, until the final decision by GEPAR. Concerning the other amount that you questioned, BRL 51.5 million.
This PCLD, complementary PCLD, is expected loss in credits that we realized related to work with it, revisiting our portfolio. In the last quarter, we recorded this amount. It is refers to the clients that Who has not paid his bills, his current bills, and has no installments. We revisited our portfolio and discussing our independent audits, also to meet the CPC 48 norm that rules the assets and liabilities. We constituted this complementary amount and revisited our policy of constitution of losses for clients.
Our next question comes from Philippe Tobias, an investor. After universalization, can we expect an expressive increase of payout?
Hi, Philippe, thank you for your question.
This is a future issue, it's hard to answer right now. Obviously when the company reaches universalization, when in its areas of work, speaking of Sanepar, when that has a high CapEx and have to maintain 100% universalization, 100% of treated water for the population, water resilience, that will be important for the companies in the future. We expect the expenses to come to a level of reposition of assets, which is a level close to depreciation, amortization. Obviously, from this point on, we have resources left. How we will use this remaining, let's say, fund, this depends on the company, on decisions.
Because as the effort that many companies have made in terms of investments and these are objectives that sometimes compete with investments and distribution of dividends. I think it's a good perspective, but I believe we have a good perspective, but this is a step that in our case, not in only in our case, but in the case of the companies, those who are concerned about universalization investments, this will be a discussion, a second step discussion. Of course, it makes sense to question this, but it will depend on future decisions.
Thank you. Our next question comes from Gabriel Zuma, investor.
I observed the interest of capital on capital concerning. They do not have a defined payment date or come date, even if it after being approved in council or assemblies. Why this is still not totally defined?
Thank you for your question. The company, let me check the release. The company in the past few years has paid the dividends in the months of June every year. It has been paying annually, every year. When you look at the history, last year, 2025, we paid on June 26. In 2024, we paid on June 27. In 2023, June 27, and 2022, June 24. Why these dates are so, they coincide because the company, according to its statutes, it has 60 days to make the payments of dividends after the AGO realization, the ordinary assembly, which is done by April.
Once the GO approves the distribution of dividends and interest over own capital, the company, based on its dividends policy and in conformity to the statute, it pays after 60 days. This has coincided with the months of June of every year. As a result, this is when the company makes its payment.
Our next question comes from Mariana Guerra.
Are the new reservoirs operating? I would like some new.
This was Mariana's question.
As I said previously, it is concluded. The civil work are concluded. All the cuts of tree, destination are concluded. All this, the area around the reservoir is, so we had a provision of 10-12 months to fill the reservoir. The first months, now January, February, they've had rain below the average, which is not interesting for us.
We still have, we are expecting the month of March to bring us enough rain to, so that we reach the level, expected level, so that we can reserve the water inside the lake to reach the 2,000 liters per second, which was how the project was idealized. We don't need all this amount right now. We understand that the reservoir is operating in some situations. Throughout February, we made use of part of the water which was there. We made use of it so that we didn't experience any lack of water, any shortage of water. Our main goal right now is to save, to reserve this water. Yeah, we can say that it is in operation.
Next question. Eduardo Lazzaretti, GTI.
CapEx has been increasing above the revenue in the past quarters. What is your expectation for 2026?
Thank you for your question. Indeed, we have been observing, especially in 2025, an increase above what inflation, at least measured by IPCA. Of course, like many companies, we suffered with an issue that is very structural in this sector. The sector is heated, when we see the INCC, which is the national index, while inflation closed in 4.6, we have around 9% at the end of January 2026. When you talk about pipes and connections, we had an increase of 17%.
The sector brings some challenges for us in the sense that not always inflation that measured by IPCA is reflected in our contractual cost. Many times they are connected to the inflation by Getúlio Vargas. We had some non-recurrent events in 2025, as I said, which impacted strongly in the cost. When we speak of a personal account that is added, is increased by a PDV, which was quite robust, this was done with the objective of allow people to leave and enjoy their pensions, bring new talents to the company, but also reduce the expectation of salary in the next years. This was done, and the price was paid in 2025.
We had some, in terms of Well, not so operational, but more financial issues, the AVP, which is the contract assets. This was. We expect it to be reflected in 2026. The PPCs, we always need to observe that it's not a key that you turn off, turn on, so an operator that is in a station, you cannot just remove him from that if. You have a PPP, and you have that cost suppressed. So these issues of changes, even of change of paradigm in the operation, in this case of PPPs, they had a reflection in 2025. What we see that in, at least on the fourth quarter of 2025, we have an improvement in what was realized.
Although the total cost of expenses has increased 11.8%, when we take out the effect of PDT, which is a change in politics, something that has always been executed and changed, we would have an increase of 7.6%. When we take an inflation close to 5%, plus the increase on in 2%-3%, we see that it begins to be aligned with what is expected for the company in terms of cost. Obviously, the company has its control bodies, administration, the council, the board, and the council that is always demanding from the board. We are engaged in bringing the cost to lower levels, to reasonable levels, but some non-recurrent effects affected exceptionally the year of 2025.
Now we close the session of question and answer. We hand over to Abel Demetrio.
Thank you. I'd like to thank you once again, your participation. Thank you for your questions. If by any chance any question has not been clarified, feel free to send your question by email to the RI channel. You may ask for more clarifications. We are available to answer every action, every answer. Thank you for your participation, for trusting our company. Thank you and good weekend.
The conference of our earnings results is concluded. Thank you for all participants. Have an excellent day.