Everyone, it's a pleasure to welcome you here at Sabesp 2023. Before I turn the floor over to him to start the event, I would like to give you some initial announcements. We have simultaneous translation into English, and it's being recorded. The presentation and recording will be available for download at the IR portal of Sabesp. Questions will be answered or be sent by chat, and we'll have a duration of two hours. This presentation may have future forward-looking statements referring to Sabesp business outlook, operating and financial results, estimates and growth prospects. These are only forecasts, and as such, they are exclusively based on Sabesp's management expectation regarding the future of the business and its continuous access to capital to finance the company's business plan. Do not constitute any investment recommendation or guarantee of performance.
These forward-looking statements largely depend on changes in market conditions, governmental rules, industry performance, and the Brazilian economy, among other factors. In addition to risks presented in disclosed documents filed by Sabesp, and therefore are subject to changes without prior notice. Before turning the floor over to André, we have a short video we would like to play. Very well. André is the CEO and Chairman of the board of directors since January 2023. He has a degree in electrical engineering, and has a master's degree in electrical engineering. He has been a director, executive of insurance, new business. He has been a Climate Bonds Initiative consultant and BNDES. He has a wide experience in the capital markets, with the highlights for infrastructure, financing, mergers and acquisitions, and new businesses. André, the floor is yours.
Thank you, Tibério. Good morning, everyone.
It's a pleasure to be here with you, presenting the team that will join the Sabesp team to build the future that is as challenging, as promising as the past of this company in this 50 years of history.
So the idea today, being very straightforward and making the most of everyone's time, is to tell the story of what we expected to have in the beginning of the year, and the changes and adaptations we have envisaged for the company, what has been done in the last six months and what we envisage, we have committed for each one of the officers to deliver in the next six months to generate more value, making the company more modern, more competitive... competitive and using innovation as a value leverage, and then making the most of the potential, that a company has with its human capital, that has built such a solid company as Sabesp in 50 years.
So the idea is to increase even more the potential and capacity that the company has to deliver water and sanitation for those who still don't have it, with the maximum quality and efficiency in our operations. So taking a step back, as a team, what have we envisaged when we look at Sabesp? It's a 50-year-old company with lots of qualities and, a wonderful past in terms of delivering, meeting the demands of the population, and a talent to innovate and test new solutions for complex problems. Managing all the municipalities that are in our coverage is not easy. Well, there are many challenges, the coast, the interior.
So all these challenges that came up with time were very fertile ground for the company to develop and create solutions that today are the parameters and benchmark for sanitation in Brazil and worldwide. The main idea for this new management is to be customer-centered and environmentally centered. So this illustration shows that the entire company is working to provide support for operations that wants to meet on a timely manner all our customers. There are two layers of customers. One is the granting authorities, the mayor, the city, that we have the honor and the pleasure to serve, and the second layer is the population, the users of sanitation and water services.
So we have reviewed the officers, executive officers structures, so that the support may happen in the most efficient and integrated manner for Sabesp to really operate as a single company. So we concentrated all engineering, CapEx planning, and new solutions to that, investment, and has to be made in order to organize the plant, automate to better manage the system or expand the network, is located in a single engineering that has CapEx engineering and planning, innovating, innovation and digital management. On the other side of the mandala, when we think about people and management of the infrastructure that the company has, we have a people and corporate management officer, that will deliver the transformation of this company to a new reality.
Leadership will be closer to people who work, and so that processes could flow in with more harmony, that everybody feels it's part of the structure, and that decisions are made on a collegiate basis, and looking at the entire company. So that we're able to manage not only people, which are the, our best resources, but also the infrastructure more effectively, migrating to new business. This is a view that the regulation, that it's, important. Managing is important to extract the most value for the company and for society, with the recognition of the regulator. And new businesses is linked to this structure, because any new business in a regulated environment needs regulations. So the challenge of this, officer in this regulated environment, is to capture the most value in an agenda that's it's very cl...
Working closely with the regulatory agencies, and ensure that the company's vision is fully presented to the regulatory authorities, so that we can align the divisions for the future to deliver quality of services, investment, and for the entire population.
In terms of finances and our relationship with investors, we have two main avenues that we're going to build. One of them is the integration of all of the systems and processes of the company, that need an IT basis so that they can work properly, and therefore, there's a lot going on, both in terms of infrastructure and also information technology apps, so that the implementation cycle is implemented within an adequate timeframe with efficiency. The maintenance board of directors perhaps has a more impactful challenge: unify operations that, until last year, operated in different manners. We have the Metropolitan board of directors, and also the Coast and inner state, that are organized within regional board of directors.
And therefore, the challenge is to integrate everything, map the best operational practices in the company, and guarantee that the best practices are implemented t hroughout the company, so that operational activities are taken care by operations, and everything else migrates to the other departments, which will integrate everything as a very large organisms that thinks and acts together.
The client department has one of the main challenges. We have to guarantee that we're going to offer the best services possible to our client base, and then once services are provided, the charging cycle is harmonic. And so, the role of the CEO is to guarantee that they work together in an integrated and harmonic manner, thus contributing for the agendas that we have, the future agendas. And so now, at the board of directors, we have corporate representation in a centralized manner. Next slide, please. So the first one is the logic of the use of data for decision-making processes.
How can we make the best use of all of the information the company generates, both in terms of operations and client relationship, so that we can make faster decisions in a more profitable manner that will generate new businesses? And therefore, we have our technology, we have a possibility to best manage data in a more integrated and efficient manner, leading to a better user experience, including decision-making and of complex systems, water collection, sewage treatment. Hello? Hello. Hello? And so we also have the automation cycle of the treatment stations of the water production systems, and also the sewage treatment plants, where we have been advancing, and the use of analytics and artificial intelligence allows us to anticipate failures and also identify fraud in the water distribution systems.
Also, the data we have access to today, using the 11 million invoices we issue every day, we have about 28 million clients, and every day, they generate an enormous potential to identify new businesses, potential, anticipate payments such as default, fraud, or other behaviors that may hinder our level of service. And so, in this area, we've been integrating the client alert area engineering and operations so that we can generate value with all of the data we have available today. Another agenda or another center we created is the sustainability and governance area. Here, the logic is to centralize this topic for the company's strategy. Sanitation and sanitation companies naturally work with ESG.
To capture water, we depend on nature to provide services, and our services have an impact on the environment, and therefore, having ESG with an integrated view of the social impact of our operation to the center, which will provide corporate guidelines, it materializes the importance of this agenda for the perception that our activity adds value and contributes for a less impactful human presence, and also for the climate resilience, where we have a lot of contributions for future cycles. There are two agendas here in our ESG strategy. The first one is to identify within the company, all of the potential and initiatives that are being implemented in environmental, social, agenda, and also in governance terms. Within all of these activities, we choose the ones that are more impactful and also provide strategic guidelines for our goals and indicators to be reported.
Another agenda is the agenda for the adaptation of our operations so that we have less environmental impact. I'd like to highlight an initiative that we've just started with the operation team and investment team now. Hello? Hello. Hello, I'm sorry for that. Obrigado. With the investment team and business units, so that we can look at the main activity, which has an impact on greenhouse gases. And therefore, basically, we try to optimize the operation of these stations using biogas for the production of energy and heat, which will be reinjected in the system, thus improving the efficiency of the processing of sewage gas, reducing the volume of sludge, and eventually transforming this sludge into substances that will be used in agriculture as fertilizer, and also in civil construction for the production of ceramics.
And therefore, this materializes what we see in terms of innovation, of a constructive view to transform cost into a new business for the company, and this is totally aligned with the ESG strategy. We have many different initiatives. They naturally contribute for the expansion and presence of the company in vulnerable area. The example of the Pinheiros River, we invested almost BRL 20 million with the training of the community, investments in infrastructure that potentiate the economic activity in these communities, and we will continue doing this in a coordinated manner. As, for example, we have the Integre project, which has impact, which is five times higher than it was for the Pinheiros River, and therefore, we have a lot of potential in this area. And then finally, I did not mention anything related to names on purpose. This is all related to people.
The team was chosen with a lot of freedom, and I'd like to highlight that the governor gave us total freedom to hire our teams. We were able to bring in the best professionals in the market to occupy their current positions and add value to our agenda. The company also has a basis and an exceptional team. This team adds value by means of their competence and skills, where we see a lot of potential to combine our existing experience in this sector with new activities which are not developed now, and we will start developing. In the second half of this year, we see an important cash generation for the company. Part of what we're doing is becoming materialized, and when we look ahead into the future, the need for investment is very important.
We have an ability to deliver these investments, keeping in mind that our space is still very optimized for leverage. Our EBITDA is still at a very comfortable level, and that's not to mention that this leverage level and the potential we see for the company is very comfortable, even if we now operate with one of the lowest tariffs in the sector. The team has a potential to generate value with an integrated view for Sabesp. The outlook for the future is very promising. I have the honor to lead this company with the legacy of what we've built in the past few years, and I look ahead with a lot of enthusiasm. We will have an opportunity to meet each and every one of them, and knowing that the company is made by people, we want all of our professionals to reach their full potential.
Thank you very much.
Thank you, André. The next speaker is Caio. Caio has joined the company in August 2023 as Chief Customer Officer. He has a degree in economics. He was mergers and acquisitions officer of Santander Brasil Investment Bank, and a partner of Estater Gestão e Finanças. He worked at BNDES in several executive positions, including the head of the sanitation department and urban transportation. He was a leader in the capital markets of BNDESPar. Caio?
Good morning, everyone. Well, I'm very happy to talk to the market for the first time, and in my first days in this company, I believe that Sabesp, I can still bring a bit of, the view from outside.
Sabesp is a brand that has a lot of credibility in its operational capacity and technical expertise, and I was able to see these few days how deep a knowledge the company is in operations and its expertise of the business. It's a very interesting combination of this deep operational knowledge with many value leverages, given the external environment, the sector of the company, as well as the options to improve internally with the digital transformation process. As part of this strategy, as said by André, we are customer-centric. We are going to talk about the evolution of the concept of user to an idea of customer... 13 million people that are served, and of course, they are assets in themselves, regardless of the specific services we provide.
So this area is being created with this purpose, continuing with all the good things the company already performed, but trying to focus on customer experience and on the invoice management or billing management. The customer experience, I would like to highlight that knowing the customer better is very important. Data analysis, data that belongs to the company, to map behaviors that allow us to work and act quickly, either to provide services to the end users or to have the right channels, and as well as to learn about behaviors and better work with billing. So serve residential customers more efficiently, we can integrate channels, which will bring cost efficiency. For example, having more digital services provided to customers that will increase efficiency and lower costs.
Another message regarding large customers is to reposition the company's position, because we have competitors, especially regarding alternative sources, and the idea is to reposition the company in our relationship with large customers, providing a complete solution for customers that require that. They want a wider view of the sanitation services cycle, from water supply until sewage treatment. This will largely focus on repositioning the company's relationship with large customers. And all that is to add value and expand services offered. In terms of billing, there are things that may seem obvious, but it's worth, they're worth mentioning, like reducing delinquency. This is a commitment of all officers, and some things are already being done in the company. And here, we're talking about basically a process. There's no silver bullet.
The idea is to adjust our processes and we expect to have positive results in terms of reducing delinquency. Likewise, increasing focus on owed credits and combining our own initiatives with some partnership in order to try to recover credits that belong to the company, and we have to collect them. The next slide, please. As a customer area, of course, the company's initiatives were already in progress. But as a new executive officers area, we need to map the company's status, things that could have short-term impacts, and Cátia had advanced, and André focused on that.
But the fact is that we are changing the billing processes, integrating the SMS, step, telephone services, emails, and we add other elements that we're trying to use more efficiently now in terms of, whenever applicable, suspending services and also sending customers' names to some black list of bad debtors. So we're going to make intensive use of data. Data is in the company already, so it's more of a question of working with this data and making the most of them with intelligence. And a company such as Sabesp, we need to adjust our systems to this new approach of having an approach that is customer-centric. And as recent deliverables, and of course, we can move on to the next slide, please.
Something we delivered, recently, and this is, of course, not the result of my few days at the company, but rather of initiatives that were already being, implemented by the company. We had a massive campaign for renegotiating debts, and we're doing well. The company is, meeting its objectives. We are reaching close to 170,000 contacts made, and the company—this campaign will go until September 30. In the credit recovery, we need to have a combination of our own initiatives, since most of our customers that are owed debtors are still in our customer base. So it's interesting, we can look for these credits and try to recover them, and when possible, we can also work with partnerships in this area. Second topic that's, also very important in large customers is commercial programs.
This market is different from residential and market, and has competition, and the tariff is much higher. So oftentimes, to remain competitive, you need to work with some discount rate, and it's the regulatory treatment given to such discount is very important. And there is some regulation in terms of, having the regulatory treatment for this approach, and we are increasing our negotiations in order to make use of this regulatory framework, to make something that is profitable for the company to dilute fixed costs, and everyone has the benefit in the sequence of, regulatory cycles towards the future. So there are BRL 420 million in stock around this cycle, and we are making efforts with Sabesp to have the right regulatory treatment of these funds.
I'll try to be brief, and I finish my presentation here, and I think that we're starting now, and based on certain initiatives that were already started by the company. What changes is the focus. As I said, we are going to have the extraordinary asset of the company, which are the customers, having them as the strategic focus, so that we could serve them better with the full solutions for large customers and with a better performance for the company. Thank you.
Okay, now we'll have Paula, or rather Roberval, presenting the operation and maintenance area. He's the Officer for Operation and Maintenance since April 2023. He has a degree in Civil Engineering and a graduate degree in Public Health, Public Business Management. He's been operating in sanitation for 31 years. He's worked at Sabesp for 29 years.
He was an engineer, manager and superintendent for 14 years. He's an expert in agile methods and operational efficiency. He has worked in energy efficiency, IoT, exponential, and many others. In addition to sanitation experience, he's the Chairman of the Brazilian Institute of Excellence in Management, and the national president for the Association of Engineering and Sanitation. Good morning, everyone. I'm very proud to be representing the operations area of Sabesp, and leading this change that we're making in the sanitation in São Paulo State. We have a new structure. We started with two operations area, the metropolitan and the regional systems, and we have unified that under a single area. We went from 22 operating units to 18, of which 15 are regional units. We've maintained the success, distribution according to hydrographic, watersheds and basins.
This, we have a water production unit, and one sewage treatment unit, and one strategic maintenance. The focus of these 18 areas is to operate in the water supply, collection, and treatment of sewage, and to give maintenance to these systems as in the best possible way, and provide operating services generated in the company. The focus of our unification was to take best practices that used to have in the old areas, to all units of Sabesp. So first, unification, prioritizing best practices that will be implemented in all operating units. In this last six months, we've been operating this way. Optimization of a leadership structure that's more horizontal, having leaders closer to employees, allows us to take faster decisions. As the CEO mentioned, working with engineering, the other engineering works are concentrated in our area.
We have a shared services center that operates in all operating units, but under the coordination of the financial area, that's Catia will talk about shortly. With that, we are able to have greater focus on operations and reduce costs. An important point to be mentioned is that the reservoirs management, we do not have any municipality in the state of São Paulo, out of 375 municipalities operated by Sabesp, that are under critical reservoir condition. We are in August 30th, at the end of the dry season. In October first, we'll start the wet season, and during this period, we will have more rainfall. All because with the years, we're able to have greater granting, and we're able to improve the capacity of storage of our reservoirs.
We have interconnection between the reservoirs for raw water and treated water. Today, in the metropolitan area of São Paulo, has a reservoir volume of 70%, which is something that didn't happen in the last 10 years. If you look at August 31, in the last years, you'll see that's always been lower than 70%. So the projections for the next 12 months are very good in terms of reservoir management, which leads to a better efficiency of our operations. Water transfers are able to improve the use of chemicals, the use of energy, and therefore reduce the costs regarding those items. All of that allows us to make the best possible use of each reservoir we have in the state of São Paulo. Another important point.
Also, in terms of operational efficiency, we have our IGQ, which is our quality index, or the indicator of our agency, our regulating agency. So indications of lack of water, the scope of, of water leaks, of visible leaks in our network. In 2022, we were negative with IGQ, which has an impact on our tariffs. It was - 0.2, but we've already recovered all of these indicators with a trend for improvement, and therefore, we are probably going to close 2023 with positive IGQ values. The best of all is that we will be able to provide better services to our clients and the society. Another highlight, our program for the reduction of losses. Performance contracts, which have been improved in the past few years. They are paid for with our partners.
We have results that have generated 8.3 million cubic meters of savings, highlights to an increment of 2.7 in measured volume, which is an indication of the reduction of leaks. Also, we have clients in areas that are part of our Legal Water Program. These clients consumed water, but there was no revenue in that area. Now we have a national benchmark, I'm sorry, and in terms of IPM, the measured water loss, we manage large extents of water with pressure valve reductions. We have 12,000 areas of connections and things that we do on a monthly basis for prevention.
In terms of operating efficiency, this is what's going to guide us over the next two years, and this is related to what our President André mentioned about digital implementations. We're now. And we're also going to talk about actions related to automation, going from capture until the effluents are launched in the river system. Our system will be much better, leading to cost reductions in the implementations, including our consumption measures with an IoT, 223,000 connections with online consumption measurement, automation in distribution and collection systems, including sewage, and this is going to be integrated. The best of it is that we have a contract, and for issues related to automation, we consider what is delivered by Sabesp, regardless of the technology.
We have different top-notch technologies, and this is going to lead to cost optimization and a technology made available to our clients, who will receive better services because of this. And then to wrap up, we have two programs that have a lot to do with universalization. We have a program called Legal Water, with 194,000 connections regularized, benefiting 680,000 people. We also have a contract by the World Bank. And we also have a partnership with the government of the State of São Paulo, where we have regulated our interventions within households. This program was awarded and is considered a success case by the UN Global Compact program. So this is what I wanted to say.
I'd like to reinforce that we're very proud to be leading this board of directors and to be part of the Sabesp's team.
Well, thank you, Roberval. We are now going to turn over to Paula Violante. She's Director of Engineering and Innovation. She has a degree in Chemical Engineering. She has an MBA in Controllership. She was also Engineering Director for training, and worked directly with the mobilization of the Block 2 concession. She was also Operations Director. She also worked with contractor sectors in different countries. She was also Contract Director in Espírito Santo. Paula, please.
Well, thank you, Tibério. Good morning, everyone. It's an honor to be able to be here. I will make a brief summary of what we do with engineering and innovation. So how are we divided?
We are subdivided into a team that takes care of the future plans, expansion, which is engineering, I'm sorry, and asset management. They take care of the evaluation and the investment plan, focusing on universalization, regulatory targets, contracts, rectify that design, and deliver it to the investment areas where we have two offices, and they are divided by the similarity of the project they are carrying out. For example, we have the metropolitan region, plus Baixada Santista, countryside, and the North Coast. Along with Roberval and all of the teams, we optimize the operational development, where we work together with the loss management, with automation and new technologies, as mentioned by André and Roberval. We control the quality of our products, the water, the efficiency of the sewage treatment stations. We also contract energy from distributed energy and other partners.
According to the different contracts we have with our energy installed areas, we also analyze hydrometry management. In terms of environmental management, we've evaluated existing licenses, the requirements for each and every one of them, for each and every one of the enterprises. Also, the capture licenses, wells, including an integration of the different teams with the requirements of ISO 14001, which mitigate issues with environmental compliance. We have another team that works with operations, and all the other teams, is research, development, and innovation. This year, we won an award from Valor Econômico. We were considered the best, the second best in the infrastructure market in research and development. Here, we evaluate all of the technologies available in the domestic and international market.
We also contact startups and universities to bring in most modern technologies for pilot projects, and if possible, to implement them in our existing operations, always focusing on the improvement of our results and optimizing our practices. A little of what we see working in the first quarter of the year was on prioritizing and executing CapEx. We have a purely annual investment plan from 2023 to 2027, including BRL 26.2 billion. Basically, we aimed to prioritize all of the investments for environmental compliance, to meet all of the legal requirements for the agreements that we have already executed, and also to fulfill contract goals and universalizations that have to do with our legal framework.
When we analyze everything along with Roberval and the different operational units, we aim at hydric resilience, which is very important for our business, mitigates environmental risks, expands our revenue, looking at improved efficiency as well. Now, here, we summarize what we've been doing to depollute the Tietê River. We've worked hard looking at this region in red on the map, which leaves from Salesópolis and goes all the way to Pirapora do Bom Jesus. This is where we've had a lot of projects.... So that in the near future, we'll be able to hire whatever we need. It's a large and complex project, a very large river with many affluents. One of them is the Pinheiros River. And the Pinheiros River, we had an excellent experience. We're going to apply the same experience we used in the Pinheiros River, on the Tietê River.
What do we have to do? We have to expand the capacity of the sewage treatment stations in over 14,000 liters per second. Work with the Tietê Rivers to implement collector networks. We have a lot of vulnerable areas throughout this area, and we are mapping every one of them. We also want to include the interceptors and collectors, including over 900 kilometers. After that, we will talk a little bit about the STP in the metropolitan regions. So what is the idea here? As André and Roberval have mentioned, we are trying to work with the technological routes of these treatment areas of the metropolitan region, Barueri, São Miguel, Mogi das Cruzes, Novo Mundo, and Suzano. What do we see?
We have a concept of circular economy, where waste, whatever is waste, is reused, recycled, redefined within the concept of a circular economy, and therefore, we have the biogas generated from the sludge digestion process. Today, for example, we have a very interesting experience. It's been implemented already with the innovations and operations team in the city of Franca, where the biogas that is generated supplies all of our operation freight in the region of Franca. So we're going to bring in this experience. We are no longer a sewage treatment station and become a station for the recovery of water resources. With that, we operate to add operations, more digitalized processes, the diversification of the energy matrix in the areas that are available in the stations, so that we can generate energy for photovoltaic plants.
At the end of the day, we're going to really use, these areas and use biogas with an ability to generate new businesses, as mentioned by Bruno and Roberval. This is an important aspect. By the end of the year, we're going to have the first international bidding packages for all of these STPs in this new system, keeping in mind that they are no longer stations and become water resources, reuse within the circular economy concept. And we work very closely to the ESG team to do this. In the next slide, we can see a very important activity already carried out by Sabesp. 65% of our energy and the installed loads is already in the market, all of it with renewable energy sources, with a certification of renewable energy.
But in April, in the first quarter of the year, we actually observed, always looking into the future, whenever we hire, we always evaluate the upcoming quarter, 2026, 2027, and we evaluated the possibility to include a new energy option for Sabesp, where we had our best historic results, including the energy of hired energy of 2025 and 2027, [BRL 114 /MW-BRL 74 /MW]. This represents year-over-year 33% of our hired load in 2025, and in 2027, it will represent 50%. Furthermore, we work with other products for diversification, and energy is one of our main raw materials. We're always trying to use new things that will add improved performance for all of our processes. Today, in terms of distributed generation, we have 33 plants that have already been hired.
These are photovoltaic plants and will generate up to 60 megawatts. We'll have an expansion, and by 2025, we have our final deadline. Within the 43, nine are already in operation. We have 11 megawatts under generation in our plants, using always the WTPs and STPs in installed areas. And the other large project that we have is a project that until the end of this year, the second half of the year, we'll have self-production of energy with 100 megawatts. And the study was to lease it for 20 years with solar energy, which accounts for 7.5% of Sabesp energy consumption. This is a brief summary, and I thank you for the opportunity to present our work, and we remain available for any questions later.
Thank you, Paula. The next speaker is Bruno D'Abadia. He is the Regulation and New Business Officer since April 2023. He has a degree in Mechatronics Engineering and Accounting Sciences, with MBA in Production Engineering, Market Analysis, and a Master's in Economics. He was an Auditor and a Legislative Consultant in Public Finance, and he's a Secretary for the Goiás Administration, a professor of UnB University, and, in addition, Chairman of the Fiscal Council of the Sanitation Company of Goiás.
Good morning, Tibério, CEO, and colleagues, and everyone who is watching us.
I'm very pleased to be able to introduce the new officers to us, and this area was created with the idea of gathering several topics that have a potential to add value to the company, that needed to have an integrated and strategic vision, and this is our mission. We have three superintendencies. Two of them already existed in other areas of the company, and as the CEO said, we're united here. We also created the Superintendency of Contract Managing, so we could use all the synergies with the regulatory framework and opportunities. The first one is regulation. This area already existed, although in a different format, and it shows the concern we have with the regulatory model. It's a technical superintendency that works with engineering and operations and takes care of technical requirements, such as IGQ, mentioned by Roberval.
But the focus of this superintendency is the economic regulation focused on tariffs, on the asset base for regulatory assets, on our costs of OpEx, and how we can maximize value for the company by reviewing these models. It's worth mentioning that we'll have a strong agenda on the laws, regulation laws, not only with the agency that we have a close contact with, we are already discussing the next tariff cycle, but ANA, that has the capacity to improve the entire regulation ecosystem in the country. So we, Sabesp, participate in all hearings that have been opened by ANA to treat the benchmark rules. And we're always in contact with them, because after the new legal framework, there's a huge demand for a unification of procedures and understanding about economic regulation processes, and this area is in charge of this agenda. Without...
We have in the management contracts and institutional relations, we have a conformity area, either legal, regulatory, environmental, or contract obligations, liability. So the idea is to unify this understanding, causing regulations to have a convergence, reducing the risk of the company of not meeting any requirement that is, that has to be complied with in terms of environmental compliance, regulatory, and any other technical rules that may be set forth. And finally, we have the new business area that was widely enlarged in this restructuring of the company, and is here to talk with all the other areas to increase our synergy and capacity to generate value. We can work in regulated markets, the markets of sanitation, water, and sewage, or in other opportunities than Paula and other colleagues mentioned.
The CEO mentioned the idea of working in a circular economy and transforming what used to be expense and cost into business opportunity, increasing the quality of energy and the potential of our services. And finally, this area brings a special look on all the companies we work with, in our investments, in things we've done, and need to work on the governance of our existing and future invested companies. As about regulatory gap, we know that's a topic, a hot topic today. We've been working hard on that area, especially about OpEx. We've started a very frank or candid dialogue with the regulatory agency, addressing qualitative and quantitative aspects of the regulatory model.
With the ANA, that has the capacity to work with the best practices, but as Sabesp, we want to anticipate the understanding, discussion, and possible improvement of the current model. As for revenue, we had a special tariff review this year, and because we did not agree with some calculations that were made, we filed an administrative appeal with the agency, requesting the review of some points of this adjustment that was made in 2023. We're also addressing internally other components of our revenue, to be able to bring the revenue modeling closer to what it can really deliver. We want to internalize the concept of regulation. Regulation was mentioned by everyone in this event, so that's a result of the sharing of the regulatory concept, so that management can also be driven by regulation and value added in the choices it makes in processes.
About new business, there is an iconic event that happened in the first half of this year, which was winning the auction for water and sanitation in the city of Olímpia, in the state of São Paulo. We won the auction, and in the next month, we're going to sign the agreement, and be able to take over the operation as soon as possible. This is a very important victory, because Sabesp is the first state-owned company that won a sanitation auction. But there's a key word, which is capital discipline. We did not go to the auction trying to win at any price. On the contrary, we want to have a return with a good safety margin, because the assumption behind winning an auction must be to add value to the company.
We mapped several opportunities, used all the synergies available to the company because of our technical expertise in management, engineering, finance, but also due to the geographic location, because we could be more efficient in this process. So it's a great case that shows how if Sabesp is competitive and efficient, and it will be present in every business opportunity that could add value, substantial value to the company. I would like to thank you again for the opportunity, and I remain available for the questions later.
Thank you, Bruno. Now, let's talk to someone that Catia Pereira, people in the market know her already. She's the Chief Financial Officer and Investor Relations Officer since March this year. She's a degree in contro-- as a Controller, Economic Engineering. She's the Head of the Shared Services Center for South America and Treasurer for South America.
He worked at Embratel. She worked at Embratel in several positions. Catia?
Thank you, Tibério. Thank you, all. Good morning, everyone. I'll talk about the structure of the financial officer area, financial office. We have four areas, the core areas that we have in any financial and investor relations office. We have accounting, finance, that went through a recent restructuring, considering this organizational restructuring, looking. It's also the shared services, planning and control, which helps us to look forward, looking on budget, and discussing with other areas of the company, helping us to design the future. Investor relations, which is a very key area for the company, and the way it serves and relates to investors. Roberval and André already talked about integrated services or shared services area. We have named it Sabesp Integrated Services area. So the idea is to integrate.
We see that the shared services here area brings a large synergy because we reduce the burden on other areas and bring this area activities that were operational in other areas and bring to a single area. The main goal is to have the areas that they concentrate their attention on their core activities, and that these areas of shared services will have experts on the topics that we'll deal with. So when we have experts, we have more trained team, productivity, efficiency, development, because all the topics will be addressed in the single place with a team that's fully dedicated to that. This is the main service, purpose of this center, and it also works on a transversal way throughout the company. It provides services to other areas of the company, given the nature of services that it encompasses. And
... Also with that, there are two main challenges: transformation and the area of IT. Building a center that's also working with, in a cross-sectional way with all the other areas. So we need to have a look in terms of process, what could be the standardizations and opportunities to be developed and working close to the market in terms of benchmarking. That's essential to build our vision of the future. And looking at technology developments. So IT is here to develop an important leverage of value for the center and the entire organization. And this is seen in everyone's talks. How can technology be used to bring the company to update the company? And IT is key to pave this process.
In terms of delivery, we also focused on looking at cash generation, how we can use it, trying to decrease expenses, and we also talk a lot, a lot about capture. But when we look at our cash, we also talk about planning, control, what we're doing and what we can do in a different manner, so that we can, in fact, align everything that we're talking about in terms of opportunities, specify everything, optimize our portfolio and investment in the financial area, cash management. What is the cash we need to support the company in terms of development, growth, with a huge challenge in terms of investments and CapEx? And then, when we look at technology, we see that we have a lot of challenges, and one of the challenges we have, and Bruno talked about Olímpia here.
So the first time we create and develop this within our corporate systems, including our [ERP], is a company that is different from Sabesp. With that, we realize that we have to learn how to do it, and this is a challenge. We are building Olímpia from scratch in our systems, and this is the first step for us to be more flexible and to be able to grow. These are things that our department is trying to pursue so that we can deliver what we want. We are also concluding our IT plan. We have to better understand where we are in terms of technology. When we talk about technology, we talk about infrastructure, data protection. We also talk about different systems, so that we can have a map, and based on this map, we can anticipate our growth.
This is done by four hands. All of our directors are involved, so that we can meet the demands, lead with the problems, and then be able to support the deliveries of the company's strategic goals. Another important pillar, right now, we have a migration plan, and then it's going to be a very significant technology leap. It will allow us to have the required leverage. This project is going to take about 14 months, and we are going through the required approvals. Also, when we talk about clients, everything that has been done, where we are, what our challenges are. We have some improvements to make. We have a project, and we are going to work so that we can deliver visibility and everything that is required to better manage our protection system.
In terms of risks, we have delivered BRL 1 billion and other fundings that have already been paid for. The main challenge is that in the capture area and our portfolio, the funding lines that can meet the CapEx demands with a vision for the mid and long term, so that we can compare it with a portfolio that will give us some flexibility. So we are working together with engineering so that we can develop this, pursuing the best resource sources in terms of investments. And also in terms of finances, we created a financial risk management office, and we had this in a specific area, but we are now improving it so that we can have a hedge policy for the company.
Today, 14% of our debt is in foreign currency, but this generates volatility, and therefore, we are trying to design our hedge policy... so that we can eliminate this variable in our results. Whenever we talk about CSC and management, we are reviewing processes not only of what is migrating to our system, but everything. It's a good opportunity to look at what we do and what we can do differently, using technology and an opportunity to migrate to an SAP, revisiting processes, to analyze what I did in our previous version and what I can discontinue and do it in different manner by being faster and more flexible. This is something that we brought to the financial area. Training, capacity building.
When we migrate areas into a new one, we're talking about training, not only of technical aspects, but how you provide services in an organization where you become a service provider and not an employee that is just delivering something. So in terms of CSC, we've already designed the whole infrastructure. We are already in the transition and implementation phase, and all of this must be based on digital transformation and the corporate transformation. Finally, but not less important, we have Sabesp's integrated services, where we have some different areas, including customer performance and relationship, how we relate to our internal clients, how we measure what we deliver, how we can have a continued improvement program, corporate services, including finances, human resources, IT infrastructure and contract management facilities, and procurement and logistics.
So these are the areas of Sabesp's integrated services that will be delivered to the company. This is all designed. We have 17 operational units. We will be migrating, and we've divided this migration cycle into four different cycles, basically to guarantee that we will have no ruptures, no dispersion or loss of quality while delivering. And so this is our commitment. We will have fulfilled everything within 12 months with the desired results. I thank you all for your attention. This is what I wanted to share. I also thank my colleagues, and I remain available to clarify any concerns.
Well, thank you very much, Cátia. We are now going to talk about people management. I will turn over to Sabrina. She is our human resources manager since 2023, and she has a degree in international relations.
Before working at Sabesp, she was head of Human Resources at XP. She also worked for Zenith International, and she works with projects as well in different companies. Sabrina, please.
Well, thank you, Tibério. Good afternoon, everyone. Thank you for being here with us remotely. My area and what we do is to enable that all of this happens, so I take care of people to guarantee the best working conditions, the best satisfaction level for our employees, asset management, purchase of supplies and services, while we guarantee compliance and legal security while taking care of the organizational performance. André mentioned the delivery focus for this cycle on transformation. So this is the message I wanted to share with you.
We have some examples of deliveries, movements such as PPDI, profitability of assets, and the main delivery, the main change comes from this transformation. We want to guarantee a cultural change for the promotion of changes, so the company has the culture to generate changes. This is what unlocks everything that was mentioned here before. It is what enables us to deliver all of it at the same time with a lot of transparency and coordination. There are different levels of complexity, of challenges. So we have maintenance, we have ruptures. All of this happened at the same time, and it depends on a culture that will promote changes. So much more than a restructuring, designing of boxes, we're talking about a mindset when we consider changes, migration of a culture or a model into a hybrid model with more integration and a lot more flexibility.
So we're talking about going beyond client capture, process control, cost reduction... people's efficiency, and a lot more about flexibility, which enables us to do all of this, in addition to coordinating it out all at the same time. You can do it fast, in an assertive manner, to generate the value you want to generate. So we're talking about changing a culture of decision-making, which was very centered, into a decision-making culture, which is more horizontal, closer, and focused on results, because this is what is going to generate value at the end of the day. This value generation, improvement of results, has to do with the company's strategy and leads to individual goals. So we're talking about different people, properly allocated, so that we can make the deliveries, every one of them, keeping in mind what their role is, what the gains are.
The idea is to evolve from a situation where we're really proud to do what we do, to a situation where we add this pride to a lot of autonomy and capacity of innovation. We understand this as being essential to guarantee the business resilience and also the long-lasting results that we want to have. Thank you very much.
Thank you, Sabrina. With this, we end the presentations of each of the officers, and now we'll start the Q&A session. I would like to remind our participants that questions to the speakers can be sent only in writing using the platform. The first question, I'll send to André. It comes from Ji Chen. And the question is: Does Sabesp have concrete timeline for setting up the scope of one, two, three GH, GHG reduction targets? And if so, does the company also plan on having such targets approved by SBTi?
Thank you for the question. Yes, we do have a route to implement that. The company has an inventory of greenhouse effect gases since 2019. For the first time, that we have external auditors. For that, we expect the result to be ready in October.
As of the result in October, we'll draw that we have goals that will be communicated to the market in general. In parallel, we're working with the UN to build the main leverages that affect the emission of these gases. One of the main offenders that we have identified are the sewage treatment plants that account for 80% of our greenhouse effect balance. And we have the project of rethinking these structures by using the byproduct of the sewage treatment, and we want this carbon footprint linked to sewage treatment to be reduced. We'll protocol the submission and adherence according to the institutions in the coming months, and define a standard to measure this project. The SBTi is one of the methodologies. We'll certainly follow that path, and we need the certification, and we'll also analyze other broader measures.
That could be the integrated report or the GRI, or another methodology that may be defined by the Sustainability Standard Board, which is another possibility. So I thank you for the question. This is a very significant agenda for the company, and we'll work and advance on that firmly and continuously in coming months.
Thank you, André, for your answer. There's another question from Victor Aguiar. He's asking. He has two questions, actually. Sabesp used to have BRL 1.3 billion in cash at the end of the second quarter, and BRL 1.3 billion in debts, too, for due in 2023 or to mature in 2023. What are the strategies for managing debt or strengthening cash, considering short and medium term? And the other question is: Is there any update regarding the controlling shareholder plans for privatization or capitalization of the company?
I'll start answering. The cash that you mentioned is only cash. We also had, in addition to that, another BRL 1 billion in financial investments. So our cash amounts to cash in banks to BRL 2 billion, and we monitor the need we have to use amortization programs in addition to investments, of capital investments, looking at engineering projects. And we have. There's BRL 1 billion signed with IFC that is scheduled to enter the company in coming months. So we are very okay in terms of cash. We had a venture planned for March, but we declined, but we had other financing options.
It's important to bear in mind to having a portfolio of funding that allows us to make the right decisions according to the moment, in order not to be vulnerable, and working with a short and medium-term planning that allows us to identify the needs. That's something we build with time. So you're looking at only one part, and we ended July at BRL 2,200. This is what we have in cash. We made an adjustment in terms of how December of 2022 ended. We started with a higher cash. We believe there's no need to have such a high amount of funds in cash, because revenues are very predictable, and the same applies to CapEx expenses. So we can have a better management without having such a high debt and a high cash.
The goal is not to have a high cash, but a cash that is safe for the company. Or amount in cash. The funding for this year is totally solved, given the loans that are already assigned and the disbursement expectations for CapEx investments and operating activities of the company until the end of the year. As for the route defined by the state government for privatization, we are currently at phase one, and the OFC, hiring in May, defined three phases. Phase zero, that ended in July, with the definition of the macro themes, feasibility, continuing with privatization, creating benefits for the population, such as anticipating investments, reducing contract scope, and re-tariff reduction. That was the validation for phase one. Now, we have to make the alignment by municipality, showing that the privatization route is beneficial, generates value, and it's beneficial for the entire population.
Submitting the bill of law to the assembly, authorizing the transfer of control by the state, and the definition of the new regulatory and contract model, so that all the information is submitted to the municipalities. And then we start the 180-day term for the municipalities to express their opinion. And we support the government, the state government, so that this new design can be made in a way that the company is able to deliver, and that will generate medium, short, and long-term alignments between the company, investors, and the benefits for society, with the shared gains that will be captured by the company. So the last formal manifestation was the adherence of the municipality of São Paulo by URAE- 1, and the activities that can be affected by the government's agenda have been taking place.
He's meeting with the municipality leaders, showing the advantages of the model. This is a process that has our support, our technical support, to defend a robust final solution that allows us to meet everything that's been defined there. Another question from an André Sampaio. He is asking: "I'd like to understand the process of approval of privatization in the municipalities as after the approval by URAE. Do you believe that's needed to go through the municipal chambers or not? We're following the law and Article 14, there are five paragraphs, and paragraph one says that there's no need from the granting authority to express its opinion if there's no change in object, term, or anything that's relevant in the agreement. And if there is, if there are changes of object or purpose, term, or any...
Because we want to make such changes, we want to extend the term and unify the term of 365 municipalities that will mature in different years, have a single maturity period at the end of the cycle. So given that we have this proposal, and the proposal is connected to the enlargement of the concession area, many areas that we operate, only urban area, we propose to serve the entire municipality. According to the law, only an agreement by the granting authority is enough. So the signatory of the concession agreement must agree with the change to this new agreement. So according to this new law, that is most recent than any other agreement signed by the company, there would be no need of approval by the municipal legislative authority.
But if the mayor understands that that's necessary, we will support the process with all the information that's necessary. The next question comes from Vinicius Santos: Given that you're concerned about the operational efficiency and meeting customers and cash flowing, what is how is the advancement of Pix payment? Do you plan to innovate and deliver payment slips to all 11 million customers? We started with Pix, and Pix has to do with anticipating float and cash. That's starting to be operational since July 1. We've been operating with Pix for two months now. 4% of our customers have migrated to Pix payments, and we're taking campaigns to encourage users to adopt Pix as a means of payment. Companies that we aiming at 15% of customers paying by Pix.
We have recently implemented it, and we've had 4% of customers migrating in the first two months. And there's more room to increase Pix with machines, credit card machines. We have the machines available in our stores. They could be adapted, so the customers that are present at the store could create a QR code that would be generated by the machines and be used to pay by Pix. That's an instant payment method. Carolina is asking, Carolina Carneiro: We see that you're working to implement shared services center. This term of 12 months considered a possible capture for the next review cycle. Do you have any estimate to reduce the percentage of costs in that front?
This 12-month term is associated with the PDI term, that is 12 months, and the main goal is to make migrations and transfer knowledge and ensure that the change from one place to the other for execution of activities doesn't have any problems of continuity. As we migrate and consolidate, there are opportunities to capture that, but I'd say that the largest capture will be after the entire center has been established. We have agreements that will mature, that doesn't allow us to change or capture or change modeling. So this is one important point. So there are opportunities to reduce cost and capture operational efficiencies throughout the journey, not only after the 12 months. But when we talk about capture, we talk about capturing that is associated to existing terms of existing agreements.
So until we can clearly see the opportunities, the contracts that are maturing, we are renewing them for or extending them for another 12 months maximum, so that we can have all-everyone on the same page, and we can have a better view for shared services.
Thank you, Catia. Daniel Traviski has some questions. One is: With regarding the tariff review, what is your expectation about the coverage of operational costs and required revenue? How can you ensure the adequate levels of coverage for the company of providing tariff, modest, small tariffs? And the other question is, when do you expect the terms of the new contracts to be defined? The adherence period of 180 days is as of the contracts are sent to the municipalities. So the answer, yes.
In the tariff review process that's close to happen, we are discussing in advance, even before the agenda is open efficiently, we're discussing with the regulatory agency the methodology of how we believe the model should be, of seeing costs, OpEx and CapEx, estimated revenues. The main point in this process is to have, together with our ARSESP, and using the reference rules of ANA, a model that we can have stability and better adherence to what is used in throughout the country, in federal agencies and other state agencies. Aiming not only to increase tariff, the tariff of Sabesp, but also to have greater legal certainty. The low tariff is obtained when we have right alignment of incentives. If there is a full captured of everything in the company, there's no incentive for the company to be more efficiency.
We should share the gains in efficiency, maintaining the incentives for the company to be able to innovate and become more efficient, and then a portion of this efficiency that was generated will be shared with users. Lower tariffs is a consequence of a right model of incentives to estimate CapEx.
Regarding the question on the 180 deadline, again, following what is in our legal framework, once the controlling shareholder notifies the municipality with all of the clauses that are going to be changed in the contract, and therefore, the law determines what is going to change in the contracts, and this is how we structure this notification, giving support to the state government. So do we have any expectations of time? Well, this is probably going to happen in phase one, which ends in January, and of course, the sooner the better for the process, and this is how we've been working with it.
Well, thank you very much. Vladimir asks a question: Good afternoon. Some of the initiatives introduced as biogas and biofertilizer will have additional expenses for the company.
So how are you going to deal with these investments so that you can avoid sharing these gains, do not reduce the returns on the business? In terms of methodology review, this is part of the main discussion points. The company can develop circular economy with positive externalities, and at the same time, this re-adjusts payments. Anyway, according to the current model, we already used specific purpose societies. Some of them are already in force in the company, for example, for the treatment of effluents and reused water. And therefore, we already have a structural model that enables the company to develop these synergisms, and of course, sharing costs whenever we have them. There is a solution, but we want to have a discussion on additional expenses because we see a very positive externality there.
Thank you, Bruno. The next question is from Gustavo Farrell.
He says that with all of these organizational advances, are we going to have better returns and pay shareholders by having a better level of dividends? Well, with all of the structure we are creating at the company, we want to have a more profitable and efficient company that generates better results. Today, there is a restrictions in terms of the sharing of dividends. According to the current model, before the privatization, this was anticipated until 2023, but in the government's proposal, there is an anticipation of four years by 2029. So if we do not have any changes in our bylaws, this will be done based on a universalization at 2029 or 2033. In this scenario of non-privatization, we go back to the previous scenario.
Well, this was the last question we had this far, and I'd like to remind all participants that want to ask any questions for them to do in writing, using our platform, and I'm going to give you some additional time. Okay, we already have another question. Victor Aguiar asks: Still in terms of debt management, do you have any plans for the issuance of debentures or bonds? Is there a possibility for the anticipation of debentures or payments of any other debt?
Well, right now, we are evaluating what we have according to our current scenario, looking at next year and the needs we'll have for investments. Probably, debentures will be a funding option, looking at the level of investment we'll have as of 2024. Regarding any repurchases, it will all depend on the privatization process. It has not been determined this far.
We're working with our portfolio to find out what the possibilities of funding are based on engineering and other plans so that we can support growth after 2024. Right now, we're working with our cash. Everything has already been hired to support the expected CapEx for 2023.
Thank you, Catia. This was the last question we received. André, I will now turn over to you so that you can wrap up. Well, thank you to everybody. Actually, thank you everyone, all of the directors and the teams that are part of the workforce of the employees. I would also like to thank you for your trust and all of the support we received as the directors, people engagement. The company has wonderful employees. They have transformed the sector over the years, and what we want to obtain now is to generate value based on this team.
The company has the capacity to transform the energy sector in the whole country, not just the state of São Paulo. Our mission is our commitment with the company, improved results, good services with transparency, accountability, true accountability with regulating agencies, a very open relationship, and an honest dialogue, be it with clients, the granting authority, the municipalities, the investors, the state government. The proposal is to generate value, align visions, align interests on behalf of the population, with a very clear purpose to generate value in a very broad manner, reduce inequalities. This is a hardworking team. It believes in the project. It believes that Sabesp, as a company, and as it is, has a huge potential. We can generate a lot of value. We are dedicated to pursuing that, developing this future, because we understand that this is a very important step for the company.
It is a step that places the company at a differentiated level when compared to any other company in the sector in Brazil, and it also unlocks and feeds and creates opportunities for the different stakeholders, other geographical regions. The capacity of this team to deliver services that no other company has to other places in Brazil, with significant deficits in sanitation. So we're all very dedicated to continue delivering improvements, and with your support, we have process, including the press, regulating agencies, to understand what we're doing, what can be improved, and what we have to do that we're not doing. Once again, I thank this team for their trust, for the invitation. It's not easy working at a state-owned company. It has intrinsic problems. We'll try to solve that over time. There is an unbalance between investments and return.
I would like to thank you for having accepted this challenge and for having done wonderful work this far. Thank you all very much, Tibério and everybody else.