Good afternoon, ladies and gentlemen, and thank you for waiting. Welcome to the Eletrobras Conference Call for the Earnings of the Second Quarter of 2020. [Operator Instructions] I’d like to remind you that this presentation is available as a PowerPoint presentation on the Investor Relations website of Eletrobras. [Operator Instructions] I’d like to inform you that any – before we proceed, I’d like to clarify that any statements made during this call regarding the company’s business prospects as well projections, operational and financial goals concerning its potential for growth are forecasts based on the expectations of the management for the future of Eletrobras. These expectations are highly dependent on domestic market conditions and depend on circumstances that may or may not occur. So general market conditions and other operating factors may affect the results expressed in such future comments. Now I’d like to hand over to the CEO, Mr. Wilson Ferreira Junior; Ms. Elvira Presta, Chief Financial and IR Officer; and Mr. Pedro Jatoba, the Chief Generation Officer. Starting off with the CEO, Mr. Wilson Ferreira, the floor is yours.

Thank you, Marcelo. Good afternoon to all the investors and analysts that are following us during this conference and sharing the results for the second quarter. I’d like to apologize as we had a number of events in this quarter, therefore, our presentation is very long. And I’d like to apologize that I’ll try to run a bit faster through it so that we can take the questions at the end of the presentation. So now I’d like to move on to Page 4, where we have our report talking about the fact that we’re facing the coronavirus, starting off on the first page. And I’d like to say that we’re in the process of resuming work at the company. And as you can see on this table, we were careful to work through waves. And we see waves as periods where we come back to work, where on one side, we consider the necessary social distancing; and on the other side, the – we consider the risk groups. So we’ve divided our people into three groups at Eletrobras. So we have non-risk, people under 50 years of age with no comorbidities; groups from 50 or over 50 with comorbidities; and groups over 60 years of age regardless of having a comorbidity or not. These are the groups that are considered. So the first ones are the people under 50, no comorbidities, respecting the social distancing, as I mentioned. We’ll see more or less waves according to respect of social distancing and also the issues relating to schools reopening or not, as we have employees that are parents of children under 12, or as they also coexist with people that are part of the risk groups. So we’ve achieved 72% of our employees in telework. And now we have 58%…

[Operator Instructions] Our first question is from Carolina Carneiro from Credit Suisse.

Good afternoon, everyone. Thank you for the conference call. I have two questions. Starting off with the strategic plan and what you’ve just mentioned. You gave us two scenarios of company investment, with one without capitalization and the other with. So I’d like to hear some comments. How did you handle that scenario in terms of size of the bonus grants? Did you go into that kind of detail? And the company’s financial capacity, when it would increase in a way that you would elevate investments to the – to what you mentioned? And the second question is about the capitalization process. We see that former secretary this year of the government for the privatization is leaving the government, so that means that it’s probably not moving as fast as it should. So we know that the Eletrobras process is already ongoing. The bill was already – bill of law was already proposed. So I’d like to hear your vision about this secretary leaving the government. Would that impact the bill that’s already ongoing or not, bill of law ? And also your opinion about the company expectations concerning the bill of law, recently, we saw many newspapers saying that there could be some changes to the bill, considering the initial conditions. So could you comment on that? So what do you think – what could actually change in that bill? And how that could impact the company? How could that?

Thank you for your question. Let’s start off with the first one. That’s the $1 million question, and we can’t really answer that without having interaction with the CNPE members. But as a basis for that, this is what we consider for that grant. I’m not going to talk about the figures, but instead about the elements that determined our evaluation, because these numbers, the figures could be different based on some of the themes that I’ll mention. Some of the main are physical, collateral. What we considered are the Eletrobras assets, exclusively reduced by the impacts of the collaterals that are not in the 2017 review. So something about 8,700 megawatts. That’s our evaluation. For the government, I think it was lower, but we consider all the actual physical collateral for Eletrobras and the assets that will be object of that review for the collateral for that. And the second topic, then we went to market, and we have a price view that I will not share. But it’s different that you – what I mean, I mean future price is lower than the one that was used by the government, R$960. Our number is lower, approximately R$150. That’s the vision of the future price of energy. And then we have some elements that will be object of these considerations. The first one is, what is the hydrological head that would have to be used? So that figure changes because there’s two effects there. The first one is that the drop in energy volume already improves the GSS condition and more generation for Eletrobras that was more generated than the previous period. So there’s that effect. There’s also the effect that’s indirect and has to be assessed by the CNPE and the ERP will be part of that, is that when you review the physical collateral, you decrease, meaning you’re decreasing that, the GSF will clearly be lower. So we also had an evaluation based on that. And looking at past figures isn’t the best view? Because you especially have a physical guarantee that’s not real for the market. And it has to be removed for the entire LME.

And the two last, one of them is highly related to you. So what’s the discount rate of that flow in the next 30 years?

So the work that we did, we used a consulting company, BCG, and we have a vision of a discount rate, and you have others, but a market rate was used considering a 30-year period. And the fifth one, that depends what I’m going to answer. And the second question, which is the potential impact of a potential price increase, so a way to decrease or mitigate. So – and that would be reducing prices, and if you consider longer term. And that may be an important solution given the market perspective – future market perspective. We consider the average amount, it could be up to 10 years. It could be a bit beyond five that we used for our vision. And then, Carolina, those are the parameters that each one of you can do the math and reach a grant amount that should be higher than R$10 billion discounting the unweightable variable. You know that the grant that there’s the perspective of resources. And just to round that up, the previous one talked about R$30 billion. And discounted R$3.5 billion, which is the recognition of the treasury in favor of Eletrobras that hasn’t been paid is R$3.5 billion in favor of the program to revitalize the San Francisco River. So then one third for CD and the other, which is R$15 billion that was budgeted in the past. So the 35 have to be considered with the parameters where you use amount for future value, and the excess MRE at Eletrobras. And obviously, in a more structured process, you would not do. And then now I’m going to answer your second question about the impacts and Salim Mattar. Obviously, if you lose a person with a dynamic and the willpower as Salim Mattar had isn’t good. But it’s not…

Thank you. That was perfect. Very clear.

Our next question is from Matheus from Navi Capital.

Good afternoon. Thank you for taking my questions. I have two. The first one in my questions, I’d like to understand on the cost side for this quarter. Your cost performance was very good, and you well explained it in the attendances. So that was a differential compared to the other quarters, it was well explained. So I’d like to congratulate you on that. But on the side of cost this quarter, PMSO went to very low levels when you analyze that. And you even mentioned that there’s even more cost to come. So we have annualized that R$6.5 billion, R$7 billion of PMSO. Do you have any figures about how much that would be next year? And my other question is in this first half, we had a compulsory loan paid off a bit over R$1 billion. Would you review that upwards? It seems that it’s being paid. So how is that being handled? There’s the compulsory loan, the risk effect, and there was a high payment, but nothing above book value. So I’d like to know how that’s being handled by the company.

Thank you, Matheus, I’ll give you a brief explanation. And then, Elvira can add, if she wishes. About costs. I have to be very transparent with you here. In this quarter, we were benefited by, first, people leaving the company. The main driver in cost was personnel, approximately 1,000 less a little bit over a 1,000 less last year. And we still have some people that will leave, about 450. That’s about R$250 million. That’s the good thing that you can forecast. But what disturbed us this quarter, basically one thing: We – since we had a lower – lowered investment levels than we wished, we were somehow jeopardized in the sense of capitalizing labor and investment. So in the Chesf specific example, I’m mentioning that because I had a meeting yesterday, over R$30 million that’s accounted for here as labor costs, labor expenses, are actually allocated in investments. But since it wasn’t realized for the reasons that I mentioned, we were unable to do that. So what we had to offer is for the effects of cost reduction and labor, it should be operating at R$18 million, R$19 million per quarter relating to the terminations last year. And then when we have this last group that would leave in the next quarters, we’ll have more. So it will be another R$150 million less compared to previous quarters for – in first half of 2019, and as well as the reduction in PMSO of OBZ, so we have the figures that was captured here in third-parties at Furnas, which was some contracts. So not all of them were leaving, but it’s about R$50 million, R$60 million a year. So there’s a positive effect. And if we go back to investing in the amount today, and with Angra starting up again and all the works that will start-up again, Chesf is a great investor in that area that’s a bit late, 17% of the Chesf program. So – but we had locked down in the city of – in the city of Recife. We had a lockdown in Fortaleza, in the state of – so it was very difficult. Would you like to add?

Well, let me talk about the compulsory one.

Can you hear me? Would you like to finish, and then I’ll add?

About cost. What I’d like to add in addition to what you already mentioned, it’s about the work that we’ve been doing in OBZ, of the R$280 million that you mentioned, that’s the target for this year and R$180 million for the next year. And also during the pandemic, we had some additional efforts in all our companies to avoid – to only focus on urgent aspects, as we had a very uncertain scenario. And we were concerned about impacts that did not confirm in relation to default. So that moment also helped companies to have an even stricter profile of what we were already planning in relation to OBZ and also maintaining our costs under control. That’s my comment.

And in relation to the compulsory loan, it’s important to note that it’s a provision. And in that sense, it moves in two directions. The first one is that on a monthly basis, it’s adjusted. We know that the adjustment is slightly lower, given the Selic rate. So in the quarter, that consolidated the best Selic rate. And on the other hand, it decreases what is coming due. So there’s a number of processes that are being judged. So we still have one or two months of a stoppage. And part of these processes are electronics. So obviously, the company has the provisions. Remember the effort that we did in order to update the provisions using the repetitions as criteria at the Supreme Court, so – and the payments of the amounts under controversy. And then it adjusts, which is very rare, but it also happens, especially if the results and correction according to the Selic. So in that quarter, and in this one, particularly, given the electronic matter. The first one and the second had a dilation. So we didn’t use in our guarantees, meaning that we released that – you know that you have – we have a portfolio share of connected energy companies. So we need the liquidity to take – make the payment, provided they’re lower than or equal to the allowances based on the sentencing for Eletrobras.

Thank you.

Our next question is from Gustavo from Itau.

Good afternoon. Congratulations on your results. I just like to understand a little better. You had horizon up to 2024 for investments. And when I look at the previous plan, I see that most of the investments in the next 4 or 5 years the order of magnitude is 3 billion a year. So I’d like to understand that a little better, from 2024 moving forward to maintain the R$6 billion. And let’s not consider privatization or capitalization, just so we understand how the company is doing. The 3 additional that you could add with the end of NH3, is that improvement? New projects? I’d like to have a more qualitative idea of the R$3 billion that you would add when you conclude Angra 3.

Thank you, Gustavo, for your comments. First of all, we have to look at under the view of the investments that are considered for Brazil alone and seeing the Eletrobras’ share. We’re not – haven’t been part of an auction since 2014. And that is the main reason why the only project that we have today is the Angra 3 project. We don’t have any others. Well, actually, we have the Santa Cruz project that I mentioned. If you analyze the annual investments that will be forecasted and go through a bid through ANEEL, it’s direct investment of BRL407 billion per year, that’s BRL40 billion on average a year, but we weren’t part of that. So if we would only participate in auction, there’ll be one at the end of the year. That’s R$7.5 billion for this – according to ANEEL. If we consider transmission alone, Eletrobras should dispute at least 45% of that amount, and that’s the R$3 billion that you talked about. So the first thing is about investing in greenfield growth, considering auctions that will have according to new future Brazilian demand. And the second group, and I haven’t done the report, but we have a rationalization process for our special purpose companies, and I informed that our target for the end of the year is to reach 52. So you know that we – neither us or others were able to advance in M&A because the part that we’re focused on, because a nonsolution from Supreme Court badly prices the power plant. So in the advancement of the project, that means a significant amount for Eletrobras and its share. And there will be a second option of investment, which is consolidation. We know that in many of our developments, we have partners that want to leave. And if we can do that, we could consider investing in consolidating the sector. And then we consolidate the entire position. Today, we only consolidate the results of the shares through the equivalent companies. That’s the second business line. And the third one would be relating to new businesses. We have the Brazilian legal framework being modernized, positively manifested by 2 Congress leaders. And that will create new perspective for the company to enter other businesses in sale, and not limited to, with batteries and social – or sorry, sun-powered systems or solar, so we can develop that. In Petrolina, we are a pioneer in using floaters for solar power in lakes in our hydropower plants and the transmission that’s idle. So – and not to mention the other things that we don’t know that could be a result of artificial intelligence, analytics, among other things. I understand the financial capacity. What we have to consider that in a new phase of the company is doing things, creating value for shareholders and having projects with a return that’s higher than the cost of capital for the company.

Okay, perfect. Thank you.

Our next question is from Marcelo from Itau. Marcelo Sá: Good afternoon. I have a couple of questions. The first one is that you mentioned that RBSE can be appreciated today. And if you have – do you have an estimate about how much that could generate in net present value or in concession for Eletrobras? And the second one about the collateral that you mentioned in paying the compulsory debt helped in releasing some collateral. I’d like to know which assets were released and could go to market.

Marcelo, so the GSF figures, we’re still ascertaining that. But considering the position about the bill, and not just exclusively Eletrobras, but also the shares that it has in, obviously, the projects for the big beneficiaries, right, the [indiscernible]. So around R$4 billion in the concession. About your second question, the company has, if I’m not mistaken, R$800 million. I think we have 22 participation capital stock in subsidiaries. We paid the compulsory loans in the past four years, about R$7 billion. And all of that had guarantee, none of the – or collateral and none of them were executed, so we released R$7 billion in our position. And not all compulsory loans were covered by that type of collateral. But we probably have, in all our different holdings and companies, R$2 billion to R$3 billion of our position, that R$3 billion that could be used, something about approximately like that. So when you have the execution of collateral, you have the process of releasing that – and that’s – as far as I’ve seen about six months, so when you look at the Eletrobras portfolio, it’s about R$11 billion to R$23 billion, about 20% is currently free. Thank you. Marcelo Sá: If you allow me one more question about Amazonas and Amazonas distribution receivables of R$4 billion relating to bank debt, and you have non-paid debt of purchase of energy at approximately R$1 billion. Amazonas distribution is only paying part of the obligations. I don’t know if it’s 50%, is that it? Could you give us some more flavor on that and say if there was any write-offs of that debt? Or if there’s anything that still has to be recognized moving forward? Thank you.

No. No write-offs, and we won’t have any. What we have is, according to the accounting standard, is prospective default. So this company, Marcelo, to be clear, it was sold at an unbalance last year. So there was a business plan to reduce or capture the opportunities that we had. It had very high commercial losses, had problems with contracting, with PMSO costs. So there was a lot of work to be developed and spearheaded by [indiscernible] from private initiatives. So he had an ongoing plan. And unfortunately, that was run over by the pandemic. So the situation got worse. They weren’t operating at the level of a business plan and some default. But in the past two quarters, it was particularly worse because of the pandemic. So there’s a right ascertained here in relation to the COVID accounts. And the rules are very clear, which a part of it that has to be more amortized. It’s lower than the entire debt. And we would be benefited by that option. I’d like to say that the company has been acting in institutional manner. Eletrobras, myself, Eletronuclear’s team, Eletronorte, the CEO, Financial Officer, Amazonas GT with Ferroni and its team and Amazonas distribution with [indiscernible] and his team. So we’ve been talking on a weekly basis following the problem. Well, it’s also important to mention there’s many assets relating to the contracting, so their amounts are due. And we’re working to balance that out. And I hope that comes back soon. There’s also the recognition from the Ministry of Mines and Energy of these solutions and understanding these challenges. And that’s being done, not just by the companies, but also with participation of the ministry and from ANEEL. I hope that we can have a solution. So that’s why we didn’t do any write-off, but we did follow the accounting principles. So on the page that I talked about, the allowances, let me show you that. It’s on Page 27. You have PCLT through CPC. That’s 48 with the prospective risk of Amazonas D, reduction of R$39 million and R$193 million. So I hope that as this negotiation moves, which is positive. And B, the credits in the short-term market were in contracting, we can do that. And the R$4 billion debt, as you know, has a grace period. It still is in that period. And I believe that as things improve and what they’re doing, we can receive those amounts. Marcelo Sá: Thank you. Just to confirm, the R$4 billion debt, that’s still in that waiting period, is there – there’s no bank guarantees, right? It’s – you’re going to pay and try to execute that in the company, but there’s not an actual guarantee if the other party doesn’t pay?

Actually, we’re negotiating the guarantees. Just to clarify your previous question, we have 25 affiliated companies, and 17 are listed that can operate in the stock market. Marcelo Sá: Another question based on the comment that you mentioned. When you mentioned the R$4 billion, that could be the NPV of GSF, does that include special purpose companies or just controlled companies?

No, it does include the special purpose companies. Like structuring Belo Monte, San Antonio, both companies, for instance, are special purpose companies, yes, with the share of 40% to 49%. Marcelo Sá: Okay. Thank you.

We have one more question from Victor Oliveira from [indiscernible].

Good afternoon, everyone. Thank you for taking my question. I’d like to know, Wilson, could you explain the material fact that was published yesterday about Angra 2, about the problem with the fuel, that some were changed, and the future inspection about going – about starting up operations again. So what – how about the cost of that? And how will you handle that?

I’m going to say that IR will answer that for you. But in a few words, we’ve identified when we opened the tank, a certain level of oxidation that was not within normal. So we’re part of international commissions, and we had already seen some reports relating to that. So it’s a procedure that we adopt is the same, that all other companies that had similar events adopted. Our fuel is provided by IRB, so the cost that we had to incur will be charged because we bought the fuel at a certain level of specification, and that’s not what we received. I don’t believe we’ll have any trouble in relation to costs or on the cost incurred because of that downtime. So we have – they have an obligation towards us. We have very demanding contracts. So on their side, I believe that we will have a solution for that. On the other hand, I’d like to ask our people from Investor Relations to send you a more accurate response to that.

Thank you, Wilson. As the material fact doesn’t mention any amount, that’s why I was a doubt about that. So fuel, if fuel – if it will be replaced for the – I was wondering if you wouldn’t have any additional cost because of that. Thank you.

I said IRB, actually, it’s INB. Sorry, there are so many acronyms, CCC and so many, it’s actually INB.

Okay. Thank you.

The Q&A session is now over. I’d like to hand the floor back over to Mr. Ferreira for his final comments.

Thank you, Marcelo. I’d like to thank each and every one of you for your attention here in attending our conference call. I’d also like to say that this quarter was very important because we finally had a solution for the transmission theme, which is somehow disturbing the shareholders in the company. So I’d like to thank everybody’s participation in relation to this theme. I’d like to say about our optimism in relation to the capitalization of Angra and Eletronuclear, and going back to the critical path of Angra. That’s a very important work for Brazil and especially important for Eletrobras. And now that it’s reconceived and having that optimism in relation to GSF, and it’s some well addressed and generating value, somehow jeopardizes by our operations and then perspective of the hydropower plants, it’s the main in Brazil. And obviously, clearly show the positive expectation of the next processes, given the restructuring process at the company that’s going – moving towards the final phase, considering the 2015 strategic plan. So I believe that by the end of the year, we should see the regulatory cost, that’s important, and be more rationalized. And remember that we had 268 special purpose companies. Now we have 62, that’s less than one-third. We have a very successful program of closures. So it’s something that I hope that in the next quarters, and also based on coverage that – of my team, that it’s already improved a lot, and more predictable even by analysts. And now we have more clarity about how we create value in generation, and we can share. So we have very important work in the cultural change with the consulting company that specialized in that so that we could advance our team to high-performance team. We had great recognition. But there’s a lot to achieve, and I’m very optimistic about that in Eletrobras, in this environment, competitive environment and also have a boost in capitalization with a global player that will be envied in size. And especially because it already is one of the three biggest companies in renewable energy in the world. So we are on a great path that will really make Brazilians proud. That’s what I had to say. Thank you again for your attention, and see you next time.