Engie Brasil Energia SA
BOVESPA:EGIE3
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Engie Brasil Energia SA
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Good morning, everybody. We're beginning the Engie Brasil Energia conference call referring to the fourth quarter '22 and the full year. I am Rafael Bósio, the IR Manager for the company. Some announcements before beginning the call. [Operator Instructions]
I would like to remind you that this conference is being recorded at our site, www.engie.com.br. We have the files, the presentation, all the other results and the documents that were filed yesterday at the SEC. We have income statements, operational statements, information on the implementation of new projects and much more.
Before we proceed, I would like to clarify that the forward-looking statements made during the conference, referring the company business should be dealt with as forecasts that depend on the general situation of the country performance, the regulatory segment, and they are subject to change, of course.
With us today, we have Eduardo Sattamini, the CEO and IRO; and Marcelo Malta, the CFO of the company. He will be speaking about the performance of ENGIE Brasil for the fourth quarter. For journalists who wish to pose questions, you can send them by e-mail and send them to the press group from the company. Sattamini, you have the floor.
Well, thank you, Rafael, and good morning to everybody. Once again, it is a pleasure to share the positive results of the company in the fourth quarter and full year '22. At this point in time, we like to speak about the annual results and not necessarily the quarter results because this depends on our forecast.
The quarter-on-quarter presentation is not fully representative but, of course, contains important elements. We're going to begin on Slide #5, where we can see that the strategy of the company for growth has been confirming itself as the projects come into operation.
When we look at our adjusted EBITDA, it has a minor drop and perhaps you would think that the growth strategy is not being properly executed, but we do have the GFOM that impacted the results in 2021, [ 521 ] from EBITDA. Putting aside this factor, we would have a growth of 34.4% in cash generation represented through EBITDA.
We do have several factors, as you can see to the right of the slide, an increase in price and increase in volume, better results at the Electric Power Trade Board. And you can find these results in our release. When we speak about net income, the growth is 109% vis-a-vis last year.
This, of course, due to the acceleration of inflation, which has impacted us during 2021 and 2022. And in 2022, a significant increase in prices. Now we do have obligations for concessions that are pegged to inflation.
And of course, when there is inflation, there is a greater impact, which is then readjusted in our contracts. When there is a drop in inflation, we have a very good comparison base. And this is the year-on-year increase. Taking away that impact of the GFOM, we have achieved 110% for net income. In the next slide, we speak about our highlights.
Last quarter in the Assú Sol Photovoltaic Complex, we made investments of around BRL 3.3 billion. This will have 752 megawatts of installed capacity. The highlight is our energy place platform for the commercialization of energy, which has just completed 2 years of operations with a great deal of success and we are getting ready to act in this very fragmented market the coming year. We also signed the last quarter, a financing agreement with the development bank amounting to BRL 1.5 billion for Serra do Assuruá in Bahia with 846 megawatts of installed capacity. In the next page of highlights yesterday at the meeting, we approved complementary dividends of BRL 1,455.2 million. This will have to be approved, but this total dividend of BRL 2.7 million for the year with 100% payout and a dividend yield of approximately 8.1%.
Another important highlight, we have joined the Carbon Disclosure Project, the CDP. We saw that we needed to have this. We had a CDP and a CDP rating for ENGIE as a whole. We now have our own classification, our own rating.
And during this first year, we have achieved a B classification. And of course, we're working on enhancements to be able to improve this classification. In December of 2022, we also approved interest on shareholders' equity of BRL 200 million, and the date of payment will be set forth by the Management Board.
Another highlight on this page is our participation in the Corporate Sustainability Index. We are one of the few companies that do take part in this since its creation 10 years ago. This is the third consecutive year that we have had -- or we have been part of the B3 Carbon Efficient Index.
Another highlight, a very important one, is that we obtained an extension in the concession period of Estreito Hydroelectric Power Plant of 852 days. This, of course, benefits our partners and allies that will have 60% more.
It also adds value to us and this was due to a delay in the coming into operation of the plant at the very beginning of the construction. We continue on. We're going to speak about our annual KPIs for ESG on Slide #9.
These are very important. As you can see, we continue to grow in terms of installed capacity and our generation of renewables. We do hope that in 2023, with the closing of the Pampa operation, we will reach 95% of renewables. This also contributes to the intense emission.
We had a significant reduction. We did have a problem with a boiler in Pampa Sul. Well, this already was a reduction vis-a-vis what we had in 2021. There was a steep drop because of this problem in the boiler and took Pampa out of operation.
It has returned to normalcy since August of this year. It is not being dispatched at present because the price in the spot market has fallen a great deal. And half of it is somewhat above the PLD. With this, we had a reduction in emissions in 2022. I can say that we're a net generator of credit at this point.
If you look at the credits generated minus the emissions, which are the company emissions, it would make us a generator of benefits in terms of carbon in the society. Now the water very connected to the thermoelectric plant because of what we did in 2022, but we have had a significant reduction.
Another front in ESG is diversity. You see the percentage of women in the workforce. We're working broadly with affirmative policies to bring women into our operation. We have 2 programs that we implemented in the last few years, the training of operators for our wind plants, and we're doing the same for our hydroelectric plants in areas close to our plants and our national trainee program, women once again, that have summed their work to our labor force, we have a 50-50 balance at present.
But in operations, we still have a lack of female talent. But it's not enough to become resigned to this situation. We do have to find a way to introduce female labor into the operations. When it comes to our social responsibility investments, the goal is the percentage of resources invested in social responsibility. And the incentivized resources that has reached 100%, we spend these incentivized resources from [indiscernible], from other programs, and all of these resources are aimed for use in projects, and you can find more information on this in our sustainability report on our YouTube site.
These are really very interesting projects. Let's go on to the next slide. Energy sales. And let's speak about the energy commercial strategy that you're very aware of. We are working in segments of industry and trade. We do have a diversified concentration in food, in steel mills as well because of the importance of this activity in consumption as a whole is an electric intensive activity, and we're seeking diversification and limit our exposure to specific segments.
Now because we're trying to dilute our risk, we have a commercialization system where we're always selling energy and gradually changing our percentage of contracting, and this is what you will see to the left where our contracted energy volume for 2023 has been fully sold out and the exposure will be extremely low, of course, because of the low price in the spot market in 2024, we still have 5% of our energy that is uncontracted, but this is a very small percentage. And gradually, it will increase as our contracts mature. I would like to remind you that in the contracts in the free market, we do have some contracts that are signed for an average of 4 to 5 years of duration.
And it's natural that our contracts in the free market are now maturing, and we will have uncontracted energy. We're in a very comfortable situation during this period with high levels of contracting on prices, but we are concerned when we look ahead. The prices have been announced in the market below our expansion limit.
This is what we're faced with. Of course, we will be frustrated in some of our projects that will not become feasible because of the low prices in the medium and long run. Nevertheless, there will be a marginal cost of expansion that we will used for nonconventional and renewable energy.
Let's continue on to the next slide. The Energy Commercial Strategy. We have focused on the company for the market opening. We had a reduction of customers in 2021 because of the very poor hydrological condition.
We sought out more security for our customers in 2022. The commercialization levels continue to be normal, but we're getting ready to face significant growth in the number of customers. Because of the market opening in 2024, we have been signing several contracts for the customers that will become free customers in 2024.
And we do have platforms to have a low transaction costs and become ever more competitive. We go on to speaking about expansion. We have a report on Santo Agostinho. It will come into operation in the first semester of 2023, the first stage, and then we will gradually come into full operation.
It has 434 megawatts in Rio Grande do Norte. And until the end of the year, until the beginning of 2024, it will add to our total installed capacity. Transmission for Novo Estado, a rather important plant. The construction has been fully executed. We're at 99.2% of work progress until the end of last year.
And today per se, we are at 100% of this work executed. We're scheduling the energization of the last part of the lines that will put into effect 49% of the total allowed revenue on the 25th of February. Not this weekend, which is Carnival, but next weekend, the energy from the last part of these transmission lines will come into operation, and the line will become fully operational.
And this will enable us to show our execution capacity and the ability to take sustainable energy in line for consumer markets. This is the rule of transmission. An additional project, a marginal project. It is basically an expansion that we won at last year.
We have the suppliers already contracted and everything will happen in this first quarter of '23. It's the beginning of the implementation. The CapEx had a significant reduction in the contracting vis-a-vis what we have originally obtained.
Another wind project under implementation of Assuruá. It is in the stage of the signing of contracts. We have signed a financing contract with the BNDES and, of course, the environmental installation license is expected for 2023.
We started up with the license, and we have now begun mobilizing the teams at the site. The photovoltaic project Assú Sol. The contracts have already been signed. We have supply and service agreements that are under execution.
And in the second quarter of 2023, we hope to be able to begin the [indiscernible] of this project. When we speak about expansion, okay, we have to refer to Jirau.
Jirau is a project that was built by the holding company ENGIE Brasil. And at some point, it will be transferred at least 40% of the project to ENGIE Brasil. Last year, we had a review of the tariffs of the precision process. The drop was 35%. And with this, the plant, the SPE, began to have a cash generation. And well, in my perception, this is a sign that the project is beginning to attain a level of maturity that will enable us to bring the project in-house.
The controlling company has not signaled this, but we do believe that at any moment, this will materialize, and we can begin to include this in the governance of our assets. It will be part of the minority shareholders with very well renowned companies and investment banks to help us define a fair price in this transaction.
The year before last, there was a transaction done with 2 solar assets built by a company that we have at global level. We had a very good transaction at that point that brought about very good returns for the acquisition of the [indiscernible] We hope to follow the same approach to offer security to the market, and we hope to have a fair transaction.
In the next slide, projects under development. We have a pipeline of 1.8 gigawatts with a great deal of complementary projects. This, of course, complementing the existing projects. We do have a commercial advantage going forward. And unfortunately, an environment of low prices will delay our decision-making process because of this.
We're hoping to go back to a more normal market to be able to execute these greenfield projects. In the meantime if we want to continue to grow and use cash generation and capital that we have available, we will look for an acquisition, one where we can truly generate value.
Somewhere where we can use our assets with synergy and show our operational excellence. Very well. We will now go on the financial performance. I will turn the floor to Mr. Malta, and we will once again speak at the end.
Well, thank you, Sattamini. A good day to all of you. This slide shows us some of our performance KPIs in the financial part. As you can see, we have had high levels of return on equity and on invested capital.
2021 was the year of exception with a reduction in our profit especially due to the negative financial impact on our debt. To the right in the chart, we show you our performance indicators. From 2016 to 2022, we invested BRL 25.7 billion with a leverage of 75%.
Our proprietary installed capacity was increased by 21%, and we highlight the renewal part with a growth of 36%. We acquired a stake in TAG. We entered the transmission business as Mr. Sattamini mentioned. The coming week, we will obtain full implementation of these assets, generating on RAP for 2023 of approximately BRL 620 million.
Our adjusted EBITDA for the period had a growth of 108% and net income 65%. Between dividends and interest on shareholders' capital, we paid BRL 13.8 billion. This next slide shows you the net operating revenue change with some significant impacts.
First, the increase of price by 11.5% and the sales volume of energy of 4.3%. At the trade port, CCE, we had a negative impact in our revenues. But on the other hand, we also had a cost reduction of BRL 461 million, which led to an increase of our EBITDA by BRL 250 million.
This is mainly due to that combination of increase in the GSF that went for [ 0.03 to 0.85 ] in 2022 and to the reduction of the PLD that has an average stood at BRL 60 for 2022. In the trading operation, we also had a reduction in revenues. A drop in our costs with the trading operations, generating a negative impact of only BRL 2 million in our EBITDA.
Now this is mainly due to the mark-to-market of our trading contracts. When it comes to transmission, we do have an accounting rule that is specific to record revenues and the cost of transmission.
Our revenues correspond to our CapEx plus a margin besides the remuneration of the financial assets linked to transmission. Therefore, we also had a reduction in the transmission cost of BRL 1.404 billion that led to a positive variation in our EBITDA of BRL 291 million.
I simply would like to highlight that as the work moves forward. We have a reduction in the cost and in the construction of assets. This slide shows you the financial performance of TAG that ended the year with a profit very close to BRL 2.2 billion, representing an increase of almost BRL 600 million. Our stake in that profit was of BRL 727 million, an increase of BRL 125 million vis-a-vis the previous year.
This slide shows you the EBITDA evolution. As mentioned by Eduardo Sattamini, the impairment of Pampa Sul and the result of the selling of Jorge Lacerda are recorded in the EBITDA of 2021. We don't consider that, we have a result of BRL 7.217 billion. Another adjustment done was to clean out the impacts of transmission on our results.
These impacts are mainly economic, and in the evolution of EBITDA, we did take into account the RAP. The main variations presented in 2022 were the increase in price and volume, as mentioned. The transmission RAP, BRL 348 million for the year. As I mentioned in 2023, it will go on to BRL 620 million.
In the CCEE, the Trade Board, as mentioned, an increase of BRL 247 million in EBITDA, a reduction in the cost of coal or fuel because of the sale of the Jorge Lacerda assets and equity over -- shareholders over TAG led to an increase of BRL 125 million for TAG and increased in the volume for the purchase of energy.
And this increase mainly arises from the acquisition of energy from Diamante. That operation was contracted when we sold the asset. The GFOM impact, as mentioned by Eduardo Sattamini, of almost BRL 1.6 billion, if we eliminate this effect from the EBITDA last year, as mentioned, we would have an increase of EBITDA in 2022 of 24% approximately.
Here, we see the net income change. As we did with the EBITDA, we have eliminated the impairment impact. The -- here, we have net income social contribution reaching BRL 2.369 billion adjusted net income and the main variation during the year, as mentioned, was the reduction of financial expenses mainly because of the combination of the reduction of inflationary indices and an increase in the CDI of TJLP.
Here, you can see the evolution of our indebtedness and the leverage since 2019. Significant growth in our debt in 2022, a reduction of approximately BRL 1.8 billion thanks to the reclassification of the Pampa debt. As we sold off the asset, the accounting rule sets for the need for a reclassification of our debt for the liability and assets account.
This led to a reduction in our net debt-EBITDA ratio. On the other hand, we had an increase in net debt-EBITDA ratio because of an expressive consumption of cash in 2022, mainly due to the investments that we made and also because of the payout of dividends.
Here, you can see the debt profile and the composition of ENGIE. The first graph shows you our payment schedule, which is quite balanced. The duration of the debt stands at 7.6 years. And in 2021, it was 6 years and 9 months. To the right, you can see the breakdown of the debt by index and you can see the expressive make out of IPCA, the broad consumer index, the TJLP for the debt contracted with the National Investment Bank and CDI, which are the shorter-term debt. We would like to remind you that the debt index to the IPCA is hedged by our energy contracts for sale. And they're totally indexed to the IPCA. The nominal cost of the debt stands at 11.4% per year, equivalent to IPCA plus 5.3%.
This is the CapEx since 2019 and the forecast for investments until 2025. Between 2019 and 2022, we invested approximately BRL 15 billion. In '23 and '24, we should be investing approximately BRL 12 billion in the Santo Agostinho projects, more specifically in Santo Agostinho, Serra do Assuruá, and [indiscernible] which are still at a very initial stage of construction.
Here, we see the background of our dividend payout. As mentioned by Sattamini yesterday, the Board of Management approved payment for the full net income representing 8.1% a year dividend yield. With this, I would like to end the presentation of the financial part, and I return the floor to Rafael Bósio.
Well, thank you, Malta. We do have some questions here. I will begin with the first, Maria Carolina Carneiro from Credit Suisse.
Well, in truth, there are 2 questions. The first refers to the commercialization during the fourth quarter. According to their analysis and the evolution of our balance, what we presented in the third quarter, they have identified sales above 200 average megawatts between '23 and '27.
She would like us to remark on what is happening with the energy market, the terms and the prices. Well, this is a focus for the present day moment.
Well, I can take care of that. I can do that. Thank you for the question, Carol. Basically, our strategy is when we feel this price pressure, and we were observing that this was happening with the improvement in hydrology and the continuity of this favorable hydrology during the year 2023, there is a possibility that prices in 2023 and 2024 being impacted because of this effect.
And because of that, we sped up our sales. If we had held back those 200 megawatts in our portfolio, we would have lost value for the company. At that point in time, we understood that although the prices were not favorable, it was the right time to sell so as not to further deteriorate the energy in our portfolio.
And do recall that the company's strategy is to always sell. We need to sell out our portfolio at market prices. We seek out the best prices and we speed up or slow down based on our perception of price variations. Now this is the impact, I think it was a very good strategy on our portfolio by foreseeing what would happen.
We need to work with the market for a return in prices and to be able to make investments. While this does not materialize, we're going to sell according to our normal strategy. Do we have further questions?
Yes. A question on the price increase during the quarter, which is the target price and SG&A for the quarter. She is referring to the quarter, quarter-on-quarter, fourth quarter, and year-on-year.
Well, that's very simple to explain. Well, the company is growing. When we look at a growth of 23.4% of EBITDA, we have new operations about to begin and many of them beginning operations but still not working with personnel. And of course, we have a higher personnel cost in the operation.
When we speak of SG&A, we can justify part of that because of an increase in our levels of activity, we marginally have a growth. And another very important element is the company that is getting prepared for this new market scenario, training of the team and increasing the number of sellers, investors made -- investments made in technology to be able to face the market opening.
Not only that, we had a very good year in 2022. And with that, we're going to share -- we're going to pay the share of our employees. We did have a good profit, and we have provisions for the changes that will be happening in the coming year. So these are main factors.
Look, Carol, you know that we're extremely careful with cost. We have a very good cost performance. But as you grow, as you attain good results, these costs end up increasing nominally and representing a significant growth.
And you did draw our attention to that simply to complement this, Sattamini, I think it is worthwhile underscoring that our cost SG&A ratio of our EBITDA has had a reduction through the years. This shows the efficient management of costs and expenses in the company.
Yes. Thank you, Malta. Thank you for your comment. And we can -- in the next presentation, perhaps come up with a graph to show you that. Yes, we will show you -- well, we show that frequently to our controllers in-house, of course.
The next question is from Guillierme, our individual shareholder. If we take into account the growing competitiveness, will the company remain being -- will continue to participate in auctions for transmission?
Yes, in transmission, there is a great deal of competition, very aggressive bids. And if we look upon this in the longer term, somewhat longer term. In the last auction, I understood that there was a reduction in the amount of aggressiveness, although some players continue to be very aggressive. This is normal in the transmission sector. There are cycles with less attractive prices, more attractive prices, and we have enormous financial discipline. We're willing to go until we know that the investment will create value for our investment portfolio.
The last auction was somewhat more aggressive. We came out in third place. The fight among the players tends to be quite harsh. The next auction in June with BRL 16 million CapEx of ANEEL. Perhaps we will have an opportunity. There are large lots, and we see that some of the players competing with us in the market are disinvesting from some of their assets because of the local risk to reduce exposure to the Brazil cost.
And perhaps we will find a propitious moment for the company to capture more opportunities in the transmission sector, something that will be important for the country, for the renewable energy because it does bring renewable energy for the consumer market, and this is the main role of the auction.
And we believe that opportunities will come about. We are going to participate in June and in the end of the year as well that has a significant amount. We are working with our team guiding them so that we can have good projects and good returns.
Thank you, Sattamini. The next question is from Mr. Soza, a sell-side analyst. If you could speak about the drivers and the growth of TAG? And if there is need for greater infrastructure in the sector?
TAG has a base of assets that was assessed when we acquire TAG, and it already presented good results, a ever-growing result because the indebtedness that we went into, to acquire the asset is quite short in terms of its amortization. If I'm not mistaken, it's 7 years. Well, the growth will come about in terms of our results.
And we're obtaining results beyond what was expected. Now the growth drivers are an increase in the consumption of gas throughout the country, an increase in the industrial use, which is the bet that we had made. We're going to have domestic gas in great abundance in the fields, especially in the [ pre-salt ] area.
And with this, we will have new entrants, a more dynamic market, the exit of Petrobras allows greater dynamism to the new entrants and infrastructure will be necessary to manage a larger grid, a grid with a higher level of operational complexity and opportunities will come about because of this.
We already have investments for terminals for new customers. And as the market progresses as the number of agents increases, these opportunities and the traction will increase.
Thank you, Sattamini. The next question from an individual person called [ Petro ], who asked if there's an outlook to reduce payout because of the robust investments that you have set forth for '23 and '24?
No. At present, we don't expect to reduce our payout. We have been carrying out payouts of 100% in the last few years. And if we look at the last 10 or 12 years, the payout on very rare occasions was below the 100%.
If I'm not mistaken, this happened during 3 years. One, a year where we had a noncash effect, the GFOM, where we distributed 100% of the cash results. The following year, we offset this. And in a certain fashion, we have been able to grow by paying 100% of the dividends out.
We're in a very comfortable level of indebtedness at present within our covenants, and we cannot foresee any reason today to alter this policy. I would like to remind you that it could happen if we have a very large volume of investments or a loss of market. And if we deem it to be prudent, we will reduce the payout, which did happen during some phases, especially in 2014, where we had a political crisis in 2015, also due to the GFOM.
But -- when there is a crisis, we do try to preserve cash, preserve the soundness of the company and wait for the crisis to blow out to go back to our 100% payout policy. There's no reason to do anything at present.
Sattamini, a question now that refers to dividends. coming from another individual person. He made some remarks and asks, why the company -- why our dividend payout policy is not more regular and why it works on quarter-by-quarter with dates that have been specified so that the individual investor can have a better view of what happens.
Well, our policy is to normally payout dividends twice a year on our own capital. This is done 3 times a year based on the company cash without [ great ] variations. We don't pay this every quarter. Were we to pay quarter-on-quarter, it would be a T&D.
We don't see any need or reason to do this because we don't have uniform or homogeneous quarterly results, we have variations in market prices, variations in energy location. And the results take place in a nonuniform way during the year to pay out twice a year, I think, is in accordance with most of our shareholders.
Well, thank you, Sattamini. I prefer to pay 100% twice and to pay 35% 3 or 4 times a year. Next question from Henrique Peretti, sell-side analyst from JPMorgan. And he would like to clarify our growth strategy.
If we could remark on our commercialization strategy for the Assu Sol project BRL 200 per megawatt hour and everything else is below that level. He says it's difficult to justify the development of the project at this point in time.
Well, Peretti is right. When we approve those projects, we did take into account that we would have an initial period where the cash generation would be lower than the average of the project, but important enough, and it made us take the decision to acquire the project.
It is a project that if we don't work on now, we would have to work on in a few years. And it would be less competitive in the market, which was the idea therefore, to work with the projects presently. Although in the first years, we will have a lower term in our portfolio.
And I do remind you that these projects represent 5% or 6% of our total portfolio of contracts for the year 2022. This is very bearable. We can work without contracting. We knew that in the first years, we would have lower prices that would be recovered in coming years because the system cannot grow with prices that are lower to those of expansion.
This is natural. An investor will not feel motivated to add new capacity to the system if this capacity is not managed adequately. Therefore, the prices will resume, and we will resume to the level and obtain additional benefits. Now these benefits will increase as new layers of customers are released into the free contracting market.
High voltage has been fully released, totally released. And we're going to work with low voltage as well.
Thank you, Sattamini. Changing topics. We have 2 questions from individual shareholders on hydrogen projects. The questions are how ENGIE is getting ready for the green market and which are the outlooks for that market.
In our opinion, that market currently is still very uncertain for us. When we look at green hydrogen there is still some pending issues regarding the competitiveness with the normal hydrogen. We're going to require government action for the development of this market. Not only for Brazil, but globally, incentives so that consumers will begin to use green hydrogen.
And we can say that Brazil is in a highly favorable situation for the development. We have abundant hydrogen. And if we look at sun and wind energy, and hydroelectric energy, which is also renewable. All of this will enable us to operate 24 hours with renewable energy for the generation of hydrogen optimizing the utilization of the plants. Then of course, this will lead to a change.
In Brazil at present, we see a situation that is quite different from other countries in the world. Now we do have a very good metrics. We have a marginal expansion cost, while in other countries, the situation is the opposite, a very high price of energy. We deem this to be a considerable opportunity because it will speed up the development of hydrogen in Brazil.
And it will also be a factor of regulation in the market. If you have demand for the hydrogen, if you have oversupply, this supply will be consumed at greater speed. We still have some pending issues. We require infrastructure. We need to converse about the agreement with the government.
We look upon this very positively. And how are we preparing for this? We have a global team that is looking at technology opportunities. And in Brazil, at ENGIE Energy, we created a group last year. We're looking at some projects and getting ready to capture opportunities.
So this is being developed in Brazil, and we have global teams also looking at opportunities so that we can become part of this market in the best way possible.
A question from [ Guillierme Niman ] from Santander Bank, sell-side. He asked about Jirau, the transfer that you already remarked on.
So far, there is no signal that there will be this transfer. Now when that materializes, should it materialize? If we would maintain the payout of 100% or if this could exert pressure on the payout because of the amounts that we imagine, I don't think it would be a limiting factor.
As the acquisition is with the holding company, we can carryout payments according to the cash ability of the company. The sale is not done because the holding company needs cash. The controlling company is released CapEx in other areas, especially in services in Europe.
Therefore, we truly do not think that the acquisition of Jirau because of the amount and because of the group financial situation will exert pressure on our cash or lead us to having to reduce our payout.
Okay. Thank you. Mr. Sattamini. We're heading to the end of the call. We have 2 additional questions. The first regarding M&As in the transmission sector, if ENGIE would be interested in acquiring transmission lines from competitors. And if we're going to increase our stake in TAG.
First, we will respond to the question in transmission. M&As in transmission. Yes, we did have some situations, and we saw that M&As in transmission have lower competitiveness. When we look at the added value of a strategic player, the value is very small.
The cost of operation of a transmission line, a transmission system, tends to be very low. It's more about the return that you require and the cost of capital. Now when you think of investments of individual people supporting these amounts, we end up seeing that our competitiveness is not very good.
It's different when we speak about more complex operations when you have a synergy with your assets. When you have the technical competency to resolve problems, which is the case in generation, a great capacity for commercialization, generation management capacity, geographic location, the situation is different.
I don't see that we have great competitiveness, although we do look upon those situations. Perhaps, it will make sense.
Our last question, referring to TAG, from Carlos [indiscernible], an investor. Given the scenario of interest rates and exchange rates in Brazil and the term mentioned of 7 years, 4 of which have already gone by, is there any forecast of the company through ENGIE to renegotiate the debt, the debt [indiscernible] and the leveraging of the process?
It's a possibility that's simply being raised, the leveraging. It's always good to have a partner with the cost of capital. And of course, this capital would be used to pay out additional dividends for new investments. But there's no decision made regarding that so far. These are factors that we're assessing, of course, without having made a decision.
Thank you. With that, we would like to end the question-and-answer session. I return the floor to Eduardo Sattamini for the closing remarks.
Malta?
Well, thank you very much for your attendance once again. It's always very positive to have this interaction. I wish you all a very good Carnival, and we will be back in the next quarter.
That said, once again, many thanks for your attendance. We had a large number of participants and excellent quality of questions. And our message is that we continue to grow in any environment. We will deliver results. And stick with us, we're still going to make you very happy. And enjoy Carnival.
[Statements in English on this transcript were spoken by an interpreter present on the live call.]