Engie Brasil Energia SA
BOVESPA:EGIE3
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Engie Brasil Energia SA
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I'm Rafael Bósio, the IR manager. [Operator Instructions] This conference call -- this video conference is being recorded. On our site, you may find all the files relating to this presentation, the earnings release. And there, you will find the analysis of the financial statements in the quarter in addition to operating results and the monitoring of new projects.
Before proceeding, I would like to clarify any forward-looking statements that may be made during this conference call relating to the company's business outlook should be regarded as predictions. They depend on the country's economic conditions, on the performance of the electric sector and are, therefore, subject to change.
Today, with me are Mr. Eduardo Sattamini, CEO and IRO; and Marcelo Malta, CFO. They will comment on the performance of ENGIE Brasil Energia in Q2 2022. Journalists may send the questions by e-mail to our PR agency. I now turn the floor over to Mr. Sattamini to start his presentation.
Good morning to all. Thank you, Rafael. It's a pleasure to be again here with us to disclose the results of ENGIE Brasil Energia. On Slide 5, as you can see, we have made a very brief presentation. We go straight to the point and focus on the main element so we can have enough time for the Q&A session, which is where we can actually address your needs. All this data is available on our site.
We start with the highlights. Adjusted EBITDA grew 23.8% quarter-on-quarter and 15.4% 6 months and 6 months. And this basically attests to our growth strategy. And this has been very successful in the last few years. The investments that are being made are showing in terms of the volumes of energy and our ability to generate revenue. And the net income as well has increased 20.4% quarter-on-quarter and 20.3% when we regard 6 months 2021 and 2022.
However, we are suffering with the acceleration of inflation. We have debt, which is linked to inflation, especially IPCA, and this inflates also our revenue. But now as inflation is rising, we have to bear the financial expense. And then, in time, we will also see the price of our contracts readjusted. So there is this mismatch, and this starts to happen when inflation is growing.
The drivers of these results are here, 6.9% have to do with the average increase in the sales price, and this is not linked to inflation. Inflation in 12 months was 12%, but most of our volume is being liquidated at spot price, and this has to do with the greater hydrology. We have hedged a reserve of energy, which we save because of the asymmetry in risk in the short-term market and our net price of sale was not significantly higher and did not follow -- did not track inflation. This was offset by the volume. The volume was 321-megawatt average more, a 7.9% increase. This has generated BRL 279 million, which has to do with the combination with high price and sales volume.
Also, the transmission segment contributed BRL 92 million in the quarter. And we are going to talk a little bit more about the projects that generated this increase, Gralha Azul and Novo Estado and the result of CCEE, which is positive relative to last quarter, and this has to do with a more favorable hydrology in 2022 relative to 2021.
As regards the negative impact, on the results, BRL 250 million came from the purchase of energy, which has to do with the transaction involved in the Jorge Lacerda power plant. We have committed to buy energy from this TPP, and then we will be able to decarbonize our energy portfolio. We will talk also a little bit more about another sale. We are talking with the first who are interested in Pampa, and we believe we can give you good news very shortly, and this will allow us to decarbonize our assets. In terms of financial results, it was impacted by monetary restatement and by interest.
Here, you see the nonfinancial highlights. Within our growth strategy, we were successful in getting Block 7 in the auction in January 2022, and this has to do with our substation in Novo Estado. We are going to talk a little bit more about it later, but we received a discount, and we also got better deadlines. So our auction was very -- well, bid was very successful in a very competitive auction. Some prices are extremely aggressive. We can't understand how that is. But with this block, we are very comfortable. It's a small one, and we will be successful in transforming it into a very sustainable and profitable block.
We have completed the acquisition of Serra do Assuruá, 880 megawatts. We are paying BRL 260 million for the acquisition, and we should make investments in the region of BRL 6 billion for this wind complex to be installed and be operational at the end of 2023, the beginning of 2024 -- or rather 2024, I correct myself.
So this is an important factor, an important highlight because this will ensure our growth. We have been growing in the last few years. You will see the level of investment, which has been in the region of BRL 4 billion. And this is what has allowed us to see our EBITDA grow by nearly 120% since 2016.
We have positive and negative highlights. We had to do yet another impairment relating to the sale of Pampa as a result of the allocation of risk, the discussions, but this is being absorbed by the result, by the bottom line. And this is a nonrecurring factor. Also, BRL 300 million will be invested. We have signed an agreement to implement through TAG pipeline with e Centrais Elétricas de Sergipe to connect the generation the thermal generation terminal to the TAG network. This is extremely important because it is essential for all the agents in the gas market to be connected to the transportation network. This will allow the market to operate in an efficient way. And we will, therefore, be able to optimize the resources of that segment.
So we are very happy to announce this agreement. It's an investment that will give additional returns to TAG. We were also awarded the best ESG company in 2022 by Exame Magazine, and this was together with Ibmec Business School.
And the last highlight is that we started the remote operation of the Ita Hydropower Plant. It's the largest belonging to ENGIE, which is or through the generation operation center. So 71.6% of our generation is generated through power plants, which are remotely operated. Some are not operated through the COG because they are too old. They have analog controls, and we are replacing these controls. This is a quite substantial investment that has to be made to allow us to operate them remotely.
And for some assets, this is -- this doesn't make sense. It's not cost-effective. We have -- we rely on human resources. The power plant operates in commercial hours. But in some assets the investment required to make them remotely controlled is too high. So it's not cost effective. So we have been making those decisions relative to the cost effectiveness of the investment.
Then in terms of ESG, as you can see, we continue to grow in terms of installed capacity of renewables. Very shortly, 100% of our capacity will come from renewable sources. The emission intensity is a proxy, and we will see this decrease once Pampa is sold. Pampa stopped this quarter to fix the boiler, and we had to stop operating it because the spot price was below the variable cost of the power plant. So this shows what's going to happen with our intensity of emissions once Pampa is sold.
The company will rely on renewable sources under Scope 3. In terms of water input and consumption, in the case of Pampa, for example, Pampa is one of the major consumers of water. It requires vapor steam to generate thermoelectrical -- electricity.
And we also have been increasing the percentage of women in the workforce. This is something we have been working at. We have some very specific programs for engineering trainees and for operators because we need more women to choose this technical profession, this technical role. So we are encouraging women, and we have programs to attract and retain women so that we can have a better balance in terms of the workforce.
In terms of social responsibility investments, our objective is to use 100% of incentivized resources. We also invest all the funds. But as regards incentivized funds and resources, we aim to have 100% of them employed in good projects through our Sustainability Committee.
And now let's talk about sales. In sales, the main point is that we see Serra do Assuruá inside our portfolio already, and this allows us to have more energy available as of 2025. The portion which is available in '22, '23, '24, tends to cover our hydrology hedging. We need to have uncontracted energy in order to face droughts and unfavorable hydrology conditions because there is an asymmetry. When this happens, we lose energy, and we have to repurchase it at very high cost. So we need hedging -- to hedge against unfavorable hydrological conditions.
So in 2025, '26, we will have more energy available. And the good news is that we have been able to sell energy more recently in substantial amounts at very reasonable prices. We've seen the market an increase in prices, and this is especially driven by the marginal expansion cost, which has been rising. When we look at cost rise, they're higher in wind energy because of the increased cost of cement, copper and stainless steel. Local inflation as well is driving costs up, and this has an impact in the futures market.
On the right-hand side, you see the risk. We try to diversify and operate in different segments. We never go over 15% in any segment, for example, steel. And then we have the food segment. We sell to different industries. And in the other industries as well, we have diversified our clients. And we always look for medium- to long-term contracts. And we maintain the resilience of our activity, the consistency of our sales and the resilience of our results.
In terms of consumers, we have been growing very strongly, and that was going on to 2020. And then in -- during the pandemic, we try to look better quality clients. And then in 2021, the hydrological conditions were very poor. So we had to be more conservative in terms of our sales volume. And we have been keeping the same number of clients. And here, you have the main indicators for the commercial part.
In terms of expansion, we are implementing Santo Agostinho Wind Complex with 434 megawatts of installed capacity. It's going to start operating at the end of this year. There are 70 aero generators. All the bases have been completed. 63% of the substations have been completed, and we should start mounting the equipment very shortly.
Gralha Azul also is -- it is the last quarter where we present this slide. It accumulates 94% of the total RAP. The other 6% depends on some other lines that should connect to the last substation, which is Irati. Once that happens and if that happens until March 2023, this 6% will come on stream. 2023 is the deadline for the distributor, and then anyway, we start receiving as of 2023. But the project has been fully built. It is finished. We now depend only on this last bit, which depends on the distributor.
As regards to Novo Estado, we have executed 93.4% of the works, 49% of the RAP, and we are now working on the stretch between Xingu and Serra Pelada. And according to our program, this should come on stream. We have 3 contractors working. We have more contractors now to be able to implement it faster, but it should come on stream at the end of this year in commercial operation.
Block 7 is the one we have recently acquired in the last auction. It is connected here to IratiItacaiúnas Substation. The CapEx is BRL 110 million. The concession term is 30 years, and we want to bring the operation forward by 24 months, and we want to reduce the CapEx by 30%.
We always show some data on Jirau. The operation is very stable. The production of energy was low, but this doesn't have an impact from an economic point of view. This has to do with worst hydrology in the north in the beginning of the year. But the availability is very good, over 99%. We present Jirau because, as the controlling company, wants this asset to be added to ENGIE Brasil Energia, and we should also start to operate this major unit in the group.
We talked about projects under development. And I highlight here that we have been growing our pipeline. We have been looking at opportunities to generate future growth, and this is why we made the decision in this quarter, or rather in this semester, to retain dividends a bit. We want to be conservative. And if we should need, we are going to invest in Serra do Assuruá. Some other projects as well might require investment in the near future. So we are making a conservative payout of dividends. This might change. In case we are not successful in some of the projects, we might decide to pay out 100% of the dividends. However, we've been conservative to ensure that our cash flow will be enough for investment and growth, which is extremely important at this time.
This is something about our financial performance, and I turn the floor over to Malta.
Thank you, Sattamini. Good morning to all. I'm going to talk a little bit about our financial performance in the quarter. As you can see on the slide, the returns have been consistent throughout the years, and this attests to our financial discipline and efficient capital allocation.
On the right-hand side, you see our financial performance. In the last 6 years, we have made substantial investments. Our installed capacity increased substantially, and we made investments in renewable energies. We also acquired a stake in TAG, and we entered into the transmission business with 2,800 kilometers under construction. Our adjusted EBITDA grew very significantly and in a sustainable manner. And we have distributed dividends also at very significant levels. In many of the years, we paid out 100% of the dividends allowed.
This bridge shows the evolution of our net operating revenue, and part of this has been already explained by Sattamini. We had a significant increase in sales volume, also an increase in our average price. And then in the trading operations, there was an increase by BRL 134 million and also a reduction in the cost by BRL 133 million, which took us to a margin of BRL 1 million. In the transmission segment, we saw a decrease because of the reduction in CapEx quarter-on-quarter. And I think these are the main factors that explain our net revenue and its evolution.
This slide shows our share in the bottom line of TAG -- of T-A-G. The results have been very consistent, and they closed the quarter with an income of BRL 492 million, which, to us, represents BRL 160 million. So this is on account of our stake in TAG.
This slide shows the change in our EBITDA. We have deducted nonrecurring effects. In the second of quarter 2021, we had an impairment for the Jorge Lacerda assets. And now in this quarter, as Sattamini has said, we had an impairment of BRL 118 million. We presented the EBITDA in a new way. We are purging the economic effect of the transmission assets. In the last quarter, we had an effect of BRL 159 million and, in this quarter, BRL 177 million. This economic impacts have to do with the remuneration of the financial assets in construction. And here, we have the RAP, which was captured in the quarter, and that is for BRL 92 million.
As said by Sattamini, we had an increase in the price and sales volume. And we also had an increase of sales in our portfolio, which has to do mostly with [indiscernible], the assets of Jorge Lacerda. This is our net income change. The main impact comes from the increase in our EBITDA. And as said by Sattamini, there was also an increase in our financial results because of inflation and an interest in addition to the loans of Floresta and Paracatu, which accounted in our liabilities after we acquired these 2 assets.
This slide shows our debt. In the quarter, net debt over EBITDA was 2.1x and net over adjusted EBITDA was 2.8x. This attests to an appropriate capital structure that can support our growth strategy.
This slide shows the profile of amortization of our debt, the maturity schedule, which is very balanced, and it also shows the competitive cost of our debt. Today, it is in the region of 15% yearly, and that's a nominal cost, which can be translated into 3.5% of actual interest.
Interest to end, here, you can see the makeup of our debt and the indexing factors. 73% of our debt is linked to IPCA, which is hedged by our sales contracts, which are also linked to IPCA. The duration today is 7.4 years, which is also a comfortable level.
This slide shows our investments. In the last few years, these investments have had an appropriate return, and they are supported by our stronger cash generation and by an appropriate funding strategy. As you can see here, there is a history of our dividend payout. In many years, the payout was 100%. And in this quarter, as Sattamini said, we are going to pay out 55% of our income.
And with this, I finish the presentation on our financial performance, and we will now open for the Q&A session from you.
I have some questions. I'm trying -- going to try to consolidate some of these because some of them focus on the same issues. We have 5 questions. And the first one is from an investor from Infinity and he asks what is the base scenario relative to the transfer of Jirau? Should it be transferred to ENGIE Brasil Energia? Is that your expectation? And what has to happen for this to take place?
Thank you for the question, [indiscernible]. Yes. Yes. This is still on the table. We keep the asset in our presentation quarter after quarter. But the controlling company believes it will only transfer once the project is financially balanced. As of July 2022 or rather 2023, there will be a reduction in T USD. T USD is frozen for 10 years. And then after 10 years, it starts to vary. And there is going to be a significant reduction by 30% in T USD, which is an expense in the region of BRL 1.1 billion per year. We are talking about extra cash for the company coming from Jirau in the region of BRL 330 million. This should make the operations financially balanced. And then that might be the time when the controlling company should bring the matter to the committee of related parties so that we can undergo a fair valuation with advisers with a definition by the representatives also of the minority shareholders in the Board.
So you should see something in 2023 in the sense of beginning to study the transfer. And this is also because of the difficulties of these large structuring projects, additional CapEx, delays, GSF, the hydro crisis. So all of this brought concerns to the controlling company, who doesn't want to bring problems to our company. But once these issues are sorted out, we are going to evaluate this transfer in a professional and impartial manner.
The next question comes from Arlindo Sosa sell-side Traders Club. Congratulations for the delivery. The debt in the company is comfortable? Do you have any targets regarding capital structure, especially for the expansion of projects or expansion projects such as Assuruá?
Yes. all projects have to include our basic premises regarding leverage, which is BRL 5.7 million for structure or rather 70%, 80% of financing and 20%, 30% of equity. This is normally our leverage for projects. Our global leverage in the company. We always have as a target 2.5 to 3x net debt over EBITDA. So this allows us to continue to be competitive in the capital market with AAA, good liquidity. And this is an advantage, a competitive advantage. When we place bids for projects, our cost of debt is lower than our competitors'.
Next question comes from Marcelo Sá, sell side from Itaú. You had a CapEx of BRL 6 billion for 880 mega in Assuruá. So he's saying it's BRL 6.8 million per megawatt installed which is quite high, but in line with what he claims he sees in the market. What level of prices for energy would be needed to make this complex feasible? And what is the factor expected? What is the strategy for selling this energy? And if you could contract 70% of the volume before construction or not. So he is asking about the capacity factor and level of price expected.
The capacity factor off the top of my head is in the region of 45%, 46%, just off the top of my head, yes. And what I can say is that it is higher than we expected, the CapEx per megawatt installed. As I said in the beginning of the presentation, it has been rising and this will require depending on the expected rate of return by the investors, the leverage level and level of risk. This will require prices above 200 to 210-megawatt hour. And this is what we believe is the marginal cost today of implementing a new project, a new wind project.
So this should drive prices to that level in the medium term. Prices may be lower because of supply and demand in the short term. Some may have all the stocks that they sell in a competitive environment at a lower price, but this tends to come to an end. And the prices for wind energy should be the prices that will determine the prices of energy in the future. Wind, energy, solar energy, biomass, small hydropower plants will no longer have the discount of fuel as of 2026. So as of 2027, when all of these projects come on stream and everything is contracted, there will be no energy with a few discounts. So the marginal price of expansion will become the market price in general not only for the incentivized energy but for conventional energy as well.
We believe that there are factors that in the short term might be driving the prices, good hydrological conditions. This year was spectacular relative to the last 10 years. And just to give you an idea, in the last 10 years, we had a new critical period, 49 56 and then in 2012 to 2020. And in 2021, it was last -- the worst year of the series. So this would be added to a new critical period. That is the hydrology was very bad. This year is very good. So the prices are being impacted by this expectation of better hydrology. These elements are impacting prices in the short term, but the trend is always for the medium- to long-term prices to be driven by the marginal cost of expansion, which is 210 depending on the return expected by the investors, a bit less, a bit more.
I see also Rafael that he's asking about the strategy to sell this energy. This energy, the energy from Assuruá, will represent 7% of our contract portfolio. This energy will be included in our portfolio and will be sold at the right time. We have a strategy for contracting our energy in time. And this energy, once it is in the portfolio, it will be contracted. Unlike many players who have to sell because they don't have enough cash or they don't find proper funding, we are different. We have a large portfolio. We have a large volume of clients, and we are able to meet the needs of these clients. We don't have to sell at low prices now, and we will have more appropriate times to sell this energy in the near future.
Thank you, Sattamini. Thank you for your explanation. The next 2 questions have to do with the payout. And the questions here are -- is the 55% payout going to be the payout for the year. You have said it is not going to be so.
We have been conservative here. We decided to pay out 55% so that we do not have to go for high leverage when the interest rate is high. Fighting inflation will require higher interest rates. It has already happened. So if we need to invest, we would rather not make any loans with a high interest rate. So we want to grow. We don't want any exposure to high interest rates. And it might be that, at the end of the year, the situation has changed, and we will be able to pay out 100%.
If you look at our history, in the last 10, 15 years, there were only 3 times that we pay 55%. But remember, as we reach the optimal indebtedness, we will have to balance the volume of investments and the payout so that we can continue to grow. So this is what we have to watch for. If we continue to grow and you see we have to grow in terms of the volume of the income we distribute, we have increased our debt but we have increased even more our EBITDA. As a result, the cake is bigger. The percentage must be -- may be lower, but the cake is bigger. That's the most important thing.
Another question from Rena. So going forward, in the next 5 years, he says, what is the scenario for self-production, especially companies that are clients of ENGIE Brasil. He asks if we are concerned about self-production, if this would have an impact on price and what the company's strategy would be to hedge against this impact.
We resisted entering into the self-production scheme for a very simple reason. There is an asymmetry between the benefit and the investment on the part of consumers. We believed that the other consumers who do not have self-production would end up paying the bill. But the market went in that direction, and we have that product to offer to our clients. They can do self-production. They can have a partnership with us in some projects. We have some discussions already going on.
So will this have an impact on our business? No. We are adapting our commercial strategy to serve those clients. This has a smaller impact as of the 414 regulation, which is being discussed in Congress. There will be a limitation for self-production. So producers will be clients for large volumes. So not everybody can go into self-production. We will participate. This is now part of our commercial offerings. But at some point, this market may grow at a slower pace.
A question now having to do with sustainability from Flavio Ferras, our investor. Doesn't the investment in TAG come into conflict with the decarbonization policy?
No, we don't think so. Gas is a fuel that allows us to replace all the fossil fuels, which have a bigger impact in terms of greenhouse gases, and gas helps us do it. Many plants are still relying on oil. Many industries still rely on oil or all the polluting fuel. So you -- it's not possible to have 100% renewable metrics because this is resources from the -- from nature. So you need to have some energy coming from thermal power plants, which is reliable, so that you have a renewable and balanced supply of energy.
Another factor as well is that gas will become greener in time with biogas, with the introduction of hydrogen in the makeup of gas. So this also takes us towards decarbonizing our clients.
Thank you. Next question comes from Guillerme from Santander, sell side. Could you make any comments about how you are able to get prices for the medium term above inflation? And what about overcapacity impacting prices downwards?
We have increased prices but not above inflation. That's the truth. When we see the contracting prices in the quarter, for this quarter, it's lower than inflation, slightly lower. And this is the impact of the -- not of overcapacity, oversupply but it has to do with the need for -- of many players to have projects to capture the benefit of fuel before the deadline, before it ends, and that has enabled us to be very aggressive with some players, and the market price was then pushed downwards.
But once this is over, we believe there won't be -- the prices will have to go to levels which are in line with the implementation of new generation capacity. That's why I said the marginal price of expansion is -- should be slightly higher than what we saw in the market in recent times.
Next question comes from Bruno Ferreira, our investor, and has to do with the 2 main transmission assets. The effects of the RAP will be fully -- will be full as of Q4 2022 or later?
We will have 100% of the RAPs as of March 2023. We still have 6% of Gralha Azul to go. The complete cycle of billing of RAPs will only be seen as of March 2024, so 12 months between March 2023 and 2024. Do you want to add anything, Rafael?
No, no, that's it.
As of March, we will achieve 100% in Gralha Azul. So we will have in 2024, the first full year in which these projects will contribute to the bottom line.
Next question is from Fabio Faria from Bank of America. Could we make some more comments about C3SE generation? Why did we decide not to participate?
Well, we decided not to participate because in our opinion, there were 3 or 4 plants, which accounted for almost all of the project, but there were small shares of Eletrosul and some issues relating to corporate shareholdings, which made it complicated for us. Those were the basic reasons, but it's not that we don't want to invest in new capacity in hydro. But we also have to think that investing in solar and wind will allow us to diversify our portfolio, which is now mostly based on hydro. And this gives us better conditions to manage the portfolio. It's not because it's hydro. There are other reasons. But also, we now prefer to invest in wind and solar because they are complementary to our portfolio, which is mostly hydro based.
There is a question now by Thiago, and he asks if we are interested in investing in hydro or only in wind and solar.
Yes, I believe I have answered that.
So [indiscernible] our investor. He asks what are the prospects in relation to transmission. Is there any guidance or any possibility of increasing the percentage of transmission? So the question is, what are we planning for transmission? Is there any guidance, prospect of increasing transmission in the top line?
Yes, we do. We are interested in increasing the percentage of transmission in our top line, but greenfield comes through auctions. There are concessions. And brownfield, which would be M&A, is extremely competitive. So probably, we will go down the route of exploring new projects, new concessions, new constructions. And this is also because we have the expertise in terms of construction. We know the market very well. We know the infrastructure market really well, and that's where we add value the most. We are going to look into auctions, and we are going to try and find ways to be competitive and profitable. It's no use being competitive without being profitable. We want returns for our investors.
Next question comes from Marcio Prado. Could we comment on the expected return in generation and transmission? And he also asks whether CapEx for construction -- for the projects under construction has remained the same.
We can answer to a certain extent, let's put it like that. Good to see Marcio back. Marcio has been with us for a long time. Yes, Marcio, we had some CapEx issues, especially in those projects that were developed during the pandemic. There were some problems. Some of the works were stopped, and thank God, COVID is now not that big a risk because of the vaccines. But yes, we faced problems. There were some CapEx increases, but the macroeconomic factors also were in the favor of these projects. So the projects today that we have in terms of infrastructure, transmission and generation, despite the increase in CapEx, they are still profitable or have a greater profitability relative to our expectations.
Eric Peretti from JPMorgan asks is the company going to be long in the spot market for Serra do Assuruá if we take into account the change in the method to calculate the spot price. I will repeat the question. If the company plans to stay long in the market, given the change in the method to calculate the spot price, the PLD?
Yes, that method is extremely important. It increases the risk and the spot price, but this is not the reason why we plan to stay long. With Assuruá, we are bringing energy into our portfolio. And with this energy, we will be able to sell to clients within the portfolio following our strategy to have uncontracted energy for future years. And this volume of contracts and contracts renewed with our clients is a warehouse strategy to have energy in stock.
We are not selling energy before to guarantee the flow because, as I said before, prices in the market today are not appropriate and not adequate. We believe the prices will rise. And in our warehouse, in our stock, we will be able to serve clients who are migrating. These clients don't allow us to have a balance for a large project, but these are clients who in the next few years will migrate from the captive to the premarket with a small amount. So this will be thousands of clients who are willing to pay higher rates. Because of the migration, they are now paying a lot. They go to the free market. Obviously, there are people looking for better prices. These are small clients. So we are going to work with many clients with small amounts but acting very strongly in the digitization and training of our commercial force.
There's one last question here, and then I have 2 questions here relating to Jirau. And we will be in touch with the people who ask these questions. We have one last question from Anderson Pereira, our investor, and he is asking about the privatization of Eletrobras. Will there be major changes in the market in regards to generation and transmission that could impact the company?
I believe, yes, there is going to be an impact. But maybe in the part of the market that you didn't mention, and that has to do with commercialization, generation and transmission will compete against us like any other competitors. But when Eletrobras is privatized, Eletrobras becomes flexible and can have its own sales force and offer what they have to the market.
Today, what happens is that the companies that belonged to Eletrobras, they didn't have any flexibility regarding commercialization. They had to sell the energy in auctions, and the energy was sold then to commercial companies who drove the price down and then offered the energy price plus margin to the clients. So it was a bad competition. They had a very low price and added just a small margin on top of that. Once that energy is sold by Eletrobras, as any other player, Eletrobras will try to be competitive, but we'll also try to capture the surplus consumers. We all want to do that. We want to sell at the best possible price. And I think this will be healthy once we have a competitor that acts in a competitive manner to sell the volume of energy that Eletrobras has.
Thank you very much, Sattamini. Thank you very much for the excellent questions. And I'll now turn the floor over to Sattamini for his final remarks.
Thank you so much for participating, for the great questions. The pandemic made so that we have virtual meetings, which is very efficient, but I really miss being face-to-face with you, seeing friends and discussing in-person. Let's see if we can create an opportunity for that in the short term. We cannot live only in the virtual world. We have to be together and build relationships. Thank you very much, and we'll see you in the next call.
Thank you very much. See you next time.