Companhia de Saneamento de Minas Gerais Copasa MG

BOVESPA:CSMG3

Earnings Call Transcript 2021-Q4

[Operator]

Okay. Now let's begin with the presentation from the company officers who will go into the details of the financial results for 2021 as well as the results for the -- for 4Q '21 and were published yesterday. At the end of the presentations, we'll have some time for Q&A that will be made by the guests here in person or sent by the audience. I'd like to highlight that we will begin our online streaming of the event. To begin the presentation, I'd like to invite the CEO of COPASA, Mr. Carlos Tavares de Castro.

[Carlos Eduardo de Castro, executive]

Good morning, once again. Thank you very much. Considering that we've organized COPASA Day this year in a different way, in a very interactive way, I'd like to invite all our directors and officers to take a seat here on the stage with me, and then we can begin the presentations. Ricardo, Guilherme, Cristiane, please take a seat. To give us this presentation, I'd like to ask Mr. Carlos Augusto Botrel Berto, CFO, to talk about the financial results.

[Carlos Augusto Berto, executive]

Good morning, everyone. Welcome to COPASA Day 2022. It's a great pleasure to have you here with us.

So now to begin with the overview of COPASA, you already know the company, but it's always very important for us to reaffirm our areas of operations. For water, number of concessions, 591 concessions, out of which 183 are operated; in sewage, 254 concessions, in operation, 225. In terms of water, we have 4.5 million connections, 61,000 kilometers of network of water supply and a coverage of 11.6 million inhabitants serviced. In sewage, 3 million connections, 31,000 kilometers of sewage networks and 8.3 million inhabitants serviced. We service 69% of municipalities. It's worth noting on this slide that we have -- the coverage of water is 99.4%. So COPASA has achieved its target of universalization which was 99%. In sewage, we have 71.9%, a very high level when compared to the Brazilian average. Now about our revenue. The evolution of [ revenue]; on the annual weighted growth, 7.5%. We ended the year of 2021 at BRL 5.1 billion, where BRL 1.8 billion in sewage and BRL 3.3 billion in water. The highlights for that effect if we compare 2021 to 2020, an increment of [ 3.04% ]. Highlights from '20 and '21, a tariff adjustment of 3.04% in November 2020, partially offset by the adjustment in August 2021, minus 1.52%. We also have the growth of savings, which was 1.3% in water and 3.3% in sewage. Some other figures. Considering the CAGR, I.n December 2021, 5.53 million in water savings and 3.89 million in sewage savings. In terms of water, volume measured 629 million and sewage volume measured 429 million. Now about the cost. In 2021, we ended at BRL 6.9 billion in costs. The main variations are the PDVI where we account for -- you've already known this number since September 2021, which is nonrecurring expense in the amount of BRL 152 million with a payback in 11 months. There was an important factor increasing our cost in electric energy, which increased by 24%, given the different brackets. And we have already requested with this price adjustment with our site for the impact in 2022 so we can offset that. The tariff transfer, an increment or increase of 28% given the inclusion of 85 new municipalities. In third-party services, we have an increase of 15% with an increase in the expenses with IT in the -- with the SAP to HANA migration, the Brazilian data privacy law, LGPD, the tariff review and the tax review, which would have a strong impact in 4Q '21 and also for the legal framework. Now going into the further details of the PDVI. We had 1,098 employees that adhered to the voluntary dismissal program, which is called the PDVI. And in third-party services, the cost is there that the company is aiming at actions and initiatives to modernize and improve market tools. Another important factor was the decrease in our PCLD by 40%, which was a significant reduction obviously, given the default, which went from 4.5% to 3.5%. And that's the result of campaigns, renegotiating debt and commercial initiatives and back into [indiscernible]. That's the front that [indiscernible] has been working on strongly. In depreciation and amortization, the increase was affected by the incorporation for inclusion. Now in other revenues and expenses in the financial results, you will remember that in September, we had the [indiscernible], BRL 128 million and 30% of that amount is in other operating expenses and the rest is financial expenses, which is the monetary update. The other provision that we had in December was a result of labor claim of BRL 217 million. And that process was filed in 2008 by the main union of our company employees. And if we separate that impact from company impact, [ BRL 110 million ] were accounted for in other operating expenses and BRL 107 million in financial expenses. About EBITDA and profit, we ended at adjusted EBITDA [ BRL 1.596 billion ] when adjusted, which is equal to 29.5%. If we exclude the nonrecurring event, the voluntary program and the labor claim, the margin goes up to 35.9%. And net income as a result of these nonrecurring effects -- so if we take out the nonrecurring effects, the net income would be higher than the year of 2020. In debt management, we ended December '21 at net debt of BRL 2.8 billion with leverage of 1.8x -- excuse me, 1.7x. That's low leverage, and that shows that the company has the ability to raise funds in the market to conclude the investment plan that are in line with the universalization goals. I'd also like to highlight that the company has complied with all its financial covenants. In debt management, the schedule where the main disbursements of 20 -- '21, '22 -- or '22, '23, '24 are compatible with the company's cash generation and the average coupon ending December '21 at 8% according to the Brazilian interest rates, the Selic. The company ended the year, compensation for shareholders and dividends in the amount of BRL 283 million to be paid up to 60 days after approval.

It's worth noting, and you've already probably seen this, our -- the opinion of our independent auditor had some comments in their opinion, given the provision that we made in December for a labor claim that I mentioned that was filed in 2008. So we have a supplementary provision of BRL 217 million for that claim. And in our debentures agreement, we have covenant -- nonfinancial covenants that were affected by that provisioning. Therefore, the nonfinancial covenant was reached. And since December '21, we filed a claim for a waiver, and that waiver was obtained in March 2022 before the approval of the financial statements and before the auditors' opinion. However, in the opinion of the auditors, the waiver should have been obtained by December 31, '21, and therefore, the balance sheet has that note. Company management, together with the governance bodies, the tax committee, the Board and supported by the -- by another opinion deemed that KPMG's decision is wrongful and obviously does not reflect the reality of the payment schedule in the short term. So the company still remains with that long-term debt so that our analysts, so that our investors could have a financial positioning that actually reflects a short-term payment schedule that did not occur. And therefore, the company was not reclassified and the balance sheet received that note from the auditors. That was the summary. Thank you very much for your presence here today, and thank you. Now let's continue with the presentation, and we invite the Director of Technological Development, Environment and entrepreneurship, Dr. Ricardo Augusto Simões Campos. He's going to talk about investments, innovation and projects.

[Ricardo Augusto Campos, executive]

Good morning, everyone. We will talk about the items that pertain to our directorship, the issues regarding our investment plan, and we are going to focus on a few strategic projects that we think that are very relevant, so the efficient use of energy and automation of systems. And also, we will talk about the issue of our technological and innovation program.

Now let's look at the investment plan in the short, medium and long term. The company in 2021 had investments of BRL 907 million. That really is a big increase in terms of investments, and it relates to a recovery in the capacity of investment of COPASA. In the period of 2015 to '18, the company invested BRL 2.1 billion. That is BRL 520 million per year. In the period of '22 -- of 2019 to 2022, we've had the perspective of increasing these investments in 57%, that will take us to an average investment of BRL 900 million. And therefore, we can pay everything that was already discussed. We'll actually reach our goals of the regulatory framework, specifically those connected to the sanitation, utility and treatment of sewage. We have the prediction that between '23 and 2026, we will invest BRL 6 billion, and we will reach this threshold of investment in this graph that in the year of 2022, we have investments of BRL 1.395 billion already scheduled, BRL 1.410 billion for 2023, BRL 1.6 billion for '24 and '25 and BRL 1.4 billion for '26. Now let's look at the detail -- in detail the investments that were done in 2021. In water and sewage, we invested in these connections BRL 560 million. The growth, organic growth, the necessary investments for -- following up on the natural growth of cities, we got to BRL 109 million fighting losses. The company now focuses on filing loss on the leaks and all that, BRL 54 million and other investments, BRL 185 million. We have projects looking at the real estate and everything that has to do with new building construction sites. For 2022, our investment will reach BRL 1.395 billion. For water waste, we -- our investment, BRL 324 million. For sewage, BRL 520 million. Just on those 2 items, we will get to BRL 845 million. The organic growth in modern connections is close to BRL 50 million in the potable water systems and BRL 76 million growth in the connections of sewage. We had the fighting leaks. We are now investing BRL 96 million. Therefore, we can take the company to our goals, our objectives stated by the regulatory framework and the regulatory agency. Other investments, BRL 319 million. And here, we accelerate our investments in the part of projects to give more sustainability for the future. It's very ambitious. The -- looking at work, everything has to do with the support for the implementation of our new enterprises, specifically for the systems that provide water and sewage. Within the -- getting into the details of the BRL 1.4 billion, we have the direct investment in the expansion and improvement and replenishing of asset in the connections of water and sewage. Of the BRL 995 million, we have worth of water connections and sewage, we have the water treatment station that we have a certain number, and that's a requirement for our company. We have the projects for doing a follow-up on the connections. And to make sure that we can reach our goals, the company has taken into -- has really invested in management of the program. We have an improvement -- significant improvement in the procedure for procurement of the projects. The projects were subcontracted in such a way that the management of the contract was extremely laborious, and this made the execution of the project very difficult from the standpoint of COPASA as a manager. And also for the subcontracted parties, it was very difficult to implement these projects. We had a very important improvement, and this was tested, this new model, in one of the works that we started in 2021, the adjustments that were necessary were implemented and now we started with a new public bid in 2021. We had a bid that will give support for the investment program, and it will go all the way until 2025. With this consolidated model, we are doing the investment in new projects, and that will provide the base for the investment programs in '23, '24, '25 at BRL 60 million. We will receive the commercial proposals by April 11. We implemented also our research contract. We have the participation of the work, and we are doing the quality control of the work itself. And also, we have the inspection for the enterprises to actually take the company and allowing the company to implement the investment program that is scheduled, and that is necessary not only to reach the framework, regulatory framework, but also continue with our work. And we introduced in the company in the year 2021, the management of these works through the methodology of the project management office, PMO. The first page was to introduce the methodology, train the teams of the management -- the different management units, actually. We already concluded the station. Now we're implementing the methodology in the main projects, and we are expanding little by little. This will percolate through all the projects that are under the umbrella of the investment projects -- the project of investments. And now we improved even the bidding process. We have the mixed economy, we have the legal demand of the public bids and this is all done under the regulatory framework and the appropriate laws. We started to adopt the methodology for bidding in the semi-integrated modality, where we had met the introduction of innovation on the part of the subcontracted parties. The companies will present projects, and they can also propose innovations where there is an opening for that. Another issue, budgeting, where the company no longer does the procurement by unit prices because we the -- we had almost all the risk in this contract. That subposition of risks in the process is more balanced. And this makes the processes -- the unfolding of the processes much faster, reduction of liabilities and improvement in the management process of the work, assuring quality and reaching our deadlines and the bidding done by grouping these enterprises, bundling. Here, we would subcontract several different works and we can, therefore, have more robust contracts where the technical demand can be more reliable, more rigorous. And we also can expand this to the financial aspect, and therefore, we can choose the best company in the -- that takes part in the public bid. We've been very rigorous in terms of what is the work that is developed -- that is provided by our service providers. And we removed the service providers that do not meet the requirements, either done by written in the contract or in the public bid. And the company has had to stop several contracts because of the poor performance of service providers. But this is a process that we see as a contribution so that the market improves, and we have the position of delivering -- getting better work provided to us. Another alternative by the [ Law 13-333 ]is that we would add to our bids. This is already undergoing. All the work subcontracted that are over BRL 10 million, we provide these companies the opportunity of actually getting a bonus by reducing deadlines or in the case of sewage and water connections by the anticipation of the migration of connections that are in the system, and therefore, we will get the possibility of improvement in the regulatory context, and we will get gains. The company is reviewing its regulations for subcontracting, and we have those issues that already sedimented procedures within the use of the [ Law 13-333 ] but also adding possibilities for the new law, bidding with the direct management where a few items can be absorbed by the company, therefore, improving its subcontracting process. So within the -- in the context of those over BRL 900 million that we have for investing, they are spatially divided in the state. As you can see, we have BRL 87 million in the western region of the state. BRL 143 million that will be invested in the northern part of the state, BRL 93 million in the eastern zone, BRL 337 million in the metropolitan region, BRL 188 million in the southern region and BRL 146 million, which is the central region around Belo Horizonte.

In terms of projects, strategic projects, please highlight. The first one, the company implemented the unregulated market for energy. We are migrating our main 5 units. They correspond to 35% of our usage of electricity. The bid was published on March 18. It will be effective tomorrow, and we have the expectation of an economy of around BRL 100 million until the end of April. We were already authorized by the Board of Directors, and we have the medium-range electrical units. These are units that have a relevant use. By the end of April, we will have the bid for contracts that take over 5 years. We last year mentioned that we are open for proposals for energy use and adoption of renewable energy. We've received 6 proposals. These are being under analyzed -- these are under analysis. And we also have land and full loading photovoltaic generation of energy. This is in our dams. And also the cogeneration in our units for sewage treatment for biogas. We are -- we should conclude this analysis by the end of May, and this is when the company will implement the approved procedures, whether if it's a public-private partnership or a different proposal. Finally, the energy efficiency, these are smaller projects in units that were previously selected. We have 25 units that will serve as the model for the expansion of the technological alternatives that were identified, substitution of electric engines by better performance engines, so therefore, we can have a model that can be expanded for the rest of the company. And within the strategic projects, introducing the systems automation project that doesn't specifically involve automation, but instead, making information available in a way that we can improve the operating management system, and Guilherme will address that as well. Today, the first step is to automate 324 reservoirs that are spread out in the entire state, 270 elevation areas and 36 water treatment stations. So this information is consolidated and is moving towards operations center, where at this time, we've been developing that with our own team. And we've also established a bid. The company has already been contracted. The service order was issued this week. So now we can expand the modeling to obtain information and with that add intelligence to the automation process. And lastly in innovation and research and development, this is something that we handled with a lot of care and emphasis where we develop and improve in the Board of Directors an innovation policy for the company so that we can guide the initiatives in all company systems so we have a consistent technological base and standardized. So we developed the program, an innovation program, within that policy, which is based on the development of internal technical expertise and capturing all the good ideas that we have internally in a sense that we will encourage employees in their day to day to develop suggestions, proposals that will improve company systems in all its areas of action. And that's in association with academia where we're pursuing solutions for problems and all the pain points that we have in our -- on a daily basis as well as looking for that in the market, looking at vendors, looking at start-ups. So we opened a proposal, semi-integrated call for bid for innovation in the company as they can be brought on by our actual employee service providers and contractors. Another important aspect is for the first time in company history, we have a line item with resources allocated to be invested in research, development and innovation. And that's the procedure that the company will make it long-lasting and also being discussed by the regulator to create a procedure in the tariff system to allocate the funds and make them available. That's what I have to say. Thank you very much. Now I'd like to invite the Officer of Market and Relationship, Ms. Cristiane Schwanka. She will talk about customer management.

[Cristiane Schwanka, executive]

Good morning, everyone, again. It's a great opportunity to be here with all of you. Now we're going to talk about this positioning, all the actions we have. Under our management, one of the structuring actions for the company was to organize the regulatory theme and customer service in a management division that is exclusively dedicated to that, so that at the end of the day, we can achieve our main objective, which is to add value to the business. This management division is focused on adding value to the business and placing the customer at the core of our business strategy, and that's the big position of our corporate identity, place the customer at the core. And it's not just the end user, it's not the one that receives treated water or that we collect and treat their sewage. It's also the customer that contracts us, the granting power, the government. And we also manage our grants portfolio that, as Carlos Augusto mentioned, are over 590 concessions. So the company has capillarity with 591 concessions in the state of Minas Gerais. In water, 591, and 254 in sewage. So we have room to grow. That's the big takeaway that we have today. In this huge digital transformation, we implemented in the company in order to focus on the customers. So we've innovated and added new payment terms for customer on our digital platforms. In the past, we only had a toll-free number and a website that required improvements. After that, we implemented an omnichannel platform, and we were able to centralize all our customer demand, even the ones for service orders because we also handle the regulatory aspects that I mentioned. So our quality index in customer service, which is extremely important regulatory indicator is also measured by the digital platform. So with new types of digital payment, there's a possibility for a customer to pay from home in an agile way and not having to go to a bank, for instance. So here, in the new technology, I'd like to highlight the reading modernization, which is not just measuring the volume at our customers' homes. The process that is currently in public consultation on our website brings in georeferencing and spatial data into reading the consumption such as optimizing the standing routes and also adding value to our business. Our classic management of consumption measurement with the gauges also goes through technological changes. We brought in all of that, and we do that to increase the value of perception at COPASA. We want that, and we will improve the value of the company. In this new way and how we relate to customers on a digital platform, the major focus is also to have integrated collection management. We left the classic collection chain and integrated all potential platforms so we can lower default, as was mentioned by Mr. Berto. We had a strong reduction in the bad debt or default rates. And you can see that as our bad debt figures have been -- are now lower.

In customer relationship, we went from deployment and experimentation that we did with digital platforms to an extremely relevant transition, which is contracting our 360-degree service solution. And what will this offer? It will, as from the integration of our in-person branches, include other relationship means. So our COPASA customer doesn't have to go to a branch, in-person, but they can also be serviced with video calls. So we're bringing in innovation into the sanitation industry. And with that, we will improve our relationship with customers and add value to the market. With that, we are making our customer journey smoother, more accessible so that the impacts will be seen in our business. And what's the impact? It shows where we are, closer to the future now. And the 360-degree service or solution will be available in beginning of April. The Board of Directors have approved and we will give further details on that at the end of the presentation. So we're working on the customer journey by improving the customer experience. There are a number of different projects and strategic actions. I'm not going to read the slide, but I'd like to say that all of them are spread out in the 591 concessions that we work on, and we are highly focused on operating efficiency. As you can see here, that is our focus, to increase and in this case, lower the rate of physical loss, which without a doubt is a measurement of operating efficiency that's also performed by you.

In the state of Minas Gerais, we're implementing that. And we already have actual figures of the results between September and December 2021. Over 3 million cubic meters of water were reduced. That means lower operating costs. If we capture that loss reduction, you can conclude that the cost with chemicals and energy and personnel has also followed suit.

And sticking with the apparent loss and physical loss, the company has structured itself, and we currently have a water balance that we've been following closely. Identifying in general losses, the ones that are related to under measurement or fraud or investment connections or not -- or leaks that are not visible. In the region of Belo Horizonte, you see in the news, we have a campaign in field operations with the police to combat fraud and lower default. As we find contact line connections, we have also talked to our customers in renegotiating the debt so that they can be in good standing with the company, and they can pay their debt in installments in a way that's comfortable for them and come back to our active customer chain. So that's the very important highlight. That is the reality in the state of Minas Gerais and is the reality in the state of Minas Gerais in COPASA. So the regulatory aspect of actual monitoring -- in all these aspects, we monitor the performance of our regulatory indicators on a daily basis, and we signaled to our operating managers to be managed online. And we also work strongly with our state regulator, positioning the company to advocate for its interest and the interests of its shareholders. And our intention in managing COPASA not have -- just having competitive tariffs enabling us to work in the competitive environment, but also guarantee that the regulator is expected. And regulatory management puts that on paper, and we strongly work on that front. As I mentioned, we also manage the concessions portfolio. And that is difficulty that Leo Marinho, our Secretary has mentioned in complying with all the regulation of 10-710 by tomorrow, March 31, 2022. We have achieved them successfully by COPASA. In our portfolio, we have an update that 415 COPASA contracts had all the documents according to the decree and over 28 terms to update the agreement and 329 to update and also the approvals from the government, and that's huge. The secretary mentioned the difference between micro regions and regional sites. So the Sanitation Department of Minas Gerais is regionalized. So we had to face a number of different documents to be able to achieve that. We hired consulting firm, Bureau Veritas and Ernst & Young resulting in the achievements for COPASA. It was a challenge, and we were able to achieve that. And today, we're formulating our long-term strategy, enables us to highly focus in the competitive environment as our CEO well mention. We want to increase our market share and not just maintaining our concessions. That's a fact. Our President has already mentioned that in the opening. In the state of Minas Gerais, we'll be a part of all the concessions. And we just won this in February 2022, and we'll strongly work in that bid. And as you can see on this slide is we will create new businesses. So we believe that in the company, we will talk -- bring in specialists to talk to our executives body so that we can present proposals to win that bid. So that's authorized by our Board of Directors, and we are going to face the big -- public bid. And we also talked about operational efficiency and optimization of processes. And we had seen all the records for the strengthening of our Board of Directors, our operational body, all the operational -- now everything has to be done efficiently through our indicators. And then the management will innovate our economic study. And this means that we should have business plans that will take part in a competitive scenario. So financial engineering, traditional ones, will not allow us to win this new scenario in the market. We are facing this with a great challenge. And these are the things that I wanted to tell you. And I want to tell you also that we are greatly focused to work in the satisfaction of our clients. We also work with our ESG agenda. And you can check it also at the Brazilian SEC CVM website. And there is our indicators, the 3 letters of the environmental, social and governance so that COPASA can be monitored in a better way, not only through the financial indicators, but also the sustainability indicators. And mainly the elevation of the brand and the reputation of COPASA. Thank you very much. And now we will hear the Operational Director, Guilherme Frasson, with the theme, operational efficiency.

[Guilherme Neto, executive]

Good morning, everyone. Good morning. And now to talk about the great challenge of our operation. We can see that COPASA added BRL 1 billion through its Minas Gerais units in 2021. We're not talking even about personnel, fuel treatment material, we also have the real Rio Manso system, which is operated with partners, subcontracted parties. But now talking about electric energy, Dr. Ricardo already talked about the efforts in trying to optimize these costs with working in the unregulated market, the energetic efficiency, alternative sources of energy, increase of fuels and the worldwide scenario. We've worked with the optimization of these costs. And to talk about optimization, we had, in 2019, the fusion of 3 operational directorships that had 3 superintendents, separate sub-divisions at the metropolitan region and the headquarters of the company, and now we have a single Board of Directors that controls operations. The optimization of the administrative structure and the strengthening of the operational experts are trying to standardize the best practices in the company, and that is inside out. In that sense, we transformed the operational structure of the company for 6 business units and 2 superintendencies in the metropolitan region, one for the production of water for the metropolitan region and the other one for sewage treatment. At the state level, we created 26 regional management units, and each business unit has 1 administrative support unit and 1 technical support unit with the objective of elevating the bar in management and also improving our operational control and management. With that, we provided more -- we made everything lighter in such a way, that we are focused in the customer service, the relationship and -- with our clients in the circle and checking our services. We closed the year 2021, the reduction of our staff in 7% and the management structure in 5%. This is a great challenge, and it closed our voluntary dismissal program, and we have the operational structure, almost doubling the inspection and supervision of the operation, so we can better follow up on our contracts and have more efficiency in providing the services. In terms of professional training, we are improving the knowledge and training of our field teams. 2019, we had 40,000 different workshops. In 2021, we got to over 74,000 workshops, either online, on site and also at the job site. Let's talk about the improvement in the subcontract -- in the inspection and the procurement of our services. We have different types of contracts, specific contracts for each city or region. We try, when we wanted to review the operational structure of the company, to have a specific contract about -- regarding the regional management, each regional management with specific contracts for maintenance of water and improving the services of water for each region that we work. Therefore, we can be quicker for the replenishing of assets and the improvement of losses quarterly. And we also have more efficient control and management of our contracts. With that, we could check our teams and we can actually use the on-site, on-field professionals and also add them to different operations in inspection, services and so on. The standardization of our contracts. Today, we have 56 consolidated contracts standardized and that encompass all the regional management region. We can use these contracts in any system, and now we are evaluating this contract and generating records, and we will subcontract via performance for the metropolitan region. Our objective in 2022 is to close the -- to subcontract by performance in Belo Horizonte. We have since 1990 to work -- we are working with [ 5S ] programs, and we got to a very nice program in around 2002, 2003, which is the [ max ] COPASA program. This program has improved the operational efficiency of COPASA. It was hibernating. And now we have this program being implemented again and now we have the standardization of our processes. And this allows us develop operational conditions of the systems, how is the performance of these units, the alignment with the regulatory rules, therefore, legislation and also guiding the -- our professionals per process, for each type of process that they are implementing. We also have the recognition of the best systems. In 2022, we're aligning this program with the investment plan for the company for small -- short-term investments Therefore, we will prioritize the investments in the critical systems. We are evolving, closing the second cycle of the operational efficiency program. Also another important work that has been developed since 2019 is the creation of the operational control centers. These are connected to the operational controllership, and this center allows us to see in real time what is happening in the state. And as Dr. Ricardo said, little by little, as the automation systems and controls are implemented, and we have investments in the order of BRL 35 million in this right now, these systems are also seen by our operational control system, allowing us to evaluate the operational conditions in real time, and we can provide support for each of our state units. We are also integrating a series of actions, mainly communication, management of services, control of losses and asset patrimony security. I receive information every day in the morning and in the afternoon about what is happening in the state, and these studies are aligned with the operation communications so that we can work more efficiently. Let's talk about the water situation. In the metropolitan region, we are recovering our reservoirs today. We are in 2021, 2022, the life cycle, we have our reservoirs basically at 100% levels. And in the northern region, we have a situation that we have our reservoirs of small cities that really suffered with drought, they are completely recovered. The region of Montes Claros, we are testing the new system, and our reservoirs are at 80%. This is a great scenario for 2022 for the next cycle in terms of operation and assurance of providing services for our population. That's it. And we will be available for Q&A. Well, and now to close the presentation, we invite the -- Carlos Eduardo Tavares de Castro, Director of COPASA, that will talk about the different teams, scenarios, new sanitation market and ESG.

[Carlos Eduardo de Castro, executive]

Good morning, everyone. Well, I have to thank you for being here with us. The importance of this moment goes beyond the numbers presented. As you know, we have several facts that were announced in the market. I would like to thank the Board of Directors for everything that you presented here today. We have to provide services and show the path to be trailed in the future. Also, our Chairman of the Board. He has worked with the company, and we are strengthening this company so we can work in the market and compete in all the scenarios.

So let's just go over the legal framework of sanitation. And it may cause a little bit of a destabilization in the situation that was already consolidated, but a consolidation that did not service our clients. We remember the talk of Pedro Maranhão and the number of Brazilians that are not serviced by sanitation services. So we need to break the status quo. So what is new after the change in the law? There is certainly an expectation of all the agents and specifically of the norms of ANA. We are talking about the assets, and we have the new contracts that are going to be over and contracts that will not be renewed. I was talking to one of the people in the market, and in fact, the issue is how the investors can wait for the contract to expire. Certainly, there is a lot of questions and everything is new. And the regulatory body that assembled this regulatory framework will need to clarify and guide us because this affects the provision of services and the working of our resources. Let's remember what got us here. We have the law, the decree, and I think that this has brought a lot of difficulties, what we have taken to COPASA. We could be complaining in regard to the deadline or we can work. And this is what we decided to do. Here, I think we can demonstrate this, and it was an effort of the entire organization to talk about the obligations of the new regulatory framework. We have work groups, and we have the involvement of the Board of Directors. We have 500 professionals. We work with external consulting companies, and it is important that we have experienced it. So we're seeking experiences, other experiences. To contribute, we took part on several discussions conducted by ANA, the regional ministry, the discussions of the state of Minas Gerais, the regionalization of services in such a way that we have a direct interest of COPASA being taken into consideration, but also strengthening the conditions for our operations. We believe that we need to strengthen this sector as a whole so that everything is clear and allowing COPASA to develop its role and to be an attractive company that's easier in that context. And now we've had December 31, 2021. And I can highlight through all of you this date, we will deliver 591 studies supported by all of our teams with great contributions with our partners, the people of Ernst & Young, Manesco and the Bureau Veritas. Also, we have the certification of the law. We can prove effectively that by following up on and working with robust consulting companies that we work with, Deloitte, and we validated a lot of the premises, we could reach our goals. But the issue goes beyond the deadline. For us, the issue is to work within the organization and showing that even though this is a threat on the side, this is also a great opportunity, an opportunity of placing this company in a position to value its contracts and be aware of other opportunities. But without a doubt, we had to comply with that legal framework for that first. And with that, we can announce in the month of March, and I'm sure you already know, that our regulator has -- is approving COPASA in relation to its financial and economic capacity. We had already concluded phase 1 and then phase 1 and 2. An interesting aspect that the slide isn't showing, and I don't believe we've informed this yet, in addition to Cristiane Schwanka having talked about the terms and approvals, is that they required a set of simulations from us with group of contracts, taking them away. So the regulator wanted to see if COPASA would, in fact, given the many different situations, actually be feasible, based on economic and financial point of view to leverage the fund that will be necessary for the investments of the new framework. So we were very proud that we were able to show that in a technical way, in a very structured way with financial engineering and engineering [ bridges ]. So knowing that the company in the most diverse scenarios that we will definitely have other discussions not just in Minas Gerais but all over Brazil in respect to other contracts and lack of update terms is that this company has the capability of generating funds to comply with its obligations. You saw the financial figures and our ability to leverage and obtain more funds, raise more funds. So we're very satisfied and that's an additional driver for us so that we can continue to move forward in providing our services. So we talked about the new framework, a new milestone and what my colleagues have presented before, and we can bring that into this major challenge. And this chart represents the 50 largest concessions that the company has. You can see that they account for approximately 75% of the company's total revenues. And when you look at the first bar chart, you can see the number of contracts and their maturities. On that date, we have up to 3. So up to December 31, we had 2 contracts that had matured. Among the 50 largest, another one that matured this year, as Cristiane mentioned, is the municipality of Ipatinga, and this is the term of maturity scale.

So even though it's a challenge, this is -- company, in here we have direct investors or representatives of direct investors. So based on the structuring grounds that were launched by this management, we still have time to get ready and get ready for what? Get ready so that we can in fact slide in the market. I'd like to compare this to the energy industry. We don't hear government companies or private companies in the energy industry. They're just the energy industry, and we have to go through that modernization for our market as well. So in holding shareholder issues. That's one thing. But on the other side, as managers, we have the obligation of making this company better. So now this company has to pay attention to manage its portfolio. There are other concessions that will come due and will mature as well. Up to December 31, we had 12 that had reached their term of maturity and 10 will this year. So as we deem and as we will do based on the responsibility that we have, based on how diligent we should be as managers and also considering you who are investing in your funds, we will defend the validity of our contracts, and that they're respected until the end as the law says according to Article 10, if I'm not mistaken. We have to abide by the law overall. And with these contracts that have matured, we are informing the municipality as the granting power to organize themselves and move according to new regulations for the 22 municipalities and the 12 that were matured, and the 10 that will mature this year are being approached by the company. And according to this scenario, they must find a new arrangement as service provider. And COPASA, as any other company, would assess if it's interesting or not and now not going into the individual bids because even to follow the regionalization law, we will assess if that [ logged ] regional unit or cluster or consortium. Does that make sense? Is that where I'll invest my resources, my funds or somewhere else? So the company will learn to compete and manage. The company will close partnership. As Ricardo showed, we went to the market. So why not develop a sort of business or company in PV energy. Obviously, the rules have changed, and there's the effect of transmission, but it's still a good business at the least and give us more stability in terms of supply. So we do have to be open and believe that creating partnership will be something very natural in a not so distant future. So I was talking about the agreement and respect to the ones that have matured. And as we will guarantee the ones that are in effect and ours, we have to guarantee the indemnities as well. And for those who follow us closely, you know that our regulatory amortization has its own different characteristics. So even at the end of a contract, the company still has an amount to receive. And we're looking at that and making that clear, but we don't want to use that as a way for us to remain in those locations. And in that case I insist that we have to comply with the law, respect our contracts and enable the ones that has matured so that the granting power can also decide what they need and also preserving the shareholders' and company's interest.

So more actions are focused on customers. And we have a true revolution. And when I was invited to join COPASA, in some of the situations that would be assessed and that it was seen, it called my attention that a company had 12 million customers but didn't have a department, a division that was handling our customers. So I would -- it was an honor for Cristiane Schwanka to accept my invitation and together with Guilherme who accepted the invitation to join the company, and came in with a commitment not only to decrease the number of divisions, but create a COPASA operation and those 2, supported by finance and management with Carlos and Ricardo, those 2 areas are now a part of the business. And as a definition, a business unit -- because today, we have 6 business units, so it's not matrix-like as we wish, but they know that they have to report to each one of them -- the officers in each of the necessary disciplines. So that process was created so that we can focus on operating efficiency on the customers so we can have good projects and the ability to contract the best partners, always pursuing innovation, and we've been doing that in many different ways, focusing on human resources. Today, in our arrangement, we have access to our professionals through the government examination. But with the support of the Board of Directors, today, we can bring in market professionals in up to 30% of the management and superintendent positions with one single objective, and we had to explain that internally. So it's an opportunity to exchange information, to learn, to bring in new knowledge to the company.

When I go into a competitive environment, it's immeasurable. We have to be in line with the outside and bring in new things. So I'd like to say that, that reinforces our obsession to gain efficiency, increase customer satisfaction and without a doubt, be able to compete. We were discussing internally if we would present this charter or not. But at the end of the day, we decided to do that because it shows the size of the challenge and at the same time, showing us the size of the opportunity that this company has to do different. And with the aspect that this management has been launching, we have more time to prepare because we added, from 26 to 30, we have expressive volumes of maturity. And as I mentioned, we can manage the portfolio and know exactly where and how I'm going to allocate my capital. But we can't talk about the future without focusing on ESG. That's the debate that we brought into the company. And first of all, I'd like to recognize that COPASA already had actions in all 3 components, but we were probably not seeing that those actions that bring on extended sustainability should have been included in the business model. So we created other points of attention, and we're trying to bring on the materiality to this, as Cristiane already mentioned, but I'd like to say, and we have the commitment to publish our sustainability report together with the financial statements, and that was done. And that conveys a clear message that these actions should be tangible that they can be monitored and discussed.

So our view that the ESG -- in our opinion, the ESG agenda to advance, it has to be inserted in the business model. And the purpose of this company, as was mentioned before here when we discussed the review of the business identity and now the -- that what is part of that today is take care of water and add value to people. That's what we're pursuing. In addition to the fact that water is necessary for survival and human health. An important point is the fact that we are a company -- yes, we are a company, and we have had this conversation with a lot of clarity with our internal stakeholders and other stakeholders. We do have to have results, the bottom line, and profit, invest in what's necessary and compensate for those who entrust in us. But even though we deal with something that's so essential, that does not hinder us from having social responsibility. I'll show you some programs in that sense, and also that we care for the environment. And that shows that we can talk about the future as we're talking about that today, no matter how challenging it may be. But it's possible to have that agenda as an integral part of our strategy. Here are some of the examples that in fact show the results. We have an amazing program called Pró Mananciais, and COPASA will invest BRL 34 million in actions that are aiming at preserving the water resources. And for the actions, we've been bringing in social work with environment groups such as [ Colmeia ], and many of those resources are determined together to define the priorities in building basins for water concession or for spring areas or planting trees. So we want to provide the funds, but we want the community to act and be engaged as well. So it's an arrangement that we have. Our program, Engajar para Transformar, Engage to Transform, a number of families that have been engaged already and lowering apparent losses. Educational environment, I want to mention that a point of attention in Trata Brasil, the river dweller areas and communities. So we have the works to do that and pursuing that and have a win-win situation, giving these people dignity and improving our business. That is legitimate. There's no hidden agenda, so that we could work on that. And last but not least, I'm not going to mention all of these. We have the Vem pra Rede program, Come to the Network. So in the first information we collected, we have 131,000 connections that could have been executed given the available network. And that came in, the change of the eco framework. In the previous call, there was also a possibility of charging for availability. And we were brave enough, I'd like to thank my colleagues here from management, that, yes, we will start charging from those people. And not just collecting to profitabilizing investments that's being done, it has to be done so that people can understand the importance of that connection. For those who have been in sanitation for a while now, I still get that many of you, I'd like to say more than 20 years, so we don't have to drag on even more years, that one of the troubles and additional difficulties is that water is an individual benefit, and sewage is the collective benefit. So everything becomes more complicated. And these things have given us more legitimacy, and I'm going to give you the results of this program of about [ 31,000 ], 21,000 of connected means BRL 1.6 million more in revenues on a monthly basis. 37,000 did not connect. They're paying the minimum our availability see. And we'll make this work. The difference is that everybody has been notified and waiting for the next steps and gaining awareness or not. So yes, we want to charge for availability. We want to compensate the investment that was made. But even more than that, and that's where the program's efforts come in and Engajar para Transformar and the Vem pra Rede program is that we want to fulfill our role, which is also guarantee adequate treatment of sewage and giving it back duly treated. I'm reaching the end. I think we'll have great questions here. And still about the ESG agenda. So COPASA was one of the first signatories in the Brazil network -- the Global Compact of Brazil Network and the sustainable development goal of Minas Gerais. So we're completely engaged with net zero. So many things, we're taking them off the drawing board, and we believe that all these actions are compatible with a profitable business that will be long-lasting. In customer service, like I mentioned, the reduction that we've already obtained by 54% of the time of lost call, customers called and they couldn't -- didn't talk to us. So the project that Cristiane has been spearheading in technology and with Carlos Augusto, we're talking about over BRL 500 million contract -- 5-year contracts that we've never done at the company. So -- and Brigida, our Legal Director, who is bringing the legal area inside the business and understanding that the legal team has to help provide solutions for challenges. We know what problems we have. And even the engineers that need to know a little bit more than engineering, we know how to do that. So the adequate interpretation of the law so that we can face all these challenges. And last but not least, it's to show how much we believe in everybody's engagement. We have a high incentive in voluntary programs. So we have the storytellers. We have the COPASA Choir. And these actions are extremely relevant because they're looking to open and increase the work of the business unit. So these 2 projects inside our social responsibility department currently has an incentive or a demand that they have an action schedule in line with the needs of the business units. Especially Minas Gerais, surrounding the metropolitan region, is also facing difficulties in areas where the government has difficulty to access that. But we have to be there anyway. So we will mobilize our workforce to contribute in a way that will impact the family's life or a child's life that sometimes don't have access from the within rural areas. And in a very transparent manner, we will be -- we will allow our business to work better.

And last but not least, I'd like to talk about integrity. I believe that, that was an extremely relevant point. I can't say for others, but when I was invited to join COPASA, it was about understanding the robustness in terms of company governance. And in addition to finding a good framework and having contributed with management and the Board of Directors to improve that. I believe that the robustness of this government has -- is showing itself in a very practical case when we had to face the note from the auditor and Carlos Augusto explained that.

The government bodies work together with one concern that the results, in fact, and that's why you stood by that difference to clearly reflect the company's true position. I was going to skip a topic here, but I forgot here it's on the screen, which is the zero accident program. For us, that has become yet another one of our obsessions. You can't talk about an ESG agenda with so many commitments if you can't, in fact, guarantee that our employees are actually safe in carrying out their work. So a number of different initiatives has been taken and are still being done so that the company will get to another level. There are many different things at the same time, and we believe it's extremely relevant to address the ESG agenda with that clarity, but that is part of our business strategy. Now moving towards the end, so we can move on into questions. I believe that all the work that the team has been carrying out is to give COPASA a more efficient position and capable of competing regardless of who the shareholders are. And that's the main mission that was given to us by the controlling shareholder about how the shareholder position is -- I'd like to say again, it's not in our hands, but it is in our hands to make this asset have value. And in this very clear, transparent and objective way, we are creating those conditions for the company because without a doubt, COPASA will be an important player in that market. We heard a question to the Secretary earlier about other investors entering. So depending on the role that the controlling shareholder has, COPASA is a hub for new businesses, without a doubt, and we can do that because we have the people, we have the affairs, we have the competencies. And as we've shown and the regulator has seen, we are capable of generating the resources for that. And we will continue until the end of our mandate and try to summarize that in 5 main levers, I'd say, to generate value that will contribute towards a long-lasting company. In the practice of strategic sourcing, Carlos Augusto is handling that. So our capillarity requires a differentiated way to handle that item. ESG initiatives that I just presented. And once again, the focused compatibility of that is connected to the business. How can you talk about a service provider if they don't look at the customer? So we have to look at our customers. We're not comparable to Sabesp or Sanepar. My -- some of my colleagues don't know what Sabesp or Sanepar -- who they are. But they know Cemig and they know their cable TV operator and their telephony carriers. So that's who they compare it to. So we might have some difficulties in increasing our market share for many different reasons. But we have to be there at the front to dispute the pocket share of wallet. And so when we see the drop in default and lower accounts receivable, when we see many strategy and initiatives focused on digitization and having other technology that goes towards with an eye out for the customer. So this is the first time that we make upon available for innovation, and it could be something very simple. Sometimes everybody can see it. So today, we encourage and we recognize the first cycle of innovation. Internal, it's called [indiscernible]. We've recognized 5 projects, and these people received a financial reward for that, for the delivery. And last but not least, and I believe that this is probably the biggest challenge of a company like ours being a mixed partnership agreement. So the improvement in public bids and request for proposals, looking at the innovation that the [ Law 13-313 ] gives us. So we have to compete in a similar way to the others, but we have our state a little tied in that. So we need additional efforts for that, but that's what we have to do. So the company is very much aware of the needs and challenges that it has about -- or in relation to how to win. As that was not planned just 20 or 30 years ago, I have to say that the company is lucky now out of the biggest, the next large amount of maturities is as of 2026. So we're sure that all the structuring projects and process changes that we will do when a new cycle opens, the company will be able to continue developing itself, improving itself, meeting its goals, servicing its customers and having earnings. Secretary Pedro showed that the tariffs are, be it private or public company, that are compatible to the reality. So he talked to us. When succession comments, we hope that, that transformation will continue so that the company is compliant with its commitments, respecting regulations, giving shareholders the results regardless of who that shareholder may be. Thank you, everyone. I think we have a round of questions now. I don't know if I'm breaking protocol, but I'd like to ask our CEO, André Facó, to join us during the Q&A session. Thank you very much.

[Operator]

[Operator Instructions] I'd like to hand back over to the CEO, Carlos Eduardo de Castro.

[Carlos Eduardo de Castro, executive]

Okay. We're open for questions. Giuliano Ajeje from UBS Bank.

[Giuliano Ajeje, analyst]

I'd like to go back to a point that I believe is very important for the COPASA case, which is payment of dividends. The company ended at 1.7x net debt over EBITDA. That's low leverage in a very resilient business. I think Patrick, during his presentation, mentioned that the volume doesn't really vary. So my question is, why not pay more dividend?

[Unknown Executive]

Giuliano, I believe that 2021, notably in the third quarter, we had been -- we were affected by the nonrecurring events. So in that case, we couldn't even discuss that. When we had an opportunity of having additional dividend distribution, we did so. And now considering the commitments that were fulfilled with the regulator, now we will have room to discuss that again. What I can say is that management is analyzing. We raised the preliminary discussion last year to reassess the policy even. We don't have a prior assessment if the current policy is good or bad. I'm just saying that it's a timing matter that we must consider. We're still under policy dating back to 2018 and from then until today, we only have the new milestones. So we have to discuss the matter. And there was the nonrecurring event. But now at the end of the first quarter, that topic should come back, so we can handle that.

[Unknown Executive]

I'd like to add that has always been a theme of a lot of passions, I'd say, in the Board of Directors, given with different experiences, and that's very good. That level of diversity gives you maturity and that's fabulous. We have Hamilton that's onboarding now. So we believe -- and we're looking for at COPASA that the differential for any company moving forward is having trust as one of its main assets that comes from the predictability of doing what you're saying you're going to do, so walk the talk. And that's our main driver in relation to dividends. So it's walking the talk and not complying with something only in very extraordinary conditions and also having the transparency to say why not, why we haven't. So that's what we're looking for every time we have these conversations with management and the Board of Directors.

[Rafael Nagano, analyst]

This is Rafael from Credit Suisse. I have 2 questions. They're related. One of them is about investments in new concessions. You mentioned that you're looking at new investments in the state of Minas Gerais for the concessions that are maturing. So I'd like to know if you're only focusing on the state of Minas Gerais or if you're looking at other regions in Brazil maybe through partnerships? That's my first question. And the second question is also related to that. We've seen companies, including privately owned companies with the difficulty in growing a lot in this industry, giving the profile that they require specialized labor. So I'd like to know if you do believe that, that is a problem that you see in the industry to achieve the universalization goals within the deadline? Or if that was just something more specific and it's expected?

[Unknown Executive]

Thank you for your question. About the first part, at this time, yes, the focus is the state of Minas Gerais. But when -- at first, when we look at that, and for a company that is not accustomed to compete, that's already a challenge post for us. So at this time, we believe it would be premature to look into opportunities that go beyond our borders of the state. But in the midterm, I believe that, that would be a natural path to take.

Just look at the big infrastructure operators. You lose some contracts, renew others, gain others. So in the mid term, we can't limit ourselves to the borders of Minas Gerais. And at this point, it's very important because in our specific case, we have a relevant maturity, which is the city of Ipatinga. And that would be a great test via the arrangement that they're going to do. And those are the comments about how it goes. And about labor, I don't see that as an issue for COPASA. We have a lot of people, even though we've had the voluntary termination program, but people that are willing to do things. So labor, I don't think that there is going to be a problem. The sector as a whole is facing and maybe the super part of the synergies is the price that the country is paying for the infrastructure for its engineering chain. We are missing good people working on projects, and this is a difficulty for all the companies. So I just want to get this last case of labor, and I believe that specifically at COPASA, this is well controlled. Looking at the entire sector, this is a point of attention because if we're thinking about the expansion of the system we are using techniques of building, which are the same ones that we used 40 years ago. So it's a challenge for us, and it can be done again working with other infrastructure players. And something that comforts me here, specifically, if we look at the operation, is that technology is helping in this issue. And we had [indiscernible]. It was operated with over 60 people. And at that time, we have 4 operators, in the automation process. It's a process that has a lot to do with growth, but it added a lot of value. In the operation of the systems as a whole, we have been around that the technology will help. And here, we have to find technologies that are different from the ones that we're taking part, specifically in build size. This is a point of attention.

[Miguel Rodrigues, analyst]

Miguel Rodrigues, Morgan Stanley. You commented that you need to assure the payment after the contracts are due. These are under the directives of ANA, but what can you tell us about these projects? What are the alternatives that you think are on the table? And also this is something directly connected to trust of the investors, anything that can risk the indemnization that the company have -- direct might have a lot of implications for the stability of the sector.

[Unknown Executive]

Excellent questions, Miguel. I believe that for you and investors, and we managers, we eventually will sometimes fight our regulator, but the assets today are effectively open per city per unit. So the accountability of COPASA and with these contracts, we are assuring that even a contract that is the -- once it's over, the cities have been informed. We have been working and we submitted, and it's well submitted with a specific city, the way that we're going to do this payback. So I believe that this first movement has taken care of the others is that our expectation is that we can solve this in a friendly and in a way that we can negotiate it currently. Once again, we are building with real guarantees indicate -- showed they're not -- should there be a nonpayment of this payment that might have to be done in installments. We are paying attention, but the first indication -- and due to how clear this is, it indicates that we're going to have a good path moving forward. Even though we don't have all the definition and we have a great expectation from ANA, we had the conversation with Giuliano earlier. They have a higher expectation, maybe you, about -- for example, these [ operating CDs ] and then you have different discussions because this will demand, and we're going to get into another issue, not only assets, but the ROI and et cetera. But this has to do also with the maturity -- regulatory maturity of this new scenario. Going back to your main point, Miguel, about our regulatory area and the regulator has this well defined, so the reason to ask this question, they are paying the tariffs based on those assets. And the first experience is showing us -- and I believe that we're going to have a peaceful path to assure everyone's right.

[Miguel Rodrigues, analyst]

Can I ask another two. And following up on the question of Rafael, do you -- are you venturing the new concessions alone or with partners or in here still, are you going to be majority or not? And you are going over the CapEx that is 50% higher? The question is, is there enough rational capacity to do the CapEx that is 50% higher?

[Unknown Executive]

Yes, we're open. At first, we have a very consistent plan in which we'd post -- or set forth by the legal framework. We placed all our efforts in 2021 to have the material that we bring on traceability so that we could easily have those simulations that are cited for example. So what are the priority systems? And if the systems aren't there, up to what extent? Would it be feasible? So we did a lot of work to service the legal framework. So it's not just to service the legal framework, but a little more. But right now, that's open. That's why we're creating a new business area to look into many different things and not necessarily just taking part in some public bids, but also to analyze if we have correlated businesses in COPASA, maybe energy. We already have some companies in the world that are looking for energy neutrality and maybe create a company in that area, alone, together, joint venture, special purpose vehicles. So the world is open for that. We're structuring COPASA to consider the legal framework in a good way, but we also have to look at sanitation. Sometimes when we look at tariff mobility, it might come in from other areas that are not regulated and have a higher profitability that can be reinvested in that business. So there are practices in that sense. And our biggest wish is to give COPASA that framework or the possibility of modeling different things that only what the legal framework is requiring. That's pretty much the line we're following, and we've shown many initiatives. Even though they're small, they demonstrate that the company will be ready for a legal framework and to answer to these challenges in a different way. I'm not sure if I answered your question, we're not closed off to anything. Well, about operating capacity to invest, and that's a big challenge, considering that the demand, especially in the legal framework makes the company have faster actions in its investment considerably faster. So the company needs to recover the operating capability that it has had, one thing. And that's why we're asking to see -- to have the engineering projects that are available with a better quality that enables you to have investments in a more agile manner, having a way to plan development so that when you start the process, these developments would be really based it on -- be it about land or the environment, having that ready -- having a market ready to pursue that. And that has to do with what the Chair says. Even bringing on other players in the infrastructure segment, I'd see that. So when you start to make contracts available and more appealing, and all those actions so that the company will have the operating capacity to do that. And as a supply market to be able to make these plans available, materialize the changes that were made, that's in the cluster of the work. So in the complexity -- that's right. Yes, that's something that the Board monitors on a monthly basis. So we have in the works, a better and more valuable, so that are greater than BRL 30 million, we already have set up, and also based on those matters performances that are more favorable. In the physical advance that has -- in areas that were already planned, and sometimes you have some difficulties in the development of lower volume.

[Unknown Analyst]

[indiscernible]. About the voluntary dismissal program. In the first quarter, we should see that? And throughout the year, how much should we see in that sense?

[Unknown Executive]

BRL 152 million, where we had the results in September. We -- the payback estimate is 11 months. We estimate that as of the second half of the year, we should have a total monthly effect of the voluntary dismissal program.

[Guilherme Lima, analyst]

Guilherme from Santander. Can you talk about the BNDES plan, Brazilian Development Bank, for regionalization and how that can affect COPASA?

[Unknown Executive]

We're in the process to approve that by the assembly and what we have in-house, the power for our concession. As I mentioned, we have information currently to be able to simulate what would happen with the regionalization. What we did today and liquidations [indiscernible] asked for we're stable and we're able to comply with the legal framework. Obviously, we can't map out all the possible points that took place. But with the scenarios that we have designed, we envision that we can maintain the consistency in that development and establish what the legal framework has by 2023. So it brings on challenges and especially with the dialogues with the design that we created to looking into that information with consistency, we can anticipate potential scenario when we see where that regionalization is moving towards.

[Unknown Analyst]

It's Pedro from [indiscernible]. Two questions, one about company investments. How are these investments being made in concessions that end before the 2023 due date for the legal framework? Is it modernizing or just advanced and considering that at the end, you'll end the concession and you see the indemnity? And the second point is irrational use of water. We see a lot of that. And we see a lot of pursuit for efficiency. So in rational terms, consumption in a household should decrease after a while because you're going to install more efficient systems. So we need to have a perception that water is infinite, but now we have different actions. So what impact would that be to your volumes? To the savings? Without adding that, what impact would that have to your revenues when you have lower water use in the midterm?

[Cristiane Schwanka, executive]

I'll start off thinking about investments and concessions with lower term than the regulatory for 2023. We believe that we have to continue our investment, complying with the legal framework. And as I mentioned in my presentation, we're always looking for financial engineering solutions that are more adequate to that. So a cautious look on the amount invested and the methodologies and method supply, the engineering solutions per se. And just as an example, the Ipatinga concession that ended in February 2022, we've maintained our investments there in the sewage treatment station. After all, we have to comply with the conditions in relation to sanitation, we have to invest because we're still there. And while we're there, we're going to provide services with regularity, continuity and according to the standards defined.

[Unknown Executive]

Let me add to that. Yes, that is the point, Cristiane, but we're also facing the market in general. I mean we're also facing this new situation. So the regulator is always looking for, and so are we, into cautious investments and that those discussions are already being handled with the regulator and municipalities. So when Cristiane is talking about the specific case of Ipatinga, we've maintained that in the sewage treatment station. And as of February 7, we're a transient operator, but I had an obligation to guarantee the standard of the effluent. So that's why the investment continued. And tomorrow -- but I have a growth vector here, and I need you to create a new supply line. So that investment won't be done because we're in a transient condition. So -- and we have contractual obligations that have already been determined that have to be done and others may come and that -- the clarity between the granting power or the contract is the regulator and the company, the contracting party business. So we won't be investing just for the sake of it. We've never done that. But the fact is, is that in the past and in the past based on the previous legal framework, where there was always a perspective, a favorable perspective that resulted in most part in executing a new agreement, that had lower level of concern differently than now what the law is requiring. In consumption -- yes, so here in the presentation, we talked about how we faced recovery of losses and also restructuring processes and water balance. So we're doing a continuous management. So we can achieve the regulatory management goals to be above the legal ones and using new technologies and innovative manners that we're using. And in -- we're also using start-up to working on nonvisible leakages. So we can speed up that recovery. We focus more on just the apparent leakages or gauge deficiencies. Our pursuit is always to protect our revenues. That's what we focus on mainly in preserving our revenue. As every day goes by, society is looking for more conscientious consumption of water. And across decades, individual consumption has been lower. But there are many other things that have to be addressed, especially in relation to the appreciation of sewage treatment. Society still doesn't appreciate the treatment of sewage and the cost that, that represents. So there's many things still to come that we have to consider in cost proposition that has to be perceived by regulatory agencies as well in future tariff review. Now just to make sure that your main question does have an answer, if we look at that alone, we can say, yes, the market should decrease. But there are 2 aspects in relation to sustainability of the business. The first one, and to motivate us even more is while there is an increase in awareness in using the available resources in each person's household and the installation, so to speak, of more efficient equipment. On the other hand, people from classes C to D and D to C and B to A -- well, in B to A, you may not feel that much, but C to D or D to C -- excuse me, and D to B, these people acquire new habits, and those new habits increase consumption. So somehow, there is a balance. And last, and obviously, that we have to have that clarity. We mentioned that before and the point of view of being more efficient and somehow that's reflecting in the tariffs. So we want to provide good services and compensate that capital invested, but that can be offset in the future, because having to do that with more repair. So if the cost is now reduced, somehow we're going to have problems. So I rather believe that we're going to have the first compensation. So you have country development with a better selection of people. And the other one that will not be -- has to be materialized in the different tariff and these efficiency actions will be reflected in a lower cost, compensating the reduction of the market and keeping remuneration for the invested capital. This is an important point and complementing the President. And even though this is the first rationale that makes our clients decrease their use, this might have more efficiency for the conduct of losses program we had from September until December, the reduction of 3 liters per economy. And we have to be more efficient to assure the revenue. And we have to see how the border countries have been dealing with this. We have the universalization and we have had the change in the behavior of the population, and this all has to become compensated by the tariff issue. So I believe that this is a horizon that will be -- has to be mature. But at least we need to have a reference. But if it doesn't happen, here and there, we have to understand where is this going.

[Operator]

Well, now, we are closing the event. I would like to invite once again, the President, Carlos Eduardo, to do the official closing.

[Carlos Eduardo de Castro, executive]

We had a big expectation to answer the online questions. Well, I apologize for the advance of the -- how advanced the time was. I would like to thank you all for being here. The company is available to you. Should you work your way to Osvaldo [indiscernible] he worked with Investor Relations and all the Board of Directors and the council, I reinforce my thank you to all the government, fiscal, we have on the rest of our call.

And COPASA is a company that is a listed company, but it's also an open company to receive as we have discussed this many times before, hearing potential partners, that can bring solutions that contribute to the development of the company and other partners from the capital standpoint, and we have resources applied. And you want to know more about what the company is doing. So I believe that this is the main anxiety, as I would say, from management. And to be with you in an on-site event and having the results that reflected and we have reinforced that we don't have -- I apologize that we don't have [indiscernible]. She didn't know what would be the quality of the conversation that was going to be served. So she didn't want to risk my reputation. But once again, I apologize once again for the joke. And please be here with us, get to know the company better and believe this is natural for this event, partner, shareholders. And we, as a manager, our role has been that the company is ever better and provide more efficient services for our partners, and for the investors. And certainly, at the end of the cycle, we are going to deliver a very promising future. Thank you very much.

[Operator]

We are at the end of the event. Thank you all. Have a great afternoon. [Statements in English on this transcript were spoken by an interpreter present on the live call.]