Enel Americas SA
SGO:ENELAM
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Earnings Call Analysis
Q4-2023 Analysis
Enel Americas SA
The company witnessed a 31.5% year-over-year decline in EBITDA for Q4, primarily attributed to the non-consolidation of specific assets and a large one-off effect from the prior year. However, with adjustments and excluding these factors, the decrease is more modest at 10%. Overall, for the year, adjusted EBITDA saw an 8.6% increase, buoyed by improved performances in Brazil and the renewable sector. The Q4 net income surged by 38% over the same quarter the previous year, due to reduced negative impacts from an asset sale.
The company has successfully reduced its debt by 4.7% since December 2023, with a net debt to EBITDA ratio of 1.7x. This ratio does not account for certain pension funds but is expected to improve post-completion of pending transactions in Peru and payment of high-cost debt in Brazil.
Management anticipates a comfortable leverage position following the finalization of transactions in Peru and the repayment of Brazil's costly debt of approximately $1.3 billion. It's expected that 80% of the proceeds from asset sales will go towards debt management and potentially settling pension fund obligations in Sao Paulo. Afterward, the net debt to EBITDA ratio at Enel Americas might dip below 1x, indicating a robust balance sheet post these strategic moves.
The company's operational results have held steady, with nearly 100% of energy production contracted. However, there is acknowledgement of a natural decline towards the final years of the current plan. They have also maintained a conservative approach in leverage until all sales and proceeds from Peruvian assets are finalized. They continue to focus on improving service quality and customer satisfaction across their operating regions.
The current strategy includes the optimization and improvement of existing assets in Brazil. Despite regulatory uncertainties in distribution, they are not deviating from their course but will reassess towards the end of the year. Efforts to enhance operational efficacy and turnaround outcomes, especially in Sao Paulo, indicate a commitment to strengthening core business areas without immediate plans for asset divestiture.
The company is navigating regulatory developments related to concession renewal and is confident in the continuation of favorable conditions. They are closely monitoring legislative changes and how they may impact their operational strategy, particularly in Brazil and Argentina, with a cautious and adaptable approach.
Management concluded the call with satisfaction over their alignment with previous guidance and resilience in business operations. They reiterated their commitment to shareholders and promised availability for further detailing and discussions, highlighting a positive outlook for the upcoming year and beyond.
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Good day, ladies and gentlemen, and welcome to Enel America's Fourth Quarter 2023 Results Conference Call. My name is Gigi, and I'll be your operator for today. [Operator Instructions]
This presentation contains statements that could constitute forward-looking statements. These statements appear in a number of places in this presentation and include statements regarding the intent, belief or current expectations of Enel Americas and its management with respect to, among other things, Enel Americas business plans and Enel Americas cost reduction plans and trends affecting Enel Americas financial condition or results of operations, including market trends in the electricity sector in Chile or elsewhere, supervision and regulation of the electricity sector in Chile or elsewhere and the future effect of any changes in the laws and regulations applicable to Enel Americas or its subsidiaries.
Such forward-looking statements reflect only our current expectations, are not guarantees of future performance and involve risks and uncertainties. Actual results may differ materially from those in the forward-looking statements as a result of various factors. These factors include a decline in the equity capital markets, an increase in the market rates of interest in the United States or elsewhere, adverse decisions by government regulators in Chile or elsewhere and other factors described in Enel Americas integrated annual report.
Readers are cautioned not to place undue reliance on those forward-looking statements, which stay only as of their dates. Enel Americas undertakes no obligation to release publicly the result of any revisions to these forward-looking statements, except as required by law.
I would now like to turn the presentation over to Mr. Rafael de la Haza, Enel Americas' Head of Investor Relations. Please proceed.
Thank you, Gigi. Good morning, ladies and gentlemen, and welcome to our fourth quarter 2023 results presentation. I'm Rafael de la Haza, Investor Relations of Enel Americas. In the coming slides, our CEO, Mr. Aurelio Bustilho, will be presenting the main figures of the period.
Let me remind you that this presentation will follow the slides that have been already uploaded on the company's website. [Operator Instructions]
Now let me hand over the call to Aurelio who will start by outlining the main highlights of the period in Slide #3.
Thank you, Rafael. Excluding the forecast of up to 2023, we have continued with our renewable generation trends execution, adding 600 megawatts of new capacity, [ fertilizing ] 1.8 gigawatts during the year. With this, our matrix is now around 90% renewable in line with our energy transition goals.
Adjusted EBITDA in 2023 increased by 9% compared to last year. These considered simultaneous perimeters, meaning that we are including results from Peru in both periods and excluding for 2022 for Taesa Goias, CIEN, Costanera and Dock Sud as we do not consolidate those companies anymore.
We are also excluding FX effects, which had a negative impact of $108 million this year. and also are excluding one-off effect resisted last year in Argentina coming from the agreement between Edesur and CAMMESA in connection with past debt. This improvement is mainly explained by better results in this tradition business in Brazil and renewable fees.
Group net income reached $0.9 billion in 2022 -- 2023, an important improvement compared to the negative results that we had in 2022. Since result is probably in line with the guidance that we gave in our strategic plan presentation.
Regarding our corporate simplification process. Recently, the antitrust entity in Peru in the company gets its approval to the sale process of Enel distribution in Peru. With this, we continue moving ahead on the disposal plan as has announced.
In the coming slide, let me show you a summary of our main indicators in an monogenous view, this means excluding both periods sold assets, totaled Enel Goiás Costanera and Docksud and including Peruvian assets, which, as you know, are in sale process, but still part of our operational perimeter.
In Generation business, we significantly increased our installed capacity and net production, thanks to the deployment of new renewable power plants, in line with our decarbonization strategy. In Grids business, we increased our customer base and energy sold while Smart meters grew more than 2x, reflecting the importance of electrification and digitalization of our company.
Our financial indicators showed a very positive performance, improving EBITDA and net income with our net debt-to-EBITDA ratio slightly increasing compared to last year. All this reflects that we are performing a solid manner and our main indicators are improving across our businesses.
Let's now analyze our operational highlights on Slide 5. In Generation business, during this year, we have added close to 1.8 gigawatts of new renewable capacity. Considering the sale of Costanera and Docksud Thermo Cartagena, we reached 14.6 gigawatts of installed capacity from which 90% is renewable. Net production in the fourth quarter reached 11.3 terawatt hour, a decrease of 12% compared to the same period of last year.
Explained by the deconsolidation of Costanera and Dock Sud -- sorry, with Costanera -- deconsilidation of Costanera and Dock Sud. Isolating this effect, production would have increased by 4%, explained by higher generation in Brazil.
From our total production, this quarter, 88% is emission free. A significant growth compared to 74% of the same period last year. Energy sales decreased by 12% during this quarter, reaching 18.4 terawatt hour, mainly due to a change in the perimeter. Isolating this effect, sales would have decreased by 3%, mainly explained by lower sales in Brazil.
On Slide 6, we will focus on our development of renewable capacity. During [ Q3 ] 2023, we added 1.8 gigawatts of new renewable capacity, 897 megawatts in Brazil, 507 megawatts in Colombia, 300 megawatts in Peru and 47 megawatts in Panama, with an investment of $1.3 billion.
We are currently worked on additional 0.8 gigawatts of capacity under construction located in Brazil and Colombia. 0.2 gigawatts are wind projects and 0.6 gigawatts of solar projects. Also this new capacity will begin operations during 2024, and only 20 megawatts will enter into 2025.
Regarding our pipeline, we are considering 48 gigawatts of new capacity, total pipeline. From this amount, 20 gigawatts are in early stage and 26 gigawatts are in mature stage. In addition to these, we have around 1 gigawatts of battery energy storage. And we are also considering 0.8 gigawatts of projects under construction already mentioned.
Let's continue with Grids operational highlights on next slide. Electricity distributed reached 39.2 terawatt hour in the fourth quarter, which represents an increase of 6% compared to the same period last year.
In homogeneous perimeter explained by higher sales in Brazil, Colombia and Peru. Regarding number of performance, we had an increase of around 460,000 in the next -- in the last 12 months, which gave 3.8 million customers.
Smart meters increased around 2.4x, reaching 709,000 in this period, mainly due to the deployment in Sao Paulo. Our net RAB has increased by 14% in the last 12 months, reflecting the significant investment that we have done in our grids. The rates on net RAB per customer also reflects an important growth of 12%.
In terms of quality indicators, we can see a worsening in Argentina explained by the extreme high temperatures that we saw during the summer in 2023. In Colombia, the regulated changes the criteria used should calculate the indicators, which implied an increase both in SAIDI and SAIFI. In Colombia, [indiscernible] established regulatory targets, established targets and managed to exceed from 21% in SAIDI, 4% in SAIFI 2023.
Regarding Brazil, despite the difficult climate defense that we have in Sao Paulo and Rio during the fourth quarter, SAIDI remained flat while SAIFI [indiscernible]. Finally, in Peru, as we have seen in previous quarter of this year, we also had worse numbers due to a change in the calculation criteria compared to last year.
In terms of energy losses, it's improved in Argentina and Brazil, remained flat in Colombia and increased in Peru. Let's analyze our investments of the period in the coming slides. During the fourth quarter of this year, our CapEx decreased by 45% compared to the same period of last year. reached $772 million.
Isolated the impact of changes in perimeter due to the disposals in Fortaleza, Enel Goias, Costanera and Docksud would CapEx would have decreased by 39%, mainly as a consequence of lower investments in generation business in Colombia and Peru. On the total amount, 65% was invested in Brazil and 22% in Colombia. While in terms of business, 52% (sic) 53% defaulted to renewables and 41% to Grids. Gross CapEx reached $409 million, and was mainly devoted to renewables with 85%.
Considering the accumulated period, CapEx in 2023 reached $2,963 million, and 17% lower than 2022. Excluding the perimeter effect, CapEx would have decreased by 5%, also explained by lower investments in generation business in Colombia and Peru.
Now I will comment on the financial results of the period in the next slide. EBITDA in the fourth quarter reached $849 million, 31.5% lower than the same period of last year, mainly explained by the fact that we did not consolidate Enel Fortaleza and Goias, CIEN, Costanera and Docksud to this period and to a significant one-off effect registered last year in Argentina in connection with the agreement between Edesur and Argentina authorities regarding debts with CAMMESA, which implied a positive impact of $220 million. We exclude this effect and also include the results in Peru as related to FX effect we get to an adjusted EBITDA of $992 million, a decrease of 10% and 0.1% compared to the same period of last year.
On a cumulative basis, adjusted EBITDA in 2023 increased by 8.6%, mainly due to better results in Grids business in Brazil due to higher tariffs and higher results in renewable business.
Net financial results was a net expense of $233 million, which is a higher expense of 37.7% compared to fourth quarter of last year. On a cumulative basis, net financial results was a net expense of $742 million, mainly due to higher interest rates in Brazil and Colombia coupled with an increase in gross debt in Colombia.
Group net income in the fourth quarter reached $82 million, which represents an increase of 38% compared to the same period of 2022. This is mainly explained by a negative impact reduced last year coming from the sale of Enel Goias.
On a cumulative basis, Group net income was $864 million, which compares positively to last year's results, which was affected by the assets sold in Brazil. Finally, in terms of debt, we see a reduction of 4.7% compared to December 2023. We will analyze in detail our debt later on.
On Slide 11, will see an EBITDA evolution and breakdown. Starting from $1,239 million of EBITDA of the fourth quarter of it we have to exclude $220 million coming from the one-off registered in Edesur connection with CAMMESA debt agreement, and also $77 million coming from Enel Fortaleza Enel Goias, CIEN, Costanera and Docksud in our order made it comparable with the fourth quarter of 2023.
Then we see a generation grid and customer businesses had lower results compared to last year mainly as a consequence of higher energy purchase costs. With this, we get to an EBITDA of $881 million for fourth quarter of 2022, which is 15% lower than last year considering the favoring effect had a positive impact of $28 million, resulting in a reported EBITDA for this quarter of $849 million.
As already mentioned, Peruvian assets are considered discontinued operations, meaning that its result is considered below EBITDA level. If we consider coming EBITDA coming from Peru, we get to an EBITDA of $1,024 million.
From a reported -- from our reported EBITDA, 64% came from Brazil, 33% from Colombia and 4% (sic) 3% from Central America. In terms of business line, which represents 59% of our EBITDA. In the generation -- in generation, 21%, customers contributed with 11%.
Let's see EBITDA breakdown on a cumulative basis in the coming slides. Starting from $4.2 billion of EBITDA in [ Q2 ] we have to exclude $638 million coming from asset disposal and one-off in Edesur. Then we see that we have positive operational results generation and Grid business while customers decreased.
With this, we get to an EBITDA of $3.9 billion for this year, which is 10% higher than last year, considering the same perimeter. FX had a negative impact of $144 million, resulting in a reported EBITDA for this year of $3.75 billion, in line with the guidance given a few months ago in our strategic plan. EBITDA from Peruvian operations was $691 million, reaching with this -- an EBITDA of $4.4 billion.
From our reported EBITDA, 60% came from Brazil, 37% from Colombia and 3% from Central America. In terms of business line, Grids represent 53% of our EBITDA and generation 39% with Customers contributing the remaining 9%.
On Slide 13, we will have a focus on the cash flow of our company. Starting from an EBITDA of $3,749 million, net working capital amounted to minus $615 million, mainly explained by the debt and pension provisions in Brazil.
Tax paid during the period amounted to $643 million, while net financial expenses amounted to $869 million. We paid FFO funds from operations, about $1,622 million, a decrease of $1,052 million compared to the same period of last year. After investments of -- for $2,728 million, included the $1,508 million of growth CapEx, we get to a free flow of minus $1,107 million for the period.
Let me now analyze the debt of our company in the following slides. Gross debt amounted to $8.1 billion, an increase of 1% compared to December 2022, mainly explained by higher debt in Colombia and Americas holdings, partially offset by the deconsolidation of assets available for sale in 2023 and lower debt in Enel Rio and in Enel Brazil.
Net debt reached $6.5 billion, a reduction of 5% compared to the end of 2022. This includes free cash flow for minus $1.1 billion, net dividends paid for minus $345 million extraordinary operations for $1.6 billion related to the sale of Goias, Costanera and Docksud. Net debt consolidation for $866 million and FX effect for minus $726 million.
In terms of currency in the country, we see that Brazil remains as the largest contributor while the net -- while the debt at holding level represents 50% of the total.
Finally, regarding the cost of debt, we can see an increase for this period going from 10.5% to 12.2%, mainly explained despite higher interest rates in Brazil and Colombia.
On the next slide, I will conclude this presentation with some closing remarks. During 2023, we completed several renewable projects moving ahead on our decarbonization strategy. At the same time, we have devoted an important amount of CapEx in Grids businesses, boosting quality of supply, digitalization, electrification. We are really focusing aiming to improve quality indicators, quality taxation for our customers in our perimeter. We have solid operational results and maintain a sound financial position. which allows us to execute our CapEx spend.
Regarding our corporate simplification process, our asset disposals plan is well on track and then trust entity in Peru has approved the sale of distribution assets. We expect to have all the operations concluded in the coming months.
Finally, let me remind you that the end of April, we do our -- we'll have our shareholders' meeting, and we deliver more information about it in the coming weeks. Rafael?
Thank you, Aurelio. Very clear. Operator, please go ahead for the Q&A session.
[Operator Instructions] Our first question comes from the line of Javier Suarez from Mediobanca.
Two or three questions from my side. The first one is on the on the level of debt and the net debt to EBITDA, and that is comparing your numbers with the target that you presented by the by the end of November. So I remind that at that time, the -- I think that the company was indicating a net debt to EBITDA at 1.4x. And the final number has been a little bit higher. I see -- I have seen that there has been probably more net working capital absorption than initially expected. So the question is can you elaborate for the reasons why the debt seems a bit higher than what was indicated at the latest business plan update.
Then the second question is on the operational -- on the operational side. On the Slide #5, you are showing the data. And during the presentation, you made a reference to the adjusted numbers. So I noticed that there is a decrease in the energy sales also on the adjusted numbers. So if you can elaborate on the reason why the anticipate on any details through the year.
And the third question is if you can update us on the dividend policy of the company. And if you can update us on the level of comfort that you have versus the target that you presented in the business plan for 2024.
Thank you, Javier. Maybe [indiscernible] could explain a little bit about the level of earned EBITDA.
Thank you, Javier Pal, for your questions. Regarding the first question, as you know, is you are right. We have a level of 1.7x net debt to EBITDA. This is a level of EBITDA which abrasion, which we are comfortable. As you know, the commitment when we say that we have with the rating agencies to keep the company below 2x net to EBITDA.
So we are in the right position.But let me remind you that this 1.7x is not considering the pension funds, the past before the pension fund that we still have in Enel Sao Paulo. So we are comfortable with this level of net debt to EBITDA.
Of course, this will be different. We will receive the caps on the proceeds when the sales of [indiscernible] Peru and [indiscernible] will be completed. But as you probably know, as we commented during the presentation of the strategic plan of the company in November of last year, we have substantially identified the 80% of the use of proceeds coming from the sales substantially liability management in Brazil and potential, let me say, payment of the pension fund or the traffic for the pension fund that we have been in Sao Paulo.
So this is the situation. I believe we are comfortable with the current situation and with the current ratio. And maybe Q1 '24 is going to be a little bit different because of this particular situation of the completion of the processes in Peru. But that's it. I repeat that substantially, 80% of the total proceeds coming from those sales are already identified.
Yes. Regarding the level of PPAs and the level of operation. Of course, here, we are not -- we are still considering here the numbers from Peru. I mean we only remove the asset that we do not operate. So this is considerative of course, if you look forward, we will not see the generation in Peru.
Regarding the level of PPAs, it doesn't affect what we showed before because we will move when, we will move there, we will move the contracts that's related to -- that are related to the assets in this case. But let me tell you that we are perfectly in line what -- from what we mentioned in our strategic plan. We have almost 100% contracted, and that's it-- that has about -- of course, it's normal it's more decreasing in the last year of the brand, I mean 2026. but for here, we are reflecting what we told in the plan.
And especially in line with [indiscernible] told you regarding the level of leverage. We are very conservative in order to wait for the conclusion and the cashing of the operation, selling assets in Peru. And in line with this, we maintained the decision of last year to maintain the payout to 30% of the company.
Of course, after the competition and after the efficiency plan and also the efficiency that we are presenting in terms of financial costs we can readdress the situation for the next year.
It's important to mention that this operation in Peru will impact very positively in the dividend from Q4 2025 to be -- sorry, result in to phase in 2025. So this is an interesting dividend regardless, we're having a minimum payout ratio allowed in Chile.
So thank you -- thank you very much, Javier. But later, I don't know if we have more questions from live phone or we move to the ones that we have received in the past.
Our next question comes from the line of Jordan Lozano from Celpa Securities SAB.
I have one question. Regarding the sale of [indiscernible] in Peru and the approval of the Peruvian antitrust regulator and how much do you expect the yield to be closed? Is there another approval or process that you need to complete before closing the deal?
You asked if our expectation in terms of cashing or closing the deal -- I mean, closing the deal with the cash in, right? So your question is related to when we expected it exactly, right? If I didn't -- sorry to confirm.
So when you -- do you expect to be closed -- the deal to be closed? When do you expect to exit the country?
Okay. Okay. Remember that we have -- Yes, please go ahead. Now we are performing two sales, the distribution assets and generation assets. Distribution assets, we expect that we have the authorization from the Peruvian authorities is now the buyer is waiting for. I mean, the process and so on. We expect it by the end of March, before if in the, let's say, it is maybe 2 weeks more or in the middle of April.
I mean, it's not so far from here. For the generation assets, we expect by the second quarter of this year. So total by the end of -- by the first semester, we'll have these operations, the deals closed with the cash in with the company.
Now let's move to the questions that we have received in the chat, starting with Banco Santander, Francisco pad, two questions. The first question is about the situation that we see or the noise around the [ discon ] segment in Brazil. And the question is the following. What do you see as the main risk for the company? How are the concession of these cash loans advancing? This is the first question from Banco Santander.
And the second question is about in Colombia, in Rio phenomenon. And the question is the following one. Last quarter, you said the reservation [indiscernible] haven't been impacted with these lower range. Has that changed, what do you expect for the next quarters in Colombia? Those are the following -- the two questions from Santander.
Well, regarding the concession or we're going to do the process is moving forward. Everybody knows very -- it's very clear [indiscernible] We have this -- all the technical discussion regarding the renewable -- the renewal of concession is it's been very technically addressed and also all the analysis done by the government and the company is moving in the right direction.
Of course, we saw some movement during this week regarding the law project, a law project with a radical change that, frankly speaking its -- the measure is not technical. They are moving from technical to political side. It is not good, but our experience in Brazil is that in the chain balances and the proper address in technical issues prepay.
So we are very confident that these minor things will not -- will lose fourth. Of course, we need to follow as companies, associations, society, communities and also policy maker we need to follow up this process and not allow insanity that would kill everything that we -- during all the deals in Brazil, all the improvements.
And also what we need right now is measures to improve the quality, to improve the cost of our regulation or refracture. And this kind of proposal is frankly is it's not moving to this way. Moving to create a crazy way. So we need to correct this, very -- in a very strong way and of course, Republican way. So that's our vision here. I am confident that the technical aspect of renewable will be respected.
Regarding Edesur, Well, we had -- we announced the selling [indiscernible] in Argentina. We had -- we opened a process to sell these assets in the second semester or second semester of last year. In the middle of an election that we did not, of course, they have the results.
But at the end, we saw that probably considering the process and considering the new government announcement and so on and first measures in order to a more market orientation, more, I mean, responsibility in terms of the whole of private companies in the support the sustainable growth of the country.
We decided to put on hold in this process until we see the new measures and the new regulatory measure that the first measure is in -- I mean, the fact of science is being good sign. And we do not lose anything we can see what will happen in terms of these measures -- regulatory measures that the new government is applying in order to decide and to readdress this process again.
But for now, we put on hold waiting, it's a fair certification. We are waiting for better conditions to add value to our assets.
kay. and really about the linear turnover in Colombia that was the second question for [indiscernible].
Yes. we said phenomenon affected us and affected every company that was exposed to this effect. But in our case, affected less than could be affected in terms of margins, considering the position of our plans, our portfolio generation, which proves that we are in -- we have a very sound platform of generation in the country.
We expect that this -- I mean this is a stationary situation, we expect that this will be disclosed by the end of our summer, let's say, and -- but I mean we are ready to capture better conditions in terms of [indiscernible] and also to have good signs of pricing for new properties for new projects. but we expect there is a projection that will end and then will come La Nina.
I mean this is -- this is -- the importance of this is to have productivity to have a very good pipeline of projects, portfolio of projects. And also in contact and very good workforce in contact with the clients in order to close good PPAs in order to adjust and being very proactive.
We showed during the long run during all these years in Colombia that we've been doing a very good work in terms of contracting in terms of hedging position. But last but not least, the way that we built this portfolio of generation in the country, which gives us this strong position in terms of trade of energy management in share.
So I think that the best way to deal with this is to strategic trend your capacity and to retain our capacity we need to have a very good pipeline. We inaugurate a few weeks ago, a solar project in Cologne, for example.
And at one point of attention here is permitting. Permitting is something that, of course, we need the generation, and we have everything. We have to pay, we have PPA but we do not have a permitting and it delays the interest in the project.
It is something that the country, not only on the country, also the society should be concerned and should improve the conditions to be , it is something that we as an operator part of the Colombian plan to expansion its capacity we should be prepared with. And this is the best way to deal with [indiscernible] and so on.
So we do not see any extraordinary situation considering the current season in Colombia and as released before for the first quarter probably will be neutral in terms of impact. So no particular variations of changes.
Just to add a point that we answered about Colombia. Of course, it's affected also our operation in Panama, for example, right? We had a hydro plant in Panama. So if you don't like Panama, out of this Colombian perimeter, of course, you see in 2023, a negative impact of $600 million or something like this, 60 -- sorry, $60 million.
But this is -- of course, we are reviewing our position or that you compensate the effect and not to be so exposed there. But the whole system, the whole Colombia, Polos Panama, we are at a pace, will compensate this effect and do not have any major issues.
Now let's move to Moneda, [indiscernible] which is from Bolivar. And the question is about the fines that we saw in Enel Sao Paulo due to the recent blackouts, most of November. Regarding some feedback about this and the potential actions of the company.
Yes. Well, first of all, we see that these extremely things, there are more and more their reality, affecting cities affecting the country side of countries, not only Brazil, all the regions, and this is a reality.
So in a broader vision here, companies, society, communities, policymakers also with the support of Academy, we should analyze the situation and improve measures in terms of responsibility in transactions, it's important to have very clear who does what -- not only for the -- in the extreme event before, in a daily basis in order to have very clear because this is what we have good safety.
We saw this in the south of Brazil. We saw this is in Argentina. We explained the harvest weather in Argentina. Here in [indiscernible] in Chile, the hot weather and the burning events here. And Sao Paulo -- yes, at Sao Paulo. Of course, Sao Paulo is a huge city with baronetrated customers.
We have -- let me tell you that we have a regulation that does what reflects this reality. -- we should work together with the regulator with the policy maker in order to adjust this. I mean, equipment remunerated the assets that's not needed to -- it's a little bit for recognition in terms of remuneration, but it's pretty much lower than the level that we received from the extreme weather, we should adjust this, first of all, sometimes we analyze a lot of average indicators.
But at the end of the day, we need to really perform the customer centricity approach. So we need to think and analyze it is this average of traders and so on, we shouldn't. We are not addressing the real question, the real issue that affect the customers at the end of the day. And they are the most important, I mean, agent in this equation.
From our side, we are as we discussed, we invested the level of investment of our company is high standard, high level because we need to invest on this. We will keep on in as you saw our investment plan that we announced last year. So this is very important.
This event should be a certain focus in quality, need to be investments to -- that improves the perception and the quality of the clients of our clients. That's what we are performing. We are improving our -- also our communication strategy, explaining very well what is happening, what is going on in our region, in our cities. That is affecting IBP, not only us affected every company. And not only the electric sector, other companies, other infrastructure companies, industries, they are being affected, too.
So we need to present and to show very well and to act for and to be part of the solution implementing action plan and so on. We are reinforcing also our management in the country -- in the countries in Brazil. So we are reinforcing our side.
Things like -- I mean, to set the run and supporting submerged [indiscernible] in order to improve the situation. Yes, this is part of the solution, but basically to represent a higher cost for the customer, we need to have to be prudent on this. this could be a solution.
But it also -- it can be a solution. But it takes time, it takes cost and what we do right now. I think one important thing that we have with this kind of operations with the Atlantic forest is to do [indiscernible] training, we can do in a very imperative,, in a smart way. There are analytics for this, but the bureaucracy that should allow us to in the municipality. We need to work together in order to take advantage of this, especially during the period because now we will enter in the -- let's say, in the beginning of the winter of, or in the autumn. So this is the best time to do the correct repayment and also provide with this push for the visitation.
I mean I just mentioned this because probably, we are not addressing -- it's not depend on us, and it depends on the municipality. If we do not have an approval on time in terms of dealing with digitalization. It will be problematic because as I told it's extremely bad.
They are it's not a special situation that we had during a period. It will be being more and more. So these climate issues we only discussed the renew of the [indiscernible], which is correct, and I think we should put the effort on this in generation and quotation that, that's right, correct and so on.
So that is a thing that we are feeling on a daily basis more frequently that, in my opinion, we should address and act together to solve and to minimize this impact in the same time, we addressed the origin issues of climate change.
Thank you, Aurelio. Now let's move to Scotia Bank for Margo [indiscernible], but some of the brands some of them have been already aggressive so less concentrated in the new ones.
The first one is about the level of leverage at the Americas consolidated level. after the payment of the expensive Brazilian debt that we are considering from 2024 and after receiving the proceeds from the sale of the Peruvian assets.
The second question is about Edesur, if we are going to consider it to remain in the country in the distribution business. if there is a change in terms of our strategy.
And the third one is about [indiscernible], the situation in [indiscernible]. So then we can upgrade the first one, how we will follow the level of fines in terms of target?
So and the last is a very round every hole around. So I think [indiscernible] and sorry anticipate report to avert maybe around the level of net debt to EBITDA at the Enel Americas level after the payment of the most expensive Brazilian debt, and after receiving the proceeds from the sale of the Peruvian assets will be below 1x.
So we will be in a very comfortable situation once this transaction in Peru, those transactions in Peru will be completed. And after the payment of the most expensive debt in Brazil that will be close to $l.3 billion approximately.
So we will be the picture in terms of leverage, in terms of debt over to EBITDA in Enel Americas to repeat after receiving the proceeds on the sales in Peru. And after the payment of the most expensive debt in Brazil that will be around $1.3 billion loss.
Yes. Regarding the concession renewal. I answer if it gives me the opportunity to give you more color. The process -- the technical process, the technical responsible for this is the Minister of Energy, right? This is the concession, the power to give discussion.
All this technical discussion is moving in the right way that we are seeing. There is no -- it would be renewed. -- the concession for the years were not removing the fiscal benefits and so on, expecting the contracts and requiring some social investment in both on social investment that we need to do.
So it's perfectly in line. We advanced a lot since the first proposal. So we are confident that this will prevail. What we had this week was in the lower house, we have an approval of urgency of low projects, a project delay that changes. A lot of change completely this direction, reducing the time for 15 years, analyzing the situation of each distribution obligations to strand the grids, consideration about distributed generation without clarifications.
I mean, this is something that we believe that will not prevail. And in Brazil, it's very -- we are very comfortable that the check to balances, the seasonality, the respect with contracts will prevail, and it's been like this for all this year this year. So it will not be different this way, right?
Thank you for we have to be from [indiscernible]. The first one is around [indiscernible] considering the new regulatory changes that we expect there is a variation in the strategy of creating Argentina substantially. And the final one is about the strategy to sell quality in the [indiscernible] if it is confirmed or not?
Well, Argentina, as I told you, we will wait and see, right? We are in, we allow the market, I think we have good expectation of the improvements in general to the back improvements -- and for now, it's on hold. This process is on hold.
Let's see how it moves. And not only what is announced, what is being presented, No, this is very [indiscernible]. In terms of core assets, yes, it's also holding, waiting for this discussion and this alignment in terms of concessions.
It's very difficult in the short term to put, let's say, this process as a priority right now with all these discussions of concession renewals because it's touching the heart of the company. So we need to wait the conclusion of this.
Having said this, our estimation is probably by the end of this year, we'll reanalyze the situation and see what actions will do. We are not in a hurry. I mean, we're are not in a -- we want to analyze the correct time to have this decision considering that lots of important things, part of regulatory issues are moving forward to determine the correct value for those assets. And again, analyze it makes sense or not.
Thank you, Haroon. Thank you, all. Let me move to Gustavo Faria. We remain in Brazil and he asked us about our strategy in the future the assets in Sao Paulo and in Rio.
Thank you, Gustavo. For now, the strategy is to maintain the assets to improve the quality of those assets. improve the quality and improve the quality of the clients, the quality of supply. In fact, in the Grid. In case of Rio, we are focusing on special issue related to losses that we've been discussing with the regulators. I think nothing different. Sao Paulo, we are confident that we are in that number. And so now showing that we are -- we've been doing a very good turnaround of -- with operations. I mean there's no that no expectation to change to change anything.
The question is about the Brazilian relation business, and the rest is the following: led distribution any sales in Brazil increased over the quarter over the quarter and why this average selling price decrease. Do you expect this trend to continue?
And then if I understood correctly depiction and it's about -- the second one is around the pricing or the price dynamics for the future [indiscernible]. And the first one is about the energy sales that have increased quarter-over-quarter.
Yes. Well, Brazil depends a lot in the -- when you compare Brazil, I mean, if you see Sao Paulo and Rio, it depends a lot on temperature, right?
If we have a hot weather, we'll have higher consumption. The parity is the rest set. There's no difference on tax because if I consider the because it's compared to the last quarter of 2023, last quarter of 2022, right? So -- sorry, the debt changes because we perform and that is reset in July in case of Sao Paulo. And in March in terms of Rio, right?
So the part of the quarter, you see that is a change in the [indiscernible]. And it's a normal change related to the asset base that was revised. The test increased a little bit. I mean, around 5% in one company around 4% of the company, it's pretty normal increase.
In terms of quantity, for Sao Paulo, it's a variation or an impact of December. I mean it's hardest in the mid-summer compared to the other will be higher the consumption, right? And this happened in during 2023. But it's a normal issue. It's more related to our activity and operations, right?
Yes, it's a little bit different depends on hydrology. If it doesn't range the industry, the consumption of water, they need to use more energy in order to have water during this dry period. It's exactly what we saw in the fourth quarter of 23%. Despite it is not exactly the most that required more -- I mean, more activity in case of water, water lease for the water [indiscernible].
So it is difficult to analyze [indiscernible] as complete as a whole company. We are totally available if you want, with our Investor Relations [indiscernible] analyze these movements company by example, stay like I take it please because when we analyze the country, we are mixing lots of situation. Last but not least, remember that 2023, right? We had that we have that is reset with our companies in Brazil, right?
So this is a very important -- the main, it's a reset. So if we start with a new level of tax due to pricing deflation, but mostly due to assets remunerator as the base adjustment. So we need to analyze it by our company by company.
Okay. Thank you Aurelio. We Don't see more questions on the screen. So let's conclude this conference call. We are very satisfied with the results in Enel America, in line with guidance, announced 1.5 years ago. perfectly in line going up when we say with our business as usual.
So we conclude the conference call, as I said. But let me remind you before finalizing that the Investor Relations team, as usual, is available for any further detail or any further doubts you may have in the next coming days.
I wish you -- we wish you all a very nice weekend. So thank you. And see you next time.
This concludes today's conference call. Thank you for participating. You may now disconnect.