Good day, ladies and gentlemen, and welcome to the Colbún Fourth Quarter 2021 Earnings Call. At this time, all participants have been placed on a listen-only mode, and we will open the floor for your questions and comments after the presentation. It is now my pleasure to turn the floor over to your host, Sebastian Moraga. Sir, the floor is yours.
Hello to everyone, and welcome to Colbún's Fourth Quarter 2021 Earnings Review Call. My name is Sebastian Moraga. I am the company's CFO, and joining me today is Miguel Alarcón, our Deputy CFO, and Isidora Zaldívar from the investor relations team. I hope that you have received our earnings report and an earnings review presentation that we have prepared to complement the analysis of our papers. Otherwise, you can download them at the investor section in our website. Agenda for today on slide three is as follows. We will begin talking about the highlights of this year, then to analyze in detail this quarter results, and after that, we will provide an update on our growth opportunities. Following the presentation, there will be time to participate in a Q&A session. Now, please go to slide number five and six to review the highlights of this year.
Regarding the COVID-19 pandemic contingency, the company's power plants continued operating normally, and Colbún continues to take actions considering two priority focuses. First, to protect the health and personnel collaborators, suppliers, and our surrounding communities. Second, to ensure the continuity and security of the energy supply. Within the framework of an agreement signed with Goldman Sachs, IDB Invest, and Allianz during the first half of 2021, Colbún sold accounts receivables originated by the energy price stabilization mechanism to regulated clients for a total face value of $96 million. The difference between the nominal amount of the balances sold and the purchase price was recorded as other losses for the year. The agreement contemplates carrying out successive sales of the accounts receivable that originate by virtue of the aforementioned law. On September 30, the sale of all the shares of Colbún Transmisión to Alfa Desarrollo was executed.
The final sale price was $1,185 million, with which the effect on income before taxes amounted to $830 million, approximately. As a result of the extraordinary income received from the sale of Colbún Transmisión on the company's liquidity position, on October 12, the company distributed dividends for $1,000 million. This payment is comprised of a provisional dividend for $250 million, charged to 2021 profits, and an eventual dividend charged to the profits of previous fiscal years for an amount of $750 million. Regarding the progress in the development of our projects during the year, the following stand out: Diego de Almagro Sur PV Projects One and Two for 232 MW. It presents progress of 93% according to budget.
As of December 2021, the project is progressively injecting energy into the system. The commissioning of the entire park is scheduled for the first quarter of 2022. The investment approved for this project reaches $147 million. Horizonte Wind Project, which on September 2021, the board of directors approved its construction, which began during the last quarter of 2021. The investment for this project amounts to $850 million, and we estimate it will start injecting energy to the system in the fourth quarter of 2023. The entry into operation of the last wind turbine is estimated towards the last quarter of 2024. Cadin Solar PV Project. On September 2021, its environmental qualification resolution was obtained. This project has not yet received board approval to begin construction.
Colbún has other renewable projects in its portfolio for more than 1,800 MW in various stages of development. On October 14, Colbún issued its first green bond in international markets for $600 million, with a 10-year maturity, obtaining a coupon rate of 3.15% with a yield of 3.17%. The funds will be used to finance renewable energy projects eligible in accordance with our green financing framework. Colbún was selected to list for the sixth consecutive year in the Dow Jones Sustainability Chile Index, and for the fifth year in the Dow Jones Pacific Alliance Index. It obtained the second place for its 2020 integrated annual report by the Informe Reporta, which evaluates the information flow that companies give to the market.
In November of 2021, in the context of the annual review of provisions in order to assess the application of impairment in accordance with IFRS standards, an impairment provision was recorded on certain assets for an amount net of deferred taxes for an approximate value of $102 million. These include a provision for impairment of approximately $100 million for the San Pedro Hydro Project, which continued with its environmental processing process. On December 30, 2021, Colbún sold its full participation in Transmisora Eléctrica de Quillota to APG Energy and Infra Investments Chile, and Celeo Redes Chile Expansión. The sale price for the 50% associated to Colbún's participation in the company was $14 million. The sale generated a profit before taxes for Colbún of approximately $12 million. Now please go to slide number six to review the subsequent highlights.
In December 2021, Colbún announced the total prepayment of its outstanding bonds in the local debt capital market, that is F&E, which was executed on January 24, 2022. The total current notional amount of those bonds amounted to $4.6 million. As of December 2021, a provision was recorded for the accounting costs associated with the prepayment, which had an effect net of taxes on the year's result of $13 million. Now please go to slide seven to review the main consolidated figures of the company. Consolidated EBITDA for this year reached $520 million, decreasing 24% compared to the $683 million EBITDA in 2020.
The decrease is mainly explained by significantly lower hydro generation as a consequence of the extreme drought that affects Chile, which was replaced by higher gas generation, increasing the company's variable costs and higher purchases in the spot market, given higher system marginal costs driven by higher fossil fuel prices on international markets. The company recorded a profit of $540 million, compared to the loss of $90 million in 2020, mainly explained by the extraordinary effect on results of Colbún Transmisión's sale. The sale price amounted to $1,185 million, with which the effect on results before taxes of this transaction amounted to $830 million. This effect was partially offset by the provisions for impairment recorded previously explained.
As of December 31, 2021, the company holds $1,400 million of cash, and net debt to EBITDA ratio is at 1.7 x. Now, I will turn to Isidora, who will speak about the main drivers of fourth quarter's 2021 results.
Thank you, Sebastian, and hello to everyone. Now, please continue to slide nine for physical sales and generation balance analysis in Chile. Total generation of the period increased 3% compared to last quarter, mainly explained by higher gas and diesel generation due to a higher economic dispatch and system decoupling. Variable renewable energy generation also increased, mainly driven by the entry into force of an energy purchase agreement with Total Eren in August 2021. These facts were partially offset by lower hydroelectric generation, mainly due to the drier hydrological conditions during this quarter. Physical sales during the quarter reached 2.6 TWh, 4% lower than last quarter, mainly explained by lower sales to unregulated clients, given the expiration of Anglo American contract last year, partially offset by higher sales to the spot market.
Spot market balance during this quarter recorded net sales of 74 GWh compared to the net purchases of 266 GWh recorded last quarter. The variation is mainly explained by the higher generation during the quarter. Now, please continue to slide 10 to analyze the EBITDA from the generation business in Chile for the quarter. EBITDA for generation business in Chile reached $146 million in this quarter, decreasing 4% compared to last quarter. The variation is mainly explained by higher gas and diesel consumption costs due to a higher generation with those fuels. Two, a higher coal consumption driven by a higher average purchase price of this fuel.
Three, higher other expenses by nature associated with a lower comparative base, considering that last quarter, third-party services, training, travel, among others, were mostly suspended as a result of the pandemic. Now, please continue to slide 11 for physical sales and generation balance in Peru. Total generation of the period decreased 6% compared to last quarter, reaching 0.9 TWh, mainly driven by the lower economic dispatch and plant availability. Physical sales during this quarter reached 0.9 TWh, decreasing 6% compared to last year, mainly explained by lower sales to the spot market as a result of a lower economic dispatch of gas power plants in the Peruvian system, and in a small extent, the lower availability of the plant during the quarter.
This effect was partially offset by higher sales to unregulated clients due to new contracts signed in this segment. Spot market balance during this quarter recorded net sales of 0.4 TWh compared to 0.5 TWh during the same quarter of the previous year, due to the lower generation recorded during this quarter. Now please continue to slide 12 to analyze the EBITDA in Peru for this quarter. EBITDA in Peru reached $18 million this quarter, 12% higher than the EBITDA of $16 million recorded last year, mainly due to, one, the higher operating income explained by higher sales in the spot market as a result of a higher average sales price. And two, lower diesel consumption because during the last quarter, Fenix generated with that fuel while PGP carried out tests that restricted the dispatch of gas.
Now please continue to slide 15 to the consolidated non-operating income and net income analysis. Non-operating income this quarter recorded losses of $182 million compared to the losses of $207 million in the last quarter. Lower losses are mainly explained by a lower impairment provision recorded on individual assets. During this quarter, provisions were recorded for an amount net of deferred taxes of $102 million for this concept, of which $100 million corresponds to the San Pedro hydroelectric project. This project continues with the environmental assessment process. On the other hand, during last year, an accounting impairment provision was recorded in Fenix Power in Peru for an amount net of deferred taxes of $127 million.
The company recorded a loss of $52 million compared to the loss of $63 million last year, mainly explained by the lower impairment provisions recorded. Now, continuing with this conference call, please go to slide number 15 for an update on the status of our growth opportunities. Regarding our growth opportunities in Chile, we have focused our growth in renewables, hydro, solar, and wind based on three pillars. The first one is developing a pipeline of projects. Regarding the incorporation of renewable energy from variable sources, up to this date, Colbún has been able to complete a portfolio of locations for wind and solar projects, which are in different stages of studies and development. Under construction stage, the first one is Horizonte, a wind farm of 778 MW located in Atacama Region.
The second one is Diego de Almagro Sur, two PV projects of an overall capacity of 230 MW located in Atacama Region. The last one is Machicura, a PV project of 9 MW located in Maule Region. In environmental study approved, we have Inti Pacha one, two, and three, a PV project of 250 MW for each stage located in Antofagasta Region. Jardin Solar, a PV project of 540 MW located in Tarapacá. In feasibility stage, we have Los Puquios, a wind farm of 360 MW located in Biobío Region. We have Celda Solar, a PV project of 136 MW located in Arica Region.
Additionally, at the end of this quarter, Colbún has built a portfolio of locations for other wind and solar projects, which are in early stages of development. For more details on this slide, you can refer to the latest earnings report available at our website. The second pillar is that the company does not rule out the purchases of renewable assets in operation. Finally, the third pillar of our growth in renewable is acquiring energy from third parties. In terms of our international expansion strategy, as we have mentioned before, we continue searching for growth opportunities in selected countries of the region in order to maintain a leading position in the power generation business and to diversify our sources of income. This concludes Colbún's fourth quarter of 2021 results review. Thank you for listening, and now we are open to answer your questions.
Certainly. Ladies and gentlemen, the floor is now open for questions. If you have any questions or comments, please press star one on your phone at this time. We do ask that while posing your question, please pick up your handset if you're listening on speakerphone to provide optimum sound quality. Once again, if you have any questions or comments, please press star one on your phone. Please hold while we poll for questions. Your first question is coming from Alejandra Andrade from JP Morgan. Your line is live.
Hi, how are you? Thank you so much for taking my question. I had two questions, actually. First, I don't know if you can give a little bit more color on the write-off, given that this was a write-off mainly on a project that hadn't even began construction. I'm just wondering what happened there. I don't know if you have CapEx guidance for 2022, or if you could just give us a little bit more color on your expectations for CapEx in 2022. That's it from me. Thank you.
Hi, Alejandra. This is Miguel. Thank you for your question. Regarding your first question, the write-off, it's a typical process we have to run according to IFRS standards. Because of that, we compare the carrying value, the book value of all of our assets, also our projects against an NPV, taking into account future cash flows, both in terms of investment or CapEx and of course, the expected revenues within those projects or generating units. In that process, in this case, we had an investment amount, especially for the San Pedro project, which we believed in some way did not reflect the NPV value, the adjusted NPV value, once taken into account, again, additional investments and future cash flows.
For that reason, again, this is actually an accounting test, we decided to perform that impairment provision. It is a provision because then you could restore it if things were to change in the following years. You must also recall that this project has a long history in Colbún. It began in 2008. We built it for about two years and then stopped construction. We actually impaired the whole amount, the amount invested within those two years, from 2008 to 2010.
Great. Thank you.
Yes. Regarding your second question, I would say that on one side you have, of course, the recurring maintenance CapEx. We've always said that that's a figure that is close, rough number, to $60 million on average along the years. Basically, all we have for this year at this point is mainly Horizonte, which, you know, it's already approved. It was approved last year in the third quarter. For this year, that figure is close to $170 million, roughly speaking of course. There's of course the final portion of the Rio Blanco project, which we expect to commission in this quarter, first quarter of 2022. That's another, let's say, $25 million.
All in all, I would say a rough estimate of $200 million for those two projects in addition to the maintenance CapEx.
Great. Appreciate it. Thank you.
More than welcome.
Thank you. Your next question is coming from Andrew McCarthy from Credicorp Capital. Your line is live.
Good morning, everyone. Thanks very much for the call and the presentation. Hope everyone's doing well. My first question, just wanted to follow up a little bit there on Alejandra's question regarding the CapEx budget. Just more broadly trying to think about, you know, sort of the capital allocation decisions you might be looking to make during this year. Can you give me-
Andrew? Sorry to interrupt, but I have a little problem hearing you. Can you speak louder, please, if possible?
Yes, certainly. Let me try and speak louder. Thanks, Miguel.
That's better. Thank you. That's better.
Is that better? Great. Okay, fantastic. As I was saying, just wanted to follow up on the question on the CapEx budget for 2022. You know, you talked there about, I count it as $260 million, the blocks of CapEx for this year. Just trying to get a sense for, you know, how to think about that with, you know, your... You know, how you think about indebtedness and where you feel comfortable, and where you wouldn't feel comfortable maybe in terms of, you know, not crossing a certain net debt to EBITDA threshold. Then just trying to tie that back into, you know, the decisions you might be looking into in terms of dividend payments this year.
Any color you can help us out with there would be really helpful. That'll be my first question. Maybe we could go with that first.
Okay. Okay, Andrew. Thank you. I would say the following. First of all, you do recall that during the last three months, I would say we've done two decisions affecting our debt and cash balance. On one side, we issued $600 million in international markets just to, I would say, pre-fund a part of the expansion CapEx we are now discussing. On the other side, within those $600 million, we took $200 million to prepay local debt, which we believe was in some way inefficient in terms of duration, and competitively, it had a higher interest rate than the rest of the debt we currently hold. With that, we ended up, I would say, our year on a net debt-to-EBITDA figure close to 1.7 x. I think that's the figure.
That's, I think, something that we in some way plan to carry in the future. In other words, I don't foresee any additional debt activity in the sense of trying to get a higher cash portion, while at the same time, we've always cared a lot, as we explained in the past, for our rating. I think rating is a key consideration when thinking about debt metrics going forward.
We, of course, do not have a specific target we plan to follow, but I would say that we are comfortable within the current international rating we hold. In terms of dividends, I cannot say a lot because you have to remember, Andrew, that we already distributed, I would say, most of the amount we are required to, based on our dividend policy, which is 50% of net income. We ended up the year with a total profit close to $540 million, and we distributed against 2021 results, $250 million. Which is again, about the same figure we should distribute within the dividend policy approved. The rest is up to the shareholders' meeting later in April to decide on.
That's really helpful. Thanks so much, Miguel. Then my second question. I'll just speak up a bit. I was just trying to gauge a little bit the some of the, maybe the protections you have heading into this year. You know, pretty difficult, obviously, operating conditions in Chile at the moment with the weak hydrology, high international fuel prices, et cetera. Just trying to gauge a little bit, you know, in the fourth quarter, we saw the cost of gas you're importing from Argentina seemed fairly low relative to sort of international prices. Just trying to understand a little bit, you know, how you may be expecting those prices to evolve between, you know, now and April.
If you're seeing any potential maybe now also for additional supplies of gas from Argentina, maybe during the second quarter and the third quarter of the year. The other questions that are related to sort of, you know, protections or being a little bit shielded from the tough operating environment. We also saw, you know, you had quite a good impact from the backup PPAs in the fourth quarter, especially the new one with Total Eren. Can you maybe give us a bit of an idea of how much, you know, in terms of GWh of backup PPAs we should expect you to be able to sort of buy energy from during the course of this year?
Hi, Andrew. This is Isidora. As we have done before, I think that our best protection or our best hedge to hydrology is to have signed a contract with gas. In terms of that, we have a firm contract for the next semester. On one side, we have signed contract with Argentinian Gas until April. We also will have our long-term contract with ENAP for the first half of the year. Together, these two contracts allow us to meet the need for gas for the whole generation of our gas-fired power plants. I don't know. Do you have another question that I don't remember?
No.
The amount of energy for next year? Okay.
Thank you. Once again, ladies and gentlemen. Go ahead.
Sorry, I think I was just trying to follow up that. Sorry about that. No, just, Isidora, thanks very much for that color. The other question was just on the backup PPAs, whether you could provide any color there on the volumes. You know, we saw an important rise in those in the fourth quarter, which I think was really helpful. Just trying to gauge how much we should be expecting from that front during 2022, please.
Yes, of course. On one side, we have the expiration of our regulated clients for around 1 TWh. On the other side, we have the entry of BHP contract in January for 3 TWh per year. I think that's the main changes.
I'm sorry, the 1 TWh , Isidora, was to do with what?
Regulated clients.
Just in terms of the energy that you're buying from other generators. Just trying to understand, 'cause you had the, you know, the Total Sun Power. I think it was about 125-150 GWh in the fourth quarter. I think you also had some purchases from Acciona. I'm just trying to understand that total for this year.
Oh, sorry. I understand about the physical sales, not the purchase of energy. For the next year, the figure will be very similar to the last quarter of last year because we have the Total Sun Power energy purchases and also the Punta Palmeras energy purchases.
Perfect. That's great. Thanks so much.
Thank you. Once again, ladies and gentlemen, if you have any questions or comments, please press star one on your phone at this time. Please hold while we poll for questions. Thank you. There are no further questions in the queue. I will now hand the conference back to our host for closing remarks. Please go ahead.
Okay. Thank you everyone for joining us. Sorry. Go, Miguel, please. Thank you, Sebastian. I was just saying thank you again for joining us for this conference call. Hopefully, we've been able to answer all of your questions, and see you soon for the first quarter results for 2022. Have a great weekend. Bye-bye.