UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
_______________________
FORM 20-F
_______________________
☐ REGISTRATION STATEMENT PURSUANT TO SECTION 12(b) OR (g) OF THE SECURITIES EXCHANGE ACT OF 1934
☒ ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
OR
For the fiscal year ended December 31, 2023
OR
☐ TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
☐ SHELL COMPANY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
Date of event requiring this shell company report __________________.
For the transition period from __________________ to __________________.
OR
Commission file number 001-38376
_______________________
Central Puerto S.A.
(Exact name of Registrant as specified in its charter)
Port Central S.A.
(Translation of Registrant’s name into English)
Republic of Argentina
(Jurisdiction of incorporation or organization)
Avenida Thomas Edison 2701
C1104BAB Buenos Aires
Republic of Argentina
(Address of principal executive offices)
Enrique Terraneo
Avenida Thomas Edison 2701
C1104BAB Buenos Aires
Republic of Argentina.
Facsimile: +54 (11) 4317-5900
Email: inversores@centralpuerto.com
(Name, Telephone, E-mail and/or Facsimile number and Address of Company Contact Person)
_______________________
Securities registered or to be registered pursuant to Section 12(b) of the Act.
Title of each class
American Depositary Shares, each representing 10 common
shares of Central Puerto S.A.*
Trading Symbol
CEPU
Name of each exchange on which registered
New York Stock Exchange*
*
Not for trading, but only in connection with the registration of American Depositary Shares pursuant to the requirements of the New York Stock Exchange.
Securities registered or to be registered pursuant to Section 12(g) of the Act.
None
Securities for which there is a reporting obligation pursuant to Section 15(d) of the Act.
None
Indicate the number of outstanding shares of each of the issuer’s classes of capital or common stock as of the close of the period covered by the annual report.
Title of each class
Common shares, nominal value Ps.1.00 per share
Outstanding at December 31, 2023
1,514,022,256
Indicate by check mark if the registrant is a well-known seasoned issuer, as defined in Rule 405 of the Securities Act.
Yes ☒ No ☐
If this report is an annual or transition report, indicate by check mark if the registrant is not required to file reports pursuant to Section 13 or 15(d) of the Securities Exchange Act of 1934.
Yes ☐ No ☒
Note – Checking the box above will not relieve any registrant required to file reports pursuant to Section 13 or 15(d) of the Securities Exchange Act of 1934 from their obligations under those Sections. Indicate by check mark whether
the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and
(2) has been subject to such filing requirements for the past 90 days.
Indicate by check mark whether the registrant has submitted electronically every Interactive Data File required to be submitted pursuant to Rule 405 of Regulation S-T (§232.405 of this chapter) during the preceding 12 months (or for
such shorter period that the registrant was required to submit such files).
Yes ☒ No ☐
Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, or an emerging growth company. See definition of “large accelerated filer,” “accelerated filer,” and “emerging growth
company” in Rule 12b-2 of the Exchange Act.
Large accelerated filer ☒
Accelerated filer ☐
Non-accelerated filer ☐
Emerging growth company ☐
If an emerging growth company that prepares its financial statements in accordance with U.S. GAAP, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised
financial accounting standards† provided pursuant to Section 13(a) of the Exchange Act. ☐
† The term “new or revised financial accounting standard” refers to any update issued by the Financial Accounting Standards Board to its Accounting Standards Codification after April 5, 2012.
Yes ☒ No ☐
Indicate by check mark whether the registrant has filed a report on and attestation to its management’s assessment of the effectiveness of its internal control over financial reporting under Section 404(b) of the Sarbanes-Oxley Act (§ 15
U.S.C. 7262(b)) by the registered public accounting firm that prepared or issued its audit report. ☒
If securities are registered pursuant to Section 12(b) of the Act, indicate by check mark whether the financial statements of the registrant included in the filing reflect the correction of an error to previously issued financial statements. ☐
Indicate by check mark whether any of those error corrections are restatements that required a recovery analysis of incentive based compensation received by any of the registrant’s executive officers during the relevant recovery period
pursuant to §240.10D-1(b). ☐
Indicate by check mark which basis of accounting the registrant has used to prepare the financial statements included in this filing:
U.S. GAAP ☐
International Financial Reporting Standards as issued
by the International Accounting Standards Board ☒
Other ☐
If “Other” has been checked in response to the previous question, indicate by check mark which financial statement item the registrant has elected to follow.
If this is an annual report, indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act).
(APPLICABLE ONLY TO ISSUERS INVOLVED IN BANKRUPTCY PROCEEDINGS DURING THE PAST FIVE YEARS)
Yes ☐ No ☒
Item 17 ☐ Item 18 ☐
Indicate by check mark whether the registrant has filed all documents and reports required to be filed by Sections 12, 13 or 15(d) of the Securities Exchange Act of 1934 subsequent to the distribution of securities under a plan
confirmed by a court.
Yes ☐ No ☐
TABLE OF CONTENTS
Item 1.
Item 2.
Item 3.
Identity of Directors, Senior Management and Advisors.
Offer Statistics and Expected Timetable.
Key Information.
Item 3.A
Reserved.
Item 3.B
Item 3.C
Capitalization and indebtedness.
Reasons for the offer and use of proceeds.
Item 3.D
Risk Factors.
Item 4.
Information on the Company.
Item 4. A
History and development of the Company.
Item 4.B
Item 4.C
Business Overview..
Organizational structure.
Item 4.D
Property, plants and equipment
Item 4.E
Unresolved Staff Comments.
Item 5.
Operating and Financial Review and Prospects.
Item 5.A
Operating Results.
Item 5.B
Item 5.C
Liquidity and Capital Resources.
Research and Development, patents and licenses, etc.
Item 5.D
Trend Information.
Item 5.E
Critical Accounting Estimates.
Item 6
Directors, Senior Management and Employees
Item 6.A
Directors and senior management
Item 6.B
Item 6.C
Compensation.
Board practices.
Item 6.D
Employees.
Item 6.E
Item 6.F
Item 7.
Share Ownership.
Disclosure of a registrant’s action to recover erroneously awarded compensation.
Major Shareholders and Related Party Transactions.
Item 7.A.
Major Shareholders.
Item 7.B
Item 7.C
Item 8.
Related Party Transactions.
Interests of experts and counsel
Financial Information.
Item 8.A.
Consolidated Statements and Other Financial Information.
Item 8.B
Significant Changes.
Item 9.
The Offer and Listing.
Item 9.A.
Offer and listing details.
Item 9.B.
Plan of Distribution.
Item 9.C.
Markets.
Item 9.D.
Selling Shareholders.
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29
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Item 9.E.
Dilution.
Table of Contents
Item 9.F.
Expenses of the issue.
Item 10.
Additional Information.
Item 10.A.
Share capital
Item 10.B.
Memorandum and articles of association.
Item 10.C
Material contracts.
Item 10.D
Exchange Controls.
Item 10.E
Taxation.
Item 10.F
Dividends and paying agents.
Item 10.G
Statement by experts.
Item 10.H
Documents on display.
Item 10.I.
Subsidiary Information.
Item 10.J
Annual Report to Security Holders
Item 11.
Item 12.
Quantitative and Qualitative Disclosures about Market Risk.
Description of Securities Other Than Equity Securities.
Item 12.A
Debt Securities.
Item 12.B
Warrants and Rights.
Item 12.C
Other Securities.
Item 12.D
American Depositary Shares.
Item 13.
Item 14.
Item 15.
Defaults, Dividend Arrearages and Delinquencies.
Material Modifications to the Rights of Security Holders and Use of Proceeds.
Controls and Procedures.
Item 16.A
Audit committee financial expert
Item 16.B
Code of Ethics.
Item 16.C
Principal Accountant Fees and Services.
Item 16.D
Exemptions from the Listing Standards for Audit Committees.
Item 16.E
Purchases of Equity Securities by the Issuer and Affiliated Purchasers.
Item 16.F
Change in Registrant’s Certifying Accountant
Item 16.G
Corporate Governance.
Item 16.H.
Mine Safety Disclosure.
Item 16.I.
Disclosure Regarding Foreign Jurisdictions that Prevent Inspections.
Item 16J
Insider Trading Policies.
Item 16 K
Cybersecurity.
Item 17.
Item 18.
Item 19.
Financial Statements.
Financial Statements.
Exhibits.
Table of Contents
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CERTAIN DEFINITIONS
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In this annual report, except where otherwise indicated or where the context otherwise requires:
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“Argentine Corporate Law” refers to Law No. 19,550, as amended;
“Authorized Generators” refers to electricity generators that do not have contracts in the term market in any of its methods;
“BCRA” refers to the Argentine Central Bank.
“BYMA” refers to Bolsas y Mercados Argentinos S.A.;
“CAMMESA” refers to Compañía Administradora del Mercado Mayorista Eléctrico Sociedad Anónima. See “Item 4.B, Business Overview— The Argentine Electric Power Sector—General Overview of Legal
Framework—CAMMESA;”
“CNV” refers to the Comisión Nacional de Valores, the Argentine Securities Commission;
“COD” refers to Commercial Operation Date, the day in which a generation unit is authorized by CAMMESA (in Spanish, “Habilitación Comercial”) to sell electric energy through the grid under the applicable
commercial conditions;
“CTM” refers to Centrales Térmicas Mendoza S.A.;
“CVO” refers to the thermal plant Central Vuelta de Obligado;
“CVO Agreement” refers to the Agreement for Project Management and Operation, Increase of Thermal Generation Availability and Adaptation of Remuneration for Generation 2008-2011” executed on November
25, 2010 among the Secretariat of Energy (“SE”) and Central Puerto along with other electric power generators;
“CVOSA” refers to Central Vuelta de Obligado S.A.;
“Ecogas” refers collectively to Distribuidora de Gas Cuyana (“DGCU”) and Distribuidora de Gas del Centro (“DGCE”);
“Spot Sales” previously known as “Energía Base,” refers to the regulatory framework established under Resolution SE No. 95/13, as amended, and supplemented by Res. 19/17, Res. 1/19, Res. 31/20, Res. 440/21,
Res. 238/22, Res. 826/22, Res. 59/23, Res. 750/23, Res. 869/23 and, more recently, Res. 9/24 (as defined below) (see details in “Item 45.B, Business Overview—The Argentine Electric Power Sector. Operating
Results— Spot Sales (also known as Energía Base) — Resolution 1/19, amended by Resolution 31/20 and subsequent regulations”);”
“Energía Plus” refers to the regulatory framework established under Resolution SE No. 1281/06, as amended. See “Item 4.B, Business Overview—The Argentine Electric Power Sector—Structure of the Industry—
Energía Plus;”
“FODER” refers to Fondo para el Desarrollo de Energías Renovables (Fund for the Development of Renewable Energies). See “Item 4.B, Business Overview—The Argentine Electric Power Sector —Structure of
the Industry—Renewable Energy Program;”
“FONINVEMEM” or “FONI” refers to the Fondo para Inversiones Necesarias que Permitan Incrementar la Oferta de Energía Eléctrica en el Mercado Eléctrico Mayorista (the Fund for Investments Required to
Increase the Electric Power Supply) and similar programs, including the CVO Agreement. See “Item 4.B, Business Overview—The Argentine Electric Power Sector—Structure of the Industry—The FONINVEMEM
and Similar Programs;”
“FONINVEMEM Plants” refers to the plants José de San Martín, Manuel Belgrano and Vuelta de Obligado;
“FX Market” refers to the foreign exchange market;
“HPDA” refers Hidroeléctrica Piedra del Águila S.A., the corporation that previously owned the Piedra del Águila plant;
“IEASA” refers to Integración Energética Argentina S.A.;
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“IGCE” refers to Inversora de Gas del Centro S.A.;
“IGCU” refers to Inversora de Gas Cuyana S.A.;
“La Plata Plant Sale” refers to the sale of the La Plata plant to YPF EE, effective as of January 5, 2018. For further information on the La Plata Plant Sale, see “Item 4.A. History and development of the Company—
La Plata Plant Sale;”
“La Plata Plant Sale Effective Date” is January 5, 2018. For further information on the La Plata Plant Sale Effective Date, see “Item 4.A. History and development of the Company—La Plata Plant Sale;”
“LPC” refers to La Plata Cogeneración S.A., the corporation that owned the La Plata plant prior to us;
“LVFVD” refers to liquidaciones de venta con fecha de vencimientos a definir, or receivables from CAMMESA without a fixed due date. See “Item 4.B, Business Overview—FONINVEMEM and Similar Programs;”
“MATER” refers to Term Market for Renewable Energy set forth under Resolution No. 281-E/17;
“PPA” refers to Power Purchase Agreements, power capacity and energy supply agreements for a defined period of time or energy quantity;
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“Resolution 19/17” or “Res. 19/17” refers to the Resolution No. 19-E/17 issued on February 2, 2017, by the former Secretariat of Electric Energy of the former National Ministry of Energy and Mining by which the
Secretariat modified the remuneration scheme (for capacity and energy) applicable from February 1, 2017, to Authorized Generators (electricity generators which do not have contracts in the term market in any of its
modalities) acting in the WEM
“Resolution 1/19” or Res. 1/19 refers to the Resolution No. 1/19 issued on March 1, 2019, by the former Secretariat of Renewable Resources and Electric Market of the former National Ministry of Treasury
(“SRRyME,” for its acronym in Spanish) by which the Secretariat abrogated Res. 19/17 and modified the remuneration scheme (for capacity and energy) applicable to Authorized Generators (electricity generators
which do not have contracts in the term market in any of its modalities) acting in the WEM;
“Resolution 31/20” or “Res. 31/20” refers to the Resolution No. 31/20 issued on February 27, 2020, by the Secretariat of Energy of the former National Ministry of Production Development by which the Secretariat
modified the remuneration scheme (for capacity and energy) applicable from February 1, 2020, to Authorized Generators (electricity generators which do not have contracts in the term market in any of its modalities)
acting in the WEM;
“Resolution 440/21” or “Res.440/21” refers to the Resolution No. 440/21 issued on May 21, 2021, by the Secretariat of Energy of the National Ministry of Economy by which the Secretariat modified the
remuneration scheme (for capacity and energy) applicable from February 1, 2021, to Authorized Generators (electricity generators which do not have contracts in the term market in any of its modalities) acting in the
WEM;
“Resolution 238/22” or “Res.238/22” refers to the Resolution No. 238/22 issued on April 18, 2022, by the Secretariat of Energy of the National Ministry of Economy by which the Secretariat modified the
remuneration scheme (for capacity and energy) applicable from February 1, 2022, to Authorized Generators (electricity generators which do not have contracts in the term market in any of its modalities) acting in the
WEM;
“Resolution 826/22” or “Res.826/22” refers to the Resolution No. 826/22 issued on December 12, 2022, by the Secretariat of Energy of the National Ministry of Economy by which the Secretariat modified the
remuneration scheme (for capacity and energy) applicable from September 1, 2022, to Authorized Generators (electricity generators which do not have contracts in the term market in any of its modalities) acting in
the WEM;
“Resolution 59/23” or “Res.59/23” refers to the Resolution No. 59/23 issued on February 5, 2023, by the Secretariat of Energy of the National Ministry of Economy by which the Secretariat modified the remuneration
scheme (for capacity and energy) of Authorized Generators with combined cycle units acting in the WEM that have adhered to the agreement set forth in this resolution;
“Resolution 750/23” or “Res. 750/23” refers to the Resolution No. 750/23 issued on September 9, 2023, by the Secretariat of Energy of the National Ministry of Economy by which the Secretariat modified the
remuneration scheme (for capacity and energy) applicable from September 1, 2023, to Authorized Generators (electricity generators which do not have contracts in the term market in any of its modalities) acting in
the WEM;
“Resolution 869/23” or “Res.869/23” refers to the Resolution No. 869/23 issued on October 27, 2023, by the Secretariat of Energy of the National Ministry of Economy by which the Secretariat modified the
remuneration scheme (for capacity and energy) applicable from November 1, 2023, to Authorized Generators (electricity generators which do not have contracts in the term market in any of its modalities) acting in
the WEM;
“Resolution 9/24” or “Res.9/24” refers to the Resolution No. 9/24 issued on February 7, 2024, by the Secretariat of Energy of the National Ministry of Economy by which the Secretariat modified the remuneration
scheme (for capacity and energy) applicable from February 1, 2024, to Authorized Generators (electricity generators which do not have contracts in the term market in any of its modalities) acting in the WEM;
“SADI” refers to the Argentine Interconnection System;
“Sales under contracts” refers collectively to (i) term market sales of energy under contracts with private and public sector counterparties, (ii) sales of energy sold under the Energía Plus and (iii) sales of energy under
the RenovAr Program;
“SE” refers to the Secretariat of Energy;
“SEE” refers to the former Secretariat of Electric Energy;
“Spot market” refers to energy sold by generators to the WEM and remunerated by CAMMESA pursuant to the framework in place prior to the Spot Sales. See “Item 4.B, Business Overview—The Argentine Electric
Power Sector—Structure of the Industry—Electricity Dispatch and Spot Market Pricing prior to Resolution of the Secretariat of Energy No. 95/13;”
“T6” refers to Terminal 6 Industrial S.A., a company engaged in soybean crushing and biodiesel and refined glycerin production;
“YPF” refers to YPF S.A., Argentina’s state-owned oil and gas company;
“YPF EE” refers to YPF Energía Eléctrica S.A., a subsidiary of YPF; and
“WEM” refers to the Argentine Mercado Eléctrico Mayorista, the wholesale electric power market. See “Item 4.B, Business Overview—The Argentine Electric Power Sector—General Overview of Legal Framework
—CAMMESA”.
Table of Contents
Financial Statements
vii
PRESENTATION OF FINANCIAL AND OTHER INFORMATION
We maintain our financial books and records and publish our consolidated financial statements (as defined below) in Argentine pesos, which is our functional currency. This annual report contains our audited consolidated financial
statements as of December 31, 2023 and 2022 and for each of the years ended December 31, 2023, 2022, and 2021 (our “Audited Consolidated Financial Statements”), which were approved by Company's management on April 29,
2024.
We prepare our Audited Consolidated Financial Statements in Argentine pesos and in conformity with the International Financial Reporting Standards (IFRS) as issued by the International Accounting Standards Board (IASB).
In accordance with IAS 29, the restatement of the financial statements is necessary when the functional currency of an entity is the currency of a hyperinflationary economy. To define a hyperinflationary state, IAS 29 provides a series
of non-exclusive guidelines that consist of (i) analyzing the behavior of the population, prices, interest rates and wages before the evolution of price indexes and the loss of the currency’s purchasing power, and (ii) as a quantitative
characteristic, verifying if the three-year cumulative inflation rate approaches or exceeds 100%. Due to macroeconomic factors, the triennial inflation was above that figure in 2018 and Argentina has been considered hyperinflationary
since July 1, 2018. Such conditions remained during 2021, 2022 and 2023. See “Risks Relating to Argentina. As of July 1, 2018, the Argentine Peso qualifies as a currency of a hyperinflationary economy and we are required to restate
our historical financial statements to apply inflationary adjustments, which could adversely affect our results of operations and financial condition and those of our Argentine subsidiaries”.
Therefore, our Audited Consolidated Financial Statements included herein, including the figures for the previous periods (this fact not affecting the decisions taken on the financial information for such periods), and, unless otherwise
stated, the financial information included elsewhere in this annual report, were restated to consider the changes in the general purchasing power of our functional currency (Argentine peso) pursuant to IAS 29 and General Resolution no.
777/2018 of the CNV. Consequently, the consolidated financial statements are stated in the current measurement unit as of December 31, 2023. The information included in our Audited Consolidated Financial Statements is not
comparable to the consolidated financial statements previously published by us. For further information, see “Item 5.A. Operating Results-Factors Affecting our Results of Operations-Inflation” and Note 2.1.2 to our Audited
Consolidated Financial Statements.
We remind investors that we are required to file financial statements and other periodic reports with the CNV because we are a public company in Argentina. Investors can access our historical financial statements published in Spanish
on the CNV’s website at www.cnv.gob.ar. The information found on the CNV’s website is not a part of this annual report. Investors are cautioned not to place undue reliance on our financial statements not included in this annual report.
Currency and Rounding
All references herein to “pesos,” “Argentine pesos” or “Ps”. are to Argentine pesos, the legal currency of Argentina. All references to “U.S. dollars,” “dollars” or “US$” are to U.S. dollars. All references to “SEK$” are to Swedish
krona. A “billion” is a thousand million.
Solely for the convenience of the reader, we have translated certain amounts included in this annual report from pesos into U.S. dollars, unless otherwise indicated, using the seller rate for U.S. dollars quoted by the Banco de la Nación
Argentina for wire transfers (divisas) as of December 31, 2023, of Ps.808.45 per US$1.00. The Federal Reserve Bank of New York does not report a noon buying rate for pesos. The U.S. dollar equivalent information presented in this
annual report is provided solely for the convenience of the reader and should not be construed to represent that the peso amounts have been, or could have been or could be, converted into U.S. dollars at such rates or at any other rate.
See “Item 3.A. Selected Financial Data-Exchange Rates”.
Certain figures included in this annual report and in the Audited Consolidated Financial Statements contained herein have been rounded for ease of presentation. Percentage figures included in this annual report have in some cases been
calculated on the basis of such figures prior to rounding. For this reason, certain percentage amounts in this annual report may vary from those obtained by performing the same calculations using the figures in this annual report and in
the consolidated financial statements contained herein. Certain other amounts that appear in this annual report may not sum due to rounding.
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Market Share and Other Information
viii
The information set forth in this annual report with respect to the market environment, market developments, growth rates and trends in the markets in which we operate is based on information published by the Argentine federal and
local governments through the Instituto Nacional de Estadísticas y Censos (the National Statistics and Census Institute, or “INDEC”), the Ministry of Interior, the Secretariat of Energy, the Banco Central de la República Argentina (the
“Argentine Central Bank,” or “Central Bank”) CAMMESA, the Dirección General de Estadística y Censos de la Ciudad de Buenos Aires (General Directorate of Statistics and Census of the City of Buenos Aires) and the Dirección
Provincial de Estadística y Censos de la Provincia de San Luis (Provincial Directorate of Statistics and Census of the Province of San Luis), as well as on independent third-party data, statistical information and reports produced by
unaffiliated entities, as well as on our own internal estimates. In addition, this annual report contains information from Vaisala, Inc. (“Vaisala - 3 Tier”), a company that develops, manufactures and markets products and services for
environmental and industrial measurement.
This annual report also contains estimates that we have made based on third-party market data. Market studies are frequently based on information and assumptions that may not be exact or appropriate.
Although we have no reason to believe any of this information or these sources are inaccurate in any material respect, we have not verified the figures, market data or other information on which third parties have based their studies, nor
have we confirmed that such third parties have verified the external sources on which such estimates are based. Therefore, we do not guarantee, nor do we assume responsibility for, the accuracy of the information from third-party
studies presented in this annual report.
This annual report also contains estimates of market data and information derived therefrom which cannot be gathered from publications by market research institutions or any other independent sources. Such information is based on
our internal estimates. In many cases there is no publicly available information on such market data, for example from industry associations, public authorities or other organizations and institutions. We believe that these internal
estimates of market data and information derived therefrom are helpful in order to give investors a better understanding of the industry in which we operate as well as our position within this industry. Although we believe that our
internal market observations are reliable, our estimates are not reviewed or verified by any external sources. These may deviate from estimates made by our competitors or future statistics provided by market research institutes or other
independent sources. We cannot assure you that our estimates or the assumptions are accurate or correctly reflect the state and development of, or our position in, the industry.
FORWARD-LOOKING STATEMENTS
This annual report contains estimates and forward-looking statements, principally in “Item 3.D. Risk Factors,” “Item 4.B. Business Overview” and “Item 5. Operating and Financial Review and Prospects”.
Our estimates and forward-looking statements are mainly based on our current beliefs, expectations and estimates of future courses of action, events and trends that affect or may affect our business and results of operations. Although
we believe that these estimates and forward-looking statements are based upon reasonable assumptions, they are subject to several risks and uncertainties and are made in light of information currently available to us.
Many important factors, in addition to those discussed elsewhere in this annual report, could cause our actual results to differ substantially from those anticipated in our forward-looking statements, including, among other things:
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changes in general economic, financial, business, political, legal, social or other conditions in Argentina;
changes in conditions elsewhere in Latin America or in either developed or emerging markets;
changes in capital markets in general that may affect policies or attitudes toward lending to or investing in Argentina or Argentine companies, including volatility in domestic and international financial markets;
the impact of political developments and uncertainties relating to political and economic conditions in Argentina, on the demand for securities of Argentine companies;
increased inflation;
fluctuations in exchange rates, including a significant devaluation of the Argentine peso;
changes in the law, norms and regulations applicable to the Argentine electric power and energy sector, including changes to the current regulatory frameworks, changes to programs established to incentivize
investments in new generation capacity and reductions in government subsidies to consumers;
our ability to develop our expansion projects and to win awards for new potential projects;
increases in financing costs or the inability to obtain additional debt or equity financing on attractive terms, which may limit our ability to fund new activities;
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government intervention, including measures that result in changes to the Argentine labor market, exchange market or tax system;
adverse legal or regulatory disputes or proceedings;
changes in the price of energy, power and other related services;
changes in the prices and supply of natural gas or liquid fuels;
changes in the amount of rainfall and accumulated water;
changes in environmental regulations, including exposure to risks associated with our business activities;
risks inherent to the demand for and sale of energy;
the operational risks related to the generation, as well as the transmission and distribution, of electric power;
ability to implement our business strategy, including the ability to complete our construction and expansion plans in a timely manner and according to our budget;
competition in the energy sector, including as a result of the construction of new generation capacity;
exposure to credit risk due to credit arrangements with CAMMESA;
our ability to retain key members of our senior management and key technical employees;
the effects of a pandemic or epidemic and any subsequent mandatory regulatory restrictions or containment measures;
our relationship with our employees; and
other factors discussed under “Item 3.D.—Risk Factors” in this annual report.
The words “believe,” “may,” “will,” “aim,” “estimate,” “continue,” “anticipate,” “intend,” “expect,” “forecast” and similar words are intended to identify forward-looking statements. Forward-looking statements include information
concerning our possible or assumed future results of operations, business strategies, financing plans, competitive position, industry environment, potential growth opportunities, the effects of future regulation and the effects of
competition. Forward-looking statements speak only as of the date they were made, and we do not undertake any obligation to update publicly or to revise any forward-looking statements after we distribute this annual report because of
new information, future events or other factors, except as required by applicable law. In light of the risks and uncertainties described above, the forward-looking events and circumstances discussed in this annual report might not occur
and do not constitute guarantees of future performance. Because of these uncertainties, you should not make any investment decisions based on these estimates and forward-looking statements.
x
PART I
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Item 1. Identity of Directors, Senior Management and Advisors
Not applicable.
Item 2. Offer Statistics and Expected Timetable
Not applicable.
Item 3. Key Information
Item 3.A Reserved
Item 3.B Capitalization and indebtedness
Not applicable.
Item 3.C Reasons for the offer and use of proceeds
Not applicable.
Item 3.D Risk Factors
Summary of Risk Factors
We are subject to several risks related to our business that are described under “Risk Factors” and elsewhere in this annual report. These risks could materially and adversely impact our business, results of operations, financial condition,
and future prospects. Among these important risks are the following:
Risks Relating to Argentina
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Substantially all our revenues are generated in Argentina and thus are highly dependent on economic and political conditions in Argentina. Political uncertainty regarding measures to be adopted by the Argentine
government could affect macroeconomic, political, regulatory, and social conditions in Argentina.
The Argentine Peso qualifies as a currency of a hyperinflationary economy and we are required to restate our historical financial statements to apply inflationary adjustments, which could adversely affect our results
of operations and financial condition and those of our Argentine subsidiaries.
Significant fluctuations in the value of the peso could adversely affect the Argentine economy and, in turn, adversely affect our results of operations.
Exchange controls and restrictions on capital inflows and outflows could limit the availability of international credit and could threaten the financial system, adversely affecting the Argentine economy and, as a result,
our business.
Argentina’s ability to obtain financing from international markets is limited, which could affect its capacity to implement reforms and sustain economic growth and may negatively impact our financial condition or
cash flows.
The Argentine economy could be adversely affected by economic developments in other markets and by more general “contagion” effects.
We may be exposed to adverse effects arising from geopolitical conflicts worldwide.
The Argentine banking system may be subject to instability which may affect our operations.
Failure to adequately address actual and perceived risks of institutional deterioration and corruption may adversely affect Argentina’s economy and financial condition, which in turn could adversely affect our
business, financial condition, and results of operations.
Risks Relating to the Electric Power Sector in Argentina
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The Argentine Government has intervened in the electric power sector in the past and is likely to continue intervening.
Changes in regulatory frameworks under which we sell our electricity may affect our financial condition and results of operations.
We have, in the recent past, been unable to collect payments, or to collect them in a timely manner, from CAMMESA and other customers in the electric power sector.
Argentina has certain energy transmission and distribution limitations that adversely affect the capacity of electric power generators to deliver all of the energy they can produce, which results in reduced sales.
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Restrictions on the supply of energy could negatively affect Argentina’s economy.
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We operate in a heavily regulated sector that imposes significant costs on our business, and we could be subject to fines and liabilities that could have a material adverse effect on our results of operations.
Risks arise for our business from technological change in the energy market.
Competition in the Electric Power Sector in Argentina may adversely affect our results of operations.
Risks Relating to Our Business
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Our results depend largely on the compensation established by the Secretariat of Energy and received from CAMMESA.
Factors beyond our control may affect or delay the completion of the awarded projects or alter our plans for the expansion of our existing plants.
Our business may require substantial capital expenditures for ongoing maintenance requirements and the expansion of our installed generation capacity.
Covenants in our indebtedness could adversely restrict our financial and operating flexibility.
We may be unable to refinance our outstanding indebtedness, or the refinancing terms may be materially less favorable than their current terms, which would have a material adverse effect on our business, financial
condition, and results of operations.
The government’s decision regarding the future of the hydroelectric concessions could impact the HPDA operations, which may adversely affect our results of operations.
Our interests in TJSM, TMB were diluted and CVOSA will be significantly diluted.
Future changes in the rainfall amounts in the Limay River basin could adversely affect the revenues from the Piedra del Águila concession and, therefore, our financial results.
Our ability to operate wind and solar farms profitably is highly dependent on suitable wind or sun and associated weather conditions, climate change and energy transition could affect our business.
Climate change and energy transition could affect our business.
Our power plants and forest assets are subject to the risk of mechanical, electrical failures and various catastrophic events, and any resulting unavailability may affect our ability to fulfill our contractual and other
commitments and thus adversely affect our business and financial performance.
Our insurance policies may not fully cover damage, and we may not be able to obtain insurance against certain risks.
We may be exposed to lawsuits and or administrative proceedings that could adversely affect our financial condition and results of operations.
Energy demand is seasonal, largely due to climate conditions.
We may undertake acquisitions and investments to expand or complement our operations that could result in operating difficulties or otherwise adversely affect our financial conditions and results of operations.
If we were to acquire another energy company in the future, such acquisition could be subject to the Argentine Antitrust Authority’s approval.
We depend on senior management and other key personnel for our current and future performance.
We could be affected by material actions taken by the trade unions.
Our equipment, facilities and operations are subject to environmental, health and safety regulations.
We are subject to anticorruption, anti-bribery, anti-money laundering and other laws and regulations.
A cyberattack could adversely affect our business, balance sheet, results of operations and cash flow.
Our ability to generate electricity at our thermal generation plants partially depends on the availability of natural gas and, to a lesser extent, liquid fuel.
An outbreak of a disease, including COVID-19, may have material adverse consequences on our operations including new projects.
Risks Relating to our Shares and ADSs
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It may be difficult for you to obtain or enforce judgments against us.
Restrictions on transfers of foreign exchange and the repatriation of capital from Argentina may impair your ability to receive dividends and distributions on, and the proceeds of any sale of, shares underlying the
ADSs.
We will be traded on more than one market, and this may result in price variations; in addition, investors may not be able to easily move shares for trading between such markets.
Under Argentine Corporate Law, shareholder rights may be fewer or less well defined than in other jurisdictions.
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Holders of our common shares and the ADSs located in the United States may not be able to exercise preemptive or accretion rights.
Voting rights, and other rights, with respect to the ADSs are limited by the terms of the deposit agreement.
The relative volatility and illiquidity of the Argentine securities markets may substantially limit our ADS holders’ ability to sell common shares underlying the ADSs at the price and time they desire.
If there are substantial sales of our common shares or the ADSs, the price of the common shares or of the ADSs could decline.
Our shareholders may be subject to liability for certain votes of their securities.
As a foreign private issuer, we are exempt from several rules under the U.S. securities laws and are permitted to file less information with the Commission than a U.S. company. This may limit the information
available to holders of our ADSs.
As a foreign private issuer, we are not subject to certain NYSE corporate governance rules applicable to U.S. listed companies.
The market price for our common shares or ADSs could be highly volatile.
If we fail to maintain an effective system of internal control over financial reporting, we may not be able to accurately report our financial results or prevent fraud. As a result, shareholders could lose confidence in our
financial and other public reporting, which would harm our business and the trading price of our common shares.
The protections afforded to minority shareholders in Argentina are different from and more limited than those in the United States and may be more difficult to enforce.
Holders of our common shares may determine not to pay any dividends.
We may be a passive foreign investment company for U.S. federal income tax purposes.
The requirements of being a public company may strain our resources and distract our management, which could make it difficult to manage our business.
Detailed Risk Factors
You should carefully consider the risks described below, as well as the other information in this annual report. Our business, results of operations, financial condition or prospects could be materially and adversely affected if any of
these risks occurs, and as a result, the market price of our common shares and ADSs could decline. The risks described below are those known to us and that we currently believe may materially affect us.
Risks Relating to Argentina
Substantially all of our revenues are generated in Argentina and thus are highly dependent on economic and political conditions in Argentina. Political uncertainty regarding measures to be adopted by the Argentine government
could affect macroeconomic, political, regulatory, and social conditions in Argentina
Central Puerto is an Argentine corporation (sociedad anónima). All of our assets and operations are located in Argentina. Accordingly, our financial condition and results of operations depend to a significant extent on macroeconomic,
regulatory, social and political conditions prevailing in Argentina, including but not limited to, the following: (i) international demand and prices for Argentina’s commodity exports; (ii) competitiveness and efficiency of domestic
industries and services; (iii) stability and competitiveness of the Argentine peso against foreign currencies; (iv) foreign and domestic investment and financing; (v) level of foreign exchange reserves in the Central Bank of the Argentine
Republic (“BCRA”) which may cause abrupt changes in currency values and exchange and capital control regulations (including, to import equipment, payment of cross border indebtedness and other necessities relevant for
operations); (vi) high interest and inflation rates to corresponding wage and price controls; (vii) adverse external economic shocks; (viii) changes in economic or fiscal policies implemented by the Argentine government; (ix) labor
disputes and work stoppages; (x) the level of expenditure by the Argentine government and ability to sustain fiscal balance and (xi) the level of unemployment, political instability and social tensions, such as land-takings and claims in
areas where we operate.
The Argentine economy has experienced significant volatility in recent decades, characterized by periods of low or negative growth, high levels of inflation and currency devaluation. Sustainable economic growth in Argentina is
dependent on a variety of factors, including the international demand for Argentine exports, the stability and competitiveness of the peso against foreign currencies, confidence among consumers and foreign and domestic investors, a
stable rate of inflation, national employment levels and the circumstances of Argentina’s regional trade partners.
Argentina has experienced repeatedly, especially in recent years, periods of high inflation. High inflation rates affect Argentina’s foreign competitiveness, social and economic inequality, negatively impacts employment, consumption
and the level of economic activity and undermines the confidence in Argentina’s banking system, which could further limit the availability of and access by local companies to domestic and international credit. If the measures adopted
by the Argentine government fail to correct Argentina’s structural inflationary imbalances, inflation may continue or increase and have an adverse effect on Argentina’s economy and on our business, financial condition and results of
operations. Inflation can also lead to an increase in Argentina’s local currency-denominated debt and have an adverse effect on Argentina’s ability to service its debt, mainly in the medium and long term when most inflation-indexed
debt matures.
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Argentina’s fiscal imbalances, its dependence on foreign revenues to cover its fiscal deficit, and material rigidities that have historically limited the ability of the economy to absorb and adapt to external factors, have added to the
severity of the current crisis.
In the past, some administrations increased direct intervention in the Argentine economy, including the implementation of expropriation measures, price controls, exchange controls and changes in laws and regulations affecting foreign
trade and investment. These measures had a material adverse effect on private sector entities, including us. It is possible that similar measures could be adopted by the current or future Argentine Government or that economic, social
and political developments in Argentina, over which we have no control, could have a material adverse effect on the Argentine economy and, in turn, adversely affect our financial condition and results of operations. Uncertainty with
respect to government policies may lead to additional volatility of Argentine stock market prices including companies that operate in the energy sector, given the degree of state regulation and intervention in this industry.
As in the recent past, Argentina’s economy may be adversely affected if political and social pressures inhibit the implementation by the Argentine Government of policies designed to control inflation, generate growth and enhance
consumer and investor confidence, or if policies implemented by the Argentine Government that are designed to achieve these goals are not successful. These events could materially adversely affect our financial condition and results
of operations.
The Argentine economy is also particularly sensitive to local political developments. Presidential elections take place in Argentina every four years and legislative elections every two years, resulting in the partial renewal of both
chambers of Congress. On November 19, 2023, presidential elections took place, and Javier Milei was elected President of Argentina. We cannot predict the impact that the new administration’s measures will have on our business,
financial condition, results of operations and cash flows.
The Argentine government faces unique macroeconomic challenges, such as reducing the inflation rate, achieving commercial and fiscal surpluses, accumulating reserves, supporting the peso, refinancing debt owed to private creditors,
and improving the competitiveness of local industry.
The recently elected administration has enacted Decree No. 70/2023 contemplating several measures to reduce the size of the public administration and public expenses and to de-regularize the economy. In addition, on December 27,
2023, the Argentine Executive Power sent to the National Congress a draft bill entitled “Bases and Starting Points for the Freedom of the Argentine People.” The draft bill declares a public emergency in economic, financial, fiscal,
social security, defense, tariff, energy, health and social matters until December 31, 2025, extendable for two additional years, and delegates a series of legislative powers to the Argentine Executive Branch for the duration of the
emergency. The bill also includes a series of legal, institutional, tax and criminal reforms affecting various sectors of the economy. As of the date of this annual report, the House of Representatives approved the bill in general by 144
votes to 109. However, when the House of Representatives was considering the bill in particular, it was rejected and sent back to committee, so the bill promoted by the National Government will have to be analyzed again. On April 9,
2024, the government presented before Congress a new draft bill after negotiating with governors and allied blocs.
It is difficult to predict the social, political and economic impact of the measures announced and implemented by the government to date and future measures and the outcome of the ambitious deregulation scheme purported to be
enforced by means of Decree No. 70/2023 and the abovementioned draft bill. Such measures could affect our financial condition and the results of operations.
The Argentine Peso qualifies as a currency of a hyperinflationary economy and we are required to restate our historical financial statements to apply inflationary adjustments, which could adversely affect our results of operations
and financial condition and those of our Argentine subsidiaries
Pursuant to the International Accounting Standard 29, Financial Reporting in Hyperinflationary Economies (“IAS 29”), the financial statements of entities whose functional currency is that of a hyperinflationary economy must be
adjusted for the effects of changes in a general price index. IAS 29 does not prescribe when hyperinflation arises and the International Accounting Standards Board (“IASB”) does not identify specific hyperinflationary jurisdictions.
However, IAS 29 provides a series of non-exclusive guidelines that consist of (i) analyzing the behavior of the population, prices, interest rates and wages before the evolution of price indexes and the loss of the currency’s purchasing
power, and (ii) as a quantitative characteristic, verifying if the three-year cumulative inflation rate approaches or exceeds 100.00%. In June 2018, the International Practices Task Force of the Centre for Quality (“IPTF”), which monitors
countries experiencing high inflation, categorized Argentina as a country with projected three-year cumulative inflation rate greater than 100.00%. In addition, certain qualitative macroeconomic factors provided under the International
Accounting Standard 29, Financial Reporting in Hyperinflationary Economies (“IAS 29”) were also identified. Therefore, Argentine companies using IFRS, such as us, are required to apply IAS 29 to their financial statements for
periods ending on and after July 1, 2018. As a result, our Audited Consolidated Financial Statements included in this annual report, including the figures for the previous periods (this fact not affecting the decisions taken on the
financial information for such periods), and, unless otherwise stated, the financial information included elsewhere in this annual report, were restated to consider the changes in the general purchasing power of our functional currency
(Argentine peso) pursuant to IAS 29 and General Resolution No. 777/2018 of the CNV.
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Significant fluctuations in the value of the peso could adversely affect the Argentine economy and, in turn, adversely affect our results of operations
4
The depreciation of the peso has had and may continue to have a negative impact on the ability of certain Argentine businesses to service their foreign currency-denominated debt, lead to inflation, significantly reduce real wages and
jeopardize the stability of businesses, such as ours, whose success depends on domestic market demand and adversely affect the Argentine Government’s ability to honor its foreign debt obligations. In 2023, the peso depreciated
approximately 78.09%, and 5.78% from December 31, 2023, through March 31, 2024. On March 31, 2024, the exchange rate was Ps. 858.00 to US$1.00, as quoted by the Banco de la Nación Argentina for wire transfers (divisas).
The main effects of the devaluation of the Argentine peso on our net results, expressed in pesos, are related to (i) exchange rate differences as a result of our exposure to the dollar, (due to the fact that our functional currency is the
Argentine peso); (ii) higher revenues generated by the sale of energy priced in U.S. dollars, and (iii) higher costs generated by expense items priced in U.S. dollars such as financial obligations and certain maintenance contracts among
other costs. In addition, the majority of our debt is denominated in currencies other than the peso; consequently, a devaluation of the peso against such currencies will increase the amount of pesos we need to cover our debt service
obligations.
If the peso depreciates further, all the negative effects on the Argentine economy related to such depreciation could recur, with adverse consequences to our business, financial condition and results of operations. In addition, a further
depreciation of the Argentine Peso against the U.S. dollar may also have an adverse impact on our capital expenditure program and increase the Argentine Peso amount of our trade liabilities and financial debt denominated in U.S.
dollars. As of December 31, 2023, 100.00% of our financial liabilities were denominated in U.S. dollars.
We remain highly exposed to risks associated with the fluctuation of the Argentine Peso, therefore, a devaluation of the Argentine Peso could have a material adverse effect on our financial condition and results of operations.
Exchange controls and restrictions on capital inflows and outflows could limit the availability of international credit and could threaten the financial system, adversely affecting the Argentine economy and, as a result, our
business
The Argentine government and the BCRA have implemented certain measures that control and restrict the ability of companies and individuals to access to the foreign exchange market to purchase foreign currency and to transfer it
abroad. Those measures include, among others: (i) restricting access to the Argentine foreign exchange market for the purchase or transfer of foreign currency abroad for any purpose, including the payment of dividends to non-residents
stakeholders; (ii) restrictions on the acquisition of any foreign currency to be held as cash in Argentina; (iii) requiring exporters to repatriate and settle in pesos, in the local exchange market, all or a portion of the proceeds of their
exports of goods and services; (iv) limitations on the transfer of securities into and from Argentina; and (v) the implementation of taxes on certain transactions involving the acquisition of foreign currency.
The exchange controls introduced gave rise to an unofficial U.S. dollar trading market. As of the date of this annual report, the peso/U.S. dollar exchange rate in such market substantially differs from the official peso/U.S. dollar
exchange rate. The Argentine government could maintain a single official exchange rate or create multiple exchange rates for different types of transactions, substantially modifying the applicable exchange rate at which we acquire
currency to service our outstanding foreign currency denominated liabilities.
There can be no assurance that the BCRA or other government agencies will not increase or relax such controls or restrictions, make modifications to these regulations, impose further mandatory refinancing plans related to our
indebtedness payable in foreign currency, establish more severe restrictions on currency exchange, or maintain the current foreign exchange regime or create multiple exchange rates for different types of transactions, substantially
modifying the applicable exchange rate at which we acquire currency to service our outstanding liabilities denominated in currencies other than the peso, all of which could affect our ability to comply with our financial obligations
when due, raise capital, refinance our debt at maturity, obtain financing, execute our capital expenditure plans, and/or undermine our ability to pay dividends to foreign shareholders. Consequently, these exchange controls and
restrictions could materially adversely affect the Argentine economy and/or our business, financial condition, and results of operations. See “Exchange Controls”.
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Argentina’s ability to obtain financing from international markets is limited, which could affect its capacity to implement reforms and sustain economic growth, and may negatively impact our financial condition or cash flows
During recent years the Argentine Republic has experienced financial distress, leading to an increase in the incurrence of public debt.
Since 2020 and on several occasions to date, the Argentine government engaged in negotiations with Argentina’s creditors to restore the sustainability of its public external debt. During the past years, the Argentine government held
negotiations with the International Monetary Fund (“IMF”) in order to negotiate several disbursements.
On January 28, 2022, the Argentine government and the IMF announced that they had reached an understanding on key policies as part of their ongoing discussions involving an IMF-supported program. Later, on March 3, 2022, the
IMF and the Argentine government announced that the agreement is based on what is known as the IMF’s Extended Fund Facility, which includes 10 reviews to be carried out quarterly for two and a half years and disbursements for an
amount equivalent to US$44.0 billion.
The latest quarterly review was approved by the IMF executive board on February 1, 2024 and granted a disbursement of US$4.7 billion to cover payments until May 2024.
The repayment period for each disbursement is ten years, with a grace period of four and a half years, which implies that Argentina shall repay the debt between 2026 and 2034.
In the event that the Argentine Government does not comply with the economic and fiscal commitments and targets agreed with the IMF, or that the agreement is not approved by the IMF Executive Board, Argentina could default on its
debt with the IMF and, consequently, its financial and economic situation could be adversely affected.
Moreover, on March 22, 2022, the Argentine government reached an agreement with the Paris Club for a new extension of the understanding reached in June 2021 (the “Paris Club Agreement”).
On October 28, 2022, the former Minister of Economy, Sergio Massa, announced a new agreement with the Paris Club. The agreement is an addendum to the one signed in 2014 by the then Minister of Economy, Axel Kicillof, and
recognizes a principal amount of US$1,971 million, extending a repayment period of thirteen semi-annual installments, starting in December 2022 to be finally cancelled on September 2028. The interest rate was improved from 9.00%
to 3.90% in the first three installments, with a gradual increase to 4.50%. The payment profile implies an average semi-annual payment of US$170.0 million (principal and interest included). Over the next two years Argentina will
repay 40.00% of the principal due.
On June 26, 2023, the former Minister of Economy, Sergio Massa signed bilateral agreements with three members of the Paris Club to refinance the existing debt with the institution. Thus, after signing the new agreement reached in
2022, the former Minister of Economy was able to seal bilateral agreements with 15 of the 16 creditors of the institution.
We cannot assure that the EFF Agreement and the Paris Club Agreement will not affect Argentina’s ability to implement reforms and public policies and boost economic growth. Consequently, there can be no assurance that the
implementation of the revenue and expenditure policies of the EFF Agreement regarding the reduction of untargeted energy subsidies would not have material adverse effect on our financial condition and results of operations. Also, we
cannot predict the impact of the outcome of such reforms on Argentina’s (and indirectly our) ability to access the international capital markets. Moreover, the long-term impact of these measures and any future measures taken by the
current administration on the Argentine economy remains uncertain.
In addition, the Argentine Republic’s future tax revenue and fiscal results may be insufficient to meet its debt service obligations and the Argentine Republic may have to rely in part on additional financing from domestic and
international capital markets, the IMF and other potential creditors, in order to meet future debt service obligations. In the future, the Argentine Republic may not be able or willing to access international or domestic capital markets,
which could have a material adverse effect on the Argentine Republic’s ability to make payments on its outstanding public debt, and in turn, could materially adversely affect our financial condition and results of operations.
In spite of the restructuring of the Argentine public debt carried out in 2020, the international markets continued showing signs of doubts as to whether Argentina’s debt is sustainable and, therefore, country risk indicators remain high.
Without renewed access to the financial market the Argentine government may not have the financial resources to implement reforms and boost growth, which could have a significant adverse effect on the country’s economy and,
consequently, on our activities. Likewise, Argentina’s inability to obtain credit in international markets could have a direct impact on our ability to access those markets to finance our operations and our growth, including the financing
of capital investments, which would negatively affect our financial condition, results of operations and cash flows. In addition, we cannot predict the outcome of any future restructuring of Argentine sovereign debt. Any new event of
default by the Argentine government could negatively affect their valuation and repayment terms, as well as have a material adverse effect on the Argentine economy and, consequently, our business and results of operations.
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The Argentine economy could be adversely affected by economic developments in other markets and by more general “contagion” effects
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Financial and securities markets in Argentina and the Argentine economy are influenced by the effects of global or regional financial crisis and market conditions in other markets worldwide. Weak, flat or negative economic growth of
any of Argentina’s major trading partners, such as Brazil (Argentina’s main trading partner), China or the United States, could have a material adverse effect on Argentina’s trade balance and adversely affect Argentina’s economic
growth. The economic performance of other trading partners such as Chile, Spain and Canada may also affect Argentina’s trade balance.
Global economic instability such as uncertainty about global trade policies, the deterioration of economic conditions in Brazil and of the economies of other major trading partners of Argentina, such as China or the United States, the
withdrawal of the United Kingdom from the European Union, geopolitical tensions between the United States and a number of foreign countries, the ongoing conflict between Russia and Ukraine, decisions by the Organization of
Petroleum Exporting Countries (OPEC), the increasing tensions in the Middle East between Israel and Hamas, as well as the threats to trade through the Red Sea and the Suez Canal and other non-OPEC oil-producing nations with
respect to oil production that affect oil prices, idiosyncratic, political and social discords, terrorist attacks, sovereign debt downgrades, a pandemic disease, could impact the Argentine economy and jeopardize Argentina’s ability to
stabilize its economy, among others.
These developments, or the perception that any of them could occur, may have a material adverse effect on global economic conditions and the stability of global financial markets. Any of these factors could depress economic activity
and restrict our access to suppliers and have a material adverse effect on our business, financial condition, and results of operations.
The Argentine economy may be affected by “contagion” effects. International investors’ reactions to events occurring in one developing country sometimes appear to follow a “contagion” effect, in which an entire region or investment
class is disfavored by international investors.
Consequently, there can be no assurance that the Argentine economy and securities markets will not be adversely impacted by events affecting developed economies, emerging markets, or any of Argentina’s major trading partners,
which could in turn adversely affect our business, financial condition, and results of operations, and the market value of our ADSs. Furthermore, a significant devaluation of the currencies of our trading partners or trade competitors
may adversely affect the competitiveness of Argentina and consequently, adversely affect Argentina’s economy and our financial condition and results of operations.
We may be exposed to adverse effects arising from geopolitical conflicts occurring worldwide
Russia’s military incursion in Ukraine, which started in February 2022, has led to and could continue to give a rise to an escalation of armed action, regional instability and result in heightened economic sanctions by the United States,
the European Union, and other countries against Russia. Although the severity and duration of the ongoing conflict is highly unpredictable, its effects could be substantial, and any continuation of the conflict could adversely affect
global and regional economic conditions. After two years since the beginning of the armed conflict, military actions keep growing and fears of an escalation to the use of nuclear weapons are rising as a result of the decision from the
Russian government to halt its participation under the Strategic Arms Reduction Treaty III.
As of the date of this annual report, the ongoing conflict has led high volatility in commodity prices and international crude oil and gas prices, which has resulted in higher fuel prices and – consequently – in a sharper rise in inflation
around the world. Moreover, economic sanctions imposed against Russia may lead to shortage of raw materials and commodities, which could in turn contribute to the increase in inflation worldwide and to interruption to the supply
chain in general, and particularly in the energy sector. Such difficulties may consequently derive in constraints to supply the local market. Consequently, this could adversely affect our business, financial condition, or results of
operations.
Additionally, during October 2023, an armed conflict between Israel and Hamas in the Gaza Strip began. The Palestinian political and military movement Hamas, which has controlled the Gaza Strip for more than 15 years, infiltrated
across the militarized border with Israel. The Hamas attacks prompted an immediate response from Israel, which declared a state of war and launched operation “Iron Sword”. The Israeli army mobilized troops and artillery to reinforce
the borders, encircle the Gaza Strip and search for Hamas terrorists left behind in Israeli territory.
As a consequence of the ongoing conflict between Israel and Hamas, which has already involved several jurisdictions (given that Israel has received attacks from Hezbollah cells spread across the region), on April 13, 2024, Iran
launched an unprecedented attack on Israel in a new escalation of the violent situation in the Middle East. Iran’s offensive was in retaliation for an Israeli attack on its consulate in Damascus, Syria, in which an Iranian military
commander was killed. This attack implies the start of a belic conflict between two nations, and it cannot be assured that there will be no other countries involved. As of the date of this annual report, the conflict continues and it is not
possible to anticipate what the consequences will be should it escalate to a regional wide conflict.
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Due to the uncertainties inherent to the scale and duration of these events and its direct and indirect effects, it is not reasonably possible to estimate the impact this conflict will have on the world’s economy and its financial markets, on
Argentina’s economy and, consequently, our business, financial condition and results of operations. Any such disruptions caused by Russian military action or resulting sanctions, as well as the conflict between Israel and Hamas may
magnify the impact of other risks described in this annual report.
The Argentine banking system may be subject to instability which may affect our operations
In recent years, the Argentine financial system grew significantly with a marked increase in loans and private deposits, showing a recovery of credit activity. Although the financial system’s deposits continue to grow in nominal terms,
they are mostly short-term deposits and the sources of medium and long-term funding for financial institutions are currently limited.
Financial institutions are particularly subject to significant regulation from multiple regulatory authorities, all of whom may, among other things, establish limits on commissions and impose sanctions on the financial institutions. The
lack of a stable regulatory framework, or changes to such regulatory framework by the government, could impose significant limitations on the activities of the financial institutions and could induce uncertainty with respect to the
financial system stability.
The persistence of the current economic crisis or the instability of one or more of the larger banks, public or private, could have a material adverse effect on the prospects for economic growth and political stability in Argentina,
resulting in a loss of consumer confidence, lower disposable income and fewer financing alternatives for consumers. These conditions could also have a material adverse effect on the Argentine banking system, and therefore, on our
business, financial condition and results of operations.
Failure to adequately address actual and perceived risks of institutional deterioration and corruption may adversely affect Argentina’s economy and financial condition, which in turn could adversely affect our business, financial
condition and results of operations
A lack of a solid institutional framework and corruption have been identified as, and continue to be, a significant problem for Argentina. Recognizing that the failure to address these issues could increase the risk of political instability,
distort decision-making processes and adversely affect Argentina’s international reputation and ability to attract foreign investment, the 2015-2019 administration had adopted several measures aimed at strengthening Argentina’s
institutions and reducing corruption. These measures included the reduction of criminal sentences in exchange for cooperation with the government in corruption investigations, increased access to public information, the seizing of
assets from corrupt officials, and establishing a corporate criminal liability regime for corruption offenses aimed at promoting anticorruption compliance, among others. According to the Corruption Perceptions Index published on
January 30, 2024 by the organization Transparency International, Argentina dropped four positions in relation to 2022 and finished 98th out of 180 countries with the most corruption. The recently elected administration’s ability to
implement them or promote further transparency and integrity measures is uncertain in a highly polarized political context. Argentina’s political environment has historically influenced, and continues to influence, the performance of
the country’s economy. Political crises have affected and continue to affect the confidence of investors and the general public, which have historically resulted in economic deceleration and heightened volatility in the securities with
underlying Argentine risk. The recent economic instability in Argentina has contributed to a decline in market confidence in the Argentine economy as well as to a deteriorating political environment.
In addition, various ongoing investigations into allegations of money laundering and corruption being conducted by the Office of the Argentine Federal Prosecutor, have negatively impacted the Argentine economy and political
environment. Certain government officials of previous administrations as well as high ranked officers of companies holding government contracts or concessions have faced or are currently facing allegations of corruption and money
laundering as a result of these investigations. These individuals are alleged to have accepted or paid, as applicable, bribes by means of kickbacks on contracts granted by the government to several infrastructure, energy and construction
companies. We have no control over and cannot predict for how long the corruption investigations will continue nor whether such investigations or allegations (or any other future investigations or allegations) will lead to further
political and economic instability. In addition, we cannot predict the outcome of any such allegations nor their effect on the different sectors of the Argentine economy. See also “—We are subject to anticorruption, anti-bribery, anti-
money laundering and other laws and regulations”.
Risks Relating to the Electric Power Sector in Argentina
The Argentine Government has intervened in the electric power sector in the past, and is likely to continue intervening
Historically, the Argentine government has played an active role in the electric power industry through the ownership and management of state-owned companies engaged in the generation, transmission and distribution of electric
power. Moreover, the Argentine government made a number of material changes to the regulatory framework applicable to the electric power sector since the Argentine economic crisis of 2001, including adopting Law No. 25,561 (the
“Public Emergency Law”), which have had significant adverse effects on electric power generation, distribution and transmission companies and included the freezing of distribution margins, the revocation of adjustment and inflation
indexation mechanisms for tariffs, a limitation on the ability of electric power distribution companies to pass on to the consumer increases in costs due to regulatory charges and the introduction of a new price-setting mechanism (i.e.,
remuneration of power generators) in the WEM, all of which had a significant impact on electric power generators and caused substantial price differences within the market.
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In recent years, the Argentine Government has continued to declare emergencies related to the power sector, by means of Decree No. 134/2015, the Solidarity Law No. 27,541 and Decree No. 55/2023. For further details, please refer to
“Item 4.B. Business Overview—The Argentine Electric Power Sector—Emergency of the Electric Power Sector”.
It is possible that the government of Argentina may adopt certain measures that could materially and adversely affect our business and results of operations. There is also the potential for emergency legislation and measures akin to the
Public Emergency Law to be enacted in the future. Such actions could significantly alter the regulatory framework governing the electric power industry. Any changes to the regulation could indirectly have a detrimental impact on the
electric power generation industry, and consequently, on our business, financial condition, and results of operations.
For instance, a significant increase in energy costs for consumers, either due to tariff hikes or reductions in consumer subsidies, may lead to a decrease in demand for the energy we generate. Such a material adverse effect on electric
power demand could, in turn, result in lower revenues and poorer results of operations for electric power generation companies, including our own, than currently anticipated.
Changes in regulatory frameworks under which we sell our electricity may affect our financial condition and results of operations
We cannot assure what further changes the Argentine Government may make to the regulatory frameworks under which we sell power availability or electricity, nor that these changes will not negatively impact our results of operations.
Moreover, we cannot assure under what kind of regulatory framework we will be able to sell our generation capacity and electricity in the future. Any further changes in the current applicable laws and regulations, or adverse judicial or
administrative interpretations of such laws and regulations, may adversely affect our results of operations. In addition, some of the measures proposed by the Argentine government may also generate political and social opposition,
which may in turn prevent the Argentine government from adopting such measures as proposed.
The factors mentioned above for both our operation of power generation and the projects under construction/development, may also lead to an impairment of property, plant and equipment and intangible assets, related to a reduction in
the assessed value-in-use of certain assets that may exceed their previously recorded book value.
We have, in the recent past, been unable to collect payments, or to collect them in a timely manner, from CAMMESA and other customers in the electric power sector
A substantial amount of our total revenues comes from our sales to CAMMESA. In addition, we receive significant cash flows from CAMMESA in connection with the FONINVEMEM and similar programs. Payments to us by
CAMMESA, depend upon payments that CAMMESA in turn receives from other WEM agents such as electric power distributors as well as subsidies from the Argentine government to certain users, which in turn requires additional
funding to CAMMESA from the government to pay to generators.
In recent years, due to regulatory conditions and long periods of frozen tariffs in Argentina’s electric power sector that affected the profitability and economic viability of power utilities, certain WEM agents defaulted on their payments
to CAMMESA, which adversely affected CAMMESA’s ability to meet its payment obligations with electric power generators, including us. As a consequence of delays in payments that CAMMESA received from other WEM agents,
we also saw delays in, receiving payments from CAMMESA more than 90 days of month-end, rather than the required 42 days after the date of billing. Such payment delays resulted in higher working capital requirements that we
would typically finance with our own financing sources.
Additionally, a system was implemented in the past whereby a significant portion of unpaid credits were converted into LVFVDs; a practice that could be repeated in the future, or another alternative scheme could be implemented for
payments due.
As of the date of this annual report, CAMMESA is facing difficulties to make payments to generators both in respect of energy dispatched and generation capacity availability on a timely basis or in full, which in turn may substantially
and adversely affect our financial position and the results of our operations.
Argentina has certain energy transmission and distribution limitations that adversely affect the capacity of electric power generators to deliver all of the energy they can to produce, which results in reduced sales
The energy that generators can deliver to the transmission system for the further delivery to the distribution system at all times depends on the capacity of the transmission and distribution systems that connects them to it. In the past, the
transmission and distribution system operated at near full capacity and both transmission and distributors were not able to guarantee an increased supply of electric power to their customers. In the past years, the increase in demand for
electric power resulted in blackouts in Buenos Aires and other cities around Argentina, which resulted in excess capacity for generators. As a result, the amount of hydroelectric energy and thermal energy generated was larger than what
the transmission and distribution systems are capable of transmitting or distributing. Any transmission or distribution limitation for generators could reduce the energy sold, which could adversely affect our financial condition.
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Restrictions on the supply of energy could negatively affect Argentina’s economy
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Demand for natural gas and electricity has increased substantially, driven by a recovery in economic conditions and price constraints, resulting in industry shortages and/or costs increase. In particular, Argentina has been importing gas
in order to compensate the shortage in local production. In order to pay for those imports the Argentine government has frequently used the Argentine Central Bank reserves due to absence of incoming currencies from investment.
Argentina’s foreign exchange reserves are particularly limited and, therefore, Argentina’s ability to deal with significant increases in international oil and gas prices remains limited. If the Argentine government is unable to pay for the
gas import in order to produce electricity, business and industries may be affected.
Moreover, the Argentine government has taken a number of measures aimed at alleviating the short-term impact of supply restrictions on residential and industrial users such as importing natural gas from Bolivia, importing liquefied
natural gas transported to Argentina in vessels. If these measures prove to be insufficient, or if the investment that is required to increase natural gas production and energy generation over the medium-and long-term fails to materialize
on a timely basis, economic activity in Argentina could be curtailed which may have a significant adverse effect on our business.
Continued disruptions in the supply of energy could cause a significant adverse impact on the electric power generation industry, and therefore, our business, financial condition and results of operations.
We operate in a heavily regulated sector that imposes significant costs on our business, and we could be subject to fines and liabilities that could have a material adverse effect on our results of operations
We are subject to a wide range of federal, provincial and municipal regulations and supervision, including laws and regulations pertaining to tariffs, labor, social security, public health, consumer protection, the environment and
competition. Furthermore, Argentina has 23 provinces and one autonomous city (the City of Buenos Aires), each of which, under the Argentine National Constitution, has power to enact legislation concerning taxes, environmental
matters and the use of public space. Within each province, municipal governments can also have powers to regulate such matters. Although the generation of electric power is considered an activity of general interest (actividad de
interés general) subject to federal legislation, since our facilities are located throughout various provinces, we are also subject to provincial and municipal legislation. Future developments in the provinces and municipalities concerning
taxes (including sales, security and health and general services taxes), environmental matters, the use of public space or other matters could have a material adverse effect on our business, results of operations and financial condition.
Compliance with existing or future legislation and regulations could require us to make material expenditures and divert funds away from planned investments in a manner that could have a material adverse effect on our business,
results of operations and financial condition.
In addition, our failure to comply with existing regulations and legislation, or reinterpretations of existing regulations and new legislation or regulations, such as those relating to fuel and other storage facilities, volatile materials, cyber
security, emissions or air quality, hazardous and solid waste transportation and disposal and other environmental matters, or changes in the nature of the energy regulatory process may subject us to fines and penalties and have a
significant adverse impact on our financial results.
Risks arise for our business from technological change in the energy market
The energy market is subject to far-reaching technological change, both on the generation side and on the demand side. For example, with respect to energy generation, the development of energy storage devices (battery storage in the
megawatt range) or facilities for the temporary storage of power through conversion to gas (so-called “power-to-gas-technology”), the increase in energy supply due to new technological applications such as fracking or the
digitalization of generation and distribution networks should be mentioned.
New technologies to increase energy efficiency and improve heat insulation, for the direct generation of power at the consumer level, or that improve refeeding (for example, by using power storage for renewable generation) may, on
the demand side, lead to structural market changes in favor of energy sources with low or zero carbon dioxide emissions or in favor of decentralized power generation, (for instance, via small-scale power plants within or close to
residential areas or industrial facilities).
If our business is unable to react to changes caused by new technological developments and the associated changes in market structure, our equity, financial or other position, or our results, operation and business, could be materially
and adversely affected.
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Competition in the Electric Power Sector in Argentina may adversely affect our results of operations
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The power generation markets in which we operate are characterized by numerous strong and capable participants, many of which may have extensive and diversified developmental or operating experience (including both domestic
and international) and financial resources similar to or significantly greater than ours. See “Item 4.B. Business Overview-Competition”. An increase in competition could cause reductions in prices and increase acquisition prices for
fuel, raw materials and existing assets and therefore, adversely affect our results of operations and financial condition.
From time to time, we also compete with other generation companies for the megawatt of capacity that are allocated through public auction processes.
We and our competitors are connected to the same electrical grid that has limited capacity for transportation, which, under certain circumstances, may reach its capacity limits. Therefore, new generators may connect, or existing
generators may increase, their outputs and dispatch more electric power to the same grid that would prevent us from delivering our energy to our customers. In addition, the Argentine Government (or any other entity on its behalf)
might not make the necessary investments to increase the system’s capacity, which, in case there is an increase of energy output, would allow us and existing and new generators to efficiently dispatch our energy to the grid and to our
customers. As a result, an increase in competition could affect our ability to deliver our product to our customers, which would adversely affect our business, results of operations and financial condition.
Risks Relating to Our Business
Our results depend largely on the compensation established by the Secretariat of Energy and received from CAMMESA
Since the enactment of Resolution SE No. 95/13, our compensation has depended largely on the compensation determined by energy output and availability. This remuneration scheme was then subject to several modifications,
implemented by means of Resolution SE No. 529/14, Resolution SE No. 482/2015, Resolution SEE No. 22/2016, Resolution 19/17 (which established a remuneration scheme in US dollars) and Resolution 1/19 (which maintained the
scheme in US dollars).
On February 27, 2020, the Secretariat of Energy of the former National Ministry of Production Development issued Resolution 31/20 which amended Resolution 1/19 and determined the remuneration scheme applicable from February
1, 2020 for Authorized Generators in the WEM, establishing Spot Sales prices in Argentine pesos. Initially, Resolution 31/20 set forth a mechanism for updating the prices denominated in Argentine Pesos. However, on April 8, 2020,
the Secretariat of Energy instructed CAMMESA to postpone until further notice the application of the mechanism for updating the prices of energy and capacity provided for in Annex VI of Resolution 31/20, and the mechanism was
finally repealed by means of Resolution 440/21. This has caused a material adverse effect on our business and results of operations.
Except for sales under contracts, revenues from energy production are calculated and paid by CAMMESA pursuant to a fixed and variable price system arising —currently— from the Resolution 1/19 (as amended by Resolution 31/20
and further regulations, more recently, Resolution 9/24).
Since March 2020, numerous resolutions have been issued updating prices discretionally. We cannot assure you that further reductions of these remunerations will not occur in the future. See “Item 4.B. Business Overview-The
Argentine Electric Power Sector-Remuneration Scheme”.
Except for sales under contracts, revenues from energy production are calculated and paid by CAMMESA pursuant to a fixed and variable price system arising —currently— from the Resolution No. 1/2019 (as amended by Resolution
No. 31/2020 and further regulations, including Resolution No. 9/2024).
Further, as of February 2023, Resolution 59/23 is also applicable as a complementary regulation for combined cycle facilities. See “Item 5.A. Operating Results-Factors Affecting Our Results of Operations-Our Revenues-The Spot
Sales” and “Item 3.D. Risk Factors-Risks Relating to the Electric Power Sector in Argentina-We have, in the recent past, been unable to collect payments, or to collect them in a timely manner, from CAMMESA and other customers in
the electric power sector”.
Our revenues are significantly influenced by the decisions of regulatory authorities. The absence of stable mechanisms for price updates, along with the Argentine Government’s failure to provide regulated remuneration increases or to
implement such increases promptly, could materially and negatively affect our revenues. Consequently, this could lead to adverse effects on our operational results.
Factors beyond our control may affect or delay the completion of the awarded projects or alter our plans for the expansion of our existing plants
With regards to projects currently under development or new potential projects, several factors may affect, delay or cancel the completion of such projects currently under development or new projects: (i) sustained or prolonged disease
outbreaks and pandemics, that may result in restrictions to mobility and the development of any such projects, as scheduled, (ii) the economic recession in Argentina, (iii) the decrease in demand of electric energy, (iv) the lack of
available financing, and (v) the reduction in the prices of electric energy for power units under Spot Sales, among others.
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Delays in construction or commencement of operations of expanded capacity in our existing power plants or our new power plants could lead to an increase in our financial needs and cause our financial returns on new investments to
be lower than expected, which could materially adversely affect our financial condition and results of operations. Furthermore, delays in the commencement of operation of our gas turbines has negatively affected its estimated
recoverability See “Item 5.A. Operating Results-Critical Accounting Policies-Impairment of Property, Plant and Equipment”.
Factors that may impact our ability to commence operations at our existing power plants, expand their power capacity or build new power plants include: (i) the failure of contractors to complete or commission the facilities or auxiliary
facilities by the agreed-upon date or within budget; (ii) the unexpected delays of third parties such as gas or electric power distributors in providing or agreeing to project milestones in the construction or development of necessary
infrastructure linked to our generation business; (iii) the delays or failure by our turbine suppliers in providing fully operational turbines in a timely manner; (iv) difficulty or delays in obtaining the necessary financing in terms
satisfactory to us or at all; (v) delays in obtaining regulatory approvals, including environmental permits; (vi) court rulings against governmental approvals already granted, such as environmental permits; (vii) shortages or increases in
the price of equipment reflected through change orders, materials or labor; (viii) opposition by local and/or international political, environmental and ethnic groups; (ix) strikes; (x) adverse changes in the political and regulatory
environment in Argentina; (xi) unforeseen engineering, environmental and geological problems and(xii) adverse weather conditions, natural disasters, accidents or other unforeseen events. Any cost overruns could be material. In
addition, any of these other factors may cause delays in the completion of expanded capacity at our existing power plants or the construction of our new power plant, which could have a material adverse effect on our business, financial
condition and results of operations. These delays may also result in short-term sanctions by CAMMESA and, in extreme cases, sanctions for the duration of the contract.
Our business may require substantial capital expenditures for ongoing maintenance requirements and the expansion of our installed generation capacity
Incremental capital expenditures may be required to fund ongoing maintenance necessary to maintain our power generation and operating performance and improve the capabilities of our electric power generation facilities.
Furthermore, capital expenditures will be required to finance the cost of our current and future expansion of our generation capacity. If we are unable to finance any such capital expenditures in terms satisfactory to us or at all, our
business and the results of our operations and financial condition could be adversely affected. Our financing ability may be limited by market restrictions on financing availability for Argentine companies. See “—Risks Relating to
Argentina— Argentina’s ability to obtain financing from international markets is limited, which could affect its capacity to implement reforms and sustain economic growth and may negatively impact our financial condition or cash
flows” and “Item 4.B. Business Overview”.
Covenants in our indebtedness could adversely restrict our financial and operating flexibility
Some of our current indebtedness (including the debt of our subsidiaries, some of which is guaranteed by us) includes, and our future indebtedness may include, affirmative and restrictive covenants that limit our ability to create liens,
incur additional indebtedness, making capital expenditures, dispose of our assets, pay dividends, or consolidate, merge or sell part of our businesses, and require us to maintain certain financial ratios. See “Item 5.B. Liquidity and
Capital Resources-Indebtedness”. These restrictions may limit our ability to operate our business and may prohibit or limit our ability to enhance our operations or take advantage of potential business opportunities as they arise. The
breach of any of these covenants or the failure to meet any of such conditions could result in a default under the relevant indebtedness. Our ability to comply with these covenants may be affected by events beyond our control, including
prevailing economic, financial and industry conditions. If any such default occurs, the holders of such indebtedness may elect (after the expiration of any applicable notice or grace periods) to declare all outstanding amounts, together
with accrued and unpaid interest and other amounts payable thereunder, to be immediately due and payable. Further, any such default occurs, it could, in turn, result in a default and acceleration of our other outstanding debt obligations,
which would have a further material adverse effect on our business, ability to meet our payment obligations, financial condition, and results of operations. If any of our debt were to be accelerated, our assets may not be sufficient to
repay in full that debt or any other debt that may become due as a result of that acceleration.
We may be unable to refinance our outstanding indebtedness, or the refinancing terms may be materially less favorable than their current terms, which would have a material adverse effect on our business, financial condition
and results of operations
Factors beyond our control may impair our ability to meet our debt obligations or increase the cost of financing, which in turn, could have a material adverse effect on our cash flow, results of operations and overall financial position.
There is no assurance that we will be able to extend the maturity or otherwise refinance our outstanding indebtedness, or that we may be required to agree to refinancing terms that may be materially less favorable than the terms of our
current loans. Any amendment to or refinancing of our indebtedness could result in higher interest rates and may require us to comply with more burdensome restrictive covenants, which may have a material adverse effect on our
business, ability to meet our payment obligations, financial condition, and results of operations.
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If we are unable to refinance our debt in favorable terms, we may be forced to reduce or delay capital expenditures, seek additional equity capital, restructure our debt, curtail or eliminate our cash dividend to stockholders, or sell assets.
Non-payment of our obligations or any other default under any of our debt instruments could, in turn, result in a default and acceleration of our other outstanding debt obligations, which would have a further material adverse effect on
our business, ability to meet our payment obligations, financial condition, and results of operations. If any of our debt were to be accelerated, our assets may not be sufficient to repay in full that debt or any other debt that may become
due as a result of that acceleration.
The government’s decision regarding the future of the hydroelectric concessions could impact the HPDA operations, which may adversely affect our results of operations.
The HPDA Concession Agreement executed between us and the Argentine Government, pursuant to which we were permitted to operate our Piedra del Águila plant, expired on December 28, 2023, and did not provide for an automatic
renewal.
Resolution No. 574/2023, published on July 11, 2023, extended for 60 days (extendable for another 60 days) the termination date of the HPDA Concession Agreement -among other national hydroelectric power plants whose concession
term expired during 2023. Another renewal of such period was established by Resolution 02/24, issued by the Secretariat of Energy, which was set to expire on April 27, 2024. In addition, on March 15, 2024, Resolution 33/24, issued
by the Secretariat of Energy, extended once again the transition period for 60 days setting the expiration date on June 28, 2024. This plant has a total installed capacity of 1,440 MW, and it represented approximately 23.96% of our total
electric energy generation, and 9.81% of our total revenues in 2023.
We currently intend to continue renewing the HPDA Concession Agreement. The government is supposed to determine a new regulatory framework for the whole electricity market and this would foster a decision regarding the future
of all hydroelectric concessions, where a new tender offer is one possible alternative. If this is case, we would carefully evaluate the terms and conditions to determine if we participate or not. Any government's decision regarding the
future of hydroelectric concessions may adversely affect our results of operations.
Our interests in TJSM, TMB were diluted and CVOSA will be significantly diluted
As of December 31, 2020, we had a 30.875% interest in TJSM which was reduced to 9.627% during 2021 and a 30.946% interest in TMB which was also reduced during 2021 to 10.831%. Both companies are engaged in managing the
purchase of equipment, building, operating, and maintaining power plants constructed under the FONINVEMEM program. As of the date of this annual report, we also own 56.19% of CVOSA, the company that operates the thermal
power plant in Timbúes.
After ten years of operations, TJSM and TMB were entitled to receive property rights to such power plants from the respective trusts currently holding such power plants. At such time, the term of the trusts expired and the Argentine
Government, that financed part of the construction, should be incorporated as a shareholder of TJSM and TMB. Consequently, our interests in TJSM and TMB were diluted in 2021. In the case of TMB and TJSM, the ten-year period
expired on January 7, 2020 and on February 2, 2020, respectively. From such dates, during the following 90-days, TJSM and TMB and their shareholders had to perform all the necessary acts to allow the Argentine Government to
receive the corresponding shares in the equity stake of TJSM and TMB that their contributions entitle the Argentine Government to receive.
On January 3, 2020, before the aforementioned 90 days period commenced, the Argentine Government sent us a notice (doing the same with TSM, TMB and other generation companies that are shareholders of TJSM and TMB) stating
that, in accordance with FONINVEMEM Agreement, TJSM and TMB should perform all necessary acts to incorporate the Argentine Government as shareholder of both companies, claiming, in each case, the following equity interest
rights: 65.006% in TMB and 68.826% in TJSM.
On January 9, 2020, we, together with the other generation companies, shareholders of TJSM and TMB, replied such notice stating that the Argentine Government’s equity interest claims did not correspond with the contributions made
for the construction of the power plants under the terms of the FONINVEMEM Agreement that give rights to claim such equity interest. On March 4, 2020, the Argentine Government reiterated its previous claim to the Company.
Additionally, on January 7, 2020 and on January 9, 2020, Central Puerto, together with the other shareholders of TJSM and TMB (as guarantors within the framework and the limits stated by the FONINVEMEM Agreement, the Note
SE No. 1368/05 and the trust agreements), BICE, TJSM, TMB and the Energy Secretariat amended the Operation and Maintenance Agreement of the Manuel Belgrano Thermal Facility (the “TMB OMA”) and the Operation and
Maintenance Agreement of the San Martín Thermal Facility ( the “TJSM OMA”), respectively. The amendments to the TMB OMA and TJSM OMA extended the agreements until each of the trust’s liquidation effective date.
In March 2020, Central Puerto filed an administrative appeal against the Argentine Government challenging their acts referred to above (the “Claim”). Pursuant to this Claim, the position of the shareholders of TJSM and TMB is that
the Argentine Government equity interest in each of the companies should be lower but its incorporation as a shareholder in such companies is unchallenged. Therefore, even if we are successful with our Claim, our interests on TJSM
and TMB is significantly diluted.
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On May 4, 2020, and May 8, 2020, the extraordinary shareholders’ meetings of TMB and TJSM, respectively, approved the incorporation of the Argentine Government as shareholder of TJSM and TMB. In each of the extraordinary
shareholders’ meetings, the equity interest that was approved was the equity interest that the Argentine Government claims that it is entitled to, which is: 65.006% in TMB and 68.826% in TJSM.
In each of the shareholders’ meetings, Central Puerto (and other shareholders), made the corresponding reservation of rights to continue with the Claim, and expressly stated that the incorporation of the Argentine Government as a
shareholder in TMB and TJSM was approved for the sole purpose of achieving the transfer of the trust assets -which includes, among others, the power plants- from the respective trusts to TJSM and TMB.
On March 11, 2021, the Argentine Government subscribed its shares and the equity of the shareholders of TJSM and TMB were diluted. In the case of our equity interest, from 30.875% to 9.627% in TJSM and from 30.946% to
10.831% in TMB. As of the date of this annual report, the transfer of power stations to TSM and TMB was not completed.
Since February 17, 2023, and due to the acquisition of Central Costanera S.A, we hold equity interests of 10.90% in TJSM, 12.72% in TMB and 57.49% in CVOSA.
In the case of CVOSA, when the CVO Trust term expires after ten years of operation of the respective power plant the Argentine Government will be incorporated as shareholder, with a stake of at least 70.00% pursuant to
FONINVEMEM arrangements for CVOSA.
The dilution of our interest in CVOSA will reduce our income from this power plant, adversely affecting our results of operations. See “Item 4.B. Business Overview-FONINVEMEM and Similar Programs”.
Future changes in the rainfall amounts in the Limay River basin could adversely affect the revenues from the Piedra del Águila concession and, therefore, our financial results
As a hydroelectric facility, Piedra del Águila depends on the availability of water resources in the Limay River basin for electric power generating purposes, which in turn depends on the rainfall amounts in the area and water from
thaw. Lack of water resulted in lower electric power generation and, therefore, lower revenue.
In the event of critically low water levels, the Intergovernmental Basin Authority, which is in charge of managing the basin of the Limay, Neuquén and Negro rivers, is entitled to manage the water flows according to its flow control
standards, which could result in lower water resources for us, which in turn, would result in decreased generation activities. Further, under the HPDA Concession Agreement, we are not entitled to receive any compensation for revenue
losses as a result of such actions.
The Limay River basin’s flow may not be sufficient to maintain a regular generation level at Piedra del Águila and the enforcement authority may implement unfavorable measures for Piedra del Águila, and therefore, for us, which
could adversely affect our financial condition and our results of operations. For further information about Piedra del Águila’s seasonality, see “Item 4.B. Business Overview-Seasonality”.
Our ability to operate wind and solar farms profitably is highly dependent on suitable wind or sun and associated weather conditions, climate change and energy transition could affect our business.
The amount of energy generated by, and the profitability of, wind and solar farms are highly dependent on climate conditions, particularly wind conditions and irradiance, which can vary materially across locations, seasons and years.
Variations in wind conditions at wind farm sites and irradiance at solar plant sites occur as a result of daily, monthly and seasonal fluctuations in wind currents and irradiance and, over the longer term, as a result of more general
climate changes and shifts. Because turbines will only operate when wind speeds fall within certain specific ranges that vary by turbine type and manufacturer, if wind speeds fall outside or towards the lower end of these ranges, energy
output at our wind farms would decline.
Similarly, projections of solar resources depend on assumptions about weather patterns, shading and irradiance, which are inherently uncertain and may not be consistent with actual conditions at the site. During the development phase
and prior to the construction of any wind or solar farm, a wind or solar resource study to evaluate the potential wind or solar resource of the site is typically conducted over a period of several years. These wind or solar studies have
been conducted by our own team and independent technical consultants with respect to the estimated load factor resulting from our wind studies and the model of turbines used. We base our core assumptions and investment decisions
on the findings of these studies. We cannot assure you that observed climate conditions at a project site will conform to the assumptions that were made during the project development phase on the basis of these studies, and, therefore,
we cannot assure that our wind or solar farm projects will be able to meet their anticipated production levels. It is possible that future wind or solar resource patterns and electricity production at our wind or solar farms will not reflect
the historical wind or solar resource patterns at the respective sites or the projections, and wind or solar resource patterns at each site will change over time. If, in the future, the wind resource in the areas where our wind farms are
located or the solar resource in the areas where our solar plants are located is lower than expected, electricity production at such wind farms and/or solar plants would be lower than expected and consequently could materially adversely
affect our results of operations.
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If in the future the wind resource in the areas where our wind farms are located is lower than expected, electricity production at such wind farms would be lower than expected and consequently could materially adversely affect our
results of operations.
Climate change and energy transition could affect our business
We are and will be, directly and indirectly, subject to the effects of climate change and may, directly or indirectly, be affected by local and national laws, as well as international treaties and conventions, and implementing regulations
related to climate change. Any passage of climate control treaties, legislation, or other regulatory initiatives by the Argentine government that restrict emissions of greenhouse gases (“GHGs”) could require us to make significant
financial expenditures that we cannot predict with certainty at this time. This could include, for example, the adoption of regulatory frameworks to reduce GHG emissions, such as carbon dioxide, methane and nitrogen oxides. Changes
in the regulatory framework could also indirectly impact our business through changes in technology or consumer behavior.
In 2019, the Argentine Congress enacted Law No. 27,520 on Minimal Standards on Global Climate Change Adaptation and Mitigation, focusing on implementing policies, strategies, actions, programs and projects to prevent, mitigate
or minimize the damages or impacts associated with climate change. During 2021, the Secretariat of Energy issued Resolution No. 1,036/2021 approving the Guidelines for an Energy Transition Plan to 2030 in order to comply with its
new national decarbonization commitments. If additional requirements were adopted in Argentina, these requirements could increase our production costs (including compliance related costs such as for monitoring or reducing
emissions) and adversely impact our competitiveness and may also shift demand toward low-carbon sources, such as renewable energies.
The risks associated with climate change could impact our operations due to severe weather events, change the consumer profile, talent attraction, and energy transitions in the world economy towards a lower carbon matrix. These
factors may have a negative impact on the demand for our products and may affect the implementation and operation of our businesses, adversely impacting our operating and financial results and limiting our growth opportunities.
In addition, the pace and extent of the energy transition could pose a risk to our own transition towards decarbonization does not move in sync with society. If we are slower than society, our reputation may suffer and customers may
prefer a different supplier which would adversely impact demand for our products. If we move faster than society, we risk investing in technologies, markets or low-carbon products that are unsuccessful because there is limited demand
for them. Our failure to time the transition of our production to address climate-change related concerns could have a material adverse effect on our earnings, cash flows and financial condition.
Our power plants and forest assets are subject to the risk of mechanical, electrical failures and various catastrophic events, and any resulting unavailability may affect our ability to fulfill our contractual and other commitments
and thus adversely affect our business and financial performance
Our power generation units are at risk of mechanical or electrical failure and may experience periods of unavailability affecting our ability to generate electric power. Past failures on our generators, turbines and transformers have
adversely affected our results of operations. Any unplanned unavailability of our generation facilities may adversely affect our financial condition or results of operations.
During 2023, the main failures resulting in unavailability of our power generation units were the following:
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Mendoza Complex: The LDCUTG27 unit was unavailable due to scheduled maintenance from July 11 through July 29 due to the replacement of gearbox components.
Costanera Complex: The BSASCC unit was unavailable from March 20 to October 3 due to a burner failure.
Central Puerto Complex: The PNUETV09 unit was unavailable from January 17 to April 2 due to a fire in a disconnect switch.
Our forest assets are subject to the risk of various catastrophic events, including but not limited to the occurrence of significant fires or wide-spread insect or pest infestations on one or more of our assets, severe regional or local weather
events or trends, drought, flooding, major earthquakes, and significant geopolitical conditions or developments.
Our generation facilities, or the third-party fuel transportation or electric power transmission infrastructure that we rely on, may be damaged by flooding, fires, earthquakes and other catastrophic disasters arising from natural or
accidental or intentional human causes. We could experience severe business disruptions, significant decreases in revenues based on lower demand arising from catastrophic events, or significant additional costs to us not otherwise
covered by business interruption insurance clauses. There may be an important time lag between a major accident, catastrophic event or terrorist attack and our definitive recovery from our insurance policies, which typically carry non-
recoverable deductible amounts, and in any event are subject to caps per event. In addition, any of these events could cause adverse effects on the energy demand of some of our customers and of consumers generally in the affected
market. Some of these considerations, could have a material adverse effect on our business, financial condition, and our result of operations.
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Although we comply with all applicable environmental safety laws and best practices, any accident involving the fuels with which we operate could have adverse environmental consequences and could damage our industrial facilities
or our personnel. Any structural damage to the dam or any other structure located in any of our hydroelectric plants could compromise its electric power generating capacity. Any generation constraints resulting from structural damage
could have a material adverse effect on our financial condition and results of operations.
Our insurance policies may not fully cover damage, and we may not be able to obtain insurance against certain risks
We maintain insurance policies intended to mitigate our losses due to customary risks. These policies cover certain of our assets against loss for physical damage, loss of revenue and also third-party liability. However, we may not have
sufficient insurance to cover any particular risk or loss. If an accident or other event occurs that is not covered by our current insurance policies, such as cybersecurity risk, we may experience material losses or have to disburse
significant amounts from our own funds, all of which could have a material adverse effect on our operations and financial position. In addition, an insufficiency in our insurance policies could have an adverse effect on us. In such case,
our financial condition and our results of operations could be adversely affected. See “Item 16.K. - Cybersecurity”.
We may be exposed to lawsuits and or administrative proceedings that could adversely affect our financial condition and results of operations
In the ordinary course of our business, we enter into agreements with CAMMESA and other parties. Litigation and/or regulatory proceedings are inherently unpredictable, and excessive verdicts do occur. Adverse outcomes in lawsuits
and investigations could result in significant monetary damages, including indemnification payments, or injunctive relief that could adversely affect our ability to conduct our business and may have a material adverse effect on our
financial condition and results of operations.
Energy demand is seasonal, largely due to climate conditions
Energy demand fluctuates according to the season and climate conditions may materially and adversely impact energy demand. During the summer in Argentina (December through March), energy demand may increase significantly
due to the need for air conditioning, and, during winter (June through August), energy demand may fluctuate according to the needs for lighting and heating. As a result, seasonal changes could materially and adversely affect the
demand for energy and, consequently, affect our results of operations and financial condition.
We may undertake acquisitions and investments to expand or complement our operations that could result in operating difficulties or otherwise adversely affect our financial conditions and results of operations
In order to expand our business, from time to time, we may carry out acquisitions and investments which offer added value and are consistent with or complementary to our business strategy.
Therefore we may be exposed to various risks, including those arising from: (i) not having accurately assessed the value, future growth potential, strengths, weaknesses and potential profitability of potential acquisition targets; (ii)
difficulties in successfully integrating, operating, maintaining or managing newly-acquired operations, including personnel; (iii) unexpected costs of such transactions; (iv) difficulties in obtaining the necessary financing and
successfully reaching any required financial closing; or (v) unexpected contingent or other liabilities or claims that may arise from such transactions. If any of these risks were to materialize, it could adversely affect our financial
condition and results of operations.
If we were to acquire another company in the future, such acquisition could be subject to the Argentine Antitrust Authority’s approval
As of the date of this annual report, the merger control review and antitrust practices investigation in Argentina is carried out by a double-tiered structure. The technical analysis is performed by the Argentine Antitrust Commission (the
“CNDC,” for its Spanish acronym), which issues a non-mandatory report to the Secretariat of Domestic Trade (the “SDT,” and together with the CNDC, the “Antitrust Authority”). The SDT then issues the final resolution for all matters
related to the Antitrust Act.
The Antitrust Authority is currently serving as the interim enforcement agency until the National Competition Authority (NCA), the National Competition Tribunal (Competition Tribunal), Secretariat of Anti-competitive practices, and
Secretariat of Economic Concentrations are appointed, as mandated by the Antitrust Act.
The main change introduced by the Antitrust Act is the shift from a post-merger control review to a pre-merger control regime. However, this system will only take effect one year after the NCA is duly constituted and in full operation.
In the meantime, a mandatory notification must be submitted prior to or within one week of the closing (effective takeover) of any economic concentration. The post-closing notification requirement still applies in Argentina.
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If the Argentine Antitrust Authority were to reject any business combination or if such authority were to take any action to impose conditions or performance commitments on us as part of the approval process for any business
combination, it could adversely affect our financial condition and results of operations and prevent us from achieving the benefits anticipated from such acquisition.
We depend on senior management and other key personnel for our current and future performance
Our current and future performance depends to a significant degree on our qualified senior management team, and on our ability to attract and retain qualified management. Our future operations could be harmed if any of our senior
executives or other key personnel ceased working for us. Competition for senior management personnel is intense, and we may not be able to retain our personnel or attract additional qualified personnel. The loss of a member of senior
management may require the remaining executive officers to divert immediate and substantial attention to fulfilling his or her duties and of seeking a replacement. Any inability to fill vacancies in our senior executive positions on a
timely basis could harm our ability to implement our business strategy, which would harm our business and results of operations.
We could be affected by material actions taken by the trade unions
Labor relations in Argentina are governed by specific legislation, such as labor Law No. 20,744 and Collective Bargaining Law No. 14,250, which, among other things, dictate how salary and other labor negotiations are to be
conducted. Every industrial or commercial activity is regulated by a specific collective bargaining agreement (“CBA”) that groups companies together according to industry sectors and by trade unions. While the process of negotiation
is standardized, each chamber of industrial or commercial activity separately negotiates the increases of salaries and labor benefits with the relevant trade union of such commercial or industrial activity.
Argentine employers, both in the public and private sectors, have experienced significant pressure from their employees and labor organizations to increase wages and to provide additional employee benefits. Due to the high levels of
inflation, employees and labor organizations are demanding significant wage increases.
Although we have stable relationships with our work force, in the past we experienced organized work stoppages and strikes, and we may face such work stoppages or strikes in the future. Also, we could be indirectly affected by
actions taken by trade unions related to suppliers or other related parties. Labor claims are common in the Argentina energy sector, and in the past, unionized employees have blocked access and caused damages to the facilities of
various companies in the industry. Moreover, we have no insurance coverage for business interruptions caused by workers’ actions, which could have an adverse effect on our results of operations.
Our equipment, facilities and operations are subject to environmental, health and safety regulations
Our generation business is subject to federal and provincial laws, as well as to the supervision of governmental agencies and regulatory authorities in charge of enforcing environmental laws and policies. We operate in compliance with
applicable laws and in accordance with directives issued by the relevant authorities and CAMMESA; however, it is possible that we could be subject to controls, which could result in penalties to be imposed on us, such as the
termination of the HPDA Concession Agreement. In addition, future environmental regulations could require us to make investments to comply with the requirements set by the authorities, instead of making other scheduled
investments and, as a result, could have a material adverse effect on our financial condition and our results of operations.
We are subject to anticorruption, anti-bribery, anti-money laundering and other laws and regulations
We are subject to anti-corruption, anti-bribery, anti-money laundering and other laws and regulations. We may be subject to investigations and proceedings by authorities for alleged infringements of these laws. Although we perform
compliance processes and maintain internal control systems, these proceedings may result in fines or other liabilities and could have a material adverse effect on our reputation, business, financial conditions and result of operations. If
any such subsidiaries, employees or other persons engage in fraudulent, corrupt, or other unfair business practices or otherwise violate applicable laws, regulations, or internal controls, we could become subject to one or more
enforcement actions or otherwise be found to be in violation of such laws, which may result in penalties, fines, and sanctions and in turn adversely affect our reputation, business, financial condition and result of operations.
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A cyberattack could adversely affect our business, balance sheet, results of operations and cash flow
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We depend on the efficient and uninterrupted operation of our inter-plant communication systems, for which we have all our links redundant, providing greater security and minimizing the risks of outage. Additionally, we have
redundant links with CAMMESA. Temporary or long-lasting failures of our inter-plant communication systems, including their links redundant, could have a material adverse effect on our operations. In general, information security
risks have increased in recent years as a result of the proliferation of new and more sophisticated technologies and also due to cyberattack activities. As part of our development and initiatives, more equipment and systems have been
connected to the Internet. We also rely on digital technology including information systems to process financial and operational information. Due to the critical nature of our infrastructure and our business and the increased accessibility
allowed through the Internet connection, we could face an increased risk of cyberattacks such as computer break-ins, phishing, ransomware, identity theft and other disruptions that could negatively affect the security of information
stored in and transmitted through our computer systems and network infrastructure. Despite significant efforts to create security barriers to cybersecurity threats, it is nearly impossible for us to completely mitigate these risks, in
particular, as the frequency and sophistication of cyberattacks increases. For example, cybersecurity researchers anticipate an increase in cyberattack activity in connection with the misuse of artificial intelligence. The security measures
we have integrated into our internal networks and systems, and into our platform and products may not function as expected or may not be sufficient to protect our internal networks, platform and products against certain attacks.
In the event of a cyberattack targeting our infrastructure or that of third parties and vendors providing services to us, we could experience an interruption of our commercial operations, material damage and loss of customer information;
a substantial loss of income or accounts balance, suffering response costs and other economic losses; and it could subject us to more regulation and litigation and damage to our reputation. Although we intend to continue to implement
security technology devices and establish operational procedures to prevent disruption resulting from, and counteract the negative effects of cybersecurity incidents, it is possible that not all our current and future systems are or will be
entirely free from vulnerability and these security measures will not be successful. Accordingly, cybersecurity is a material risk, and a cyber-attack could adversely affect our business, results of operations and financial condition.
Our ability to generate electricity at our thermal generation plants partially depends on the availability of natural gas and, to a lesser extent, liquid fuel
The supply and price of natural gas and liquid fuel used in our thermal generation plants has been in the past, and may in the future be, affected by, among other things, price fluctuations, geopolitical factors (including the current Russia
Ukraine conflict and related sanctions on Russia by certain members of the European Union), as well as the availability of natural gas and liquid fuel in Argentina, given the current shortage of natural gas supply, especially during the
winter, and declining reserves in Argentina. In particular, many oil and gas fields in Argentina are mature or require intensive capital investments to extract natural gas, and due to the current economic scenario have not been subject to
significant investment into development and exploration activities and, therefore, reserves are likely to be depleted.
CAMMESA is in charge of managing and supplying all fuels required to run our thermal plants except for the Lujan de Cuyo cogeneration plant and to a certain extent, gas provision for the San Lorenzo cogeneration plant related to
steam production. We cannot assure you that we will be able to purchase natural gas or liquid fuel on terms comparable to the conditions we currently have with or that are fully reimbursable by CAMMESA. In addition, we cannot
assure the supply in the above-mentioned conditions, if in the future we were required to purchase our own natural gas or liquid fuel from third parties for all our operations. Geopolitical factors, including the current Russia Ukraine
conflict and related sanctions on Russia by certain members of the European Union, the United Kingdom, the United States, and certain other countries, has led to and is expected to continue to lead to an increase in the price and
availability of natural gas and liquid fuel.
Even if we were able to source the requisite natural gas or liquid fuel and CAMMESA accepted to reimburse us for such amounts, it may be uncertain when such reimbursements would occur. In addition, natural gas delivery depends
on the infrastructure (including barge facilities, roadways and natural gas pipelines) available to serve each generation facility. As a result, our thermal plants are subject to the risks of disruptions or curtailments in the fuel delivery
chain and infrastructure. Any such disruption or curtailment may result in the unavailability, or higher prices, of natural gas or liquid fuel. Moreover, if in the future we are required to purchase our own natural gas or liquid fuel from
third parties at prices that are not fully reimbursable by CAMMESA, such situation may have a material adverse effect on our financial condition and results of operations. Resolution No. 70/2018 enabled generators to purchase fuel in
the open market. However, since the enactment of Resolution No. 12/2019, the effectiveness of Section 8 of Resolution No. 95/2013 and Section 4 of Resolution No. 529/2014 was reinstated, centralizing fuel purchases through
CAMMESA.
An outbreak of a disease may have material adverse consequences on our operations including new projects
In late December 2019 a notice of pneumonia originating from Wuhan, Hubei province (COVID-19, caused by a novel coronavirus) was reported to the World Health Organization, with cases soon confirmed in multiple provinces in
China, as well as in other countries. On March 11, 2020, the World Health Organization characterized the COVID-19 as a pandemic. Several measures have been undertaken by the Argentine government and other governments around
the globe to contain the pandemic. The outbreak of a pandemic, disease or similar public health threat, such as the COVID-19 pandemic, could materially and adversely affect our business, financial condition and results of operations.
Some of the negative effects could include: a further decline in the market prices of our shares and ADSs, adverse impacts on the financial markets; a reduction in the demand for exports and imports and, therefore, in our revenues,
generating a reduction in our levels of activity and investment related to our fields of production; a significant drop in the international price of commodities, due to the combined effect of a sharp drop in demand, as well as the inability
of producers to reduce supply in an orderly manner, negatively affecting the Argentine economic environment; and substantial changes in business and social behavior and their potential impact on the sale of commodities.
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The quarantine and related restrictive measures had and may have a deep impact in the Argentine economy, including drastic reduction in the demand and supply of goods and services, increase in the unemployment rate and poverty
levels, businesses bankruptcies, disruption in the payment chain, among many others. Such negative impact in the Argentine economy may, in turn, have an impact on energy demand and negatively affect our results of operations.
Risks Relating to our Shares and ADSs
It may be difficult for you to obtain or enforce judgments against us
We are incorporated in Argentina. All of our directors and executive officers reside outside the United States, and substantially all of our and their assets are located outside the United States. As a result, it may not be possible for you to
effect service of process within the United States upon these persons or to enforce judgments against them or us in U.S. courts. We have been advised by our special counsel, Bruchou & Funes de Rioja, that there is doubt as to the
enforceability in original actions in Argentine courts of liabilities predicated solely on U.S. federal securities laws and as to the enforceability in Argentine courts of judgments of U.S. courts obtained in actions predicated upon the civil
liability provisions of U.S. federal securities laws. The enforcement of such judgments will be subject to compliance with certain requirements under Argentine law, such as Articles 517 through 519 of the Argentine Code of Civil and
Commercial Procedure, including the condition that such judgments do not violate the principles of public policy of Argentine Law, as determined by an Argentine court. In addition, an Argentine court will not order an attachment on
property located in Argentina and determined by such court to be essential for the provision of a public service.
Restrictions on transfers of foreign exchange and the repatriation of capital from Argentina may impair your ability to receive dividends and distributions on, and the proceeds of any sale of, shares underlying the ADSs
In 2001 and 2002 Argentina imposed exchange controls and transfer restrictions, substantially limiting the ability of companies to retain foreign currency or make payments abroad, including payments of dividends. In addition, new
regulations were issued in the last quarter of 2011, which significantly curtailed access to the FX Market by individuals and private sector entities. In December 2015 the 2015-2019 administration lifted many of the foreign exchange
restrictions imposed in 2011, including the lifting of certain restrictions for the repatriation of portfolio investment by non-resident investors.
After almost four years of unrestricted capital flows, the Argentine Government reimposed restrictions on the conversion of Argentine currency into foreign currencies and on the remittance to foreign investors of proceeds from their
investments in Argentina. Beginning in September 2019, the Argentine Government implemented monetary and foreign exchange control measures that included restrictions on the transfer of funds abroad, including dividends, without
prior approval by the Central Bank or fulfillment of certain requirements. Even though the current administration is expected to gradually ease foreign exchange controls, most of the restrictions imposed since 2019 remain in place. In
such a case, the Depositary for the ADSs may hold the Argentine pesos it cannot convert for the account of the ADS holders. In addition, any future adoption by the Argentine Government of additional restrictions to the movement of
capital out of Argentina may affect the ability of our foreign shareholders and holders of ADSs to obtain the full value of their shares and ADSs and may adversely affect the market value of the ADSs.
We will be traded on more than one market, and this may result in price variations; in addition, investors may not be able to easily move shares for trading between such markets
Our common shares are listed on the BYMA and, since February 2, 2018, our ADSs are listed on the NYSE. Any markets that may develop for our common shares or for the ADSs may not have liquidity and the price at which the
common shares or the ADSs may be sold is uncertain.
Trading in the ADSs or our common shares on these markets takes place in different currencies (U.S. dollars on the NYSE and pesos on the BYMA), and at different times (resulting from different time zones, different trading days and
different public holidays in the United States and Argentina). The trading prices of the securities on these two markets may differ due to these and other factors. Any decrease in the price of our common shares on the BYMA could
cause a decrease in the trading price of the ADSs on the NYSE. Investors could seek to sell or buy our shares to take advantage of any price differences between the markets through a practice referred to as arbitrage. Any arbitrage
activity could create unexpected volatility in both our share prices on one exchange, and the ADSs available for trading on the other exchange. In addition, holders of ADSs will not be immediately able to surrender their ADSs and
withdraw the underlying common shares for trading on the other market without effecting necessary procedures with the ADS Depositary. This could result in time delays and additional cost for holders of ADSs.
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Under Argentine Corporate Law, shareholder rights may be fewer or less well defined than in other jurisdictions
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Our corporate affairs are governed by our bylaws and by the Argentine Corporate Law, which differ from the legal principles that would apply if we were incorporated in a jurisdiction in the United States (such as Delaware or New
York), or in other jurisdictions outside Argentina. Thus, the rights of holders of our ADSs or holders of our common shares under the Argentine Corporate Law to protect their interests relative to actions by our Board of Directors (our
"Board of Directors") may be fewer and less well defined than under the laws of those other jurisdictions. Although insider trading and price manipulation are illegal under Argentine law, the Argentine securities markets may not be as
highly regulated or supervised as the U.S. securities markets or markets in some of the other jurisdictions. In addition, rules and policies against self-dealing and regarding the preservation of shareholder interests may be less well
defined and enforced in Argentina than in the United States, or other jurisdictions outside Argentina, putting holders of our common shares and the ADSs at a potential disadvantage.
Holders of our common shares and the ADSs located in the United States may not be able to exercise preemptive or accretion rights
Under the Argentine Corporate Law, if we issue new shares as part of a capital increase, our shareholders may have the right to subscribe to a proportional number of shares to maintain their existing ownership percentage. Rights to
subscribe for shares in these circumstances are known as preemptive rights. In addition, shareholders are entitled to the right to subscribe for the unsubscribed shares remaining at the end of a preemptive rights offering on a pro rata
basis, known as accretion rights. Upon the occurrence of any future increase in our capital stock, United States holders of common shares or ADSs will not be able to exercise the preemptive and related accretion rights for such
common shares or ADSs unless a registration statement under the Securities Act is effective with respect to such common shares or ADSs or an exemption from the registration requirements of the Securities Act is available. We are not
obligated to file a registration statement with respect to those common shares or ADSs. We may not file such a registration statement, or an exemption from registration may not be available. Unless those common shares or ADSs are
registered or an exemption from registration applies, a U.S. holder of our common shares or ADSs may receive only the net proceeds from those preemptive rights and accretion rights if those rights can be sold by the ADS Depositary;
if they cannot be sold, they will be allowed to lapse. Furthermore, the equity interest of holders of common shares or ADSs located in the United States may be diluted proportionately upon future capital increases.
Voting rights, and other rights, with respect to the ADSs are limited by the terms of the deposit agreement
Holders may exercise voting rights with respect to the common shares underlying ADSs only in accordance with the provisions of the deposit agreement. There are no provisions under Argentine law or under our bylaws that limit ADS
holders’ ability to exercise their voting rights through the ADS Depositary with respect to the underlying common shares, except if the ADS Depositary is a foreign entity and it is not registered with the IGJ. The ADS Depositary is
registered with the IGJ. However, there are practical limitations upon the ability of ADS holders to exercise their voting rights due to the additional procedural steps involved in communicating with such holders. For example,
Argentine Capital Markets Law requires us to notify our shareholders by publications in certain official and private newspapers of at least 20 and no more than 45 days in advance of any shareholders’ meeting. ADS holders will not
receive any notice of a shareholders’ meeting directly from us. In accordance with the deposit agreement, we will provide the notice to the ADS Depositary, which will in turn, if we so request, as soon as practicable thereafter provide to
each ADS holder:
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the notice of such meeting;
voting instruction forms; and
a statement as to the manner in which instructions may be given by holders.
To exercise their voting rights, ADS holders must then provide instructions to the ADS Depositary how to vote the shares underlying ADSs. Because of the additional procedural step involving the ADS Depositary, the process for
exercising voting rights will take longer for ADS holders than for holders of our common shares. Except as described in this annual report, holders of the ADS will not be able to exercise voting rights attaching to the ADSs.
Also, Section 7.6 of the deposit agreement provides that each of the parties to the deposit agreement (including, without limitation, each holder and beneficial owner) waives, to the fullest extent permitted by applicable law, any and all
right to trial by jury in any legal proceeding against us and/ or the ADS Depositary. This provision may have the effect of limiting and discouraging lawsuits against us and/ or the ADS Depositary. Moreover, you may not be able to
exercise your right to vote and you may have no legal remedy if the shares underlying your ADSs are not voted as you requested.
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The relative volatility and illiquidity of the Argentine securities markets may substantially limit our ADS holders’ ability to sell common shares underlying the ADSs at the price and time they desire
Investing in securities that trade in developing countries, such as Argentina, often involves greater risk than investing in securities of issuers in the United States (see “Risks Relating to Argentina — Substantially all of our revenues are
generated in Argentina and thus are highly dependent on economic and political conditions in Argentina”). The Argentine securities market is substantially smaller, less liquid, more concentrated and can be more volatile than major
securities markets in the United States and is not as highly regulated or supervised as some of these other markets. There is also significantly greater concentration in the Argentine securities market than in major securities markets in
the United States. During the third quarter of 2022 the ten largest companies in terms of their weight in the S&P MERVAL index represented approximately 80.00 % of its composition. Accordingly, although holders of our ADSs are
entitled to withdraw the common shares underlying the ADSs from the ADS Depositary at any time, their ability to sell such shares at a price and time at which they wish to do so may be substantially limited. Furthermore, new capital
controls imposed by the Central Bank could have the effect of further impairing the liquidity of the BYMA by making it unattractive for non-Argentines to buy shares in the secondary market in Argentina. See “Item 10.D.— Exchange
Controls”.
If there are substantial sales of our common shares or the ADSs, the price of the common shares or of the ADSs could decline
Sales of substantial number of our common shares or the ADSs could cause a decline in the market price of our common shares. In addition, if our significant shareholders, directors and members of senior management listed in “Item 6.
Directors, Senior Management and Employees—Senior Officers,” who, as of April 29, 2024, own in aggregate 0.10% of our outstanding common shares, sell our common shares or the ADSs or the market perceives that they intend to
sell them, the market price of our common shares or the ADSs could drop significantly.
Our shareholders may be subject to liability for certain votes of their securities
Our shareholders are not liable for our obligations. Instead, shareholders are generally liable only for the payment of the shares they subscribe. However, shareholders who have a conflict of interest with us and who do not abstain from
voting may be held liable for damages to us, but only if the transaction would not have been approved without such shareholders’ votes. Furthermore, shareholders who willfully or negligently vote in favor of a resolution that is
subsequently declared void by a court as contrary to Argentine Corporate Law or our bylaws may be held jointly and severally liable for damages to us or to other third parties, including other shareholders.
As a foreign private issuer, we are exempt from several rules under the U.S. securities laws and are permitted to file less information with the Commission than a U.S. company. This may limit the information available to holders
of our ADSs
We are a “foreign private issuer,” as defined in the SEC’s rules and regulations and, consequently, we are not subject to all of the disclosure requirements applicable to companies organized within the United States. For example, we are
exempt from certain rules under the Exchange Act that regulate disclosure obligations and procedural requirements related to the solicitation of proxies, consents or authorizations applicable to a security registered under the Exchange
Act. In addition, our officers and directors are exempt from the reporting and “short-swing” profit recovery provisions of Section 16 of the Exchange Act and related rules with respect to their purchases and sales of our securities.
Moreover, while we expect to submit quarterly interim consolidated financial data to the Commission under cover of the Commission’s Form 6-K, we are not required to file periodic reports and financial statements with the
Commission as frequently or as promptly as U.S. public companies. Accordingly, there may be less information concerning our company publicly available than there is for U.S. public companies.
As a foreign private issuer, we are not subject to certain NYSE corporate governance rules applicable to U.S. listed companies
We rely on a provision in the NYSE Listed Company Manual that allows us to follow Argentine law with regard to certain aspects of corporate governance. This allows us to follow certain corporate governance practices that differ in
significant respects from the corporate governance requirements applicable to U.S. companies listed on the NYSE.
For example, we are exempt from NYSE regulations that require a listed U.S. company, among other things, to:
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have a majority of our board of directors be independent;
establish a nominating and compensation composed entirely of independent directors;
adopt and disclose a code of business conduct and ethics for directors, officers and employees; and
have an executive session of solely independent directors each year.
The market price for our common shares or ADSs could be highly volatile
The market price for our common shares or the ADSs after the global offering is likely to fluctuate significantly from time to time in response to factors including:
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fluctuations in our periodic operating results;
changes in financial estimates, recommendations or projections by securities analysts;
changes in conditions or trends in our industry;
changes in the economic performance or market valuation of our competitors;
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announcements by our competitors of significant acquisitions, divestitures, strategic partnerships, joint ventures or capital commitments;
events affecting equities markets in the countries in which we operate;
legal or regulatory measures affecting our financial conditions;
departures of management and key personnel; or
potential litigation or the adverse resolution of pending litigation against us or our subsidiaries.
Volatility in the price of our common shares or the ADSs may be caused by factors outside of our control and may be unrelated or disproportionate to our operating results. In particular, announcements of potentially adverse
developments, such as proposed regulatory changes, new government investigations or the commencement or threat of litigation against us, as well as announced changes in our business plans or those of competitors, could adversely
affect the trading price of our common shares or the ADSs, regardless of the likely outcome of those developments or proceedings. Moreover, statements made about us, whether publicly or in private, may be misconstrued, particularly
if read out of context.
Broad market and industry factors could adversely affect the market price of our common shares or ADSs at any time, regardless of our actual operating performance.
If we fail to maintain an effective system of internal control over financial reporting, we may not be able to accurately report our financial results or prevent fraud. As a result, shareholders could lose confidence in our financial
and other public reporting, which would harm our business and the trading price of our common shares
Effective internal controls over financial reporting are necessary for us to provide reliable financial reports and, together with adequate disclosure controls and procedures, are designed to prevent fraud. Any failure to achieve and
maintain effective internal controls over financial reporting, implement required new or improved controls, or difficulties encountered in their implementation could cause us to fail to meet our reporting obligations, which in turn could
have a material adverse effect on our business and our common shares or the ADSs. In addition, any testing by us or any subsequent testing by our independent registered public accounting firm conducted in connection with Section
404 of the Sarbanes-Oxley Act of 2002, may reveal deficiencies in our internal controls over financial reporting that are deemed to be material weaknesses or that may require prospective or retroactive changes to our financial
statements or identify other areas for further attention or improvement. Matters impacting our internal controls may cause us to be unable to report our financial information on a timely basis and thereby subject us to adverse regulatory
consequences, including sanctions by the SEC. There also could be a negative reaction in the financial markets due to a loss of investor confidence in us and the reliability of our consolidated financial statements. Confidence in the
reliability of our consolidated financial statements also could suffer if we or our independent registered public accounting firm were to report a material weakness in our internal controls over financial reporting. This could in turn limit
our access to capital markets and possibly, harm our results of operations, and lead to a decline in the trading price of our common shares or the ADSs.
We are required to disclose changes made in our internal controls and procedures and our management is required to assess the effectiveness of these controls annually. Undetected material weaknesses in our internal controls could lead
to financial statement restatements and require us to incur the expense of remediation.
The protections afforded to minority shareholders in Argentina are different from and more limited than those in the United States and may be more difficult to enforce
Under Argentine law, the protections afforded to minority shareholders are different from, and much more limited than, those in the United States. For example, the legal framework with respect to shareholder disputes, such as
derivative lawsuits and class actions, is less developed under Argentine law than under U.S. law as a result of Argentina’s short history with these types of claims and few successful cases. In addition, there are different procedural
requirements for bringing these types of shareholder lawsuits. As a result, it may be more difficult for our minority shareholders to enforce their rights against us or our directors or controlling shareholder than it would be for
shareholders of a U.S. company.
Holders of our common shares may determine not to pay any dividends
In accordance with the Argentine Corporate Law, after allocating at least 5.00% of our annual net earnings to constitute a mandatory legal reserve, we may pay dividends to shareholders out of net and realized profits, if any, as set forth
in our consolidated financial statements prepared in accordance with IFRS. The approval, amount and payment of dividends are subject to the approval by our shareholders at our annual ordinary shareholders’ meeting. The approval of
dividends requires the affirmative vote of a majority of the shareholders entitled to vote at the meeting. As a result, we cannot assure you that we will be able to generate enough net and realized profits so as to pay dividends or that our
shareholders will decide that dividends will be paid.
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We may be a passive foreign investment company for U.S. federal income tax purposes
22
A non-U.S. corporation will be considered a passive foreign investment company, which we refer to as a PFIC, for U.S. federal income tax purposes in any taxable year in which 75.00% or more of its gross income is “passive income”
or 50.00% or more of the value of its assets (generally determined on the basis of a quarterly average) is attributable to assets that produce or are held for the production of passive income. The determination as to whether a non-U.S.
corporation is a PFIC is based upon the application of complex U.S. federal income tax rules (which are subject to differing interpretations), the composition of income and assets of the non-U.S. corporation from time to time and, in
certain cases, the nature of the activities performed by its officers and employees.
Based upon our current and projected income, assets and activities, we do not expect to be considered a PFIC for our current taxable year or for future taxable years. However, because the determination of whether we are a PFIC will be
based upon the composition of our income, assets and the nature of our business, as well as the income, assets and business of entities in which we hold at least a 25.00% interest, from time to time, and because there are uncertainties in
the application of the relevant rules, there can be no assurance that we will not be considered a PFIC for any taxable year.
If we are a PFIC for any taxable year during which a U.S. Holder, as defined in “Item 10.E. Taxation—Certain United States Federal Income Tax Considerations,” holds the ADSs or common shares, the U.S. Holder might be subject to
increased U.S. federal income tax liability and to additional reporting obligations. See “Item 10.E. Taxation—Certain United States Federal Income Tax Considerations—Passive Foreign Investment Company”. U.S. Holders are
encouraged to consult their own tax advisors regarding the applicability of the PFIC rules to their purchase, ownership and disposition of the ADSs or common shares
The requirements of being a public company may strain our resources and distract our management, which could make it difficult to manage our business
Since the global offering, we are required to comply with various regulatory and reporting requirements, including those required by the Commission in addition to our existing reporting requirements by the CNV. Complying with these
reporting and regulatory requirements will be time consuming, resulting in increased costs to us or other adverse consequences. As a public company, we are subject to the reporting requirements of the Exchange Act, and the
requirements of the Sarbanes-Oxley Act, as well as to the Argentine Law No. 26,831 (as amended and supplemented from time to time, the “Argentine Capital Markets Law”) and CNV rules. These requirements may place a strain on
our systems and resources. The Exchange Act applicable to us requires that we file annual and current reports with respect to our business and financial condition. Likewise, CNV rules require that we make annual and quarterly filings
and that we comply with disclosure obligations including current reports. The Sarbanes-Oxley Act requires that we maintain effective disclosure controls and procedures and internal controls over financial reporting. To maintain and
improve the effectiveness of our disclosure controls and procedures, we committed significant resources, hired additional staff and provided additional management oversight. These activities may divert management’s attention from
other business concerns, which could have a material adverse effect on our business, results of operations and financial condition.
Item 4. Information on the Company
Recent Developments
Acquisition of Participation Interests in Enel Generación Costanera S.A.
On February 17, 2023, our subsidiary Proener S.A.U. (“Proener”) agreed to purchase from Enel Argentina S.A. a controlling interest in Enel Generación Costanera S.A. (“CECO”) by acquiring all of Enel Argentina S.A.’s 531,273,928
shares with a par value of Ps.1 with one vote each, representing 75.68% of the share capital of CECO, for a total value of US$48,000,000.
Central Costanera is located in the City of Buenos Aires and generates energy supply for 3.5 million homes throughout the country. As of the date of this annual report, the Central Costanera thermal power plant, which is located in the
City of Buenos Aires, consists of six turbo-steam units with an installed capacity of 1,131 MW and two combined cycle power plants with a capacity of 1,128 MW.Later on, during 2023, we requested CAMMESA to derate the installed
capacity of the Buenos Aires combined cycle to 277 MW and, in February 2024, we asked for the decommissioning of the steam generation units COSTTV04 and COSTTV06, for a total installed capacity of 120 MW and 350 MW,
respectively.
In order to comply with the provisions of the Capital Markets Law and the CNV Rules, on March 17, 2023, Proener promoted and made a mandatory tender offer to all the holders of voting shares of CECO (the “Tender Offer”). The
Tender Offer commenced on May 30, 2023, and expired on June 12, 2023. On June 13, 2023, Proener published a notice of results of the Tender Offer, reporting that 65,100 shares of CECO were tendered in the Tender Offer,
representing approximately 0.0093% of the issued and outstanding shares of CECO, which were acquired by Proener at a price of Ps. 94,189 per share. As a result of the Tender Offer, Proener’s shareholding in CECO increased from
531,273,928 shares to 531,344,028 shares, representing 75.69% of CECO’s share capital.
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Acquisition of Empresas Verdes Argentina S.A., Las Misiones S.A. and Estancia Celina S.A
23
On May 3, 2023, our affiliate Proener acquired 100% of the capital stock and votes of Empresas Verdes Argentina S.A., Las Misiones S.A. and Estancia Celina S.A.
These companies own forestry assets, consisting of approximately 88,063 hectares in the province of Corrientes. 26,000 of those hectares are planted with pine, out of a total of approximately 36,000 plantable hectares. The purchase
price amounted to US$29,881,340.
Acquisition of Cordillera Solar VIII S.A. and Scatec Equinor Solutions Argentina S.A. (currently, CP Servicios Renovables S.A.).
On October 18, 2023, our affiliate Proener, acquired 100% of the capital stock and votes of Cordillera Solar VIII S.A. (“Cordillera Solar”) and Scatec Equinor Solutions Argentina S.A. (currently, CP Servicios Renovables S.A.), owner
and operator, respectively, of a photovoltaic plant located in the Province of San Juan, with an enabled power of 105 MW. The solar farm has an agreement with CAMMESA for the purchase of energy generated for a period of 20 years
from the date of start of operations.
Following the acquisition of the solar farm, we have consolidated the loan previously issued by Equinor Wind Power AS to its subsidiary, Cordillera Solar. This loan consists of a principal amount of US$62,199,879 and accrued interest
totaling US$8,983,951. To secure this loan, Cordillera Solar has provided a first-degree privileged lien on certain assets, including properties, plants, and equipment, to Equinor Wind Power On October 18, 2023, Proener and the sellers
agreed on a refinancing plan for a 24-month term counted as from the refinancing date at a 9% annual rate. We also consolidated the liability corresponding to a Junior Shareholder Loan granted to Cordillera Solar for a balance of
US$1,768,897, which on October 18, 2023, was refinanced at an annual rate of 9% to be paid 24 months after the date of refinancing.
Proener acquired all of the capital stock and votes of Cordillera Solar and Scatec Equinor Solutions Argentina S.A. (currently, CP Servicios Renovables S.A.) from Equinor Wind Power A.S., Scatec Solar Netherlands B.V. and Scatec
Solar Argentina B.V.
Acquisition of interest in AbraSilver
On April 22, 2024, our subsidiary Proener entered into a common shares subscription agreement with AbraSilver Resource Corp. (a Canadian company listed in the Canadian stock market) ("AbraSilver"), granting Proener a 4% interest
in the share capital of AbraSilver, which is the owner of the silver-gold project Diablillos located in the Northeast region of Argentina. In turn, and in conjunction with Central Puerto, Kinross Gold Corporation a major Canadian mining
company, (NYSE: KGC, TSX: K) also acquired a 4% interest on similar terms.
Share Repurchase Program
On August 24, 2023, our Board of Directors sanctioned a new treasury stock acquisition program. The program will follow existing regulations, and will also cap acquisitions at either US$10,000,000 or 10% of our share capital,
whichever is lower. The program is set to last for 180 days starting from the first business day after the announcement of the purchase is made public in the market media. This period is subject to potential renewal or extension.
The buyback can be conducted by us or our subsidiaries, with a daily transaction ceiling of 25% of the average daily trading volume of our stock, based on market data from the preceding 90 trading days. The shares’ purchase price is
capped at US$8 per ADS on the NYSE and initially up to Ps.605 per share on BYMA. This last cap was later raised to Ps.800 per share, as authorized by our Board of Directors on October 17, 2023.
As of December 31, 2023, we had repurchased 2,299,993 shares for a total value of Ps.1.66 billion under the program For a more detailed description of such transactions, see Item 16.E. The operations carried out through the program
have been recorded as acquisitions of treasury shares in accordance with the provisions of IAS 32. The consideration paid for these shares was directly recognized as equity under the heading “Other equity accounts”.
Shareholder’s General Meeting
On March 8, 2024, the Board of Directors of Central Puerto convened the Annual General Meeting of Shareholders for April 30, 2024 to discuss the following items of the agenda:
1.
2.
3.
Appointment of two shareholders to sign the minutes.
Consideration of the Annual Report and its exhibit, the Consolidated Statement of Income Statement, the Consolidated Statement of Comprehensive Income, Consolidated Comprehensive Income Statement, the
Consolidated Statement Of Financial Position, Consolidated Balance Sheet, the Consolidated Statement of Changes In Equity, Consolidated Statement of Changes in Shareholders’ Equity, the Consolidated Statement
of Cash Flows, Consolidated Cash Flow Statement, the Notes to the Consolidated Financial Statements and Exhibits, the Individual Income Statement of Income, the Individual Statement of Comprehensive Income,
Comprehensive Income Statement, the Individual Statement of Financial Position, Balance Sheet, the Individual Statement of Cash Flows, Cash Flow Statement, Notes to the Individual Financial Statements, Brief,
Auditor Report, and Statutory Audit Committee Report, all of them for the fiscal year ended December 31, 2023.
Consideration of the income (loss) for the fiscal year and the Board of Directors’ proposal that consists of a) assigning Ps.7,402,192,000 to the Statutory Reserve; b) allocating the balance of the retained accumulated
income to increase the Optional Reserve for the payment of dividends based on the evolution of our financial position and the Dividends Payment Policy in force; and c) delegating to the Board of Directors the partial
or total reversal of the payment of dividends and the determination of the opportunity, currency, terms and other terms and conditions for payment, in accordance with such delegation. Consideration and approval of
payment of the Profit-Sharing Bond stated by Sections 12 and 33 of the By-laws.
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4.
5.
6.
7.
8.
9.
10.
11.
12.
13.
Consideration of the Board of Directors performance during the fiscal year ended December 31, 2023.
Consideration of the Statutory Audit Committee performance during the fiscal year ended December 31, 2023.
Consideration of the remuneration of the Board of Directors for the fiscal year ended December 31, 2023, within the limit of profits in accordance with section 261 of the Business Entities Act and CNV Regulations.
Consideration of the advanced payment of fees to the Board of Directors for the fiscal year closing next December 31, 2024.
Consideration of the remuneration of the members of the Statutory Audit Committee for the fiscal year ended December 31, 2023; and the fee scheme for the period closing next December 31, 2024.
Board of Directors’ partial renewal. Appointment of three directors and three deputy directors for a period of three fiscal years as per Section 17 of the By-laws. Continuity of the current Chairman until the
appointment of a new Chairman by our Board of Directors.
Appointment of the Statutory Audit Committee members and deputy members for the fiscal year closing next December 31, 2024.
Consideration of the remuneration of our certifying accountant regarding the annual accounting documents for the fiscal year 2023.
Appointment of the certifying accountant and of the deputy certifying accountant for the fiscal year closing next December 31, 2024 and the fixing of their remuneration.
Approval of the Annual Budget for the functioning of the Supervisory Committee.
Granting of authorizations.
Unavailability of Power Generation
During year 2023, the main failures resulting in unavailability of our power generation units were the following:
-
-
-
Mendoza Complex: The LDCUTG27 unit was unavailable due to a scheduled maintenance from July 11 to July 29 due to the replacement of gearbox components.
Costanera Complex: The BSASCC unit was unavailable from March 20 to October 3 due to a burner failure.
Central Puerto Complex: The PNUETV09 unit was unavailable from January 17 to April 2 due to a fire in a transformer switch.
Item 4. A History and development of the Company
Central Puerto S.A. (“Central Puerto” or the “Company”) is incorporated as a sociedad anónima under the laws of Argentina. Our principal executive offices are located at Avenida Thomas Edison 2701, C1104BAB Buenos Aires,
Republic of Argentina. Our telephone number is +54 (11) 4317-5000.
We were incorporated pursuant to Executive Decree No. 122/92 on February 26, 1992. We were formed in connection with the privatization process involving Servicios Eléctricos del Gran Buenos Aires (“SEGBA”) in which SEGBA’s
electric power generation, transportation, distribution, and sales activities were privatized. We were registered with the Public Registry of Commerce of the City of Buenos Aires on March 13, 1992, and created for a term of 99 years
from the date of such registration.
In April 1992, Central Puerto, the consortium-awardee, took possession over SEGBA’s Central Nuevo Puerto (“Nuevo Puerto”) and Central Puerto Nuevo (“Puerto Nuevo”) plants, and we began operations. In November 1999, the
Puerto combined cycle plant, which was built on lands owned by Nuevo Puerto in the City of Buenos Aires, started to operate. In 2001, Central Puerto was acquired by the French company, Total S.A. At the end of 2006, Sociedad
Argentina de Energía S.A. (“SADESA”) acquired a controlling interest in Central Puerto.
Our shares are listed on the BYMA and, since February 2, 2018, have been listed on the NYSE under the symbol “CEPU”.
The SEC maintains an internet site that contains reports and other information regarding issuers who, like us, file electronically with the SEC. The address of that website is http://www.sec.gov. Central Puerto routinely posts important
information for investors in the Investor Relations support section on its website, www.centralpuerto.com. From time to time, Central Puerto may use its website as a channel of distribution of material Company information.
Accordingly, investors should monitor Central Puerto’s Investor Support website, in addition to following our press releases, SEC filings, public conference calls and webcasts. The information contained on, or that may be accessed
through, our website is not incorporated by reference into, and is not a part of, this annual report.
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The 2014 Merger
25
On October 1, 2014, we merged with three operating companies under the common control of SADESA: (i) HPDA, (ii) CTM and (iii) LPC. The purpose of the merger was to optimize operations and achieve synergies among the
businesses. We refer to this merger as the “2014 Merger”. Following the 2014 Merger, each of HPDA, CTM and LPC were dissolved.
Prior to the 2014 Merger, we owned and operated three thermal generation plants for electric power generation located within one complex in the City of Buenos Aires. Our Nuevo Puerto and Puerto Nuevo thermal generation plants are
equipped with five steam turbine-generator units in the aggregate and have an installed capacity of 360 MW and 589 MW, respectively. The third plant, the Puerto combined cycle plant has two gas turbines, two heat recovery steam
generators and a steam turbine, and it has a total installed capacity of 798 MW. Prior to the 2014 Merger, we had a total installed capacity of 1,747 MW and were already one of the major SADI electric power generators.
As a result of the 2014 Merger, we added the Luján de Cuyo plant, the La Plata plant, which, effective as of January 5, 2018, we sold to YPF EE (for further information see “Item 4.A. History and development of the Company—La
Plata Plant Sale”), and the Piedra del Águila hydroelectric complex.
As of December 31, 2023, we operated one hydroelectric generation plant, owned, and operated six thermal generation plants, seven wind farms and one solar farm, for the generation of electric power in Argentina. We had a combined
installed capacity of 7,173 MW and have significantly improved our position as a major SADI electric power generator, producing approximately 19.68% of the energy generated by private sector SADI generators in 2023.
Hidroeléctrica Piedra del Águila S.A. (HPDA)
HPDA was a sociedad anónima (corporation) incorporated in 1993 that operated the Piedra del Águila hydroelectric complex with an installed capacity of 1,440 MW since it started commercial operation in 1993. HPDA entered into
the HPDA Concession Agreement (as defined below) to operate and maintain the Piedra del Águila hydroelectric complex, that was assigned to us during the 2014 Merger. For further information regarding the HPDA and the HPDA
Concession Agreement, see “—Electricity Generation from our Hydroelectric Complex—Piedra del Águila”.
HPDA’s controlling shareholder was Hidroneuquén S.A. (“HNQ”), a company that was under the control of the SADESA group, which held a 59.00% interest. The remaining shareholders were: (i) the Argentine Government (26.00%
interest), (ii) the Province of Neuquén (13.00% interest) and (iii) HPDA’s Employee Stock Ownership Program (2.00% interest). HPDA held 21.00% of the shares of CVOSA, the company that operates the thermal power plant in
Timbúes. Following the 2014 Merger, CVOSA became our subsidiary.
Centrales Térmicas Mendoza S.A. (CTM)
CTM was a sociedad anónima (corporation) incorporated in 1993 focused on electric power generation and steam production. Before the 2014 merger, CTM was focused on two primary activities: electric power generation and steam
production. CTM owned the Luján de Cuyo plant located in Luján de Cuyo in the Province of Mendoza, which began commercial operation in 1971. With the installation of its first two steam turbines, had an installed capacity of 576
MW and was the top producer of electric power in the Cuyo region. For further information regarding CTM’s operations that were transferred to us in the 2014 Merger, see “—Electricity Generation from our Thermal Generation Plants
—Luján de Cuyo plant”.
CTM’s controlling shareholder was Operating S.A. (“OSA”), a company that was under the control of the SADESA group and which held a 94.10% interest. The other shareholder was Empresa Mendocina de Energía, SAPEM, which
held the remaining 5.89% interest. CTM held a minority interest in CVOSA, representing 9.36% of its capital stock.
Distribuidora de Gas Cuyana S.A. (DGCU) and Distribuidora de Gas del Centro S.A. (DGCE)
In addition, on January 7, 2015, acting individually, but simultaneously with other investors, we acquired non-controlling equity interests in DGCU (whose shares are listed on BYMA) and DGCE. Considering the direct and indirect
interests, we acquired (i) a 22.49% equity stake in DGCU and (ii) a 39.69% equity stake in DGCE.
DGCU
DGCU was incorporated in 1992 by the Argentine Government as part of the privatization of Gas del Estado S.E. (“GES”). The Executive branch enacted Executive Order No. 2,453 in December 1992, whereby it granted a utility
license to DGCU to distribute Natural gas through the networks in the provinces of Mendoza, San Juan and San Luis, for a term of 35 years from the date of taking possession (which occurred on December 28, 1992) with an option to
extend it for ten additional years.
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In December 1992, a transfer agreement was executed to transfer 60.00% of DGCU’s shares. The agreement was entered into among the Argentine Government, GES, the Province of Mendoza and IGCU, which formed the consortium
that became the successful bidder in the bidding process at such time. On such date, GES transferred to DGCU the assets used in the licensed utility service, net of liabilities, as an irrevocable capital contribution pursuant to Executive
Orders No. 1,189/92 and 2,453/92, and DGCU took possession of the facilities and commenced operations.
Following the Merger between IGCE, IGCU, RPBC and MAGNA (See Item 4.A–- Merger between IGCE, IGCU, RPBC and MAGNA), as of the date of this annual report, IGCE holds a 51.00% interest in DGCU, and we hold a
42.31% interest in IGCE. Therefore, we indirectly hold a 21.58% equity interest in DGCU.
DGCE
DGCE was incorporated in 1992 by the Argentine Government as part of the privatization of GES. The Executive branch enacted Executive Order No. 2,454/92 in December 1992, whereby it granted a utility license to DGCE to
distribute natural gas through the networks in the provinces of Córdoba, Catamarca and La Rioja for a term of 35 years from the date of taking possession (which occurred on December 28, 1992) with an option to extend it for ten
additional years.
In December 1992, a transfer agreement was executed to transfer 60.00% of DGCE’s shares. The agreement was entered into among the Argentine Government, GES and IGCE, which formed the consortium that became the successful
bidder in the bidding process at such time. On such Date, GES. transferred to DGCE the assets used in the licensed utility service, net of liabilities, as an irrevocable capital contribution pursuant to Executive Orders No. 1,189/92 and
2,454/92, and DGCE took possession of the facilities and commenced operations.
As of the date of this annual report, we hold a 42.31% interest in IGCE and a direct 17.20% interest in DGCE. Therefore, we hold, both directly and indirectly, a 40.59% in DGCE.
IGCE is the controlling shareholder of Energía Sudamericana S.A. (“ESSA”), which is a private company not listed in any commercial stock exchange, and which prepares its financial statements in accordance with IFRS. We also own
a 2.45% direct equity interest in ESSA.
Ecogas has a gas distribution network covering 37,502 km and served approximately 1,442,184 customers as of December 31, 2023. In 2023, Ecogas distributed an average of 12,5 million cubic meters of natural gas per day; and in
2022, Ecogas distributed an average of 13.3 million cubic meters of natural gas per day. This volume of distribution represented approximately 15.0% and 15.4 % of the gas delivered by all the distribution companies in Argentina in
December 2023 and 2022, respectively, according to data from ENARGAS.
Control Acquisition by Tender Offer of Third Parties in respect of DGCU shares
On January 7, 2015, we acquired a 49.00% interest in IGCU, the parent company of DGCU and, as a result, we held indirectly 24.49% of DGCU’s capital stock. Following this acquisition, Magna, RPBC, Central Puerto and Mr.
Federico Tomasevich (jointly, the “Offerors”) resolved to participate proportionally in the tender offer for DGCU’s shares with voting rights that were publicly listed on the BYMA in order to acquire the remaining outstanding shares of
DGCU that the Offerors did not already own. On October 30, 2015, the board of directors of the CNV approved the tender offer. Upon termination of the offer in January 2016, since no acceptances were tendered, no shares were
acquired in this tender offer. During 2019, IGCE absorbed IGCU, RPBC and MAGNA. As of the date of this annual report, we own a 42.31% interest in IGCE and, as a result, we indirectly hold a 21.58% equity interest in DGCU. For
further information on the merger of IGCE and IGCU, see “— Merger between IGCE, IGCU, RPBC and MAGNA”.
Merger between IGCE, IGCU, RPBC and MAGNA
On March 28, 2018, the Board of Directors of IGCE, IGCU, RPBC Gas S.A. (“RPBC”) and Magna Inversiones S.A. (“Magna”), approved the Preliminary Merger Agreement (Compromiso Previo de Fusión) of the companies (the
“Merger”), in which IGCE acted as the surviving company and IGCU, RPBC and Magna, as absorbed companies.
On August 9, 2019, ENARGAS issued resolution No. RESFC-2019-458-APN-DIRECTORIO#ENARGAS, approving the merger in the terms of such resolution.
On September 12, 2019, the merger was registered with the Public Registry of the City of Buenos Aires (Inspección General de Justicia).
The 2016 Merger
On January 1, 2016, we merged with three holding companies: (i) SADESA, (ii) HNQ and (iii) OSA. The purpose of the merger was to reorganize and optimize our corporate structure. As a result of the merger, we reduced our share
capital from Ps.199,742,158 to Ps.189,252,782. We refer to this merger as the “2016 Merger”. Following the 2016 Merger, each of SADESA, HNQ and OSA were dissolved.
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SADESA was a holding company with control over Central Puerto, HNQ and OSA that, prior to the 2016 Merger, held a 26.18% direct interest in Central Puerto, a 63.73% interest in HNQ, a 96.79% interest in OSA and a 5.10% direct
interest in Proener S.A.U. HNQ was a holding company that prior to the 2016 Merger held a 17.74% interest in Central Puerto. OSA was a holding company that prior to the 2016 Merger held a 30.39% interest in Central Puerto, a
94.90% interest in Proener S.A.U. and a 20.00% interest in TGM. TGM is dedicated to the operation, maintenance, and commercialization of an international gas pipeline between Argentina and Brazil.
La Plata Plant Sale
On December 20, 2017, YPF EE accepted our offer to sell the La Plata plant for a total sum of US$31.50 million (without VAT), subject to certain conditions. On February 8, 2018, after such conditions were met, the plant was
transferred to YPF EE, including generation assets, personnel and agreements related to the operation and/or maintenance of the La Plata plant’s assets, with effective date January 5, 2018. The contract between us and Transportadora
de Gas del Sur (“TGS”) for the natural gas transportation capacity has remained effective after the sale of the La Plata plant. Pursuant to the terms of our agreement with YPF EE, we resell our gas transportation capacity to YPF EE
through the resale system established by Resolution ENARGAS 419/97. The resale under such system is open to third parties and consequentially does not ensure that YPF EE will receive the gas transportation capacity needed to
operate the La Plata plant. Therefore, on January 25, 2018, we requested to be registered with the Ministry of Energy and the ENARGAS as a natural gas marketer to permit the resale of our gas transportation capacity to YPF EE
without the risk of intervention from interested third parties. On July 20, 2018, we were effectively registered as natural gas marketer. As of the date of this annual report, the delivery of the transportation capacity to YPF EE is done
through the “Resale” mechanism.
Renewable energy projects
In 2016, we incorporated a subsidiary, CP Renovables S.A. (“CP Renovables”), to develop, renewable energy generation projects. As of the date of this annual report, the company participated in the Renovar Rounds 1.0 and 1.5, in
which it was awarded with the La Castellana I and Achiras projects with 20-year PPA contracts with CAMMESA, each of the projects constructed by CP La Castellana S.A.U. (a subsidiary of CP Renovables S.A.) and CP Achiras
S.A.U. (a subsidiary of CP Renovables S.A.). La Genoveva I is a project from RenovAr 2.0 developed constructed and operated by Vientos La Genoveva S.A.U. (a subsidiary of Central Puerto S.A.).
In August 2018 and September 2018, respectively, the La Castellana I and Achiras wind farms started operations. The original COD of the La Genoveva I was expected for May 2020, but due to the outbreak of COVID-19, the
construction of the plant was delayed. On November 21, 2020, La Genoveva I commenced full commercial operations.
In addition, the former Ministry of Energy and Mining through Resolution No. 281-E/ 2017, established the regulatory framework that allows Large Users to purchase renewable energy from private generating companies and the
conditions for granting “dispatch priority” that allows such transactions to take place and ensures that the private generating companies will not be restricted in the future in its generation dispatch (see “Item 4.B. Business Overview—
The Argentine Electric Power Sector—Resolution No. 281-E/17: The Renewable Energy Term Market in Argentina”). In July 2019, September 2019, December 2019/January 2020/March 2020, and February 2020, the wind farms La
Castellana II (developed by CPR Energy Solutions S.A.U.), La Genoveva II (developed by Vientos La Genoveva II S.A.U.), Manque (CP Manque S.A.U.), and Los Olivos (CP Los Olivos S.A.U.), respectively, reached their COD. We
have entered into long-term PPA contracts with private customers for 100.00% of the estimated energy generation capacity of our term market renewable energy projects developed under Resolution No. 281-E/17 regulatory framework.
On October 18, 2023, our affiliate Proener acquired 100% of the capital stock and votes of Cordillera Solar and Scatec Equinor Solutions Argentina S.A. (currently, CP Servicios Renovables S.A.), owner and operator, respectively, of a
photovoltaic plant located in the Province of San Juan.
Within the framework of Resolution SEE No. 281-E/17, we made an offer to reserve capacity access to the electricity transportation net, in order to develop a solar farm with an installed capacity of 15MW, (the “San Carlos Project”)
located in the Province of Salta. In July 2022 we were awarded 10 MW of reserved capacity. The management of the construction and subsequent operation of the San Carlos Project will be carried out by Vientos La Genoveva II
S.A.U. We signed the EPC contracts in March 2024 and expect to have the COD of the project by April 2025 as a tentative date.
Luján de Cuyo and San Lorenzo thermal cogeneration plants
In 2017, pursuant to Resolution No. 287-E/17, the former Secretariat of Electric Energy called for proposals for the supply of electric power to be generated through the installation of co-generation units, among others. We submitted
bids on August 9, 2017, and, on September 25, 2017, we were awarded two co-generation projects, the San Lorenzo and the Luján de Cuyo projects, which will entail two additional sources of income for us: (i) electric power sales to
CAMMESA through 15-year term PPAs which are priced in U.S. dollars; and (ii) steam sales pursuant to separate steam supply agreements negotiated with private offtakers.
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On October 5, 2019, the Luján de Cuyo cogeneration project started operations, with an installed capacity of 95 MW.
San Lorenzo project reached full COD on August 15, 2021 and obtained total commissioning of its combined cycle facility (391 MW).
Purchase of the Brigadier López Plant
28
On June 14, 2019, Central Puerto, through an offer presented in a local and foreign public tender called by IEASA, purchased the Brigadier López Plant. The transference includes: (a) personal property, recordable personal property,
facilities, machines, tools, spare parts, and other assets used in connection with the operation of the Brigadier López Plant; (b) IEASA’s contractual position in certain existing contracts (including Turbogas and Turbosteam supplying
contracts with CAMMESA and the Brigadier López Financial Trust Agreement (as defined below), among others); (c) permits and authorizations in effect related to the Brigadier López Plant operation; and (d) Brigadier López Plant
employees.
The Brigadier López Plant has installed a Siemens gas turbine of 281 MW. According to the tender specifications and conditions, the project already has the boiler and a steam turbine to reach the closing of the combined cycle, which is
expected to generate 420 MW in total. As of the date of this annual report, works for the closing of the combined cycle have been launched and are expected to be completed during 2025. See “An outbreak of a disease, may have
material adverse consequences on our operations including new projects”.
Foray into the Forestry Business
On December 27th, 2022, Proener, an affiliate controlled by Central Puerto S.A., acquired 100.00% of the capital stock and votes of Forestal Argentina S.A. (“Forestal Argentina”) and Masisa Forestal S.A. (“Masisa Forestal,” currently
Loma Alta Forestal S.A.).
Both companies were acquired from Masisa S.A. and Masisa Overseas S.A. (jointly, “Masisa”), consisting of approximately 72,000 hectares in the provinces of Entre Ríos and Corrientes, of which approximately 43,000 hectares are
planted with eucalyptus and pine trees. The transaction price was US$69.4 million.
This acquisition was the largest transaction in the forestry sector in the last 30 years in Argentina. Through this acquisition, Central Puerto became the most relevant Argentine company in the forestry sector in Argentina, a market in
which mostly companies with foreign capital operate. The Company decided to make this acquisition as part of its strategy to invest in sectors in which Argentina has a comparative advantage. Argentina has one of the highest forestry
growth rates worldwide, with trees growing about ten times faster than in the northern hemisphere. This is one of the main reasons why the forestry sector has become one of the businesses in Argentina with the greatest competitive
advantage and higher growth potential. Participating in the forestry sector could become a source of future business opportunities linked to carbon credits and energy generation with biomass.
Acquisition of Participation Interests in Enel Generación Costanera S.A.
See “Item 4. Information on the Company—Recent Developments—Acquisition of Participation Interests in Enel Generación Costanera S.A”.
Acquisition of Empresas Verdes Argentina S.A., Las Misiones S.A. and Estancia Celina S.A
See “Item 4. Information on the Company—Recent Developments—Acquisition of Empresas Verdes Argentina S.A., Las Misiones S.A. and Estancia La Celina S.A.”.
Acquisition of Cordillera Solar VIII S.A. and Scatec Equinor Solutions Argentina S.A. (currently, CP Servicios Renovables S.A.).
See “Item 4. Information on the Company—Recent Developments— “Acquisition of Cordillera Solar VIII S.A. and Scatec Equinor Solutions Argentina S.A.”.
Item 4.B Business Overview
Overview
We are one of the largest private sector power generation companies in Argentina, as measured by generated power, according to data from CAMMESA. In the year ended December 31, 2023, we generated a total of 20,774 net GWh of
power, representing approximately 19.68% of the power generated by private sector generation companies in the country during such period, according to data from CAMMESA. We had an installed capacity of 7,173 MW as of
December 31, 2023.
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We have a generation asset portfolio that is geographically and technologically diversified. Our facilities are distributed across the City of Buenos Aires and the provinces of Buenos Aires, Córdoba, Mendoza, Neuquén, Río Negro,
Santa Fe and San Juan. We use conventional and renewable technologies (including hydro power) to generate power, and our power generation assets include combined cycle, gas turbine, steam turbine, co-generation, hydroelectric,
wind turbines and solar panels.
The following table presents a brief description of the power plants we owned and operated as of December 31, 2023.
Power plant
Location
Puerto Nuevo(1)
Nuevo Puerto(1)
Puerto combined cycle(1)
Central Costanera(3)
Luján de Cuyo plant
City of Buenos Aires
City of Buenos Aires
City of Buenos Aires
City of Buenos Aires
Province of Mendoza
Installed capacity (MW)
589.00
360.00
798.00
2,259.00
576.00
Technology
Steam turbines
Steam turbines
Combined cycle
Combined cycle, Steam turbines
Steam turbines, gas turbines, two cycles and mini-hydro turbine
generator, producing electric power and steam
Brigadier López plant
San Lorenzo plant
Piedra del Águila plant
Province of Santa Fe
Province of Santa Fe
Piedra del Águila (Limay River, bordering provinces of Neuquén and Río
Negro)
La Castellana I wind farm(2)
La Castellana II wind farm(2)
La Genoveva I wind farm(2)
La Genoveva II wind farm(2)
Achiras wind farm(2)
Manque wind farm(2)
Los Olivos wind farm(2)
Guañizuil II A(4)
Total
_______________________
(1)
(2)
Province of Buenos Aires
Province of Buenos Aires
Province of Buenos Aires
Province of Buenos Aires
Province of Córdoba
Province of Córdoba
Province of Córdoba
Province of San Juan
281.00
391.00
1440.00
101.00
15.00
88.00
42.00
48.00
57.00
23.00
105.00
7,173.00 MW
Gas turbine
Combined cycle
Hydroelectric plant
Wind turbines
Wind turbines
Wind turbines
Wind turbines
Wind turbines
Wind turbines
Wind turbines
Solar panel
The mentioned plants are included within the “Puerto Complex” as defined in “Business”.
La Castellana I, La Castellana II, Achiras, Manque, Los Olivos, La Genoveva I and La Genoveva II wind farms are owned by CP La Castellana S.A.U., CPR Energy Solutions S.A.U., CP Achiras S.A.U., CP Manque S.A.U.,
CP Los Olivos S.A.U., Vientos La Genoveva S.A.U. and Vientos La Genoveva II S.A.U., respectively, the first five of which are fully owned subsidiaries of CP Renovables S.A. while the latter two are wholly owned
subsidiaries of Central Puerto S.A. We own a 90.00% interest in CP Renovables. See “Item 4.B. Business Overview—Our Subsidiaries”.
The mentioned plants are included within the “Costanera Complex” as defined in “Business”. On February 22, 2024, the request submitted by Central Costanera for the decommissioning of the steam generation units
COSTTV04 and COSTTV06 -for a total installed capacity of 120 MW and 350 MW, respectively- was published in the Official Gazette of the Republic of Argentina.
Costanera complex is owned by Central Costanera S.A. which is 75.22% owned by Proener S.A.U., as of December 31, 2023. As of the date of this annual report, we own a 100% interest in Proener. See “Item 4.B. Business
Overview—Our Subsidiaries”.
Guañizuil II solar farm is owned by Cordillera Solar which is a wholly-owned subsidiary of Proener As of the date of this annual report, we own a 100% interest in Proener. See “Item 4.B. Business Overview—Our
Subsidiaries”. We consider Guañizuil II solar farm information as of October 18, 2023.
(3)
(4)
In addition, we participate in two arrangements known as the FONINVEMEM and the CVO Agreement, which are managed by CAMMESA at the instruction of the Secretariat of Energy (for further information see “Item 4.B. Business
Overview—FONINVEMEM and Similar Programs”). The Argentine Government created the FONINVEMEM with the purpose of repaying power generation companies, like us, the existing receivables for electric power sales
between 2004 and 2011 and funding the expansion and development of new power capacity. As of the date of this annual report, there are no outstanding receivables under the FONINVEMEM agreement. As a result of our participation
in the CVO arrangement, we receive monthly payments for certain of our outstanding receivables with CAMMESA. Additionally, we have an equity interest in the companies that operate the FONINVEMEM and CVO Agreement’s
new combined cycle projects, which will be entitled to have an ownership of the combined cycle projects.
During 2023 and 2022 we collected Ps. 36.94 billion and Ps. 38.64 billion from CVO receivables, respectively, in each case measured in current amounts as of December 31, 2023.
As of December 31, 2023, we held equity interests in the companies that operate the following FONINVEMEM thermal power plants:
Power plant
San Martín
Manuel Belgrano
Vuelta de Obligado
Operating
Company
Termoeléctrica José de San Martín S.A.
(TJSM)
Termoeléctrica Manuel Belgrano S.A.
(TMB)
Central Vuelta de Obligado S.A.
(CVOSA)
Location
Timbúes, Province of Santa Fe
Campana, Province of Buenos Aires
Timbúes, Province of Santa Fe
Installed
capacity (MW)
865.00
873.00
816.00
Technology
Combined cycle plant, which became
operational in 2010
Combined cycle plant, which became
operational in 2010
Combined cycle plant, which became
operational in March 2018
% Interest in the
operating company(1) (2) (3)
10.90%
12.72%
57.49%
_______________________
(1)
(2)
(3)
In each case, we are the private sector generator with the largest ownership stake.
As of December 31, 2023, Central Costanera holds a 1.68% equity interest in TJSM, a 1.89% equity interest in TMB and a 1.30% equity interest in CVOSA.
Numbers include Central Puerto and Central Costanera information.
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On January 3, 2020, the Argentine Government sent us a notice stating that, in accordance with the FONINVEMEM Agreement, TJSM and TMB should perform all necessary acts to incorporate the Argentine Government as
shareholder of both companies, claiming, in each case, the following equity interest rights: 65.006% in TMB and 68.826% in TJSM.
On March 11, 2021, the Argentine Government subscribed its shares and the equity of the shareholders of TJSM and TMB were diluted. In the case of our equity interest, from 30.875% to 9.627% in TJSM and from 30.946% to
10.831% in TMB.
Since February 17, 2023, and due to the acquisition of Central Costanera S.A, we hold equity interests of 10.90% in TJSM, 12.72% in TMB and 57.49% in CVOSA. See “Item 3D. Risk Factors—Risks Relating to our Business—Our
interests in TJSM, TMB were diluted and CVOSA will be significantly diluted” and “Item 4.B. Business Overview—Our Affiliates—Termoeléctrica José de San Martín S.A. (TJSM) and Termoeléctrica Manuel Belgrano S.A. (TMB)”.
The following set of graphs shows our total assets under the FONINVEMEM program, as of December 31, 2023:
_______________________
(1)
(2)
(3)
Future ownership structure of the operating companies is subject to the Claim that we filed against the Argentine government.
“FONINVEMEM Plants” refers to the plants José de San Martín, Manuel Belgrano and Vuelta de Obligado, see “Item 4.B. Business Overview—FONINVEMEM and Similar Programs”.
Power capacity numbers have been rounded. The power capacity with respect to certain assets is the nominal power capacity of the plant, which may differ from the awarded capacity.
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The following graphic breaks down where our plants and power investments were located in Argentina as of December 31, 2023, and their installed capacity:
Source: TJSM, TMB and CVOSA
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_______________________
(1)
(2)
(3)
(4)
(5)
(6)
Source CAMMESA, corresponds to the total theoretical power of each asset.
Net available power capacity reported to CAMMESA.
MW over available capacity.
Part of these MW are remunerated under Res. 59/23 - For more information, please refer to slide 18 “Annex 1 - Regulatory framework”.
The facility Includes 290 MW of combined cycles, 95 MW of cogeneration, 190 MW of gas/steam turbines and 1 MW of mini-hydro.
On February 22, 2024, the request submitted by Central Costanera for the decommissioning of the steam generation units COSTTV04 and COSTTV06 -for a total installed capacity of 120 MW and 350 MW, respectively- was
published in the Official Gazette of the Republic of Argentina.
In the year ended December 31, 2023, we had revenues of Ps.313.57 billion. In the year ended December 31, 2023, we sold approximately 80.42% of our electric energy sales (in MWh) under the Spot Sales. Sales under Spot Sales
accounted for 49.60% of our revenues in the year ended December 31, 2023.
In the year ended December 31, 2023, tariffs under the Spot Sales were paid by CAMMESA according to Res. 826/22, Res. 59/23, Res. 750/23 and Res. 869/23. The remuneration scheme is based on a fixed and variable costs system
which was determined by the Secretariat of Energy pursuant to Resolution No. 95/13, as amended and complemented successively by Resolution SE No. 529/14, Resolution SE No. 482/15, Resolution SEE No. 22/16, as well as Res.
19/17, Res 1/19, Res. 31/20, Res. 440/21, Res. 238/22, Res. 826/22, Res, 59/23, Res. 750/23, Res. 869/23 and, more recently, by Res. 9/24 (see details in “Item 5.A. Operating Results—Spot Sales (also known as Energía Base)”. In the
case of power, the price was set at 2,000 USD/MW-month plus (i) 85.00% of the remuneration of power set forth in Resolution No. 826/22 in Argentine pesos (during spring and autumn) or (ii) 65.00% of the remuneration of power set
forth in Resolution No. 826/22 in Argentine pesos (during summer and winter). In the case of energy, the price was set at 3.5 USD/MWh for units that use gas and at 6.1 USD/MWh for units that use alternative fuels (i.e., diesel).
Regarding fuel costs, on November 7, 2018, pursuant to Resolution No. 70/18 of the Secretariat of Electric Energy, the Argentine Government authorized generators to purchase their own fuel for assets under the Spot Sales Regulatory
framework. If generation companies opt to take this option, CAMMESA values and pays the generators their respective fuel costs in accordance with the Variable Costs of Production (CVP) declared by each generator to CAMMESA.
The dispatch agency (Organismo Encargado del Despacho or “OED” using the Spanish acronym), which is part of CAMMESA, continued to supply the fuel for those generation companies that do not elect to take this option. In
accordance with Resolution of the Secretariat of Electric energy, in November 2018, we started purchasing fuel for our Luján de Cuyo combined cycle, and in December 2018, for all our thermal units.
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On December 27, 2019, the former Ministry of Productive Development issued Resolution No. 12/2019, repealing Resolution of the former Government Secretariat of Energy No. 70/18 and restoring Art. 8 of Resolution SE No.
95/2013. Beginning January 2020, CAMMESA became the only fuel supplier for generation companies, except for (i) thermal units that had prior commitments with CAMMESA for energy supply contracts with their own fuel
management and (ii) thermal units under the Energía Plus regulatory framework, authorized under Resolution SE No. 1281/06 to supply energy to large private users.
Additionally, we have sales under contracts, including (i) term market sales under contract, (ii) MATER sales under contracts, (iii) Energía Plus sales under contract; and (iii) sales of energy under the RenovAr Program.
Term market sales under contract include sales of electric power under negotiated contracts with private and public sector counterparties. MATER sales under contracts include sales of electric power under negotiated contracts with
private and state-owned companies generated exclusively from renewable energy plants. In all cases, sales under contracts generally involve PPAs with customers and are contracted in U.S. dollars. Prices in term market sales under
contracts from thermal units and Energía Plus contracts include price of fuel used for generation, cost of which is assumed by the generator or include such cost as a component of the sale that is charged to the client. For terms longer
than one year, these contracts typically include electric power price updating mechanisms in case of fuel price variations or the generator being required to use liquid fuels in the event of a shortage of natural gas. For further information
regarding our main clients for term market sales under contract, see “Business—Our Customers”.
Term market sales under contract, and MATER sales under contracts accounted for 9.94% and 3.12% of our electric power sales (in MWh) and 24.17% and 6.31% of our revenues for the year ended December 31, 2023, respectively.
In our Luján de Cuyo plant, we are also permitted to sell a minor portion (up to 16 MW) of our generation capacity and electric power under negotiated contracts with private sector counterparties under the Energía Plus scheme,
designed to encourage private sector investments in new generation facilities. Energía Plus sales under contracts accounted for 0.28% of our electric power sales (in MWh) and 0.47% of our revenues for the year ended December 31,
2023. These contracts are typically one-to-two years long, are denominated in U.S. dollars and are paid in pesos at the exchange rate determined in the contract as of the date of payment. Under the rules and regulations of the Energía
Plus, the generator buys the fuel to cover the committed demand of electric power and supplies the electric power to large electric power consumers at market prices, denominated in U.S. dollars, previously agreed between the generator
and its clients.
RenovAr sales under contracts include sales of electricity generated exclusively from renewable energy power plants under negotiated contracts with public sector counterparties. We have long term contracts signed with CAMMESA.
Prices under these PPAs are denominated in U.S. dollars and guaranteed by the FODER. In the RenovAr Program, our subsidiaries, Achiras, La Castellana I, La Genoveva I and Cordillera Solar entered in a 20-year PPA with
CAMMESA that establishes that 100% of the contracted generation capacity of the power plants will be sold to CAMMESA at the awarded price plus the respective incentive and adjustment factors, which increase the awarded price
approximately by 10.00% to 15.00%. See “Item 4.B, Business Overview—The Argentine Electric Power Sector —Structure of the Industry—Renewable Energy Program”. Sales under RenovAr Program accounted for 6.24% of our
electric power sales (in MWh) and 11.29% of our revenues for the year ended December 31, 2023. See “Item 4.B. Business Overview—The Argentine Electric Power Sector”.
We also produce steam. As of December 31, 2023, we had an installed capacity of 465 tons per hour: the San Lorenzo cogeneration plant had an installed capacity of 340 tons per hour while the installed capacity of Luján de Cuyo plant
was 125 tons per hour. Steam sales accounted for 4.72% of our revenues for the year ended December 31, 2023. Our production of steam for the year ended December 31, 2023, was 2,018 thousand metric tons, of which 1,090 thousand
metric tons were provided by the San Lorenzo plant and 980 thousand metric tons by the facilities installed in Luján de Cuyo.
Our Luján de Cuyo plant supplies steam under negotiated contracts with YPF while the San Lorenzo plant provides steam under a negotiated contract with T6 Industrial S.A. Our Luján de Cuyo plant has a combined heat and power
(CHP) unit in place, which started operations on October 5, 2019, replacing the previous CHP, and supplies up to 125 metric tons per hour of steam to YPF’s refinery in Luján de Cuyo under a steam supply agreement. This contract is
denominated in U.S. dollars but can be adjusted in the event of variations in U.S. dollar-denominated prices of fuel necessary for power generation. This new steam supply contract with YPF was entered into on December 15, 2017, for
a period of 15 years and replaced the contract in place with YPF. For further information on the steam supply agreements with YPF for the Luján de Cuyo plant, see “Item 5.A. Operating Results—Factors Affecting Our Results of
Operations—Sales Under Contracts, Steam Sales and Others —Steam supply to YPF—Luján de Cuyo plant”.
The contract between us and Transportadora de Gas del Sur (“TGS”) for the natural gas transportation capacity has remained effective after the sale of the La Plata plant. Pursuant to the terms of our agreement with YPF EE, we resell
our gas transportation capacity to YPF EE through the resale system established by Resolution ENARGAS 419/97. The resale under such system is open to third parties and consequentially does not ensure that YPF EE will receive the
gas transportation capacity needed to operate the La Plata plant. Therefore, on January 25, 2018, we requested to be registered with the Ministry of Energy and the ENARGAS as a natural gas trader to permit the resale of our gas
transportation capacity to YPF EE without the risk of intervention from interested third parties. On July 20, 2018, we were effectively registered as natural gas trader. As of the date of this annual report, the delivery of the transportation
capacity to YPF EE is done through the “Resale” mechanism. The resale to YPF EE of our natural gas transportation capacity accounted for 0.59% of our revenues for the year ended December 31, 2023.
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In addition, we have income derived from the operating fee that we receive for the management of the Central Vuelta de Obligado plant. Revenues from the management of the Central Vuelta de Obligado plant accounted for 1.46% of
our revenues for the year ended December 31, 2023.
Finally, as a result of our acquisitions in the forestry industry, carried out in December 2022 and May 2023, we have another source of revenues provided by five subsidiaries: Forestal Argentina S.A., Loma Alta Forestal S.A., EVASA,
Estancia Celina S.A. and Las Misiones S.A. These subsidiaries as a whole generated 1.46% of our aggregate revenues for the year ended December 31, 2023. Since Forestal Argentina S.A. and Loma Alta Forestal S.A. were acquired on
December 27, 2022, and EVASA, Estancia Celina S.A. and Las Misiones S.A. were acquired on May 3, 2023, the year 2023 is the first one with forestry sales.
The following graph breaks down our revenues in the year ended December 31, 2023, by regulatory framework:
_______________________
Source: Central Puerto. Includes sales of energy and power to CAMMESA remunerated under Resolution No. 95/13, Resolution No. 19/2017, Resolution of the Secretariat of Energy No. 1/2019, Resolution No. 31/20, Resolution No.
440/21, Resolution No. 238/22 and Resolution No. 826/22, Resolution No. 59/23, Resolution No. 750/23 and Resolution No. 869/23 (see “Item 4.B. Business Overview—The Argentine Electric Power Sector—Remuneration Scheme).
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The following graph breaks down our electric energy sales in the year ended December 31, 2023, by regulatory framework, in MWh:
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Source: Central Puerto.
In 2014, we acquired four heavy-duty, highly efficient gas turbines: (i) one General Electric gas turbine with a capacity of 373 MW; (ii) two Siemens gas turbines, each with a capacity of 298 MW; and (iii) one Siemens gas turbine with
a capacity of 286 MW, which we installed in our San Lorenzo co-generation project, which commenced operations as a combined cycle on August 15, 2021. During 2021 two Siemens gas turbines stored in Germany, each with a
capacity of 298 MW were sold. With respect to the GE gas turbine, which is already in Argentina, we are considering it for potential projects in the future and analyzing other prospects. Additionally, we have also acquired 130 hectares
of land in the north of the Province of Buenos Aires, in a location that provides excellent conditions for fuel delivery and access to power transmission lines.
We have long-term maintenance service agreements for our thermal generation plants provided by world-leading companies in the construction and maintenance of thermal power plants such as (i) General Electric, which maintains the
combined cycle plant of Nuevo Puerto, and Luján de Cuyo, (ii) Siemens, which carries out the maintenance of the combined cycle of the Mendoza site, the Brigadier López thermoelectric plant and the Luján de Cuyo and San Lorenzo
cogeneration units, and (iii) Mitsubishi, which carries out the maintenance of the remaining cycle combined located in the Central Costanera.
Within the framework of the aforementioned agreements, these suppliers supply materials, spare parts, labor and engineering direction of scheduled maintenance in accordance with the corresponding technical recommendations.
We have entered into long term contracts with Vestas Argentina S.A. for the operation and maintenance of the La Genoveva I wind farms until August 30, 2040, La Genoveva II until May 31, 2039, La Castellana II until May 31, 2039
and Manque and Los Olivos until May 31, 2039. We also have entered into long term contracts with Nordex Energy Argentina S.A for the operation and maintenance of Achiras wind farm until September 3rd, 2028 and La Castellana
until August 12th. 2028. As for Guañizuil II A solar farm we currently hold a long term contract with Huawei International Corporation until April 16th 2025.
We also own long-term significant non-controlling investments in companies that have utility licenses to distribute natural gas through their networks in the provinces of Mendoza, San Juan, San Luis, Córdoba, Catamarca and La Rioja.
Considering our direct and indirect interests, we hold (i) a 21.58% equity stake in DGCU and (ii) a 40.59% equity stake in DGCE (Ecogas).
Ecogas has a gas distribution network covering 37,502 km and served approximately 1,442,184 customers as of December 31, 2023. In 2023, Ecogas distributed an average of 12,5 million cubic meters of natural gas per day; and in
2022, Ecogas distributed an average of 13.3 million cubic meters of natural gas per day. This volume of distribution represented approximately 15 % and 15.4% of the gas delivered by all the distribution companies in Argentina in
December 2023 and 2022, respectively, according to data from ENARGAS. In the year ended December 31, 2023, our interest in Ecogas produced Ps.5.83 million in share profit of an associate, which represented 3.99% of our net
income for such period.
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Through Resolution No. 17,949 dated January 7, 2016, the CNV granted us a conditional authorization to enter the public offering regime through the issuance of simple, non-negotiable obligations, convertible into shares and the
creation of a global program for the issuance of negotiable obligations (the “Program”) and, on March 16, 2016, the CNV decided to give effect to the Resolution. On September 9, 2019, our Shareholders Meeting resolved to approve
our voluntary withdrawal from the Public Offering Regime in which we were stating that we had not issued negotiable obligations, and to cancel of the Program. On October 24, 2019, the CNV gave us notice of the joint signature CNV
Resolution No. RESFC-2019-20506-APN-DIR # CNV of the same date, through which it resolved to cancel, as of the date of Resolution, the authorization granted to make a public offering of our Negotiable Obligations, due to the
lack of outstanding securities. Likewise, having the Shareholders’ Meeting of January 26, 2018, resolved to approve our application to join the Public Offering of shares, the CNV authorized the Public Offering of class “B” shares
(Resolutions No. 19,384 and No. 19,391 dated March 1, 2018, and March 8, 2018, respectively); However, the selling shareholders decided to postpone the offering, due to market reasons. Consequently, the CNV, on October 24, 2019,
notified us of the CNV Resolution of joint signature No. RESFC-2019-20511-APN-DIR # CNV of the same date, through which it was resolved to cancel, as of that date, the authorization granted to us to make a public offering of our
shares, due to the absence of placement of the negotiable securities.
Our Competitive Strengths
We believe that we have achieved a strong competitive position in Argentina mainly as a result of our development in the power generation sector, which has allowed us to accomplish the following strengths:
·
One of the largest private sector power companies in Argentina. We are one of the largest private sector power generation companies in Argentina, as measured by power generated, according to data from
CAMMESA. In the year ended December 31, 2023, we generated a total of 20,774 net GWh of power. As of December 31, 2023, we had an installed generating capacity of 7,173 MW. Our size within the Argentine
market positions us well to take advantage of future developments as investments are made in the electric power generation sector. Our ample installed capacity is also an advantage, as we have enough capacity to
support large, negotiated contracts.
The following graphs show the SADI’s total power generation by private companies and market share for 2023 (grouped by related companies and subsidiaries):
(1) Source CAMMESA
(2) Energy Generation of total SADI
·
High quality assets with strong operational performance. We have a variety of high-quality power generation assets, including combined cycle turbines, gas turbines, steam turbines, wind farms, solar panels,
hydroelectric technology and steam and power co-generation technology, with a combined installed generating capacity of 7,173 MW, as of the date of this annual report. Our efficiency levels compare favorably to
those of our competitors due to our efficient technologies. The following chart shows the efficiency level for the period between January 2023 and December 2023 of each of our generating units compared to our
main competitors based on heat rate, which is the amount of energy used by an electric power generator or power plant to generate one kWh of electric power.
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The following chart shows the availability ratio of our thermal assets as compared to the market average:
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Source: Central Puerto, CAMMESA.
(1) Availability reported by CAMMESA, as determined by the total installed capacity of each power plant.
(2) Central Costanera figures do not encompass the power capacity values of the steam generation units COSTTV04 and COSTTV06, which have a total installed capacity of 120 MW and 350 MW, respectively.
We have long-term maintenance contracts with the manufacturers of our combined cycle units and co-generation plants with the largest capacity, namely the Puerto combined cycle unit, the Luján de Cuyo combined cycle unit at the
Luján de Cuyo plant, the Brigadier López gas turbine, the co-generation units at the Luján de Cuyo plant, San Lorenzo cogeneration plant, Mitsubishi combined cycle in Central Costanera and our windfarms and solar farms, under
which the manufacturers provide maintenance using best practices recommended for such units. Our remaining units receive maintenance through our highly trained and experienced personnel, who strictly follow the recommendations
and best practices established by the manufacturers of such units. We are also capable of generating power from several sources of fuel, including natural gas, diesel oil and fuel oil. In addition, in recent years we have invested in
adapting our facilities to be able to generate power from biofuels, and we have developed business relationships over the years with strategic companies from the oil and gas and the biofuel sectors. Our power generation units are also
favorably positioned along the system’s power dispatch curve (the WEM marginal cost curve) as a result of our technologically diverse power generation assets and high level of efficiency in terms of fuel consumption, which ensures
ample dispatch of energy to the system, even when taking into account new capacity additions expected in the coming years that were awarded pursuant to auctions to increase thermal generation capacity and capacity from renewable
energy sources.
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Diversified and strategically located power sector assets. Our business is both geographically and technologically diverse. Our assets are critical to the Argentine electric power network due to the flexibility provided
by the large fuel storage capacity, which allows us to store 72,000 tons of fuel oil (enough to cover 5.5 days of consumption) and 89,000 tons of gas oil (enough to cover 7.3 days of consumption) at our thermal
generation plants, in addition to our access to deep water docks, our dam water capacity and our ability to store energy for 45 days operating at full capacity at Piedra del Águila. The prices for power transmission are
regulated and based on the distance from the generating company to the user, among other factors. In this regard, our thermal power plants are strategically located in important city centers or near some of the
system’s largest customers, which constitutes a significant competitive advantage. For example, approximately 37.6% of Argentine energy consumption was concentrated within the metropolitan area of Buenos Aires
during 2023 according to the monthly report of December 2023 prepared by CAMMESA. Because the lack of capacity in SADI limits the efficient distribution of energy generated in other geographic areas, our
generation plants in Buenos Aires and Mendoza are essential to the supply of energy to meet the high demand in these areas. In addition, this need to generate energy close to a high consumption area in Argentina
means that our plants are less affected by the installation of new capacity in other regions.
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The diversification of our fuel sources enables us to generate energy in different contexts, as shown in the following chart:
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Luján de Cuyo’s Siemens Combined Cycle unit (290 MW installed capacity) and Buenos Aires’ Combined Cycle unit (277 MW installed capacity) are CEPU’s only units relying exclusively on natural gas.
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Expansion of the current installed capacity. We have taken steps to improve our strategic position as a leader among power generators by expanding and developing our thermal generation and renewable energy
capacity. Likewise, our recent investments in the forestry industry allow us to both diversify our operations and source of revenues and complement and strengthen our energy business in the energy transition era.
Source: Central Puerto
Thermal Generation
In 2014, we acquired four heavy-duty, highly efficient gas turbines: (i) one General Electric gas turbine with a capacity of 373 MW; (ii) two Siemens gas turbines, each with a capacity of 298 MW; and (iii) one
Siemens gas turbine with a capacity of 286 MW. We also acquired 130 hectares of land in the north of the Province of Buenos Aires. For example, we are currently using a Siemens gas turbine, with a capacity of 286
MW, for the San Lorenzo co-generation project. During 2021 two Siemens gas turbines stored in Germany, each with a capacity of 298 MW were sold. With respect to the GE gas turbine, which is already in
Argentina, we are considering it for potential projects in the future and analyzing other prospects.
In addition, in 2018, we acquired two additional Siemens gas turbines with a capacity of 56 MW for a purchase price of SEK$381.37 million (which, converted at the exchange rate quoted by the Central Bank as of
the date of each payment, equals US$45.46 million) for our Luján de Cuyo project, which started commercial operations on October 5, 2019.
Pursuant to Resolution No. 287-E/17, the former Secretariat of Electric Energy called for proposals for supply of electric power to be generated through existing units, the conversion of open cycle units into combined
cycle units or the installation of co-generation units. We submitted bids on August 9, 2017, and, on September 25, 2017, we were awarded two co-generation projects at San Lorenzo (with an awarded electric capacity
of 330 MW and 317 MW for the winter and summer, respectively) that started operations on August 15, 2021 and Luján de Cuyo (with an awarded electric capacity of 93 MW and 89 MW for the winter and summer,
respectively), which started operations on October 5, 2019, seven weeks ahead of the committed COD.
On July 26, 2023, the National Secretariat of Energy announced, through Resolution 621/2023, a national and international “Terconf” public tender for the submission of offers for new or existing thermal plants with
the aim of incorporating stable and reliable thermal power to the national interconnected system.
The public tender was divided into:
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Thermal Generation for the reliability and supply of the interconnected system (“SADI”), targeting a range between 2,250 MW and 3,000 MW; and
Thermal Generation to replace and make the Tierra del Fuego power generation system more efficient, targeting a range between 30 MW and 70 MW.
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The public tender was further divided into subcategories that had a power limit to be awarded:
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Line 1.0: Power increase of existing combined cycles.
Line 1.1: Improvement of supply reliability in critical areas.
Line 1.2: Improvement of regional supply reliability.
Line 1.3: Improvement of general supply reliability.
As part of the bidding process, the group presented projects in Central Puerto for 312 MW and in Central Costanera for 516 MW. The submission of bids took place on September 26, while the technical qualification
and the opening of the bids were carried out on October 25 and October 27, respectively. Finally, on November 29, CAMMESA announced the outcome of the bidding process, resulting in the awarding of the two
projects presented by Central Costanera for a total of 516 MW. However, as of the date of this annual report, the contracts have not been signed and the TerConf bidding process is currently being reviewed by the new
administration.
As of the date of this annual report, works for the closing of the combined cycle of the Brigadier Lopez Plant have started and are pending completion. In February 2024, the agreement with the constructor, Sociedad
Argentina de Construcción y Desarrollo Estratégico (“SACDE”) was formalized. Under such agreement, all the works, services and works necessary to complete the closure of the cycle were defined, with the “notice
to proceed” having been delivered on February 26, 2024. Works are expected to be completed during 2025. The plant, which has a dual-fuel Siemens SGT5-4000 F gas turbine with a total nominal power of 292 MW,
is expected to increase its capacity by 140 MW thanks to the closing cycle. This means that total power output will reach 432 MW.
Renewable Generation
In connection with our renewable energy efforts, Law No. 27,191, provides that Large Users, whose demand exceeds 300 KW of average annual power, should comply with the obligation to purchase renewable
energy by entering into a contract with a generating company or through self-generation. The former Ministry of Energy and Mining through Resolution 281-E/ 2017, established the regulatory framework that allows
Large Users to purchase renewable energy from private generating companies and the conditions for granting the “dispatch priority” that allows such transactions to take place and ensures that the private generating
companies will not be restricted in the future in its generation dispatch (see “Item 4.B. Business Overview—The Argentine Electric Power Sector—Resolution No. 281-E/17: The Renewable Energy Term Market in
Argentina”). We have signed long-term PPA contracts with private customers for 100% of the estimated energy generation capacity of our term market renewable energy projects developed under Resolution No. 281-
E/17 regulatory framework and our seven wind farms commenced commercial operations.
With the aim of diversification of our energy matrix, on October 18, our subsidiary Proener, directly acquired 100% of the capital stock of Cordillera Solar and Scatec Equinor Solutions S.A. (currently, CP Servicios
Renovables S.A.), owner, and operator respectively of the solar power plant “Guañizuil II A”.
The Guañizuil II A solar power plant is located in the province of San Juan, Argentina, and has a nominal rated power capacity of 105 MW, generating approximately 300 GWh/year. The plant counts with 358,560
solar panels and covers a total area of 270 hectares, being the third largest solar farm in Argentina. This acquisition has been recorded as an assets acquisition as per IFRS 3.
In addition, the Guañizuil II A solar power plant has a capacity factor of 33%, exceeding the average for the region and positioning it as one of the farms with the best capacity factor in the world, which allows it to
produce energy to supply the demand of approximately 86,000 homes. The remuneration scheme of the power plant is a PPA with CAMMESA under the Program Renov.ar 2.5 for 20 years.
We consider the acquisition of our first photovoltaic technology park represents another milestone in the diversification of our energy matrix within the framework of our expansion strategy and consolidation in the
renewable energy market. Thus, Central Puerto will generate 9.6% of the country’s total solar energy and will reach a capacity of 475 MW of renewable energy, of which 80% corresponds to wind energy and 20% to
solar energy.
We cannot assure you that the Argentine Government will open new auction processes, or our bids will be successful or that we will be able to enter into PPAs in the future. See “Item 3D. Risk Factors—Risks
Relating to our Business—Factors beyond our control may affect or delay the completion of the awarded projects or alter our plans for the expansion of our existing plants”.
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Stable cash flow generation, partially supported by U.S. dollar denominated contracts payable in Argentine pesos. Part of our cash flows are denominated in US dollars mainly from (a) long term contracts (PPAs) with CAMMESA,
and (b) contracts signed directly under Energía Plus framework, MATER and Steam Sales. Such payments principally depend on two factors: (i) the availability of power capacity (in the case of thermal units) and (ii) the amount of
power or steam generated. All variables have been relatively stable in recent years, as a result of the diversified technology and high efficiency of our power generation units. In addition, our cash flows have little exposure to the fuel
price changes as the fuel needed to produce the energy under the Spot Sales is supplied by CAMMESA without charge and our term market sales under contracts typically include price adjustment mechanisms based on fuel price
variations, if applicable.
During 2023, we collected Ps.36.94 billion from the CVO receivables, measured in current amounts as of December 31, 2023.
Adequate financial position. We benefit from an adequate financial position, operating efficiency and a relative low level of indebtedness, allowing us to deliver on our business growth strategy and create value for our shareholders. In
terms of our financial position, our total cash and cash equivalents and current other financial assets was Ps.103.31 billion as of December 31, 2023 (approximately US$127.79 million). As of the date of this annual report, we also have
uncommitted lines of credit with commercial banks, totaling approximately Ps.89.8 billion.
Solid and experienced management team with a successful track record in delivering growth. Our executive officers have vast experience and a long track record in corporate management with, on average, 19 years of experience in
the industry. Our management has diverse experience navigating different business cycles, markets and sectors, as evidenced by the growth and expansion we have undergone since the early 1990s. They also have a proven track record
in acquisitions and accessing financial markets. On June 14, 2019, Central Puerto, in the context of a local and foreign public tender called by IEASA, which had been awarded to us, purchased the Brigadier López Plant. Our
management successfully obtained US$180.0 million loan from Citibank N.A., JP Morgan Chase Bank N.A. and Morgan Stanley Senior Funding INC. to fulfill the acquisition. “See Item 5.B. Liquidity and Capital Resources—
Indebtedness—Loan from Citibank N.A., JP Morgan Chase Bank N.A. and Morgan Stanley Senior Funding INC”.
Additionally, during 2018, 2019 and 2020, our management also obtained financing for the expansion of our installed capacity from multilateral credit agencies, export credit agencies, commercial banks and the local securities market,
as described in “Item 5.B. Liquidity and Capital Resources—Indebtedness”.
In addition, in 2015, jointly with an investment consortium, we acquired non-controlling equity interests in Ecogas, which distributes natural gas through its network covering 37,502 km and serving approximately 1,442,184 customers
as of December 31, 2023, further diversifying our interest in the sector. We believe that our management team has been successful in identifying attractive investment opportunities, structuring innovative business plans and completing
complex transactions efficiently.
Our management has significant in-country know-how, with professionals who have taken an active role in project development and construction, developing private and public investment plans with both Argentine and international
partners. In addition, our management team has business experience at the international and national level, are familiar with the operation of our assets in a constantly changing business environment and are strongly committed to our
day-to-day decision-making process.
Finally, our executive officers have a solid understanding of Argentina’s historically volatile business environment. They have built and maintained mutually beneficial and long-lasting relationships with a diversified group of suppliers
and customers and have cultivated relationships with regulatory authorities.
Strong corporate governance. We have adopted a corporate governance code to put into effect corporate governance best practices, which are based on strict standards regarding transparency, efficiency, ethics, investor protection and
equal treatment of investors. The corporate governance code follows the guidelines established by the CNV. We have also adopted a code of ethics and an internal conduct code designed to establish guidelines with respect to
professional conduct, morals, and employee performance. In addition, the majority of our Board of Directors qualifies as “independent” in accordance with the criteria established by the CNV, which may differ from the independence
criteria of the NYSE and NASDAQ.
Our Business Strategy
We seek to consolidate and grow our position in the Argentine energy industry by maintaining our existing asset base and by acquiring and developing new assets related to the sector. We decided to expand our businesses lines in those
sectors in which Argentina has clear comparative advantages. The key components of our strategy are as follows:
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Consolidating our leading position in the energy sector. We seek to consolidate our position in the energy sector by analyzing value-generating alternatives through investments with a balanced approach to
profitability and risk exposure. We are committed to maintaining our high operating standards and availability levels. To this end, we follow a strict maintenance strategy for our units based on recommendations from
their manufacturers, and we perform periodic preventive and predictive maintenance tasks. We plan to focus our efforts on optimizing our current resources from a business, administrative and technological
perspective, in addition to capitalizing on operating synergies from the plants currently under construction that rely on similar systems, know-how, customers and suppliers.
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Becoming a leading company in renewable energy in Argentina. Several research studies from organizations such as the Cámara Argentina de Energías Renovables suggest that Argentina has a significant potential
in renewable energy (mainly in wind and solar energy). We also believe that renewable energy will become a larger part of the installed capacity in Argentina. The former Ministry of Energy and Mining, through Law
No. 27,191, has established a target for renewable energy sources to account for 20% of Argentina’s electric power consumption by December 31, 2025. We intend to capitalize on this opportunity by expanding our
investments into renewable energy generation. To achieve this goal, we are strengthening our renewable energy portfolio. In August 2018, September 2018, July 2019, September 2019, December 2019/January 2020,
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February 2020 and November 2020 our wind farms La Castellana I, Achiras, La Castellana II, La Genoveva II, Manque, Los Olivos and La Genoveva I started operations, respectively. In October 2023, our subsidiary
Proener also acquired 100% of the capital stock and votes of Cordillera Solar and Scatec Equinor Solutions Argentina S.A (currently, CP Servicios Renovables S.A.), owner and operator, respectively, of a
photovoltaic plant located in the Province of San Juan. Additionally, we are also exploring several other options to diversify our generation assets to include sustainable power generation sources (see Item 3D. Risk
Factors—Risks Relating to our Business— Factors beyond our control may affect or delay the completion of the awarded projects or alter our plans for the expansion of our existing plants). In 2016, we formed our
subsidiary, CP Renovables, to develop, construct and operate renewable energy generation projects.
Acquiring assets in the forestry sector. In line with the global trend of developing innovative projects that increase the environmental performance of companies and contribute to global decarbonization objectives,
we took a first step by acquiring one of the largest forestry companies in Argentina from Masisa Chile, seeking to consolidate our position as a relevant player in the forestry sector. Argentina has clear regional and
global comparative advantages in the sector, while Forestal Argentina S.A. and Loma Alta Forestal S.A, acquired by our affiliate Proener, have a highly experienced management and a significant growth potential. On
May 3, 2023, our affiliate Proener also acquired 100% of the capital stock and votes of Empresas Verdes Argentina S.A., Las Misiones S.A. and Estancia Celina S.A.
Maintaining an adequate financial position and sound cash flow levels. We have a relatively low level of debt, which reflects our adequate financial position and additional debt capacity. We believe our adequate
financial position is the result of our responsible financial policies and stable cash flows. We will preserve our current cash flow levels in the coming years by, among other things, keeping a rigorous maintenance
program for our production units, which we expect will help us continue the positive operational results we have experienced, particularly regarding our electric power dispatch availability. We intend to finance our
expansion plans through market alternatives that enhance the return on capital of the projects, relying on loan agreements -such as credit facilities and project financing- and on the local and international capital
markets. Each of CP La Castellana, CP Achiras, CPR Energy Solutions, Vientos La Genoveva I, Vientos La Genoveva II, entered into long term loans to fund the development of renewable energy projects they were
awarded and to purchase wind turbines. We also obtained a long-term loan from Kreditanstalt für Wiederaufbau (“KfW”) to support the construction of the Luján de Cuyo cogeneration project, and a loan from
Citibank N.A., JP Morgan Chase Bank N.A. and Morgan Stanley Senior Funding INC. to purchase the Brigadier López plant, which was fully paid on January 12, 2024. See “Item 5.A. Operating Results—
Indebtedness”. We expect that the new capacity from these projects will allow us to further increase our cash flow, while enhancing our financial position.
Our Subsidiaries
Central Vuelta de Obligado S.A.
CVOSA is a private, unlisted company, engaged in managing the purchase of equipment and building, operating and maintaining the CVOSA power plant that was constructed and began operations in March 20, 2018 under a program
substantially similar to the FONINVEMEM program. In the year ended December 31, 2023, CVOSA accounted for a gain equaling 0.04%% of our consolidated net income.
We have 57.49 % of the voting rights in CVOSA, which grants us the power to unilaterally approve resolutions for which a majority is required at the relevant shareholders meeting. However, pursuant to a shareholders’ agreement
entered into among Hidroeléctrica El Chocón S.A., Central Dock Sud S.A. and Central Costanera S.A (the “Other CVOSA Shareholders”) and us, we will only be able to approve the following decisions with the affirmative vote of the
Other CVOSA Shareholders: (i) entering into a merger, spin-off, transformation or liquidation; (ii) increasing or decreasing the capital stock; (iii) receiving capital contributions; (iv) entering into transactions with related parties; (v)
amending the bylaws; (vi) entering into an operating and maintenance agreement for the Vuelta de Obligado power plant; (vii) approving the trust agreement in connection with the Vuelta de Obligado power plant and its amendments;
(viii) filing any lawsuit against any governmental authorities, CAMMESA and/or the FONINVEMEM trust fund currently holding the Vuelta de Obligado power plant; (ix) entering into engineering services, gas supply and
transportation agreements; and (x) entering into a power purchase agreement with CAMMESA for the Vuelta de Obligado power plant. If such decisions are to be decided at a board of directors’ meeting, they can only be approved with
the affirmative vote of at least one member of the board of directors appointed by the Other CVOSA Shareholders.
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Currently the board of directors of CVOSA is composed by four members, two of which have been appointed by us. In addition, we have the right to appoint the chairman of the board of directors of CVOSA, who has double vote in
case of a tie. In addition, we have the right to appoint one member of the supervisory committee of CVOSA.
Pursuant to the terms of the FONINVEMEM agreement relating to the Vuelta de Obligado power plant, on the tenth anniversary of the start of operations of the Vuelta de Obligado power plant, which occurred on March 20, 2018, all
governmental entities that financed the construction of the Vuelta de Obligado power plant have the right to be incorporated as shareholders of CVOSA, which in turn may dilute our interest in CVOSA. If such dilution were to occur,
we may no longer control CVOSA.
Proener S.A.U.
Proener S.A.U. is a private, unlisted company. We hold a 100.00% interest in Proener S.A.U., a company engaged in investment activities in the energy and forestry sectors. In the year ended December 31, 2023, Proener S.A.U. and its
subsidiaries accounted for a gain equaling 71.91% of our consolidated net income.
CP Renovables S.A.
In 2016, we formed a subsidiary, CP Renovables S.A. (“CP Renovables”), to develop, construct and operate renewable energy generation projects. As of the date of this annual report, we directly own a 86.53% interest in CP
Renovables. The remaining interest is owned through CPR Energy Solutions S.A.U. (0.33%) and Vientos La Genoveva II S.A.U. (3.14%).
CP Renovables S.A. invests in renewable energy assets. In the year ended December 31, 2023, CP Renovables S.A. and its subsidiaries accounted for a consolidated gain, equaling 3.44% of our consolidated net income.
CP Achiras S.A.U.
CP Achiras S.A.U. is a private, unlisted company. CP Renovables holds a 100.00% interest in the capital stock of CP Achiras S.A.U., a company engaged in the generation and commercialization of electric power through renewable
sources. In the year ended December 31, 2023, CP Achiras accounted for a loss equaling 0.72% of our consolidated net income.
CPR Energy Solutions S.A.U.
CPR Energy Solutions S.A.U. is a private, unlisted company. CP Renovables holds a 100.00% interest in the capital stock of CPR Energy Solutions S.A.U., a company engaged in generation and commercialization of electric power
through renewable sources. In the year ended December 31, 2023, CPR Energy Solutions S.A.U. account for a loss of 0.03% of our consolidated net income.
Puerto Energía S.A.U. (Previously known as CP Patagones S.A.U.)
Puerto Energía S.A.U. is a private, unlisted company., engaged in generation and commercialization of electric power through renewable sources. In the year ended December 31, 2023, Puerto Energía S.A.U. did not account for any of
our consolidated net income.
CP La Castellana S.A.U.
CP La Castellana is a private, unlisted company. CP Renovables holds a 100.00% interest in the capital stock of CP La Castellana, a company engaged in generation and commercialization of electric power through renewable sources.
In the year ended December 31, 2023, CP La Castellana accounted for a loss equaling 5.14% of our consolidated net income.
Vientos La Genoveva S.A.U.
Vientos La Genoveva S.A.U. is a private, unlisted company. On March 7, 2018, our subsidiary CP Renovables S.A. acquired 100% of the equity interests in Vientos La Genoveva S.A. and, on that same date, transformed it into a S.A.U.
(sole-shareholders corporation) On August 6, 2018, we purchased from our subsidiary, CP Renovables S.A., 100.00% of the equity interests in Vientos La Genoveva S.A.U. Vientos La Genoveva is a company engaged in generation and
commercialization of electric power through renewable sources. In the year ended December 31, 2023, Vientos La Genoveva accounted for a gain equaling 3.63% of our consolidated net income.
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Vientos La Genoveva II S.A.U.
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Vientos La Genoveva II S.A.U. is a private, unlisted company. On June 28, 2018, our subsidiary CP Renovables S.A. acquired 100% of the equity interests in Vientos La Genoveva II S.A. and, and was later transformed it into a S.A.U.
On August 6, 2018, we purchased from our subsidiary, CP Renovables S.A., 100.00% of the equity interests in Vientos La Genoveva II S.A.U.
In the year ended December 31, 2023, Vientos La Genoveva accounted for a loss equaling 0.39% of our consolidated net income.
CP Manque S.A.U.
CP Manque S.A.U. is a private, unlisted company. CP Renovables holds a 100.00% interest in the capital stock of CP Manque S.A.U., a company engaged in generation and commercialization of electric power through renewable
sources. In the year ended December 31, 2023, CP Manque S.A.U. accounted for a gain equaling 14.73% of our consolidated net income.
CP Los Olivos S.A.U.
CP Los Olivos S.A.U. is a private, unlisted company. CP Renovables holds a 100.00% interest in the capital stock of CP Los Olivos S.A.U., a company engaged in generation and commercialization of electric power through renewable
sources. In the year ended December 31, 2023, CP Los Olivos S.A.U. accounted for a gain equaling 1.56% of our consolidated net income.
Forestal Argentina S.A.
Forestal Argentina S.A. is a private, unlisted company. Our subsidiary Proener holds a 98.00% interest while Central Puerto S.A. holds 2.00% of the capital stock of Forestal Argentina S.A, a company engaged in the production and
commercialization of forestry assets. In the year ended December 31, 2023, Forestal Argentina S.A. accounted for a gain equaling 1.37%of our consolidated net income.
See “Item 4. Information on the Company—Recent Developments—Acquisition of Loma Alta Forestal and Forestal Argentina”.
Loma Alta Forestal S.A.
Loma Alta Forestal S.A. is a private, unlisted company. Our subsidiary Proener holds a 98.00% interest while Central Puerto S.A. holds a 2.00% interest in the capital stock of Loma Alta Forestal S.A., a company engaged in production
and commercialization of forestry assets. In the year ended December 31, 2023, Loma Alta Forestal S.A. accounted for a loss equaling 2.62% of our consolidated net income.
See “Item 4. Information on the Company—Recent Developments—Acquisition of Loma Alta Forestal and Forestal Argentina”.
Empresas Verdes Argentina S.A
Empresas Verdes Argentina S.A. is a private, unlisted company. Our subsidiary Proener holds a 98.01% while our subsidiary Forestal Argentina S.A. holds a 1.99% interest in the capital stock of Empresas Verdes Argentina S.A, a
company that owns forestry assets in the Province of Corrientes. In the year ended December 31, 2023, Empresas Verdes Argentina S.A. accounted for a gain equaling 6.57% of our consolidated net income.
The results accrued after the acquisition date for the acquired company are not material.
See “Item 4. Information on the Company—Recent Developments— “Acquisition of Empresas Verdes Argentina S.A., Las Misiones S.A. and Estancia Celina S.A”.
Las Misiones S.A.
Las Misiones S.A. is a private, unlisted company. Our subsidiary Proener holds a 88.67% while Empresas Verdes Argentina S.A. holds a 11.33% interest in the capital stock of Las Misiones S.A, a company that owns forestry assets in
the Province of Corrientes. In the year ended December 31, 2023, Las Misiones S.A. did not account for any of our consolidated net income.
The results accrued after the acquisition date for the acquired company are not material.
See “Item 4. Information on the Company—Recent Developments— “Acquisition of Empresas Verdes Argentina S.A., Las Misiones S.A. and Estancia Celina S.A”.
Estancia Celina S.A.
Estancia Celina S.A. is a private, unlisted company. Our subsidiary Las Misiones S.A. holds a 79.20%, our subsidiary Proener holds a 17.20% and Empresas Verdes Argentina S.A. holds a 3.60% interest, respectively, in the capital
stock of Estancia Celina S.A, a company that owns forestry assets in the Province of Corrientes. In the year ended December 31, 2023, Estancia Celina S.A. did not account for any of our consolidated net income.
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The results accrued after the acquisition date for the acquired company are not material.
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See “Item 4. Information on the Company—Recent Developments— “Acquisition of Empresas Verdes Argentina S.A., Las Misiones S.A. and Estancia Celina S.A”.
Central Costanera S.A.
Central Costanera S.A. is a public, listed company on BYMA that is 75.22% owned by Proener as of December 31, 2023 and is engaged in the production and commercialization of electric energy. In the year ended December 31, 2023,
Central Costanera S.A. accounted for a loss equaling 6.47% of our consolidated net income.
The results accrued after the acquisition date for the acquired company are not material. See “Item 4. Information on the Company—Recent Developments—Acquisition of Participation Interests in Enel Generación Costanera S.A”.
Cordillera Solar VIII S.A.
Cordillera Solar is a private, unlisted company which owns the Guañizuil IIA photovoltaic plant located in the Province of San Juan. In the year ended December 31, 2023, Cordillera Solar accounted for a loss equaling 6.91% of our
consolidated net income.
The results accrued after the acquisition date for the acquired company are not material.
See “Item 4. Information on the Company—Recent Developments— “Acquisition of Cordillera Solar VIII S.A. and Scatec Equinor Solutions Argentina S.A.”.
CP Servicios Renovables S.A. (Previously known as Scatec Equinor Solutions Argentina S.A.)
CP Servicios Renovables S.A.is a private, unlisted company. Proener holds a 100% interest in the capital stock of CP Servicios Renovables S.A., a company operating the Guañizuil IIA photovoltaic plant located in the Province of San
Juan. In the year ended December 31, 2023, CP Servicios Renovables S.A. accounted for a loss equaling 0.36% of our consolidated net income.
See “Item 4. Information on the Company—Recent Developments— “Acquisition of Cordillera Solar VIII S.A. and Scatec Equinor Solutions Argentina S.A.”.
Our Affiliates
Termoeléctrica José de San Martín S.A. (TJSM) and Termoeléctrica Manuel Belgrano S.A. (TMB)
TJSM and TMB are private, unlisted companies, which are engaged in managing the purchase of equipment, and building, operating and maintaining the San Martín and Belgrano power plants, respectively, each constructed under the
FONINVEMEM program. In the year ended December 31, 2023, TJSM and TMB did not account for any of our consolidated net income.
As of December 31, 2023, we had 10.90% of the voting rights in TJSM and 12.26% of the voting rights in TMB.
The board of directors of each of TJSM and TMB consists of nine members.
After ten years of operations, TJSM and TMB were entitled to receive property rights to such power plants from the respective trusts currently holding such power plants. At such time, the term of the trusts expired and the Argentine
Government, that financed part of the construction, should be incorporated as a shareholder of TJSM and TMB. Consequently, our interests in TJSM and TMB were diluted in 2021. In the case of TMB and TJSM, the ten-year period
expired on January 7, 2020, and on February 2, 2020, respectively. From such dates, during the following 90-days, TJSM and TMB and their shareholders had to perform all the necessary acts to allow the Argentine Government to
receive the corresponding shares in the equity stake of TJSM and TMB that their contributions entitle the Argentine Government to receive.
On January 3, 2020, before the aforementioned 90 days period commenced, the Argentine Government sent a notice to us (doing the same with TSM, TMB and other generation companies that are shareholders of TJSM and TMB)
stating that, in accordance with the FONINVEMEM Agreement, TJSM and TMB should perform all necessary acts to incorporate the Argentine Government as shareholder of both companies, claiming, in each case, the following
equity interest rights: 65.006% in TMB and 68.826% in TJSM.
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On January 9, 2020, we, together with the other generation companies, shareholders of TJSM and TMB, replied such notice stating that the Argentine Government’s equity interest claims did not correspond with the contributions made
for the construction of the power plants under the terms of the FONINVEMEM Agreement that give rights to claim such equity interest. On March 4, 2020, the Argentine Government reiterated its previous claim to us.
Additionally, on January 7, 2020 and on January 9, 2020, Central Puerto, together with the other shareholders of TJSM and TMB (as guarantors within the framework and the limits stated by the FONINVEMEM Agreement, the Note
SE No. 1368/05 and the trust agreements), BICE, TJSM, TMB and the Energy Secretariat, amended the Operation and Maintenance Agreement of the Manuel Belgrano Thermal Facility (the “TMB OMA”) and the Operation and
Maintenance Agreement of the San Martín Thermal Facility ( the “TJSM OMA”), respectively. The amendments to the TMB OMA and TJSM OMA extended the agreements until each of the trust’s liquidation effective date.
In March 2020, Central Puerto filed an administrative appeal against the Argentine Government challenging their acts referred to above (the “Claim”). Pursuant to this Claim, the position of the shareholders of TJSM and TMB is that
the Argentine Government equity interest in each of the companies should be lower but its incorporation as a shareholder in such companies is unchallenged. Therefore, even if we are successful with our Claim, our interests on TJSM
and TMB were significantly diluted.
On May 4, 2020, and May 8, 2020, the extraordinary shareholders’ meetings of TMB and TJSM, respectively, approved the incorporation of the Argentine Government as shareholder of TJSM and TMB. In each of the extraordinary
shareholders’ meetings, the approved equity interest that was approved was the equity interest that the Argentine Government claims that it is entitled to, which is: 65.006% in TMB and 68.826% in TJSM.
In each of the shareholders’ meetings, Central Puerto (and other shareholders), made the corresponding reservation of rights to continue with the Claim, and expressly stated that the incorporation of the Argentine Government as a
shareholder in TMB and TJSM was approved for the sole purpose of achieving the transfer of the trust assets -which includes, among others, the power plants- from the respective trusts to TJSM and TMB.
On March 11, 2021, the Argentine Government has subscribed its shares and the equity of the shareholders of TJSM and TMB were diluted. In the case of our equity interest, from 30.875% to 9.627% in TJSM and from 30.946% to
10.831% in TMB.
Since February 17, 2023, and due to the acquisition of Central Costanera S.A, we hold equity interests of 10.90% in TJSM, 12.72% in TMB and 57.49% in CVOSA. As of the date of this annual report, the transfer of power stations to
TSM and TMB was not completed. See “Item 3D. Risk Factors—Risks Relating to our Business—Our interests in TJSM, TMB were diluted and CVOSA will be significantly diluted”.
In the case of CVOSA, when the CVO Trust term expires after ten years of operation of the respective power plant the Argentine Government will be incorporated as shareholder, with a stake of at least 70.00% pursuant to
FONINVEMEM arrangements for CVOSA. The dilution of our interest in CVOSA will reduce our income from this power plant, adversely affecting our results of operations. This will also take place when the Argentine Government
incorporates as a shareholder of CVOSA and our equity interest in that company is diluted. See “Item 4.B. Business Overview—FONINVEMEM and Similar Programs”.
Ecogas Group–- Inversora de Gas del Centro S.A. (IGCE)
IGCE is a private, unlisted company. Its only significant assets are a 55.29% interest in DGCE, a company engaged in the distribution of natural gas in the provinces of Córdoba, La Rioja and Catamarca. and a 51.00% interest in
DGCU, a company engaged in the distribution of natural gas in the provinces of Mendoza, San Juan and San Luis. During 2019, IGCE absorbed IGCU, RPBC and MAGNA. For further information on the merger of IGCE and IGCU,
see “Item 4.A—Merger between IGCE, IGCU, RPBC and MAGNA”.
As of the date of this annual report, we hold a 42.31% interest in IGCE and a direct 17.20% interest in DGCE. Therefore, we hold, both directly and indirectly, a 40.59% of DGCE’s capital stock and indirectly have a 21.58% interest in
DGCU’s capital stock.
In the year ended December 31, 2023, IGCE (including a direct interest in DGCE) accounted for a gain equaling 3.98% of our consolidated net income (see “Item 4.A. History and development of the Company—Distribuidora de Gas
Cuyana S.A. (DGCU) and Distribuidora de Gas del Centro S.A. (DGCE)” and “Item 4.A. History and development of the Company—Preliminary Merger Agreement between IGCE, IGCU, RPBC and MAGNA”).
Energía Sudamericana S.A.
Energía Sudamericana S.A. is a private, unlisted company, engaged in natural gas commercialization. We hold a 2.45% direct interest in the capital stock of Energía Sudamericana S.A., plus a 41.06% indirect interest in its capital stock,
through our equity interest in IGCE. In the year ended December 31, 2023, Energía Sudamericana S.A. did not account for a material portion of our net income.
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COySERV S.A.
45
COySERV S.A. is a private, unlisted company, engaged in services and constructions related to the gas industry. We hold a 32.21% indirect interest in the capital stock of COySERV S.A., through our equity interests in IGCE, DGCE
and DGCU. In the year ended December 31, 2023, COySERV S.A. did not account for a material portion of our net income.
GESER S.A.U.
On March 24, 2022, we acquired an 8.599% interest in the related company GESER S.A.U., an entity controlled by IGCE. The purchase price was Ps.2,631 thousand. GESER S.A.U. is a private unlisted company which is engaged in
providing administrative services. In the year ended December 31, 2023, GESER S.A.U. did not account for a material portion of our net income.
Transportadora de Gas del Mercosur S.A. (TGM)
TGM is a private, unlisted company. We hold a 20.00% interest in the capital stock of TGM, which owns a natural gas pipeline extending from Aldea Brasilera (in the Province of Entre Rios) to Paso de los Libres (in the Province of
Corrientes). In the year ended December 31, 2023, TGM accounted for a loss equaling 0.34% of our consolidated net income.
The remaining 80.00% is owned by Total Gas y Electricidad Argentina S.A. (32.68%), Tecpetrol S.A. (21.79) %, RPM Gas S.A. (14.63%) and Compañía General de Combustibles S.A. (10.90%).
The pipeline is approximately 450 km long and its transportation capacity reaches up to 15 million cubic meters per day.
Business Overview
All of our operations in the power generation sector are concentrated in fourteen plants in Argentina, and our portfolio can be divided into two types of electric power generation plants: (i) electric power generation from conventional
sources and (ii) electric power generation from renewable sources.
The table below details certain operating features regarding our power generation assets for the periods indicated:
2023
For the year ended December 31,
2022
2021
Generation—GWh/year
Puerto Complex
Costanera Complex (4)
Luján de Cuyo plant
Brigadier López plant
San Lorenzo plant
Piedra del Águila plant
La Castellana I wind farm (2)
La Castellana II wind farm (2)
Achiras wind farm (2)
Manque wind farm (2)
Olivos wind farm (2)
La Genoveva I wind farm (2)
La Genoveva II wind farm (2)
PS Guañizuil II (3)
Total
Sales under Spot Sales and electric power sales on the spot market—GWh/year
Puerto Complex
Costanera Complex (4)
Luján de Cuyo plant
Brigadier López plant
San Lorenzo plant
Piedra del Águila plant
La Castellana I wind farm (2)
La Castellana II wind farm (2)
Achiras wind farm (2)
Manque wind farm (2)
Olivos wind farm (2)
La Genoveva I wind farm (2)
La Genoveva II wind farm (2)
PS Guañizuil II (3)
Total
Table of Contents
Sales under contracts and Power Purchase Agreements—GWh/year
Puerto Complex
Costanera Complex (4)
Luján de Cuyo plant
Brigadier López plant
San Lorenzo plant
Piedra del Águila plant
La Castellana I wind farm (2)
la Castellana II wind farm (2)
Achiras wind farm (2)
Manque wind farm (2)
La Genoveva II wind farm (2)
Olivos wind farm (2)
La Genoveva I wind farm (2)
PS Guañizuil II (3)
Total
Energy purchases—GWh/year
Puerto Complex
Costanera Complex (4)
Luján de Cuyo plant
Brigadier López plant
San Lorenzo plant
Piedra del Águila plant
La Castellana I wind farm (2)
La Castellana II wind farm (2)
5,371
3,367
3,138
67
2,037
5,173
398
70
188
238
99
378
177
73
20,774
5,371
3,367
2,489
69
41
5,174
.
-
-
-
-
-
-
-
16,511
7,414
3,090
153
1,934
3,283
432
62
201
231
102
391
191
-
17,484
7,414
.
2,480
34
72
3,283
.
.
.
-
-
-
-
-
13,283
46
2023
For the year ended December 31,
2022
2021
-
-
641
-
1,987
-
398
70
188
245
177
92
378
73
4,249
49
66
11
-
3
-
1
-
-
-
609
118
1,863
-
432
62
202
239
191
94
391
-
4,201
71
-
17
3
225
-
1
-
6,563
3,136
93
463
2,565
416
68
191
236
104
375
179
-
14,389
6,563
.
2,409
1
156
2,565
.
.
-
2
1
-
-
-
11,697
-
-
727
92
307
-
416
71
191
241
178
97
375
-
2,695
46
-
7
3
6
-
1
-
Achiras wind farm (2)
Manque wind farm (2)
La Genoveva II wind farm (2)
Olivos Wind farm (2)
La Genoveva I wind farm (2)
PS Guañizuil II (3)
Total
Steam production (metric tons/year)
Luján de Cuyo plant
San Lorenzo plant
Total
Natural gas consumption—MMm3/year
Puerto Complex
Costanera Complex (4)
Luján de Cuyo plant
Brigadier López plant
San Lorenzo plant
Total
Gas oil consumption—thousands of m3/year
Puerto Complex
Costanera Complex (4)
Luján de Cuyo plant
Brigadier López plant
San Lorenzo plant
Total
Fuel oil consumption—thousands of tons/year
Puerto Complex
Costanera Complex (4)
Luján de Cuyo plant
Brigadier López plant
San Lorenzo plant
Total
Availability—% per year(1)
Puerto Complex
Costanera Complex (4)
Luján de Cuyo plant
Brigadier López plant
Piedra del Águila plant
San Lorenzo plant
Weighted average for thermal units(1)
Weighted average for thermal and hydro plants(1)
_______________________
Source: CAMMESA.
Table of Contents
-
-
-
-
-
-
130
-
8
-
-
-
-
325
-
-
-
-
-
-
63
928,381
1,089,509
2,017,890
918,044
1,042,066
1,960,110
1,099,223
109,288
1,208,511
876
902
660
1
274
2,713
44
10
-
19
105
178
278
52
4
-
-
334
75%
43%
89%
93%
98%
99%
66%
73%
899
637
2
199
1,737
222
-
-
43
161
426
567
-
4
-
-
571
79%
89%
95%
100%
91%
84%
89%
831
673
2
91
1,597
267
-
-
-
9
276
361
-
-
-
-
361
88%
84%
96%
99%
84%
88%
91%
47
(1)
(2)
(3)
(4)
Weighted average based on the power capacity of each unit without considering renewable energy units, which do not receive payments tied to their availability.
La Castellana I, La Castellana II, Achiras, Manque, Olivos, La Genoveva I and La Genoveva II wind farms are owned by CP La Castellana S.A.U., CPR Energy Solutions S.A.U., CP Achiras S.A.U., CP Manque S.A.U., CP
Los Olivos S.A.U, Vientos La Genoveva I S.A.U and Vientos La Genoveva II S.A.U., respectively, the first five of which are fully owned subsidiaries of CP Renovables S.A. while the last two are a fully owned subsidiary of
Central Puerto S.A. As of the date of this annual report, we own a 90.00% interest in CP Renovables. See “Item 4.B. Business Overview—Our Subsidiaries”.
PS Guañizuil II solar farm is owned by Cordillera Solar which is a fully owned subsidiary of Proener S.A.U., as of December 31, 2023. As of the date of this annual report, we own a 100% interest in Proener. See “Item 4.B.
Business Overview—Our Subsidiaries”. We consider the Guañizuil II solar farm information as of October 18, 2023
Costanera complex is owned by Central Costanera S.A. which is 75.22% owned by Proener S.A.U., as of December 31, 2023. As of the date of this annual report, we own a 100% interest in Proener. See “Item 4.B. Business
Overview—Our Subsidiaries”. We consider Central Costanera information as of February 17, 2023.
Additionally, the table below shows the availability features regarding the three FONINVEMEM Plants for 2023, this availability rate considers 100% of the hours of the year:
The following graph shows the evolution of Central Puerto’s electric power generation for the period 2014-2023:
Source: Central Puerto, CAMMESA
Source: CAMMESA. The graph (i) includes generation of companies that were absorbed by Central Puerto in 2014 (see Business Section—The 2014 merger) and (ii) excludes the La Plata plant, which effective as of January 5, 2018,
we sold to YPF EE. For further information, see “Item 4.A. History and development of the Company—La Plata Plant Sale”).
Electricity Generation from our Thermal Generation Plants
As of December 31, 2023, we owned six thermal generation plants across five complexes: Puerto Complex, Costanera Complex, Brigadier Lopez, Luján de Cuyo and San Lorenzo.
48
Table of Contents
Puerto Complex
Our Puerto Complex is composed of two facilities, Nuevo Puerto, including the Puerto combined cycle plant, and Puerto Nuevo (collectively, the “Puerto Complex”), located in the port of the City of Buenos Aires on the bank of the
Río de la Plata. The two facilities are close to one another inside a complex of 246,475 square meters with a total installed capacity of 1,747 MW. Nuevo Puerto’s facilities (which includes both the Nuevo Puerto plant and the Puerto
combined cycle plant) has 70,518 square meters. Puerto Nuevo has approximately 92,370 square meters.
Nuevo Puerto’s facilities were completed in 1926 and Puerto Nuevo’s facilities were completed in 1930. The two facilities were merged into a single company in the 1980s within SEGBA, which was later converted to Central Puerto
after the privatization in 1992.
Nuevo Puerto is located at Av. Thomas Edison 2001/2151 in the City of Buenos Aires in the northern part of the complex and has two conventional steam turbine generator sets (steam turbine units 5 and 6). The plant can run on natural
gas and fuel oil and has a current installed capacity of 360 MW.
The Puerto combined cycle plant was built at Nuevo Puerto’s facilities and commenced commercial operations in 2000. The Puerto combined cycle plant has an installed capacity of 798 MW and is composed of two General Electric
9FA gas turbines, two heat recovery steam generators and a General Electric D11 steam turbine. The Puerto combined cycle plant is one of the most modern and efficient plants in Argentina and can run on natural gas and gas oil. In
addition, since 2011, the facilities were modified to allow for the use of a blend of up to 20.00% gas oil and biodiesel when running on liquid fuel.
Puerto Nuevo is located at Av. Thomas Edison 2701 in the City of Buenos Aires in the southern part of the complex and has three conventional steam turbine generator sets (steam turbine units 7, 8 and 9). The plant is capable of
running on natural gas and fuel oil and has an installed capacity of 589 MW.
Technology. The steam turbine generators at both facilities include turbines with high, medium and low-pressure stages that run on superheated steam from a dedicated conventional heat generator. The steam turbine generator works on
a cycle. Water flows towards a heat generator that creates steam. The expansion of the steam makes the turbine rotate, triggering an electric power producing generator. Once the steam has been used in the turbine, it is collected in
condensers where it returns to its liquid form, and the water flows again towards the heat generator to produce more steam and feed the turbine again.
The combined cycle technology is one of the most efficient fossil fuel-based electric power generation technologies available. It works by first feeding each gas turbine with a mix of fuel and air. The gas that is produced from this
process expands rapidly due to combustion and the generator and turbine ultimately convert the resulting rotational energy into electric power. The exhaust gas from each turbine is collected and channeled to a heat recovery steam
generator that uses the heat energy contained in the gas turbine exhaust gas to produce steam. The steam that is produced is injected into a steam turbine where it expands and transmits energy to the turbine, which converts the energy
into electric power through a generator. Similar to the case of a conventional steam turbine, the steam is condensed and sent back to the circuit to produce more steam.
Location. The Puerto Complex is located inside the port of the City of Buenos Aires and has a right-of-way to use the port facilities, allowing it to receive and store fuel on a large scale. The liquid fuel (gas oil, fuel oil and biodiesel) is
delivered by ships that dock near the premises, where the fuel is directly unloaded at the complex. To provide operating flexibility, the Puerto Nuevo and Nuevo Puerto facilities have underground connection systems, which are used to
move fuel between plants based on each plant’s delivery needs.
The Puerto Complex’s location on the bank of the Río de la Plata is also convenient in terms of water supply, which is a basic input for our plants. Water is integral both for creating steam and cooling the generation units. Puerto Nuevo
and Nuevo Puerto have water treatment facilities that are capable of taking water from the river and delivering it at the quality required for each stage of the electric power generation process.
We currently own the property where the Nuevo Puerto, Puerto combined cycle and Puerto Nuevo plants are located.
Supply. The electric power produced at each plant is delivered to the SADI through a transformer belonging to our generation units. The transformer adjusts the generator output voltage to the voltage required by the network. The
electric power is delivered at 132 KV sub-stations neighboring the plants, which are currently operated by Edenor S.A. (the holder of the electric power distribution concession in the area where the Puerto Complex is located).
Costanera Complex
Technology. It ranks among the country’s largest thermal power plants, boasting over 2,200 MW of installed capacity. This capacity is comprised of six Steam Turbine units totaling around 1,100 MW (including i. four British Thomson-
Houston – BTH – units, each approximately accounting for 120 MW, operational since the 1960s, ii. One 350 MW Hitachi unit commissioned in 1976, and iii. One 310 MW LMZ unit from 1984), capable of being fueled by both
natural gas and fuel oil.
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49
Location. The Central Costanera complex stands as one of Argentina’s primary thermal power plants. Commencing operations in 1963, it strategically sits in the southern area of the port of the Autonomous City of Buenos Aires,
adjacent to the Río de la Plata. This positioning allows a significant flexibility in fuel supply, and also a key proximity to the country’s major electricity consumption center, the Greater Buenos Aires area.
Additionally, it features two high-efficiency combined cycles, a Siemens unit of approximately 270 MW, which was Argentina’s first combined cycle, built during 1995-1996, and a Mitsubishi unit of 850 MW, capable of operating with
either natural gas or gas oil, commissioned in 1999.
Supply. Central Costanera injects its energy into the SADI via connections at 132kv and 220kv, facilitated by a transformer station operated by EDESUR.
Luján de Cuyo Plant
The Luján de Cuyo plant is located in Luján de Cuyo, Mendoza and has an installed capacity of 576 MW. The plant began operating in 1971.
Technology. The Luján de Cuyo plant has eleven generating units, seven gas turbines, three steam turbines and a mini-hydroelectric turbine (which began operating in 2013). The plant has a total installed capacity of 576 MW.
The main generator is a combined cycle unit composed of a Siemens gas turbine (TG25) and a Sköda steam turbine (TV15). We believe this is state-of-the-art technology is and our combined cycle unit is highly efficient.
The plant also has a combined heat and power (CHP) unit in place, which commenced operations on October 5, 2019. This unit supplies up to 125 tons per hour of steam to YPF’s refinery in Luján de Cuyo under a steam provision
contract. The plant has two Siemens gas turbines (TG26 and TG27) and two heat recovery steam generators. The steam flows into YPF’s facilities through a steam duct that connects the plant to the refinery. Both gas turbines can
operate on natural gas or gas oil.
The Luján de Cuyo plant also has two Alstom-branded Frame5-type gas turbines (TG23 and TG24). Prior to the commencement of operation of units TG26 and TG 27 described above, TG23 and TG24 supplied steam to the YPF Luján
de Cuyo refinery in a combined heat and power (cogeneration) configuration. Beginning October 5, 2019, TG23 and TG24 have been set up to work in an open cycle configuration Both gas turbines can operate on natural gas or gas oil.
The Luján de Cuyo plant also had an ABB combined cycle unit in place composed of two gas turbines (TG21, TG22) and a steam turbine (TV14), which operates on natural gas or gas oil, or on blends of gas oil and biodiesel (up to
30.00%). Since TG21 had been out of service since 2014, we petitioned CAMMESA an authorization to disconnect this unit from the WEM, which was granted in April 2019. Additionally, we requested the disconnection of the steam
turbine unit TV14, due to the low power output capacity of the unit, which was granted in October 2019. The technical characteristics of TG22 allow it to operate as an open cycle gas turbine. As a result, only the power capacity of
TG22 was considered for the purpose of describing the total capacity of the Luján de Cuyo plant in this annual report.
In 2013, a mini hydroelectric turbine began operations under the GENREN program, a renewable energy program sponsored by the Ministerio de Planificación (Planning Ministry), (later, the Secretariat of Electric Energy and currently
the Secretariat of Energy). The operation consists of a turbine and a 1 MW Ossberger generator and relies on the waterfall inside the Luján de Cuyo plant’s premises to generate energy. The waterfall is connected to the Mendoza River,
and the water from the waterfall is channeled towards the plant to cool the steam turbine condensers.
In 2013, we also made the necessary investments to generate and sell electric power in the Energía Plus. To such end, we augmented the combined-cycle facilities (TG25-TV15) to increase the power of the generator assembly by 16
MW. Under the rules and regulations of the Energía Plus, the generator buys the fuel to cover the committed demand of electric power and supplies the energy to large electric power consumers at market prices, denominated in U.S.
dollars, previously agreed between the generator and its clients. Under these agreements, the generator needs to have a contract for the supply of fuel for generation purposes to cover the committed demand.
Location. The plant is located inside the Provincial Industrial Park in Luján de Cuyo, Mendoza. The plant is close to other industrial facilities, including YPF’s Luján de Cuyo refinery.
The premises on which the Luján de Cuyo plant is located are on the banks of the Mendoza River, a major river in the Province of Mendoza. The Luján de Cuyo plant’s access to water from the Mendoza River provides it with a source
of water to supply the generation process and to cool the condensers. The facility has a water treatment plant with production levels suitable to meet its requirements.
Supply. The electric power generated by the units installed in the Luján de Cuyo plant is delivered to the SADI through a connection between the network and the Luján de Cuyo 132 KV sub-station, which is adjacent to the plant. The
sub-station is operated by Distrocuyo, an operator of the trunk pipeline system from the Cuyo region. Steam is delivered to YPF pursuant to separate contract (apart from the La Plata plant YPF agreement) through a short pipeline that
connects our Luján de Cuyo plant with YPF’s adjacent Luján de Cuyo refinery.
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50
Because the Luján de Cuyo plant is land-locked, liquid fuels must be transported by land, typically by truck. To accommodate the fuel supply chain, the plant has an unloading area for trucks with facilities equipped to receive gas oil,
fuel oil and biodiesel. YPF is required to supply natural gas to be used on-site, and, in the event of a shortage, YPF is required to supply gas oil for up to 45 days per year. The location of the YPF-owned Luján de Cuyo refinery makes
the logistics process easier due to the proximity of the Luján de Cuyo refinery to the Luján de Cuyo plant.
Brigadier López Plant
Brigadier López power plant is located in the Sauce Viejo Industrial Park, in the city of Sauce Viejo, Santa Fe. The plant has an installed capacity of 281 MW and has been in operation since August 2012.
In 2010, the public sector power generation company IAESA (formerly named ENARSA) began the construction of the plant. In 2012, ENARSA set the COD of the open cycle Gas Turbine, completing the first stage of the project. In
June 2019, Central Puerto acquired the plant, with the objective to install a steam turbine, which was already acquired, with an installed capacity of up to 140 MW in a combined cycle configuration together with the existing gas
turbine. As of the date of this annual report, the facilities construction of the combined cycle plant has started and is expected to be completed during 2025 (see Item 3D. Risk Factors—Risks Relating to our Business— Factors beyond
our control may affect or delay the completion of the project, or alter our plans for the expansion of our existing plants” and “Item 3D. Risk Factors—Risks Relating to our Business—An outbreak of a disease, may have a material
adverse consequences on our business operations including new projects”).
Technology: The Brigadier Lopez Power Plant has one operating power generation unit, with 281 MW of installed capacity (which could reach up to 420 MW of total capacity, operating as a combined cycle unit). This generating unit
is composed of a modern Siemens Gas Turbine (TG01) model SGT5-4000 F and an air-cooled Siemens power generator, model SG 1000A. The Gas Turbine can operate both on natural gas and gas oil (diesel oil).
In addition, the plant has at its location a 140 MW Steam Turbine model SST-900 RH Dual Casing and a Heat Recovery Steam Generator, installation of which has not been completed as of the date of this annual report. Under a
combined cycle configuration, the Brigadier Lopez plant would operate as a highly efficient combined cycle, increasing both its efficiency and total power capacity.
Location: The plant is located in the Sauce Viejo Industrial Park, nearby many other industrial facilities. Sauce Viejo industrial park is located on the National Highway N° 11, 20 km from Santa Fe City, capital district of the Province of
Santa Fe. This location is highly convenient due to its accessibility and logistic advantages.
Furthermore, the Brigadier López power plant is located on the banks of the Coronda River, one of the major branches of the Paraná River. Such access from the Coronda River provides a source of water supply for the generation
process and the steam turbine’s condenser. The facility has a water treatment plant with production levels suitable to meet its requirements.
Supply: The electric power generated by the units installed in the Brigadier Lopez power plant is delivered to the SADI, first through a high voltage power transformer, and then through the Brigadier Lopez 132 kV power sub-station.
While the transformer is property of Central Puerto, the sub-station is operated by EPE Santa Fe (holder of the electric distribution and transmission concession in the Province of Santa Fe). The transformer changes the generator’s
voltage output to meet the required voltage of the electrical grid, and the sub-station serves as an interface between the Brigadier Lopez plant and the overhead transmission lines connected to the SADI.
The plant operates most of the time using natural gas. It is connected to the main gas pipeline (GNEA) through a 19 km dedicated pipeline that guarantees supply of natural gas. Alternatively, the plant can also be operated using liquid
fuels which must be transported by land, typically by truck. To accommodate the fuel supply chain, the plant has an unloading area for trucks with facilities equipped to receive and deliver gas oil. Alternatively, the plant also has a dock
(operation not available yet), that will be capable of receiving liquid fuels transported by ship.
San Lorenzo
San Lorenzo power plan is located near San Lorenzo city in the Province of Santa Fe. This is a greenfield cogeneration project, with a total installed capacity of 391 MW and a steam generation capacity of 370 tn/h. The plant started
commercial operations by the end of 2020 and started commercial operations under the CAMMESA contract on August 15, 2021.
Technology: San Lorenzo power plant is a Siemens combined cycle able to generate up to 391 MW, with a 291 MW Gas turbine and a 100 MW Steam turbine. By electric output regulation, the plant can supply up to 370 tn/h of steam
to our neighbor customer, T6 Industrial S.A. Gas turbine can operate on natural gas or gas oil.
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Supply: The electric power generated by the units installed in the San Lorenzo plant is delivered to the SADI through two connections. The steam turbine generator is connected by a 132 KV cable with San Lorenzo Substation (EPESF
facility) and the gas turbine generator is connected by a 500 KV line to TRANSENER facilities.
Maintenance
The plants have repair shops, warehouses and facilities suitable for the operation and maintenance of the units. Maintenance of the plants is coordinated with CAMMESA to avoid shortage in the power grid. Repair and maintenance
procedures are key to the success of our business and are conducted according to unit type by either our own staff or under long-term service agreements executed with leading global companies in the construction and maintenance of
thermal generation plants, such as (i) General Electric, which is in charge of the maintenance of the Puerto combined cycle plant and part of the Luján de Cuyo-based units, and
(ii) Siemens, which carries out the maintenance of the combined cycle of the Mendoza site, the Brigadier López thermoelectric plant and the Luján de Cuyo and San Lorenzo cogeneration units, and (iii) Mitsubishi, which carries out the
maintenance of the remaining cycle combined located in Central Costanera.
Under long-term service agreements, suppliers provide materials, spare parts, labor and on-site engineering guidance in connection with scheduled maintenance activities, in accordance with the applicable technical recommendations.
Our own staff is in charge of the maintenance of the steam turbine generator sets. We maintain an inventory of the necessary spare parts on-site, which ensures the immediate availability of parts when needed. This reduces the time it
takes to replace the spare parts while ensuring a supply of spare parts that may no longer be available in the market.
Our accurate planning of in-house maintenance and outsourced maintenance by General Electric, Siemens and Mitsubishi under the long-term service agreements allows us to minimize downtime and reduce the government-imposed
outage rate of the units, thus maximizing their efficiency.
Fuel and Water Supply for Thermal Generation
Our conventional resource plants operate on three different types of fuel: (i) natural gas in all units, (ii) fuel oil in the steam turbines exclusively and (iii) gas oil in the gas turbines and combined cycle units. In addition, a mix of bio-
diesel and gas oil may be used in certain percentages in our dual combined cycle units.
The table below shows the potential consumption (calculated as the standard consumption declared by CAMMESA based on the unit manufacturer’s specifications, assuming the unit produces energy throughout the entire day) of fossil
fuel by the units in the conventional resource plants we owned as of December 31, 2023:
Plant
Puerto combined cycle
Puerto combined cycle
Nuevo Puerto
Nuevo Puerto
Puerto Nuevo
Puerto Nuevo
Puerto Nuevo
Subtotal Puerto Complex
Central Costanera
Central Costanera
Central Costanera
Central Costanera
Central Costanera
Central Costanera
Central Costanera
Central Costanera
Central Costanera
Subtotal Central Costanera Complex
Luján de Cuyo
Luján de Cuyo
Luján de Cuyo
Luján de Cuyo
Luján de Cuyo
Luján de Cuyo
Luján de Cuyo
Luján de Cuyo
Subtotal Luján de Cuyo plant
Brigadier López
Subtotal Brigadier López plant
San Lorenzo
Subtotal San Lorenzo plant
Total Central Puerto
_______________________
Source: CAMMESA. Definitive Seasonal Programming
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Natural gas
(thousands of
m3/day)
Gas oil
(m3/day)
Fuel oil
(tons/day)
1,804
1,804
791
1,612
992
1,319
1,600
9,922
1,074
927
936
929
2,543
2,278
1,947
1,947
1,387
13,968
1,342
457
463
285
206
211
207
210
3,381
1,758
1,758
1,585
1,585
30,614
1,917
1,917
-
-
-
-
-
3,834
-
-
-
-
-
-
2,072
2,072
-
4,144
-
-
-
288
201
206
202
206
1,103
1,820
1,820
1,640
1,640
12,541
-
-
690
1,369
826
1,109
1,356
5,350
807
776
734
719
2,030
1,860
-
-
-
6,926
-
378
379
-
-
-
-
-
757
-
-
-
-
13,033
Unit
CEPUCC11
CEPUCC12
NPUETV05
NPUETV06
PNUETV07
PNUETV08
PNUETV09
COSTTV01
COSTTV02
COSTTV03
COSTTV04
COSTTV06
COSTTV07
COSTCC08
COSTCC09
BSASCC01
LDCUCC25
LDCUTV11
LDCUTV12
LDCUTG22
LDCUTG23
LDCUTG24
LDCUTG26
LDCUTG27
BLOPTG01
TER6CC11
52
Our exposure to changes in fuel prices is limited because, under the existing regulations, the necessary fuel to produce our base energy is supplied by CAMMESA without any charge. In the case of our PPA contracts, variations in the
cost of fuel are considered to determine the price of the electric power sold. The price that the generators receive for this energy is determined by the Secretariat of Energy, without provisions for the price of the fuel supplied.
With respect to water consumption, water has an associated cost only in certain specific cases since we produce the necessary water with our own facilities. In the case of the supply of steam to YPF’s Luján de Cuyo plant in Mendoza,
we pay for the water when the water consumption thresholds set forth in the contract with YPF are exceeded.
Electricity Generation from our Hydroelectric Complex
Piedra del Águila
The Piedra del Águila hydroelectric complex is the largest private sector hydroelectric generation complex in Argentina. It was completed in 1994 and is located approximately 1,200 kilometers to the southwest of Buenos Aires at the
edge of Limay River and on the border of the provinces of Neuquén and Río Negro. Piedra del Águila has an installed capacity of 1,440 MW from four 360 MW generating units.
Piedra del Águila has a gravity dam made of concrete, with a maximum height of 170 meters from its foundation, a power plant with four generating turbines of 360 MW each, intake and pipeline work, a spillway with an unloading
capacity of 10,000 cubic meters per second, river diversion works, unloading equipment with a capacity of 1,500 cubic meters per second, and construction facilities, including access roads, a bridge and electric power supply. The dam
is designed to be able to accommodate two additional turbines of 360 MW, although, as of the date of this annual report, we do not plan to have them installed (they would provide the plant with increased power to supply demand peaks
but would not change the electric power generated per year since such generation depends on river water levels).
Water resources allow Piedra del Águila to generate an average of 4,495 GWh per year (based on historical operations between 1994 and 2023, exclusive of electric power generated for internal use). During this period, the maximum
generation in a single year was 7,333 GWh in 2006 and the lowest was 2,351 GWh in 2016.
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The following table shows the electric power generated by Piedra del Águila during the period 1994-2023:
53
Source: CAMMESA
The Dam. The Piedra del Águila dam is composed of approximately 2.8 million cubic meters of waterproof concrete. It is 860 meters long and approximately 170 meters high (from its foundation). The storage capacity of the dam totals
12 billion cubic meters, out of which 6 billion cubic meters are usable, which would allow for 45 days’ generation at a capacity of 1,440 MW on a 24-hour basis.
Safety of the Paleochannel. On the left bank of the dam there is a fluvial valley filled with basalt, which we refer to as the “paleochannel”. This natural structure consists of the second part of the river closing, which was made
waterproof to ensure stability. The paleochannel contained a potential leakage zone on the left bank. To mitigate risks associated with this potential leakage zone, a number of works were performed to reduce drainage gradients and
ensure stability prior to the initial filling of the dam:
·
·
·
·
·
Cutoff Curtain: To make the alluvial fill between the bedrock and the basalt contact area watertight, a cutoff curtain was created through grouting and chemical injections from horizontal tunnels of about 1,200 meters
in length that were dug into the massif.
Diaphragm Wall: This is a transition concrete structure of about 150 meters in length that connects the cutoff curtain to the dam.
Drainage Curtain: This is a horizontal tunnel of over 400 meters in length dug in the rock massif that covers the entire transversal section of the paleochannel, from which drillings were performed to capture the
leakage water that passes the cutoff curtain.
Drainage Wells: These consist of five vertical wells of about 40 meters in depth and five meters in diameter located in a downstream area of the drainage curtain, from which sub-horizontal holes were drilled directed
towards the basalt-alluvium contact to capture the water draining through such highly permeable zone.
Pumping System: This consists of ten electric pumps installed in a gallery located in the amphitheater (the area at the bottom of the paleochannel massif) intended to maintain piezometric levels of one of the existing
aquifers in the alluvium at predetermined levels to ensure the zone stability.
The Power plant. The hydroelectric generation plant is located at the foot of the dam and has four Francis-type turbines with corresponding generators, transformers for each generator and operating, control and auxiliary equipment.
The turbines are hydraulic turbines composed of vertical axes with a spiral steel casing. Each turbine has a rated capacity of 360 MW and a rated hydraulic load of 350 cubic meters per second and is designed to rotate at 125 rpm.
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Each generator has a corresponding set-up transformer of 500 kV, which consists of a dual guide rod system, with a single SF-6 iron-isolated switch, to which all generating units are connected. The switch is connected to the SADI’s
transformer substation through two transmission lines. Energy is delivered at Piedra del Águila’s 500 KV plant, which is operated by Compañía de Transporte de Energía Eléctrica en Alta Tensión S.A. (“Transener”), which owns,
operates and maintains the largest high voltage electric power transmission system in Argentina.
During the shutdowns and start-ups of the power plant, there are two 13.2 kV lines in place that serve as auxiliary service related to the local distribution network operated by Neuquén’s energy regulatory authorities, two back-up
generators, and two 110V stationary batteries, each of which is capable of supplying electric power.
The operation and maintenance of a hydroelectric plant are relatively simple compared to the labor-intensive requirements of thermal plants. To operate the plant, we mainly monitor the water flow, the electric power generation and the
related equipment. The plant’s operations staff is organized into several departments: (i) civil engineering (in charge of monitoring the equipment and the dam structure); (ii) operations (in charge of monitoring the delivery of the
electric power); (iii) special services and technical support; and (iv) administration. Our employees are in charge of plant maintenance.
Operation and maintenance of the hydroelectric plant are managed in accordance with manufacturers’ recommendations and industry standards. To monitor management of the plant, we use performance metrics specified in Standard
762 of the Institute of Electrical and Electronics Engineers (IEEE).
All ordinary operation and maintenance tasks are performed by company personnel. Electromechanical maintenance of generators and auxiliary equipment focuses on fault prediction and prevention and is intended to minimize
corrective maintenance and maximize availability of the generators.
Generators are operated in accordance with the requirements of the Organismo Encargado del Despacho (OED) (the “Dispatching Agency”) and in compliance with the Normas de Manejo de Aguas (NMA) (Water Management
Standards). Water management and dam operation are overseen by the Autoridad Interjurisdiccional de Cuencas (Intergovernmental Basin Authority).
The status of the dam and paleochannel is audited every five years by an independent expert panel under the supervision of the Organismo Regulador de Seguridad de Presas (ORSEP) (Dam Safety Regulator). Fish and water quality
are also monitored in the dam and tributaries at least four times per year.
The HPDA Concession Agreement. We entered into a concession agreement with the Argentine Government that expired on December 28, 2023 (the “HPDA Concession Agreement”). Under the HPDA Concession Agreement, we are
entitled to generate and sell electric power and use certain state-owned property, including the plant and its water resources. We can use the plant solely for the purpose of generating electric power. The Argentine Government and the
Intergovernmental Basin Authority are entitled to allocate or use in any other manner the current or future water resources without any obligation to compensate us. The HPDA Concession Agreement and the rights granted therein may
not be assigned without the Argentine Government’s prior consent. Upon the expiration of the concession term, the Argentine Government will recover possession of the plant without any obligation to compensate us. As of the date of
this report, we are currently in the Transition Period, as established in Section 67.1 of the HPDA Concession Agreement.
Resolution No. 574/2023, published on July 11, 2023, extended for 60 days (extendable for another 60 days) the termination date of the HPDA Concession Agreement, among other national hydroelectric power plants whose concession
term expired during 2023. Another renewal of such period was established in Resolution 02/24, issued by the Secretariat of Energy, which was set to expire on April 27, 2024. In addition, on March 15, 2024, Resolution 33/24, issued by
the Secretariat of Energy, extended once again the transition period for 60 days setting the expiration date on June 28, 2024.
By means of such extension, we extended the useful life of the turbogroups and auxiliary equipment of the Piedra del Águila Hydroelectric Complex, in order to depreciate them until the new date of termination of the HPDA
Concession Agreement.
Below we summarize certain terms of the HPDA Concession Agreement:
·
·
·
Operations: We are required to comply with certain standards and conduct certain activities, including maintaining Ps.2.7 million as a guarantee, maintaining the plant and complying with certain safety and
environmental obligations, contributing to a repair fund, maintaining books and maintaining insurance, among others.
Mandatory works: The Argentine Government may require us to carry out works jointly funded by it and us.
Fees and royalties: The Intergovernmental Basin Authority is entitled to a fee of 2.50% of the plant’s revenues, and the provinces of Río Negro and Neuquén are entitled to royalties of 12.00% of such revenues.
·
Indemnity: The Argentine Government indemnifies us in certain circumstances, including, among others, for damages or repairs that are not attributable to us, or our agents and damages caused by downstream waters,
in each case subject to certain conditions. We also indemnify the Argentine Government in certain circumstances.
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55
·
·
Fines: Any delay or failure by us to comply with the provisions of the HPDA Concession Agreement or the regulations concerning the generation and sale of electric power may result in fines imposed by the
applicable regulatory authorities, calculated as a percentage of the plant annual revenues, depending on the type of breach. The Argentine Government may require that CAMMESA make payment of the fines directly
to the Argentine Government out of proceeds from the electric power sold in the WEM.
Termination: We and the Argentine Government may terminate the HPDA Concession Agreement in certain circumstances in which we fail to perform our obligations under the agreement and in which we are subject
to fines or do not comply with the certain laws and regulations, among others.
Supply. Substantially all of the electric power produced by Piedra del Águila and other generators in the Comahue area is transported to locations where demand is higher. Demand is highest primarily in the Buenos Aires metropolitan
area, which is located some 1,200 kilometers away from the plant. The distribution system from the Comahue region comprises two corridors with a total of four 500 kV transmission lines (the last of them started to operate in
December 1999), in addition to a fifth line that connects Comahue to the Cuyo region, which started to operate in September 2011. Since the end of the construction of these last two lines, the plants in the Comahue region have been
able to use the entire generation capacity.
Relationship with Provincial Governments. As members of the governing body of the Intergovernmental Basin Authority, the governments of Neuquén and Río Negro are involved in the regulatory oversight of the water resources used
by Piedra del Águila. In accordance with the HPDA Concession Agreement and Section 43 of Law No. 15,336, we are required to pay a 12.00% royalty on the revenues derived from electric power generation. This royalty is distributed
between the provinces of Neuquén and Río Negro in equal parts. The government of Neuquén owns a 4.13% stake in us.
Electricity Generation from our Wind Generation Plants
As of the date of this annual report we operate seven wind farms: La Castellana I, La Castellana II, Achiras, Manque, Los Olivos, La Genoveva I and La Genoveva II.
La Castellana I Wind Farm
La Castellana I is a wind farm operated by CP La Castellana S.A.U., a wholly-owned subsidiary of CP Renovables, in which we have a majority interest. The wind farm is located in the south of the Province of Buenos Aires, near the
cities of Villarino and Bahía Blanca, and started its operations in August 2018.
It has a total installed capacity of 100.8 MW, from 32 wind turbines, supplied from Nordex-Acciona, of 3.15 MW each.
Achiras Wind Farm
Achiras is a wind farm operated by CP Achiras S.A.U., a wholly-owned subsidiary of CP Renovables, in which we have a majority interest. The wind farm is located in the east of the Province of Córdoba, near the city of Achiras, and
started its operations in September 2018.
It has a total installed capacity of 48 MW, from 15 wind turbines, supplied from Nordex-Acciona, of 3.2 MW each.
La Castellana II Wind Farm
La Castellana II is a wind farm operated by CPR Energy Solutions S.A.U., a wholly-owned subsidiary of CP Renovables, in which we have a majority interest. The wind farm is located in the south of the Province of Buenos Aires, near
the cities of Villarino and Bahía Blanca, and started its operations in July 2019.
It has a total installed capacity of 15.2 MW, from 4 wind turbines, supplied by Vestas, of 3.6 MW each.
Manque Wind Farm
Manque is a wind farm operated by CP Manque S.A.U., a wholly-owned subsidiary of CP Renovables, in which we have a majority interest. The wind farm is located in the east of the Province of Córdoba, near the city of Achiras, and
started its operations partially in December 2019 (38 MW), in January 2020 (15.2 MW), and fully in March 2020 (3.8 MW).
It has a total installed capacity of 57 MW, from 15 wind turbines, supplied by Vestas, of 3.8 MW each.
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Los Olivos Wind Farm
Los Olivos is a wind farm operated by CP Los Olivos S.A.U., a wholly-owned subsidiary of CP Renovables, in which we have a majority interest. The wind farm is located in the east of the Province of Córdoba, near the city of
Achiras, and started its operations in February 2020.
It has a total installed capacity of 22.8 MW, from 6 wind turbines, supplied from Vestas, of 3.8 MW each.
La Genoveva I Wind Farm
La Genoveva I is a wind farm operated by Vientos La Genoveva I S.A.U., in which we have a majority interest. The wind farm is located in the south of the Province of Buenos Aires, near the town of Cabildo and 30 km to the
northwest of the city of Bahía Blanca and started its operations in November 2020.
It has a total installed capacity of 88.2 MW, from 21 wind turbines, supplied from Vestas, of 4.2 MW each.
La Genoveva II Wind Farm
La Genoveva II is a wind farm operated by Vientos La Genoveva II S.A.U., in which we have a majority interest. The wind farm is located in the south of the Province of Buenos Aires, near the town of Cabildo and 30 km to the
northwest of the city of Bahía Blanca and started its operations in September 2019.
It has a total installed capacity of 41.8 MW, from 11 wind turbines, supplied by Vestas, of 3.8 MW each.
Electricity Generation from our Photovoltaic Plant
Solar Farm Guañizuil IIA
Proener acquired 100% of the capital stock and votes of Cordillera Solar and Scatec Equinor Solutions Argentina S.A. (currently, CP Servicios Renovables S.A.), owner and operator, respectively, of the Guañizuil IIA photovoltaic plant
located in the Province of San Juan. The photovoltaic plant has an installed capacity of 117 MW dc /105 MW ac.
FONINVEMEM and Similar Programs
Following Argentina’s economic crisis in 2001 and 2002 and the subsequent devaluation of the peso, there were significant imbalances between the electric power prices generators received and their operating costs. As resources in the
country’s Stabilization Fund, a fund administered by CAMMESA intended to make up for fluctuations between the seasonal price paid by distributors and the spot price in the WEM, became scarce due to the Argentine Government’s
decision to maintain seasonal prices (the energy prices paid by distributors) below the spot price paid to generators, the Argentine Government, through a series of resolutions, fixed a set of priorities with respect to payments made from
this fund. This resulted in a system under which generators collected payment for only variable generation costs and power capacity, while the resulting monthly obligations to generators for the unpaid balance were to be considered
LVFVD.
In 2004, through Resolution SE No. 826/2004, generators with receivables due to the lack of funds in the Stabilization Fund (including us) were invited to participate in forming the FONINVEMEM, created by Resolution SE No.
712/04. The FONINVEMEM allowed electric energy generators to link the collection of their outstanding receivables relating to electric power sales to CAMMESA from January 2004 through December 2006 to one or more combined
cycle projects, with a right to receive payment of their receivables once the new combined cycle plants built with FONINVEMEM financing become operational. For more details regarding the Program, see also “Item 4.B. Business
Overview—The Argentine Electric Power Sector—Structure of the Industry — The FONINVEMEM and Similar Programs”.
In December 2004, we agreed to participate in the creation of the FONINVEMEM. We entered into an agreement on October 17, 2005, which stated that generators would receive (i) their receivables relating to sales of electric power
from January 2004 through December 2006, amounting to US$157 million in our case, plus an interest rate of 360-day LIBOR plus 1.00% in 120 equal, consecutive monthly installments and (ii) their proportional equity interest in the
generating companies formed for such projects, TJSM and TMB, which are in charge of managing the purchase of equipment, and of building, operating and maintaining each of the new power plants, and after ten years of operation
would receive the property of these plants. The generation plants are not owned by TJSM and TMB but rather owned by two trusts, created by the Argentine Government, that receive revenue from the sale of electric power generated
by the plants, among others, to repay the LVFVD receivables.
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On October 16, 2006, we entered into two pledge agreements with the Secretariat of Energy to guarantee our performance obligations in favor of the two trusts under certain construction management and operation management
agreements and provided as collateral: (a) 100% of our shares in TJSM and TMB and (b) 50% of the rights conferred by our LVFVD receivables for the duration of the construction management agreement and the operation
management agreement.
On July 13, 2007, we agreed to include 50.00% of our total receivables relating to the sale of electric power to CAMMESA from January through December 2007 in the FONINVEMEM arrangement, which totaled US$30.3 million.
These receivables were also reimbursed in 120 equal, consecutive monthly installments starting from the commercial launch date of the plants, converted into U.S. dollars at the applicable exchange rate pursuant to the FONINVEMEM
arrangement, with an interest rate of 360-day LIBOR plus 2.00%. We received no additional equity interest in TJSM and TMB as a result of the inclusion of these additional receivables in the FONINVEMEM arrangement.
After the commercial authorization was granted to the Manuel Belgrano power plant (on January 7, 2010) and the San Martín power plant (on February 2, 2010), we started to collect monthly payments of the receivables. As of
December 31, 2023, there is no balance owed to us under the FONINVEMEM arrangement relating to the sale of electric power to CAMMESA from 2004 through 2007. As of December 31, 2023, we owned 10.90% of TJSM and
12.72% of TMB. The operating companies have a variable revenue (US$1.00 per MW generated) and a fixed revenue to compensate for their operating costs. In 2023, we received no dividends from our equity interests.
See “Item 3D. Risk Factors—Risks Relating to our Business—Our interests in TJSM, TMB were diluted and CVOSA will be significantly diluted” and “Item 4.B. Business Overview—Our Affiliates—Termoeléctrica José de San
Martín S.A. (TJSM) and Termoeléctrica Manuel Belgrano S.A. (TMB)”.
With respect to the LVFVD corresponding to the sales of electric power to CAMMESA from 2008 to 2011, on December 28, 2010, our Board of Directors approved an agreement with the former Secretariat of Electric Energy that
established, among other agreements, a framework to determine a mechanism to settle receivables accrued by generators over the 2008-2011 period. For that purpose, (i) the construction of the new generation plant, CVOSA, was
agreed upon, with receivables earned from January 1, 2008 through December 31, 2011 to be paid starting as of the commercial launch date of the CVOSA plant’s combined cycle unit; (ii) a managing company for this project,
CVOSA, was created in which we hold a controlling interest and (iii) a trust was created by the Argentine Government to hold the property of the plant under construction. The combined cycle unit commenced operations on March 20,
2018.
After the CVOSA power plant became operational, in the case of receivables accrued between 2008 and September 2010, the amount due was converted into U.S. dollars at the exchange rate effective at the date of the CVO agreement
(i.e., November 25, 2010), which was Ps.3.97 per U.S. dollar. Additionally, certain receivables that accrued after September 2010 and that were also included in the CVO Agreement, were converted into U.S. dollars at the exchange rate
effective at the due date of each monthly sale transaction. The total estimated amount due to us under the Agreement for the LVFVD 2008-2011 was US$548 million (including VAT), plus the accrued interest after the CVO Commercial
Approval. Under the CVO Agreement, we are entitled to receive payment for the LVFVD 2008-2011 receivables in the form of 120 equal, consecutive monthly installments, starting from March 20, 2018, the date of commencement of
commercial operations of the combined cycle plant, bearing interest at a nominal annual rate of 30-day LIBOR plus 5.00%. The U.S. denominated monthly payments under the CVO Agreement are payable in pesos, converted at the
applicable exchange rate in place at the time of each monthly payment.
As of March 20, 2018, CAMMESA granted the CVO Commercial Approval in the WEM, as a combined cycle, of the thermal plant Central Vuelta de Obligado. A PPA between the CVO Trust and CAMMESA, through which the CVO
Trust makes energy sales and, consequently, receives the cash flow to pay the trade receivables, had to be signed in order to start the collections.
The PPA agreement was signed on February 7, 2019, with retroactive effect to March 20, 2018.
As a result, the original amortization schedule from the CVO Agreement is in full force and effect.
As a result of the Central Costanera acquisition, we have incorporated the portion of the CVO agreement that this company was entitled to receive for the LVFVD 2008-2011 receivables starting on February 17, 2023. The total
estimated amount due to us was US$ 17.86 million.
During 2023 and 2022, we collected Ps. 36.94 billion and Ps. 38.64 billion, respectively in CVO receivables, in each case measured as of December 31, 2023.
In accordance with the CVO agreements, after the first ten years of operation, ownership of the combined cycle plants was transferred from the trust to the operating companies, and the operating companies began to receive revenues
from the sale of electric power generated by the plants. At such time, since the Argentine government financed part of the construction, it was incorporated as shareholder of CVOSA, and our interests in CVOSA were significantly
diluted. Although the effect of the potential dilution has also not yet been defined for the same reasons, the Argentine government’s stake in CVOSA will be at least 70% due to an agreement between the parties. The dilution of our
interest in CVOSA will reduce our income, which could adversely affect our results of operations.
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Forestry assets
58
On December 27, 2022 our subsidiary Proener acquired 100.00% of the capital stock and votes of Forestal Argentina S.A. and Masisa Forestal S.A. (currently, Loma Alta Forestal S.A.) which own forestry assets, consisting of
approximately 72,000 hectares in the provinces of Entre Ríos and Corrientes, of which approximately 43,000 hectares are planted with eucalyptus and pine trees.
On May 3, 2023, we further expanded our forestry business, as our subsidiary Proener acquired 100% of the capital stock and votes of Empresas Verdes Argentina S.A., Las Misiones S.A. and Estancia Celina S.A.
These companies own forestry assets, consisting of approximately 88,063 hectares in the province of Corrientes, of which approximately 26,000 hectares are planted with pine, out of a total of approximately 36,000 harvested hectares.
As a result of such acquisitions, we became the largest Argentine company in the forestry sector, a market in which mostly foreign capital companies operate. Argentina has one of the highest growth rates not only in the region, but in
the world: trees grow approximately ten times faster than in the Northern Hemisphere. By means of these acquisitions, we have diversified our asset portfolio and operations and strengthened our position in the energy sector, since these
assets are a source of future business opportunities linked to carbon credits and energy generation with biomass. Our property, plant and equipment now also include over 160,000 hectares.
Market Area and Distribution Network
Market Area
Our power generation plants are located at various locations in Argentina. All of them are connected to the SADI, enabling coverage for residential and industrial users nationwide.
Puerto plants: The Puerto Nuevo, Nuevo Puerto and Puerto combined cycle plants are situated in a unique location within the port of the City of Buenos Aires, one of the most populated metropolitan areas in the world, which reduces
costs arising from lost power during transmission. In addition, the plants have three docks for unloading liquid fuels from large vessels, thus facilitating the supply of fuel.
Central Costanera plant: The Central Costanera plant sits strategically in the southern area of the port of the City of Buenos Aires adjacent to the Río de la Plata. This positioning allows a significant flexibility in fuel supply, and also a
key proximity to the country’s major electricity consumption center, the Greater Buenos Aires area. This city, together with Greater Buenos Aires, requires about 40% of the total electricity produced in the country.
Piedra del Águila Hydroelectric Complex: the Piedra del Águila hydroelectric complex is located on the Limay river, which serves as the border between the provinces of Río Negro and Neuquén. The dam is close to the city of
Neuquén and is able to supply energy to cities far from the complex through existing transmission lines.
Brigadier López plant: The Brigadier López Plant is located in the Province of Santa Fe, near the City of Sauce Viejo.
San Lorenzo plant: The San Lorenzo Plant is located in the Province of Santa Fe, near the City of San Lorenzo.
Luján de Cuyo plant: The Luján de Cuyo plant is located within YPF’s Luján de Cuyo refinery and supplies steam to such refinery. This location enables it to obtain gas oil supplies from the refinery itself in case of natural gas
shortages.
La Castellana I and II Wind Farms: La Castellana I and II wind farms are located in the Province of Buenos Aires, near the cities of Villarino and Bahía Blanca.
La Genoveva I and II Wind Farms: La Genoveva I and II wind farms are located in the Province of Buenos Aires, near the town of Cabildo and the city of Bahía Blanca.
Achiras Wind Farm: Achiras wind farm is located in the Province of Córdoba, near the City of Achiras.
Manque Wind Farm: Manque wind farm is located in the Province of Córdoba, near the City of Achiras.
Los Olivos Wind Farm: Los Olivos wind farm is located in the Province of Córdoba, near the City of Achiras.
Guañizuil II A Solar Farm: Guañizuil II A Solar Farm is located in the Province of San Juan, located near National Route 150.
Manuel Belgrano plant: The Manuel Belgrano plant is located in the Province of Buenos Aires, near the City of Campana.
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San Martín plant: The San Martín plant is located in the Province of Santa Fe, near the City of Timbúes.
Vuelta de Obligado plant: The Vuelta de Obligado plant is located in the Province of Santa Fe, near the City of Timbúes.
Distribution Network
59
All of our plants are connected to the SADI, which allows us to reach almost all the users in the country. The SADI permits interaction among all agents in the Argentine WEM and allows generating companies to dispatch power to
Large Users and distributors through the transmission companies. The system is regulated and allows participation of all WEM agents (generators, transmission companies, distributors, Large Users and the Argentine Government
through CAMMESA), thus preventing discrimination among any involved participants.
The prices for power transmission are regulated and based on the distance from the generating company to the user, among other factors. In this regard, our thermal power plants are strategically located in important city centers or near
some of the system’s largest customers (e.g., YPF’s refineries), which constitutes a significant competitive advantage.
Our Customers
Modality continuing operations
Main clients
For the year ended December 31,
2023
(in thousands
of Ps.)
percentage
of revenues
Spot Sales(1)
RenovAr Program sales under contracts
Term market sales under contracts
MATER sales under contracts
Energía Plus sales under contracts
Steam sales
Forestry
Other
Revenues from CVO thermal plant management
_______________________
(1)
CAMMESA
CAMMESA
CAMMESA
Cervecería y Maltería Quilmes S.A.I.C.A. y G. (subsidiary of AB Inbev); PBBPolisur S.A. (subsidiary
of Dow Quemicals); Aguas y Saneamientos Argentinos S.A.; Minera Alumbrera Limited -Proyecto
MARA – Glencore (subsidiary of Glencore in Argentina); Rayen Cura S.A.I.C – Verallia; Metrive –
Sabrositos; N. Ferraris – Autoperforantes; INC – Carrefour; SCANIA, San Miguel; Frío Dock.
Pbbpolisur S.A. – Bahia Blanca (Subsidiary Of Dow Quemicals); Diaser S.A. – Bioetanol Plant; Aces –
Hospital Universitario Austral; Frio Dock S.A.; N Ferraris S.A; Marlew S.A.- Ezeiza; H.J. Navas Y Cia
Sacia (Navaaz3n); Bolsapel Planta 2 Pet Foods Saladillo S.A.; Ceres Agropecuaria S.A.
YPF / T6 Industrial S.A.
Enrique Zeni & Cia Saciafei
Gran Mandisovi S.A.
A.C.B. Alimentos Coronel Baigorria
Urcel Argentina S.A.
Borgo Horacio Rene
YPF
Fideicomiso Central Vuelta de Obligado
155,523,697
35,413,525
74,314,490
19,800,530
1,484,236
14,789,842
2,815,213
1,858,093
4,568,538
49.60%
11.29%
23.70%
6.31%
0.48%
4.72%
1.85%
0.59%
1.46%
Includes sales of energy and power to CAMMESA remunerated under Resolution No. 95/13, Resolution No.19/2017, Resolution of the Secretariat of Energy No. 1/2019, Resolution No. 31/20, Resolution No. 440/21,
Resolution No. 238/22, Resolution No. 826/22, Resolution No. 59/23, Resolution No. 750/23, Resolution No. 869/23 and Resolution No. 9/2024 (See “Item 4.B. Business Overview—The Argentine Electric Power Sector—
Remuneration Scheme—The Current Remuneration Scheme”).
For a discussion of the different regulatory regimes under which we sell our electric power, see “Operating and Financial Review and Prospects—Factors Affecting our Results of Operation—Our Revenues” and “Item 4.B. Business
Overview—The Argentine Electric Power Sector—Structure of the Industry”.
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Seasonality
Seasonality of Electricity Generation by Thermal Facilities
The following graphic breaks down our average thermal energy production over the last six years on a month-by-month basis:
60
Seasonality of Water Resources and Electricity Generation of Piedra del Águila
Source: CAMMESA
The availability of water is the key factor for determining Piedra del Águila’s electric power generation capacity and is tied to annual and seasonal changes in rains in the upstream mountain area of Piedra del Águila. Water levels
generally increase between May and December due to the winter rains and the spring thaw, and we are able to produce more energy over such periods. The following graphic breaks down our average hydroelectric energy production
over the last six years on a month-by-month basis:
Source: CAMMESA
61
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Seasonality of Wind and Solar Resources and Electricity Generation of Achiras, La Castellana I, La Castellana II, La Genoveva I, La Genoveva II, Manque and Los Olivos wind farms and Guañizuil II solar farm
The availability of wind resources is the key factor for determining the wind farms electric power generation capacity and is tied to annual and seasonal changes in wind speed in the areas where each farm is located. Wind speed is
generally higher between May and September, and we are able to produce more energy over such periods.
Our ability to operate wind and solar farms profitably is highly dependent on suitable wind or sun and associated weather conditions, climate change and energy transition could affect our business.
The amount of energy generated by, and the profitability of, wind and solar farms are highly dependent on climate conditions, particularly wind conditions and irradiance, which can vary materially across locations, seasons and years.
Variations in wind conditions at wind farm sites and irradiance at solar plant sites occur as a result of daily, monthly and seasonal fluctuations in wind currents and irradiance and, over the longer term, as a result of more general climate
changes and shifts. Because turbines will only operate when wind speeds fall within certain specific ranges that vary by turbine type and manufacturer, if wind speeds fall outside or towards the lower end of these ranges, energy output
at our wind farms would decline.
Similarly, projections of solar resources depend on assumptions about weather patterns, shading and irradiance, which are inherently uncertain and may not be consistent with actual conditions at the site. During the development phase
and prior to the construction of any wind or solar farm, a wind or solar resource study to evaluate the potential wind or solar resource of the site is typically conducted over a period of several years. These wind or solar studies have
been conducted by our own team and independent technical consultants with respect to the estimated load factor resulting from our wind studies and the model of turbines used. We base our core assumptions and investment decisions
on the findings of these studies. We cannot assure you that observed climate conditions at a project site will conform to the assumptions that were made during the project development phase on the basis of these studies, and, therefore,
we cannot assure that our wind or solar farm projects will be able to meet their anticipated production levels. It is possible that future wind or solar resource patterns and electricity production at our wind or solar farms will not reflect
the historical wind or solar resource patterns at the respective sites or the projections, and wind or solar resource patterns at each site will change over time. If, in the future, the wind resource in the areas where our wind farms are
located or the solar resource in the areas where our solar plants are located is lower than expected, electricity production at such wind farms and/or solar plants would be lower than expected and consequently could materially adversely
affect our results of operations.
The following graphic shows the energy production of our wind farms on a month-by-month since inception and until December 2023:
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Competition
62
The demand for electric power in Argentina is served by a variety of generation companies, both state-owned and private-owned. These companies pursue the right to supply generation capacity and electric power and to develop
projects to serve the demand for electric power in Argentina. Some of our foreign competitors are substantially larger and have substantially greater resources than our company. Because of the significant gap between the demand and
supply of electric power in Argentina, voluntary and forced blackouts at times of seasonal peak consumption have occurred. During 2023, and particularly in March, there was a historic demand peak recorded totaling 29,105 MW. In
2023, 6,241 GWh were imported, representing a 1.10% decrease in energy imports as compared to 2022.
Our primary competitors in the electric power generation market are the AES Argentina Generación S.A. (an affiliate of the AES Corporation), Pampa Energía S.A, YPF EE S.A., and MSU Energy.
Below we detail the installed capacity of the main private sector generators in Argentina, as of December 31, 2023:
Company and subsidiaries
Central Puerto
The AES Corporation
Pampa Energía S.A.
YPF EE
MSU Energy
_______________________
Sources:
(1)
(2)
(3)
(4)
(5)
Based on the documentation officially declared to CAMMESA by Central Puerto for continuing operations
Based on company’s financial statements as of and for the year ended December 31, 2023, data from CAMMESA.
Based on AES institutional website (2,985 MW) + Termoandes CT is added with 642.7 MW of installed power (CAMMESA).
Based on data from company’s official corporate website.
MSU institutional website. Includes MSU’s three combined cycle plants (750 MW) + Las Lomas Solar farm enabled in December 23 (32.4 MW).
The following graphs break down the market share of electric power generation supplied by private sector companies in Argentina as of December 31, 2023, based on data published by CAMMESA:
Power (MW)
7,173(1)(2)
3,628(3)
5,332(4)
3,174(4)
782(5)
(1) Source CAMMESA
(2) Energy Generation of total SADI
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Source: CAMMESA
63
The following table shows the installed capacity in terms of MW assigned to each regulatory framework (Spot Sales, Energía Plus, Resolution No. 220/07, Renewable Energy) for us and each of our main competitors as of December
31, 2023:
In MW
Spot Sales(1)
Energía Plus
(Res. 1281/06)
Power
Purchase
Agreements
Under Res.
220/07
Power
Purchase
Agreements
Under Res.
21/17
Power
Purchase
Agreements
Under Res.
287/17
Term market
for renewable
energy
(MATER)
Central Puerto
AES Argentina Group(1)
Pampa Energía S.A(2)
YPF EE(3)
MSU Energy(4)
6,192
2,912
3,911
2,142
0
16
416
113
0
0
0
0
335
140
0
0
0
305
381
427
486
0
381
289
323
137
120
187
222
32
RenovAr
Total
342
180
100
0
0
7,173
3,628
5,332
3,174
782
_________________________
(1)
(2)
(3)
(4)
Source: AES institutional website (2,985 MW) + TC Termoandes with 642.7 MW of installed capacity (CAMMESA) is considered.
Source: Pampa Institutional Web.
Source: YPF Luz institutional website.
Source: MSU institutional website. Includes MSU’s three combined cycle plants (750 MW) + Las Lomas Solar farm enabled in December 23 (32.4 MW).
Our efficiency levels compare favorably to those of our competitors due to our efficient technologies. The following chart shows the efficiency level of our most important generating units compared to the units of the rest of the market
based on heat rate, which is the amount of energy used by an electrical generator or power plant to generate one kWh of electric power:
We are also one of the largest consumers of natural gas in Argentina’s electric power sector, as well as the one of the largest consumers of fuel oil, gas oil and biodiesel. Although CAMMESA is our current supplier of biodiesel, we
have developed business relationships over the years with strategic companies from the oil and gas and the biofuel sectors, and in the past have participated in certain joint ventures with some of them.
Source: CAMMESA’s seasonal programing
Insurance
We carry commercial and personal insurance coverage for certain of our power generation plants, placed at different geographical locations within Argentina. The following list includes all the insurance risk covered:
1.
Operational All Risks–- Including Material Damage & Machinery Breakdown and Business Interruption (Loss of Profits)
This coverage protects against unexpected events due to a sudden or accidental cause, including weather, fire and natural disasters, that may damage property or fixed assets (Material Damage); and Mechanical and
Electrical breakdown events that may cause sudden and unforeseen physical loss or damage to machinery (Machinery Breakdown) that is operational; any of which may damage our ability to generate power,
including coverage for consequential Loss of Profits (Business Interruption) for a maximum period of 12 months.
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2.
Commercial General Liability
64
This coverage protects against the claims from third parties arising out of bodily injury or death and property damage resulting from the insured activities including Premises, Operations, Products and/or Completed
operations. The coverage limit is up to US$10,000,000 per occurrence.
3.
Commercial Excess Liability (CPSA only)
This coverage protects against the same risks described in the previous bullet point but covers “in excess” of the coverage limit of the underlying primary insurance for a combined limit (concurrent in all locations) of
up to US$50,000,000.
4.
Port Operators Liability (CPSA only)
Covers CPSA´s liability to third parties for Personal Injury or Property Damage as a result of an occurrence or event in connection with day-to-day Port Operator Activities.
5.
Directors and Officers Liability
This policy covers individuals for claims made against them while serving on a board of directors and/or as an officer and it is payable to those directors and officers of a company, or to the organization(s) itself, as
indemnification (or reimbursement) for losses or advancement of defense costs in the event an insured suffers such a loss as a result of a legal action brought for alleged wrongful acts in their capacity as directors and
officers.
6.
Motor Vehicle + Mobile Equipment
CPSA and its subsidiaries carry cover for all its fleet vehicles as well as trucks and mobile equipment for daily operation. The coverage goes from basic third-party liability in mobile equipment to Comprehensive
Coverage in some cars (theft, fire, hail, vandalism, property and vehicle damage).
7.
Worker´s Compensation
This coverage provides wage replacement and medical benefits to employees injured in the course of employment and/or while commuting to and from work.
8.
Compulsory Life Insurance
This coverage is provided by the employer and guarantees the payment of a death benefit to named beneficiaries upon the death of the insured (employee).
9.
Optional Term Life Insurance
This is an optional and additional coverage the employer pays over the basic Compulsory Life insurance in order to guarantee its employees the payment of 24 additional wages in case of death. This is part of an
Employee Benefits Plan.
10.
Ocean & Inland Transit All Risks (floating policy)
Transit Coverage for an annual period during all stages of transit and delivery, whether marine, on the dock, by air or inland transportation from anywhere in the world to anywhere within the Argentine territory and
vice versa. Premiums are paid monthly at an Ex-Post basis.
11.
Commercial Business Combined
This is a tailored policy to cover specifically the offices and warehouses owned by CPSA in the city of Neuquén, Piedra del Águila Town and Piedra del Águila Hydroelectric Dam. This is a comprehensive business
coverage in a single policy, bringing together a range of coverages: Employers’ Liability, Public Liability, Product Liability, Legal Expenses, Material Damage and Theft, Goods in Transit and others.
12.
Construction All Risks / Erection All Risks (CAR/EAR)
This is a non-standard policy that provides coverage for Property Damage and third-party injury or damage claims during construction projects. We carry this insurance every time we undertake a new construction.
13.
Compulsory Environmental Pollution Insurance
This coverage protects against third party personal injury; third party property losses; ecological damage and costs incurred in provision of emergency services and environmental clean-up.
We believe that the level of insurance and reinsurance coverage we maintain is reasonably adequate in light of the risks we are exposed to and is comparable to the level of insurance and reinsurance coverage maintained by other similar
companies doing business in the same industry.
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Environment
65
As of the date of this annual report, we are not involved in pending or threatened judicial proceedings in connection with environmental issues.
As of the date of this annual report, we have obtained or have applied for the environmental permits required by the applicable environmental regulations and our environmental management plans have been approved by the applicable
regulatory authorities. To maintain high environmental standards, we carry out periodic controls in accordance with applicable legislation.
Our activities are subject to certain environmental regulations. Our management considers that our operations comply in all relevant respects with applicable laws and regulations related to environmental protection. On the other hand,
we record provisions for decommissioning for renewable wind and solar assets based on the commitments assumed with the owners of the properties where they are located. We also monitor potential changes relevant to environmental
legislation related to our activity and we have not identified significant changes in the foreseeable future.
We have developed a broad environmental compliance and management program, which is subject to periodic internal and external audits by TÜV Rheinland.
In August 2023, TÜV Rheinland completed a series of ISO recertification audits. The details of the certificates are the following:
Standard: ISO 14001/2015
Certificate Register. No.: 01 10406 1629668
Certificate Holder: Central Puerto S.A. Av. Tomas Edison 2701 Ciudad Autónoma de Buenos Aires Argentina.
Scope: Generation of electric energy from: hydraulic energy, thermal energy (gaseous and liquid fuel), wind energy. Steam production. Operation and maintenance of extra high voltage line.
Validity: The certificate is valid from 2022-08-18 until 2025-07-12
Including the locations:
No:
1
2
3
4
5
6
7
Name/Location
Central Planta Buenos Aires
Av. Thomas Edison 2701
Ciudad Autónoma de Buenos Aires
Central Mendoza
Parque Industrial Provincial, Ruta 84 s/n, Lujan de Cuyo, Provincia de Mendoza
Central Hidroeléctrica Piedra del Águila
Ruta Nacional 237, Km 1450.5
8315 Piedra del Águila
Provincia de Neuquén
c/o Central Puerto S.A. – for its subsidiary Parque Eólico Achiras, Lote 325, Parcela 1274 (Latitude
33° 12´ 44,23´´S, Longitude 65° 5´ 16,52´´O), Achiras, Córdoba – Argentina
c/o Central Puerto S.A. – for its subsidiary Parque Eólico La Castellana, Camino rural a la altura de
la RN 3, Km 712,5 (Latitud 38° 38´22,40´´ S, Longitud 62° 43´1,04´´ O), Villarino, Buenos Aires–-
Argentina
Planta Brigadier López
Ruta 11 Km 455
3017 Parque Industrial Sauce Viejo, Calle 8, Colectora Norte
Santa Fe–- Argentina
c/o Central Puerto S.A. – for its subsidiary Parque Eólico La Castellana II
Ruta 3 km 712,5 sobre camino vecinal, Villarino, Buenos Aires–- Argentina.
Scope
Generation of electric energy from: thermal energy (gaseous and liquid fuels).
Generation of electric energy from: thermal energy (gaseous and liquid fuels). Steam production.
Generation of electric energy from: hydraulic energy
Generation of electric energy from: wind energy.
Generation of electric energy from: wind energy.
Generation of electric energy from: thermal energy (gaseous and liquid fuels).
Generation of electric energy from: wind energy.
66
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8
9
10
11
12
c/o Central Puerto S.A. – for its subsidiary Parque Eólico La Genoveva II
Ruta 51 Km 705, Cabildo, Buenos Aires–- Argentina
c/o Central Puerto S.A. – for its subsidiary Parque Eólico Manque (Latitude 33°13’35.26”S;
Longitude 65° 4’38.69”O), Achiras. Córdoba – Argentina
c/o Central Puerto S.A. – for its subsidiary Parque Eólico Los Olivos (Latitude 33°13’50.34”S;
Longitude 65° 2’59.94”O) Achiras. Córdoba – Argentina
c/o Central Puerto S.A. – for its subsidiary Parque Eólico La Genoveva I
Ruta 51 Km 705, Cabildo, Buenos Aires, Argentina
Planta Cogeneración San Lorenzo
Combate Punta Quebracho s/n (esquina Vucetich), zona rural Puerto Gral. San Martín, Santa Fe,
Argentina
Certificate Register. No.: 01 10406 2329630
Certificate Holder: Central Costanera S.A. Av. España 3301.Ciudad Autónoma de Buenos Aires
Scope: Generation of electric energy from: thermal energy (gaseous and liquid fuel).
Validity: The certificate is valid until 2025-07-27
Including the locations:
No:
1
Name/Location
Central Costanera S.A.
Av. España 3301
Ciudad Autónoma de Buenos Aires
Generation of electric energy from: wind energy.
Generation of electric energy from: wind energy.
Generation of electric energy from: wind energy.
Generation of electric energy from: wind energy.
Generation of electric energy from: thermal energy (gaseous and liquid fuels). Operation and maintenance of extra
high voltage line (EVL)
Scope
Generation of electric energy from: thermal energy (gaseous and liquid fuels).
Additionally, pursuant to Section 22 of Argentina’s Environmental Policy Law No. 25,675, any individual or legal entity, whether public or private, engaged in activities that endanger the environment, ecosystems and their constituent
elements, including us, must carry insurance for an amount sufficient to cover the cost of repairing the damages such individual or legal entity may cause. We fully comply with this regulation.
Security and Health
In managing occupational safety and health we seek to protect people and our own and third parties’ property, assuming that:
·
·
·
all accidents and occupational diseases can be prevented.
compliance with applicable occupational and health standards is the responsibility of all individuals participating in activities in our facilities; and
raising awareness among individuals contributes to the welfare at the workplace and to the improved individual and collective development of the members of the work community.
Our commitment to ongoing improvement compels us to review the sufficiency of our current policy and its stated goals on an ongoing basis to ensure conformance to the changes required by the market and the applicable laws.
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67
In August 2023, TÜV Rheinland completed a series of ISO recertification audits to expand the scope of the existing certificates and include seven new sites: Castellana, Castellana II, Genoveva, Genoveva II, Achiras, Manque and
Olivos wind farms. As of the date of this annual report, we hold the following certificates:
Standard: ISO 45001/2018
Certificate Register. No.: 01 21306 2329655
Certificate Holder: Central Puerto S.A. Ruta Nacional 237, Km 1450.5 (8315) Piedra del Águila Provincia de Neuquén Argentina.
Scope: Generation of electric energy from: hydraulic energy, thermal energy (gaseous and liquid fuel) and wind energy.
Validity: The certificate is valid from 2021-10-05 until 2024-10-04
Including the locations:
1
Central Hidroeléctrica Piedra del Águila
Ruta Nacional 237, Km 1450.5
8315 Piedra del Águila
Generation of electric energy from: hydraulic energy
2
3
4
5
6
7
8
9
Provincia de Neuquén
Central Puerto S.A. – Planta Brigadier López
Ruta 11 Km 455
3017 Parque Industrial Sauce Viejo, Calle 8, Colectora Norte
Santa Fe–- Argentina
c/o Central Puerto S.A.–- para su subsidiaria Parque Eólico Achiras Lote 325, Parcela 1274 Lat 33°
12 ́ 44,23 ́ ́S, Long 65º 5 ́ 16,52 ́ ́ O
Córdoba-Achiras, Argentina
c/o Central Puerto S.A.–- para su subsidiaria Parque Eólico La Castellana Camino rural altura de la
RN 3, Km 712,5 ́Lat. 38º 38 ́ 22,40 ́ ́S Long. 62º 43 ́1,04 ́ ́ O–- Villarino, Buenos Aires Argentina
c/o Central Puerto S.A. para su subsidiaria Parque Eólico La Castellana II Ruta 3 km 712,5 sobre
camino Vecinal Villarino, Buenos Aires, Argentina
c/o Central Puerto S.A. para su subsidiaria Parque Eólico La Genoveva II Ruta 51 Km 705
Cabildo, Buenos Aires, Argentina
c/o Central Puerto S.A. para su subsidiaria Parque Eólico Manque (Latitud 33°13’35.26”S;
Longitud 65° 4’ 38.69”O)
Achiras, Córdoba, Argentina
c/o Central Puerto S.A. para su subsidiaria Parque Eólico Los Olivos (Latitud 33°15’50.34”S;
Longitud 65° 2’59.94”O)
Achiras, Córboba, Argentina
c/o Central Puerto S.A. para su subsidiaria Parque Eólico Vientos La Genoveva I Ruta 51 Km 705
Cabildo, Buenos Aires
Argentina
Certificate Register. No.: 01 21306 2329630
Certificate Holder: Central Costanera S.A. Av. España 3301.Ciudad Autónoma de Buenos Aires
Scope: Generation of electric energy from: thermal energy (gaseous and liquid fuel).
Validity: The certificate is valid until 2025-07-27
Generation of electric energy from: thermal energy (gaseous and liquid fuels).
Generation of electric energy from: wind energy.
Generation of electric energy from: wind energy.
Generation of electric energy from: wind energy.
Generation of electric energy from: wind energy.
Generation of electric energy from: wind energy.
Generation of electric energy from: wind energy.
Generation of electric energy from: wind energy.
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Including the locations:
No:
1
Name/Location
Central Costanera S.A.
Av. España 3301
Ciudad Autónoma de Buenos Aires
Integrated Management System with ISO Certifications
68
Scope
Generation of electric energy from: thermal energy (gaseous and liquid fuels).
Our management has put an integrated management system (“IMS”) in place for its electric power and steam generation plants in order to meet the needs and requirements of our internal policies and goals, as well as the needs and
requirements of our clients, the applicable laws and regulations and ISO standards, namely, ISO 9001/2015 (quality), ISO 14001/2015 (environment) and ISO 45001/2018 (Occupational health and safety Assessment Series. Our IMS is
certified by renowned international entities and audited from time to time, as required by the aforementioned standards.
The IMS seeks to achieve the following goals:
·
·
·
·
·
·
·
·
·
equip the plants with useful and proactive management tools;
ensure process quality;
satisfy clients’ requirements;
pursue ongoing improvement in processes;
safeguard people and our own and third party’s property;
prevent pollution;
make efficient use of resources;
preserve the ecological balance; and
improve life quality.
We identify the processes and the necessary support for the accurate operation of a sustainable, participatory and bureaucracy-free IMS that is useful for implementing the principles established by management with respect to
environmental, quality, and occupational safety and health policies and for ensuring the availability of human, material and financial resources. We have used a management model based on planning-doing-checking-acting in order to
guarantee the maintenance and ongoing improvement of the IMS in our facilities, which involves one or several of the following systems:
·
·
·
Quality Management System
Environmental Management System
Occupational Safety and Health Management System
The individual scope of the IMS at each plant is as follows:
·
Puerto Complex:
·
·
·
Nuevo Puerto plant: Environmental Management System with ISO 14001/2015 certificate and Quality Management System with ISO 9001/2015 certificate
Puerto Nuevo plant: Environmental Management System with ISO 14001/20015 certificate and Quality Management System with ISO 9001/2015 certificate
Puerto combined cycle plant: Environmental Management System with ISO 14001/2015 certificate and Quality Management System with ISO 9001/2015 certificate
Certification body:
From 2004 through 2015: IRAM
From 2016-2023: TÜV Rheinland
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·
·
·
Luján de Cuyo plant: Environmental Management System with ISO 14001/2015 certificate and Quality Management System with ISO 9001/2015 certificate
Certification body:
From 2004 through 2015: SGS
From 2016 through 2023: TÜV Rheinland
Piedra del Águila plant: Environmental Management System with ISO 14001/2015 certificate, Quality Management System with ISO 9001/2015 certificate and Occupation Safety and Health Management System
with ISO 45001:2018 (through March 2021) certificate
Certification body:
From 2004 through 2015: IRAM
From 2016 through 2023 (through 2024 to ISO 45001): TÜV Rheinland
Brigadier López plant: Environmental Management System with ISO 14001/2015 certificate, Quality Management System with ISO 9001/2015 certificate and Occupation Safety and Health Management System with
ISO 45001:2018 (through March 2021) certificate
Certification body:
From 2019 through 2023 (through 2024 to ISO 45001): TÜV Rheinland
Wind Farms Achiras, La Castellana I, La Castellana II and La Genoveva II: Environmental Management System with ISO 14001/2015 certificate, Quality Management System with ISO 9001/2015 certificate and
Occupation Safety and Health Management System with ISO 45001:2018 (through July 2022) certificate.
Certification body:
From 2019 through 2023 (through 2024 to ISO 45001): TÜV Rheinland
Wind Farms Manque and Los Olivos: Environmental Management System with ISO 14001/2015 certificate, Quality Management System with ISO 9001/2015 certificate and Occupation Safety and Health
Management System with ISO 45001:2018 (through July 2022) certificate.
Certification body:
From 2020 through 2023 (through 2024 to ISO 45001): TÜV Rheinland
Wind Farms La Genoveva I: Environmental Management System with ISO 14001/2015 certificate, Quality Management System with ISO 9001/2015 certificate and Occupation Safety and Health Management
System with ISO 45001/2018 (through July 2022) certificate.
Certification body:
From 2021 through 2023: TÜV Rheinland
Cogeneración San Lorenzo: Environmental Management System with ISO 14001/2015 certificate, Quality Management System with ISO 9001/2015 certificate.
Certification body:
From 2021 through 2023: TÜV Rheinland
Central Costanera Complex:
·
·
·
·
·
o
Environmental Management System with ISO 14001/2015 certificate, Quality Management System with ISO 9001/2015 certificate and Health Management System with ISO 45001/2018.
Certification body:
From 2023: TÜV Rheinland
It is our policy that the IMS be reviewed upon a change to our organizational structure, operating procedures, processes or facilities and that it be updated as applicable. Once updated, the IMS is subject to a comprehensive review
considering the existing interrelations to avoid overlap or omissions. Where no changes have occurred, the IMS is reviewed every five years, unless a new version of the reference ISO standards is released during that period, in which
case the IMS is adjusted to conform to the new standards.
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The Argentine Electric Power Sector
70
The following is a summary of certain matters relating to the electric power industry in Argentina, including provisions of Argentine laws and regulations applicable to the electric power industry and to us. This summary is not
intended to constitute a complete analysis of all laws and regulations applicable to the electric power industry. Investors are advised to review the summary of such laws and regulations published by the Secretariat of Energy
(https://www.argentina.gob.ar/economia/energia), CAMMESA (www.cammesa.com.ar) and the Ente Nacional Regulador de la Electricidad (Argentine Electricity Regulatory Entity, or “ENRE”) (www.enre.gob.ar) and to consult their
respective business and legal advisors for a more detailed analysis. None of the information on such websites is incorporated by reference into this annual report.
History
During the majority of the second half of the 20th century, the assets and operation of the Argentine electric power sector were controlled by the Argentine Government. By 1990, virtually all of the electric power supply in Argentina
was controlled by the public sector (97% of total generation). The Argentine Government had assumed responsibility for the regulation of the industry at the national level and controlled all of the national electric power companies. In
addition, several Argentine provinces operated their own electric power companies. As part of the economic plan adopted by former President Carlos Menem, the Argentine Government undertook an extensive privatization program of
all major state-owned industries, including those in the electric power generation, transmission and distribution sectors. Argentine Law No. 23,696 passed in 1989 (the “Federal Reform Law”) declared a state of emergency for all public
services and authorized the Argentine Government to reorganize and privatize public companies. The privatization had two ultimate objectives: first, to reduce tariffs and improve service quality through free competition in the market,
and second, to avoid the concentration of control of each of the three subsectors of the market in a small group of participants and thereby reduce their ability to fix prices. Separate limitations and restrictions for each subsector were
imposed in order to reach these goals. In accordance with the Federal Reform Law, Decree No. 634/1991 established guidelines for the decentralization of the electric power industry, for the basic structure of the electric power market,
and for the participation of private sector companies in the generation, transmission, distribution and trading sub-sectors.
General Overview of Legal Framework
Key Statutes and Complementary Regulations
The body of rules that constitutes the basic regulatory framework of the Argentine electric power sector currently in force are the following: (i) Law No. 15,336, enacted on September 20, 1960, as amended by Law No. 24,065, passed
on December 19, 1991, partially promulgated by Decree No. 13/92, and regulated by Decree No. 1398/92 and Decree No. 186/95 (collectively, the “Regulatory Framework”), (ii) Law 24,065 which implemented privatizations of
government-owned companies in the electric power sector and separated the industry vertically into four categories: generation, transmission, distribution and demand, and it also provided for the organization of the WEM (described in
greater detail below) based on the guidelines set forth in Decree No. 634/91; and (iii) Decree No. 186/95 also created the notion of “participant,” among which it is worth mentioning the “trader,” which is defined as a company that is
not a WEM agent but trades electric power in bulk.
Procedures for the Programming of Operation, Dispatch and Price Calculation
For the purposes of implementing the provisions set forth in the Regulatory Framework, a set of regulatory provisions were issued, through Resolution No. 61 of April 29, 1992 of the former Secretariat of Electric Energy, which are
referred to as the “Procedures for the Programming of Operation, Dispatch and Price Calculation” (the “Procedures”). The Procedures have been amended, supplemented and extended by subsequent resolutions issued by the relevant
authorities.
Provincial Regulatory Powers
Provinces regulate the electrical system within their territories and are enforcement authorities in charge of granting and controlling electric power distribution concessions therein. Nonetheless, if a provincial electric power market
participant is connected to the SADI, it must also comply with federal regulations. In general terms, provinces have followed federal regulatory guidelines and have established similar regulatory institutions. In addition, isolated
provincial electric power systems are very rare, and most provincial market participants are connected to the SADI and buy and sell electric power in the WEM, which falls within the regulatory powers of the Argentine Government.
ENRE
Law No. 24,065 also created the Ente Nacional Regulador de la Electricidad (Argentine National Electricity Regulator) (ENRE) as an autonomous entity within the scope of the current Secretariat of Energy, the main duties of which
are as follows: (a) enforcing the Regulatory Framework and controlling the rendering of public services and the performance of the obligations set forth in the concession contracts at a national level; (b) issuing the regulations
applicable to the WEM agents; (c) setting forth the basis for calculation of tariffs and approving the tariff schedules of transmission and distribution companies holding national concessions; (d) authorizing electrical conduit easements;
and (e) authorizing the construction of new facilities. Besides, Law No. 24,065 has entrusted ENRE with a jurisdictional activity. Any dispute arising between WEM agents should be subject to prior compulsory jurisdiction of ENRE
(subject to further judicial review).
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Pursuant to art. 58 of Law No. 24,065, regulated by Decree No. 1398/92, ENRE’s board of directors should be composed of five (5) members, who shall be elected through a selection procedure by open call (convocatoria abierta)
among professionals who have the required curricular background.
However, in 2019, Section 6 of the Solidarity Law No. 27,541 authorized the Executive branch to intervene the ENRE’s board for one year.
·
·
In that context, the ENRE was intervened by virtue of Decree No. 277/2020 —initially until December 31, 2020
Such intervention was subject to numerous extensions that remain in force to this date, by means of Decrees No. 1020/2020, 871/2021, 815/2022 and recently, Decree No. 55/2023 issued by the new Milei
administration, which ordered the intervention of the ENRE as from January 1, 2024, until the new members of the board of Directors are appointed.
The Secretariat of Energy
In addition to the ENRE, one of the main regulatory entities in Argentina is the Secretariat of Energy.
Its role is defined in Law No. 24,065 and Decree No. 50/2019. Pursuant to Decree No. 50/2019 (as amended, particularly by Decree No. 480/2022), the Secretariat of Energy, currently under the orbit of the Ministry of Economy, has
overall responsibility of organizing the electricity industry and establishing the policies applicable to the sector.
CAMMESA
The creation of the WEM made it necessary to create an entity in charge of the management of the WEM and the dispatch of energy into the SADI. These duties were entrusted to CAMMESA, created by virtue of Decree 1192/1992, as
a non-profit corporation. Each of the shareholders of CAMMESA hold twenty percent of its shares and are as follows: the Argentine Government (represented by the Secretariat of Energy) and the four associations representing the
different segments of the electric power sector (generation, transmission, distribution and large users).
CAMMESA is managed by a board of directors composed of ten regular directors and up to ten alternate directors, which are appointed by its shareholders. Each of the associations that represent the different segments of the electric
power sector is entitled to appoint two regular directors and two alternate directors. The two remaining regular directors of CAMMESA are the current Secretariat of Energy, who serves as chairman of the board and an independent
member who acts as vice chairman, appointed at a meeting of the shareholders. The decisions adopted by the board of directors of CAMMESA require the affirmative vote of a majority of the directors present at the meeting, including
the affirmative vote of the chairman of the board.
CAMMESA is in charge of managing the SADI in accordance with the Regulatory Framework.
In addition, under current applicable regulations, CAMMESA has been tasked with the role of acquiring and supplying the fuel for the electric power sold under the Spot Sales free of cost to the generators.
WEM (Wholesale Electricity Market)
Transactions among different participants in the electricity industry take place in the WEM, administrated by CAMMESA, which clears all transactions as a power pool administrator. The WEM was originally conceived as a
competitive market in which generators, distributors and certain large users of electricity could buy and sell electricity at prices determined by supply and demand, and were also allowed to enter into medium and long-term power
purchase contracts.
The WEM consisted mainly of:
1.
2.
a term market, where contractual quantities, prices and conditions were freely agreed upon among sellers and buyers; however, it should be noted that Resolution SE No. 95/2013 established the suspension of the
incorporation of new contracts in the term market, with the exception of those contracts entered into under certain special regimes, and those contracts that have a differential remuneration regime (this suspension
remains in effect to this day). Since then, large users of the WEM must purchase their electricity demand directly from CAMMESA, except in the case of contracts entered into under the excepted regimes;
a spot market, where prices were established on an hourly basis based on the economic production cost, represented by the short-term marginal cost measured at the system’s load center (market node) (however, in
practice, this system has suffered significant regulatory distortions since the year 2002). Purchases made in the spot market vary according to the nature of the buyer: large users, generators and self-generators pay the
Spot Price, while distributors pay a seasonal price calculated by CAMMESA and approved by the Secretariat of Energy. Seasonal prices are periodically established by the Secretariat of Energy based on the
programming made by CAMMESA, and maintained for six-month periods (subject to quarterly adjustments), in order for distributors to pay a stabilized price, and thus be able to transfer it to the tariffs paid by end
users. It should be noted that since 2002, this price is not transferred in full to demand agents of the WEM, which in turn leads to relevant deficits in the stabilization fund administered by CAMMESA. Finally, the
electricity remuneration values for generators (Spot Sales) are set by the National Executive Branch; and
3.
a quarterly stabilization system of spot market prices, managed by CAMMESA, intended for the purchases of electric power by distributors.
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The following chart shows the relationships among the various actors in the WEM:
72
Structure of the Industry
Generation
According to Law No. 24,065, electric power generation is classified as an activity of general interest associated with the provision of the public service of transmission and distribution of electric power but conducted within the
framework of a competitive market.
Thermal electric power generators (i.e., generation using natural gas, liquid fuels derived from oil, such as gas oil and fuel oil, coal, solar panels or wind turbines) do not need a concession granted by the government to operate, whereas
hydroelectric power generators do need a concession granted by the government to be able to use water sources. Typical terms included in concession agreements include the right to use water resources and facilities for a fixed amount
of time (e.g., thirty years), in cases where the dam is owned by the Argentine Government or an Argentine provincial government, and the option to extend or renew the concession period for a fixed number of years. Usually, the
concessionaire must make a one-time initial payment to the Argentine Government or an Argentine provincial government in exchange for the rights granted in the concession and periodically must pay a fee and/or royalties to the
respective provincial government where the river is located in exchange for the use of this water resource. Normally, these periodic fees vary according to the amount of energy generated.
As of the date of this annual report, following the enactment of Resolution SE No. 95/2013, the incorporation of new PPAs in the term market was suspended, except for those power purchase agreements executed under certain special
regimes. See “Item 4.B. Business Overview— The Argentine Electric Power Sector—Remuneration Scheme” below.
In addition, it should be noted that in recent years, Argentina has prioritized the generation of electric power from renewable sources. In such regard, it has not only issued regulations intended to regulate and incorporate this type of
energy into the WEM, but it has also promoted it by granting incentives in the form of tax benefits and preferential or subsidized tariffs.
In this regard, through the enactment of Law No. 26.190 in December 2006, amended and supplemented by Law No. 27.191, both regulated by Decree No. 531/2016, the generation of electric energy from the use of renewable energy
sources for public service provision was declared to be of national interest. See “Item 4.B. Business Overview—The Argentine Electric Power Sector—Structure of the Industry—Renewable Energy.” Below.
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Within this framework, the Argentine Government launched a series of bidding processes for the development of renewable power generation projects —See “Item 4.B. Business Overview—The Argentina Electric Power Sector—
RenovAR (Round 1, Round 1.5 and Round 2): Bidding Process for Renewable Energy Generation Projects”—, and also implemented the Renewable Energy Term Market by means of Resolution No. 281-E/2017 of the former Ministry
of Energy and Mining — See “Item 4.B. Business Overview—The Argentina Electric Power Sector— The Renewable Energy Term Market in Argentina - Resolution No. 281-E/17”.
Transmission and Distribution
Pursuant to Law No. 24,065, transmission and distribution activities are regulated as public services due to the fact that they are natural monopolies. The Argentine Government has granted concessions to private entities conducting
these activities, subject to certain conditions, such as service quality standards and fixing the tariffs they are entitled to collect for their services.
Electricity transmission is comprised of (i) a high-voltage transmission system, operated by the company Transener, which connects the main electric power production and consumption areas allowing the transmission of electric power
between different Argentine regions and (ii) several regional trunk systems, which transmit electric power within a particular region and connect the generators, distributors and Large Users that operate in such region.
Electricity distribution is regulated only at the federal level for the City of Buenos Aires and the districts in the metropolitan areas of Greater Buenos Aires. EDENOR operates in the northern area of both the City of Buenos Aires and
Greater Buenos Aires, and EDESUR operates in the southern area of both the City of Buenos Aires and Greater Buenos Aires. In the rest of the country, the electric power distribution service is regulated at the provincial level and
subject to concession granted by provincial authorities. Section 124 of Law No. 27,467 established that both EDENOR and EDESUR would be transferred to the regulatory jurisdiction of the Province of Buenos Aires and the City of
Buenos Aires, as applicable. However, such transfer was not implemented, and was later suspended by the Solidarity Law that established that the ENRE will retain its regulatory powers over such companies for as long as the
emergency declared by such law remain in force.
Transmission services are rendered by concessionaires that operate and use high and medium voltage transmission lines. Transmission services consist of the transformation and transmission of electric power from generators’ delivery
points to distributors or Large Users’ reception points. Law No. 24,065 provides that electricity transmission companies must be independent from other WEM participants and prohibits them from purchasing or selling electricity.
Distribution companies are in charge of supplying electric power to end-users who cannot contract with an independent electric power supply source due to their consumption levels, such as residential end-users.
The main characteristics of concession contracts for the transmission and distribution of electric power are: (i) service quality standards with penalties that are applied in case of breach; (ii) a concession term of 95 years for the
monopoly of the supply service in a supply area or network, divided into “management periods,” with an initial term of 15 years and subsequent terms of ten years (at the end of each management period, the Argentine Government
must call for bids to sell the majority stake of the corresponding transmission or distribution company); and (iii) tariffs fixed based on economic criteria with a price cap system and predefined processes regarding their calculation and
adjustment.
Large Users
The WEM classifies Large Users of energy into three categories: (i) Grandes Usuarios Mayores (Major Large Users, or “GUMAs”), (ii) Grandes Usuarios Menores (Minor Large Users, or “GUMEs”) and (iii) Grandes Usuarios
Particulares (Particular Large Users, or “GUPAs”).
GUMAs are users with a maximum capacity equal to or greater than 1 MW and a minimum annual energy consumption of 4,380 MWh. Their transactions in the spot market are invoiced by CAMMESA.
GUMEs are users with a maximum capacity ranging from 0.03 to 2.0 MW. They are not required to have any minimum annual demand.
GUPAs are users with a minimum capacity of 0.030 MW and a maximum of 0.1 MW. They are not required to have any minimum annual demand.
Traders
Since 1997, traders have been authorized to participate in the WEM by intermediating block sales of energy.
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Vertical and Horizontal Restrictions
The WEM agents are subject to vertical restrictions, pursuant to Law No. 24,065 and Decree No. 1398/92, according to which:
1.
2.
3.
neither a generation or distribution company nor a Large User or any of its controlled companies or its controlling company, can be an owner or a majority shareholder of a transmission company or the controlling
entity of a transmission company. Nevertheless, the Executive branch may authorize a generation or distribution company or a Large User to build, at its own cost and for its own need, a transport network for which it
will establish the modality and form of operation.
the holder of a distribution concession cannot be the owner of generation units; however, the shareholders of the electric power distributor may own generation units, either by themselves or through any other entity
created with the purpose of owning or controlling generation units; and
no transmission company may purchase or sell electricity.
Section 33 of the Argentine Corporate Law states that “companies are considered as controlled by others when the holding company, either directly or through another company: (1) holds an interest, under any circumstance, that grants
the necessary votes to control the corporate will in board meetings or ordinary shareholders’ meetings; or (2) exercises a dominant influence as a consequence of holding shares, quotas or equity interest or due to special linkage between
the companies”. However, we cannot assure you that the electric power regulators will apply this standard of control in implementing the restrictions described above. According to the ENRE resolutions, a company controlled by or
controlling an electric power transmission company is a company that owns more than 51.00% of the voting shares of the controlled company and exercises a majority control.
Both electric power transmitters and distributors are also subject to horizontal restrictions. The horizontal restrictions applicable to transmission companies are the following:
1.
2.
3.
two or more transmission companies can merge into or be part of a same economic group only if they obtain an express approval from the ENRE; such approval is also necessary when a transmission company intends
to acquire shares in another electric power transmission company;
pursuant to the terms of the concession agreement that govern the transmission of electric power through transmission lines above 132 kv and below 140 kv, the transmission service is rendered exclusively in the
specific areas indicated in such agreement; and
pursuant to the terms of the concession agreement of the company that renders electric power transmission services through lines with voltage equal to or higher than 220 kv, the service must be rendered exclusively
and without territorial restrictions, throughout Argentina.
The horizontal restrictions applicable to electric power distribution companies are the following:
1.
2.
two or more distribution companies can merge into or be part of a same economic group only if they obtain an express approval from the ENRE; such approval is also necessary when a distribution company intends
to acquire shares in another electric power distribution company; and
the distribution service is rendered within the areas specified in the respective concession contracts.
Import and Export Transactions
Pursuant to Decree No. 974/97, import and export transactions are conducted through the TEII (Sistema de Transporte de Energía Eléctrica de Interconexión Internacional), a public service subject to the concession granted by the
former Secretariat of Electric Energy. Under such system, through Resolution No. 348/99, the former Secretariat of Electric Energy granted Interandes Sociedad Anónima a concession for the TEII through the Güemes Transmission
System, which connects the Central de Salta Thermal Generation plant located in Güemes, Salta, with the Sico Border Crossing, on the border with the Republic of Chile.
All import and export transactions conducted through the term market require the prior authorization of the Secretariat of Energy and CAMMESA.
Electricity Dispatch and Spot Market Pricing prior to Resolution SE No. 95/13
According to the Regulatory Framework, an electric power generator’s remuneration was a function of two components: (1) a variable component, based on quantity of energy sold in the market, and (2) a fixed component that aims to
remunerate the generator for each MW of capacity of its units available per hour in the WEM, regardless of the consumption of the electric power generated by such units. The value of the fixed component depended on, among other
things, the connection node to which the unit connects to the SADI.
In accordance with the spot market that was in place prior to Spot Sales, electric power was traded at prices reflecting supply and demand. CAMMESA dispatched the available power units based on the variable costs of production
determined by the generation agents, either based on the cost of fuel or the price of water determined, dispatching the most efficient power units first. The spot market price was determined by CAMMESA on an hourly basis at a
specific geographic location, referred to as the “market node,” which is located in the system’s load center at Ezeiza, Province of Buenos Aires. The energy price consisted of a value referred to as the “marginal system price” or “market
price,” and represented the economic cost of generating the next MWh to satisfy an increase in demand at the same value. The seasonal price fixing system was directly related to the quarterly average prices of the spot market.
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However, in practice, the Spot Market pricing mechanisms have suffered significant changes since 2002, and by means of Resolution of the Secretariat of Energy No. 95/2013, relevant changes were made to the remuneration of the
generation sector, transforming the system into a “cost plus” regime, in which generators were remunerated on the basis of variable “non-fuel” costs, fixed costs and an additional margin. In addition, Resolution No. 95/2013 prohibited
generators to purchase their own fuel, with CAMMESA being the only buyer and administrator of fuel.
The remuneration regime for electricity generation was modified and supplemented by numerous resolutions in the years that followed: (i) Resolution SE No. 529/14, (ii) Resolution SE No. 482/2015, (iii) Resolution SEE No. 22/2016,
(iv) Resolution No. 19/17 (which established a remuneration scheme in US dollars); (v) Resolution 1/19 (which maintained the scheme in US dollars).
Afterwards, Resolution 1/19 was amended by (i) Resolution 31/20 (which re-established a remuneration scheme valued in Argentine pesos), (ii) Resolution 440/21, (iii) Resolution 238/22, (iv) Resolution 826/22, (v) Resolution 750/23,
(vi) Resolution No. 869/23 and (vii) Resolution 9/24.
The Stabilization Fund
Energy prices are passed on to end-users through the public utility distribution companies. To fix prices for end-users, CAMMESA analyzes electric power supply and demand for the period for which the price is being calculated. The
seasonal price is a fixed quarterly price. The Regulatory Framework created the Stabilization Fund that absorbs the differences between the seasonal price and the spot price in the WEM. When the seasonal price is higher than the spot
price, there is an accumulated surplus in the Stabilization Fund. Any surplus is used to offset any losses resulting from periods during which the spot price has been higher than the seasonal price. However, due to tariffs’ public policies,
the Stabilization Fund has been in deficit since 2003.
Tariffs
The tariffs charged by electric power transmission companies include: (i) a connection charge, (ii) a transmission capacity charge and (iii) a charge for actually transmitted energy. In addition, transmission companies may receive
income derived from the expansion of the system. Transmission tariffs are passed on to final users through the distributors.
The amounts that distribution companies charge to end-users include: (i) the price for the purchase of energy in the WEM (the seasonal price as described above), (ii) transmission costs, (iii) the value-added for distribution (“VAD”),
which compensates the distributor, and (iv) taxes. The VAD is the marginal cost of providing services, including the network development and investment costs, operation maintenance and commercialization costs, as well as
depreciation and a reasonable return on the invested capital. The tariffs determined as set forth above must enable an efficient distributor to cover its operating costs, finance the renovation and improvement of its facilities, satisfy
increasing demand, comply with established quality standards and obtain a reasonable return, while also enabling such distributor to comply with certain operating efficiency standards and operate in a manner consistent with the
amounts it has invested and the national and international risks inherent in its operations.
Please note that tariffs have been impacted by subsequent emergencies of the power sector, as described in the following section.
Emergency of the Electric Power Sector
The electric power sector has been significantly affected by the Public Emergency Law enacted on January 6, 2002, and the measures adopted as a consequence thereof. As a result of the law, electric power transmission and distribution
tariffs were converted into pesos and frozen for more than six years. They were only subject to limited and small-scale increases.
Since the approval of the Public Emergency Law, a series of temporary provisions amended the original mechanism for the determination of prices in the WEM. The measures adopted pursuant to the Public Emergency Law also
distorted this mechanism: in spite of an increase in the spot price, the seasonal price remained frozen for all users until 2004, when a partial adjustment was adopted that did not affect residential demand. As a result, the amounts
collected based on seasonal prices have been lower than the amounts based on spot prices, therefore increasing the Stabilization Fund deficit.
In addition, the remuneration to power generators was maintained at artificial low levels through regulations that, among other measures, sets a cap on spot prices freezing the capacity payments.
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On December 15, 2015, through Decree 134/2015 the Executive Branch declared a state of emergency with respect to the Argentine electric power sector until December 31, 2017.
On December 20, 2019, the Solidarity Law No. 27,541 was enacted, which once again declared a public emergency in tariff and energy matters, extending such declaration to the economic, financial, fiscal, administrative, pension,
health, and social fields, delegating to the National Executive Branch a variety of powers to fulfill the objectives envisaged in the regulation.
The Solidarity Law implemented a series of relevant measures related to the power sector:
(i)
(ii)
(iii)
it suspended increases in transportation and distribution rates for 180 days, which was later subject to extensions by means of Decree No. 543/2020 and Decree No. 1020/2020.
it instructed the initiation of a tariff renegotiation process, which was initiated by means of Decree No. 1020/2020 (for a term of two years), and was extended by means of Decree No. 815/2022 (for a term of one
year).
it granted the Executive branch broad powers to intervene the ENRE, initially until December 2020. However, the intervention was also subject to extensions throughout the entire Fernández Administration, by means
of Decree No. 277/2020, Decree No. 1020/2020, Decree No. 871/2021 and Decree No. 815/2022.
On June 16, 2022, with the publication of Decree No. 332/2022, a subsidy segmentation regime for residential users of electricity and natural gas public services by network was established, starting from June 2022, with the aim of
achieving reasonable energy values and susceptible to be applied with criteria determined by the regulatory authority (the Secretariat of Energy).
On December 18, 2023, the National Executive Branch (under the Milei Administration) issued Decree No. 55/2023 which resolved:
·
·
·
Regarding the emergency:
·
·
Declare a state of emergency in the segments of electricity generation, transmission, and distribution, as well as in the transmission and distribution of natural gas under federal jurisdiction until December 31,
2024.
Instruct the Secretariat of Energy to develop, implement, and enforce a program of necessary actions. The objective is to establish price sanction mechanisms under conditions of competition, maintain
income levels, and cover investment needs to ensure the continuous provision of public services for the transmission and distribution of electricity and natural gas.
Regarding tariff review:
·
·
·
·
Initiate the tariff review for providers of electricity and natural gas transmission and distribution services.
The resulting new tariff schedules shall not enter into force until after December 31, 2024.
Until the tariff review process is completed, temporary tariff adjustments and periodic adjustments may be approved, aiming at the continuity and normal provision of the involved public services, on account
of the tariff review outcome.
Establish mechanisms for citizen participation in the temporary tariff adjustment process.
Regarding the intervention of ENRE and ENARGAS:
·
·
·
·
Order the intervention of ENRE and ENARGAS as of January 1, 2024, until the appointment of new members of the Board of Directors.
Grant the Secretariat of Energy the authority to appoint the interveners of ENRE and ENARGAS.
Grant the interveners the authority to conduct the tariff review process.
The Secretariat of Energy must initiate the process of selecting members of the Board of Directors of ENARGAS within 180 days. It must also review and/or redirect and/or confirm and/or annul the process
of selecting members of the Board of Directors of ENRE.
On December 20, 2023, through Decree No. 70/2023, the National Executive Branch resolved, among other matters, to:
·
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Empower the Secretariat of Energy to redetermine the current subsidy structure in order to ensure that end-users have access to basic and essential electricity and natural gas consumption. For this purpose, it must
consider the income of the household group.
Empower the Secretariat of Energy to define specific mechanisms that materialize the allocation and effective perception of subsidies, determining the roles and tasks to be performed by public actors, concessionaire
companies, and other relevant actors or agents.
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On January 3, 2024, through Resolutions No. 2/2023 and 3/2023 of ENRE, it was resolved to convene a public hearing to be held on January 26, 2024, for the temporary adjustment of transportation and distribution tariffs (of EDENOR
and EDESUR).
Accordingly, on February 16, 2024, through Resolutions No. 101/2024 and 102/2024 of ENRE (amended by Resolution No. 115/2024), it was resolved to approve the Tariff Schedule for residential users Level 1, Level 2, Level 3, and
other tariff categories to be applied starting from February 16, 2024.
The FONINVEMEM and Similar Programs
In 2004, the Argentine Government, seeking to increase generation capacity, created the FONINVEMEM (Resolution SE No. 712/2004), a fund to be administered by CAMMESA. To provide capital for the FONINVEMEM, the
former Secretariat of Electric Energy invited all WEM participants holding LVFVDs (Liquidaciones de Venta con Fecha de Vencimiento a Definir, as per Resolution SE No. 406/2003 and 943/2003) that originated from amounts owed
by CAMMESA’s to generators from the period January 2004 to December 2006, to contribute these credits to the FONINVEMEM. In the initial stages of the FONINVEMEM, generators had to participate in the construction of two
new 800 MW combined cycle thermal generation plants. Consequently, on December 13, 2005, the generation companies TMB and TJSM were created. Subsequently the generators also contributed the LVFVDs from 2007 to said
projects.
The FONINVEMEM reimburses the private sector contributors the amount of their contributed receivables in 120 equal, consecutive monthly installments starting from the commercial launch date of the plants, converted into U.S.
dollars at the rate effective as of the date of the applicable agreement, with interest at the interest rate specified in the applicable agreement for each project. For further information, see “Item 4.B. Business Overview —FONINVEMEM
and Similar Programs”.
Subsequently, in 2010, a new agreement with WEM generators was entered into to promote new electric power generation to satisfy the increase in the energy and capacity demand and also to facilitate the settlement of the generators’
receivables from CAMMESA (LVFVDs) for electric power sales. Within the framework of such agreement, Central Puerto and the Endesa and Duke groups participated in a project for the construction of a thermal combined cycle
plant named Central Vuelta de Obligado, in Timbúes, Province of Santa Fe, and, in turn, The AES Group was part of a project for the construction of Central Guillermo Brown, located in Bahía Blanca, Province of Buenos Aires. In
connection with the former, the generation company CVOSA was created.
Energía Plus
In September 2006, the Secretariat of Energy issued Resolution No. 1281/06 which created the Energía Plus Service, to respond to the sustained increase in energy demand and to foster new private sector interested parties to invest
fresh capital into the energy sector in order to generate new energy sources.
The resolution provided that:
1.
2.
The energy available in the market will be used primarily to serve residential customers, public lighting, public entities and industrial and commercial users whose energy demand is at or below 300 kW and that have
not entered into term contracts.
GUMAs, GUMEs and large customers of distribution companies (in all cases with consumption equal or higher than 300 kilowatts) are allowed to satisfy any consumption in excess of their base demand (equal to
their demand in 2005) with energy from the Energía Plus service, consisting of the supply of additional energy generation from new generators and generation agents, co-generators or self-generators that are not
agents of the WEM or who, as of the date of publication of the resolution, were not interconnected with the WEM. The price required to pay for excess demand, if not previously contracted for under the Energía Plus,
was originally fixed to be equal to the marginal cost of operation. The marginal cost is equal to the generation cost of the last generation unit transmitted to supply the incremental demand from electric power at any
given time. With the Energía Plus, the price has been amended to for GUMAs and GUMEs and has been maintained for large customers of distribution companies for their excess demand (Note No. 111/16 issued by
the former Secretariat of Electric Energy).
PPAs for additional generation and associated energy from generation – Secretariat of Energy - Resolution 220/07
Pursuant to Resolution No. 220/07, the Secretariat of Energy authorized the execution of Power Purchase Agreements (“PPAs”) between the WEM (represented by CAMMESA) and companies that offer additional generation to the
system (i.e., the so-called offer of additional generation and associated energy from generation, co-generation and self-generation agents that, as of the date of publication of the resolution, were not WEM agents or did not have the
generation facilities to commit to such supply). PPAs are applicable to all such projects for additional energy generation that involved the participation of the Argentine Government or ENARSA or those that be determined by the
former Ministry of Federal Planning, Public Investment and Services (currently, the Secretariat of Energy).
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Resolution No. 220/07 sets forth the standard terms of PPAs, including:
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1.
2.
3.
4.
5.
6.
Effective Term: Maximum of ten years.
Parties: The company whose offer has been approved by the former Secretariat of Electric Energy, as seller, and the WEM as a whole, represented by CAMMESA, as buyer.
Remuneration: To be determined based on the costs accepted by the former Secretariat of Electric Energy and approved by the former Ministry of Planning.
Delivery Point: The connection node of the plant with the SADI.
Remedies: The PPAs must include remedies for breach based on the effect that the unavailability of the units committed under the PPAs may have on the proper supply of the electric power demand in the SADI.
Dispatch: The machines and plants assigned to the PPAs will generate electric power to the extent they are dispatched by CAMMESA.
The National Hydroelectric Works Program
The Secretariat of Energy issued Resolution No. 724/2008, which authorized the execution of WEM committed supply agreements associated with the repair or repowering of diesel generation groups and related equipment with WEM
generation agents. The compensation to be received by the seller will be paid according to the payment priority provided in subsector “I” of Section 4 of Resolution SE No. 406/03.
On November 11, 2009, Resolution SE No. 762/2009, which created the National Hydroelectric Works Program (the “National Program”), was published in the Official Gazette.
The purpose of the National Program is to promote and support the construction of hydroelectric plants within Argentina through the creation of funding sufficient to assure the repayment of investments made and loans provided in
such framework.
Within this framework, the Argentine Government has provided that CAMMESA and the WEM generation agents to be determined by the former Ministry of Energy and Mining may enter into electric power supply agreements in
respect of the energy generated by the hydroelectric works that are part of the National Program. One of the purposes of the supply agreements for hydroelectric works is to repay the investments made and the loans used to complete all
hydroelectric works included in the National Program.
The standard term of such agreements may be of up to 15 years, but such agreements may be extended by the former Ministry of Energy and Mining. Upon expiration of such term, each hydroelectric plant that is part of the National
Program may sell the energy generated by it at the price then specified by the WEM.
The terms and conditions of the agreements were determined by the former Secretariat of Electric Energy taking into account principles of economic reasonableness, equity and operating benefits for the electric power system as a
whole, according to which it will qualify the hydroelectric works to be executed within the scope of the National Program.
Call for Bids for New Thermal Generation Capacity and Associated Electricity Generation
By means of Resolution SEE No. 21/16, the former Secretariat of Electric Energy called for bids for thermal generation capacity and associated electric power generation. The energy was to be made available in the WEM to meet
essential demand requirements beginning with the following seasons: summer 2016/2017, winter 2017 and summer 2017/2018.
The agent whose bid was finally accepted was required to enter into a contract for the sale of electric power generation capacity availability and the related generated electric power in the WEM (a “wholesale demand contract”) with the
distribution agents and Large Users of the WEM represented by CAMMESA.
Resolution No. 21 sets forth the guidelines for wholesale demand contracts, which included, among other things, the following terms: (i) the contractual term is required to be between five and ten years; (ii) the maximum specific
consumption of each generating unit by type of fuel used is required to be lower than 2,500 kilocalories per kilowatt-hour; (iii) a set of remedies are required to be defined for failures to comply with the committed availability of
generation capacity; (iv) the supply of and recognition of the cost of fuel used by the machines and power plants involved is required to be included in accordance with applicable regulations; (v) contracts are required to have first
priority in payment and rank equally with existing supply agreements with the Banco de Inversión y Comercio Exterior (BICE) in its role as trustee of the trusts “Central Termoeléctrica Manuel Belgrano” and “Central Termoeléctrica
Timbúes” since January and February 2010, respectively, and priority in payment must rank equally with payment obligations in respect of liquid fuel purchases for electric power generation; and (vi) the contracts are required to
include other features stemming from the provisions of Resolution No. 21.
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In accordance with Resolution No.21, the former Secretariat of Electric Energy received bids for 6,611 MW and awarded an aggregate amount of 2,871 MW.
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Pursuant to Resolution No. 155/16 and Resolution No. 216/16, the former Secretariat of Electric Energy authorized CAMMESA to subscribe the wholesale demand contracts with every winning bidder, for 1,915 MW with an average
price of US$21.833/MW-month, and for 956 MW with an average price of US$19.907/MW-month, respectively. In addition, through Resolution No. 387/16, the former Secretariat of Electric Energy authorized CAMMESA to execute
additional wholesale demand contracts for two generation projects (one for 100 MW and the other for 137 MW).
Thermal Power Tender Offer – former Secretariat of Electric Energy Resolution 287-E/2017
Through Resolution No. 287-E/2017, of May 11, 2017, the former Secretariat of Electric Energy called for a new thermal power tender for the execution of long-term power purchase agreements. The tender focuses on combined cycle
conversion projects and co-generation project.
The main features of the tender were as follows (further requirements and conditions apply):
a)
b)
c)
d)
e)
f)
g)
h)
Combined cycle conversion projects had to be related to thermal power plants (i) existing at that time or near to reach commercial operation in simple cycle mode; (ii) with low specific consumption; (iii) with the
possibility of improving its efficiency once converted into a combined cycle; (iv) that its conversion did not affect the current grid transmission capacity (being any required expansion to be borne by the bidder); (v)
which had the appropriate fuel infrastructure system to guarantee permanent operation of the combined cycle; and (vi) with, in principle, a maximum construction term of 30 months.
Co-generation projects (i) had to be efficient, (ii) did not affect the current grid transmission capacity, (iii) had to guarantee its own principal and alternative permanent fuel supply, and (iv) had to entail, in principle, a
maximum construction term of 30 months.
15-year PPAs extension.
CAMMESA-as the offtaker, acting on behalf of distributors and large users of the Argentine Wholesale Electricity Market. The PPAs might be proportionally assigned to large users and distributors at a later stage.
The generator would receive both a fixed capacity payment (subject to power availability) and a variable payment for actual power supplied to the grid.
Prices under the PPAs should be established in US dollars. However, CAMMESA should make payment in Argentine pesos at the prevailing exchange rate on the business day immediately before the payment date
established in the sales liquidation document issued by CAMMESA.
Payments under the PPAs will benefit from a priority payment mechanism (equal to the one established for the payment of fuel costs for power generation).
Within three months after execution of the PPAs, CAMMESA had to constitute a Payment Guarantee Fund to guarantee the obligations undertaken under each PPA. It should cover six months of the estimated
capacity payments under each PPA. The Secretariat of Electricity should provide the specifics with respect to the Fund’s constitution and administration.
PPAs were awarded to different projects, by means of Resolution SE No. 820/2017 and Resolution SEE 926/2017.
ENARSA transfers
Decree No. 882/2017 instructed the former Ministry of Energy and Mining (acting as a shareholder of IEASA, now named ENARSA), to implement the necessary measures so that ENARSA sells, assigns or transfers its assets, rights
and/or shares (as the case may be) related to Ensenada Barragan, Brigadier López and Manuel Belgrano II thermal power plants and Compañía Inversora de Transmisión Eléctrica CITELEC S.A.
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Pursuant to Decree No. 882/2017, the former Ministry of Energy and Mining was also instructed to implement the necessary measures and procedures to execute the sale, assignment or transfer (as the case may be) of (i) the Argentine
Government’s shares in Central Puerto S.A. equity and the equity of other energy companies (Central Dique S.A, Central Térmica Güemes S.A, Centrales Térmicas Patagónicas S.A, TRANSPA and Dioxitek S.A), (ii) the rights held by
the Argentine Government regarding the following power plants, companies and shares: Termoeléctrica Manuel Belgrano, Termoeléctrica José de San Martín (Central Timbúes), Termoeléctrica Vuelta de Obligado and Termoeléctrica
Guillermo Brown.
The subsequent sales and transfers had to contemplate public and competitive procedures which had to protect the rights established in the companies’ bylaws and related corporate and contractual documentation.
The bidding terms and conditions of the bidding contest to transfer Ensenada Barragan and Brigadier Lopez power plants were approved by means of Resolution No. 289/2018 of the former Ministry of Energy and Mining. We
submitted offers for both power plants, on February 27, 2019, and we were notified that we had been awarded Brigadier López Power Plant, which was effectively transferred on June 14, 2019.
On June 14, 2019 the transfer agreement for the production unit part of Brigadier López Plant and for the premises on which the Brigadier López Plant is located, was executed, also including: (a) personal property, recordable personal
property, facilities, machines, tools, spare parts, and other assets used in connection with the operation of the Brigadier López Plant; (b) IEASA’s (now ENARSA) contractual position in the following contracts: (i) Turbogas and
Turbosteam supplying contracts with CAMMESA, (ii) the Brigadier López Financial Trust Agreement (as defined below), (iii) the long term maintenance agreement with Siemens, (iv) the spare part sales agreement with Siemens, (iv)
insurance contracts; (c) permits and authorizations in effect related to the Brigadier López Plant operation; and (d) Brigadier López Plant employees.
The Brigadier López Plant has a 280.50 MW Siemens gas turbine installed. It is expected that such gas turbines will be supplemented with a boiler and a steam turbine to complete the combined cycle, which will allow the Brigadier
López Plant to generate 420 MW in the aggregate. The installation of all necessary items for the completion of the combined cycle has not been finalized as of the date of this annual report. Completion is expected to be reached during
2024 (see Item 3D. Risk Factors—Risks Relating to our Business— Factors beyond our control may affect or delay the completion of the awarded projects or alter our plans for the expansion of our existing plants).
Under the above-mentioned trust agreement (the “Brigadier López Financial Trust Agreement”), Central Puerto replaced ENARSA as the trustor of the Brigadier López Financial Trust Agreement, and BICE Fideicomisos is the trustee.
The financial debt balance of the trust as of June 14, 2019, was US$154,662,725. The amount paid on June 14, 2019, amounted to US$165,432,500, formed by a cash amount of US$155,332,500, plus an amount of US$10,100,000
settled through the assignment of LVFVD to ENARSA.
Under the terms of the trust agreement, the financial debt accrues interest at an annual rate equal to the greater of (i) LIBOR plus 5% or (ii) 6.25% and amortizes principal on a monthly basis. BICE Fideicomisos as the trustee, is in
charge of the administration, and pays such debt, using for that purpose the proceeds from certain components of the sales of Brigadier Lopez power plant that were assigned to the Brigadier López Financial Trust Agreement and are
paid monthly directly from CAMMESA to the Brigadier López Financial Trust Agreement. Additionally, there is a reserve account founded, for a total amount of two monthly debt services. In case of insolvency according to the
Brigadier López Financial Trust Agreement, creditors have no recourse against other assets of Central Puerto. As of the date of this annual report, this financial debt has been cancelled.
Renewable Energy
Renewable Energy Program
In recent years, Argentina has prioritized the generation of electric power from renewable sources. In such regard, it has not only issued regulations intended to regulate and incorporate this type of energy into the WEM, but it has also
promoted it by granting incentives in the form of tax benefits and preferential or subsidized tariffs.
To promote renewable energy, Law No. 26,190 was enacted in December 2006 and approved the National Promotional Regime for the Use of Sources of Renewable Energy destined to Power Generation (the “Promotional Regime”).
The renewable energy sources provided for in this system include wind, solar, geothermal, tidal, hydraulic (hydroelectric power plants up to 30 MW), biomass, landfill gas, sewage-treatment plant gas and biogas (except for the uses
provided for in Law No. 26,093 on biofuels). The purpose of Law No. 26,190 is to increase the proportion of energy provided by renewable energy sources to 8% of the national electric power consumption within ten years from its
effective date. Law No. 26,190 also established a system of investments for the construction of new works intended to generate electric power from renewable energy sources, which will remain in force for a term of ten years. The
system set forth by Law No. 26,190 has been excluded from the general remuneration scheme regulated by Resolution SE No. 95/13 as amended (as described below).
The beneficiaries of this system are individuals and legal entities that hold investments and concessions for new renewable energy generation works in Argentina that have been approved by the enforcement authority. The energy must
be intended for the WEM and the project must be related to the rendering of public services.
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On September 23, 2015, Law No. 26,190 was amended by Law No. 27,191. The amendments seek to establish a legal framework to increase investments in renewable energies and foster the diversification of the electric power
generation mix, increasing the participation of renewable sources. To such end, the law, among other things:
1.
2.
3.
4.
sets renewable energies consumption targets for all of Argentina’s electric power consumers, as minimum percentages of renewable energies electric power that they are required to consume as of December 31 of the
following years: 8.00% for 2017, 12.00% for 2019, 16.00% for 2021, 18.00% for 2023, and 20.00% for 2025;
amends and expands the tax benefits for eligible projects;
establishes the FODER as a trust fund for which the Argentine Government serves as the trustor, Banco de Inversión y Comercio Exterior (BICE) serves as the trustee and the owners of the approved investment
projects are the beneficiaries. The trust fund must allocate the trust assets to extend credit, make capital contributions and acquire all such other financial instruments as required for the execution and financing of
eligible projects involving electric power generation from renewable sources; and
establishes obligations for Large Users and large demand: clients of electric power distribution providers or distribution agents with capacity demand equal to or higher than 300 KW must meet gradual goals through
self-generation or otherwise purchase such electric power from generators (directly or through electric power distributors or brokers or from the wholesale market operator CAMMESA), at a price which may not
exceed an average of US$113/MWh until March 30, 2018, and thereafter at a price determined by the former Ministry of Energy and Mining. In this respect the former Ministry of Energy and Mining by means of
Resolution 281/2017, established the regulatory framework that allows Large Users to purchase renewable energy from private generating companies.
Pursuant to Decree No. 531/16, the Argentine Government set forth general guidelines and principles for the development of energy projects, by delegating the procedures for compliance with energy goals, bids or auctions for the
implementation of the FODER to the former Ministry of Energy and Mining, particularly to the former Undersecretariat of Renewable Energies. The most important aspects of these regulations are as follows:
1.
2.
3.
4.
The former Ministry of Energy and Mining must be the enforcement authority of the law (currently the Secretariat of Energy).
The system is applicable to projects for the construction of new facilities or for expanding or upgrading existing ones, the acquisition of new or second-hand equipment, to the extent new assets, works and other
services are used for the project and are directly connected to the project. Access to the system is allowed for projects for which, after having been selected under Resolutions Nos. 220/2007, 712/2009 and 108/2011
set forth by the Secretariat of Energy, construction has not yet begun and that have been selected by the enforcement authority and the executed agreement is terminated. Projects for which construction has begun may
also be eligible to the extent amendments to the executed contracts are allowed, as required by the enforcement authority. The enforcement authority must establish the merit order for projects that have been approved
and determine the granting of the promotional benefits for each project.
The goals established by the law must be audited annually commencing on December 31, 2018. Users are allowed a 10% margin of error per year for achieving the goals related to energy consumption from renewable
sources established by the law.
The enforcement authority must establish the terms and conditions under which it will allocate a portion of the funds of FODER’s financing account to finance the development projects of the value chain of local
production of power generating equipment, using renewable energy sources, parts or components.
Tax Benefits Under Law No. 26,190
The former regime includes the following tax benefits:
·
·
·
Early refund of the VAT on the project’s new depreciable assets or infrastructure works: the VAT as invoiced to the beneficiaries on the purchase, production, manufacture or final import of capital goods or the
execution of infrastructure works shall be credited against other taxes by the AFIP as soon as at least three fiscal periods have elapsed, as counted from the fiscal period in which the investments were made, or it shall
be recoverable in the term provided upon approving the project, under conditions and with the guarantees set forth in that respect.
Accelerated asset depreciation for purposes of income tax: the beneficiaries may apply depreciations on the investments associated with the projects subsequent to their approval and under the terms set forth therein.
These depreciations are subject to a differential treatment depending on their timing, within the first, second or third twelve-month period after project approval. This alternative is subject to the condition that the
assets are to remain as property of the project holder for at least three years.
Non-calculation of the minimum presumed income tax provided by Law No. 25,063 on the assets allocated to the projects initiated under the system created by the renewable energy law: this benefit applies to the
three fiscal periods preceding the completion of the relevant project. The assets must be connected to the relevant project and must be acquired by the company after the approval of the project. Pursuant to Law No.
27,260, passed by the Argentine Congress on June 29, 2016, the minimum presumed income tax was eliminated for tax periods beginning as of January 1, 2019.
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Tax benefits under Law No. 27,191
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Law No. 26,190, as amended by Law No. 27,191, together with Decree No. 531/2016 and the regulations of the former Ministry of Mining and Energy, set forth the National Promotional Regime for the Use of Renewable Sources of
Energy (the “Promotional Regime”). The Promotional Regime includes the following tax benefits:
1.
2.
Early refund of VAT and accelerated depreciation of assets for income tax purposes, with beneficiaries being able to apply for both benefits simultaneously, subject to reduced benefits based on the actual
commencement date of the project’s execution.
Extension to ten years of the tax loss carry forward term. Tax loss carry forwards arising from the promoted activity may only be set off against net income arising from the same activity.
3.
4.
5.
6.
7.
8.
Exclusion of assets connected to the activity subject to the Promotional Regime from the taxable base related to the minimum presumed income tax until the eighth fiscal year following the project’s commencement
(inclusive of the first year). Excluded assets are those connected to the project subject to the Promotional Regime and included in the owner’s net worth after the approval of such project. Pursuant to Law No. 27,260,
the minimum presumed income tax was repealed effective as of the fiscal periods beginning on or after January 1, 2019.
A 10% exemption on tax on the dividends distributed by the companies that own the projects subject to the Promotional Regime, which are reinvested in new infrastructure projects within Argentina. This tax was
eliminated under the terms of Law No. 27,260. The exemption would not apply to the tax applicable to the net gain derived from dividends and profits distributed by Argentine entities to individuals, undivided
estates, and beneficiaries abroad, established by the enactment of Law No. 27,430 and amendments, currently subject to a 7% withholding tax on the amount of such dividends.
Tax certificate applicable to the payment of income tax, VAT, minimum presumed income tax and excise taxes for an amount equal to 20% of the value of components of electromechanical facilities made in
Argentina, provided that at least 60% of the components (excluding civil works) are made in Argentina. Where there is insufficient or a lack of production in Argentina, the percentage is reduced to 30%. The
assignment of the tax certificate is conditioned upon the fact that the taxpayer cannot have liquidated debts due and payable to the AFIP. The tax credit certificate may be transferred to third parties only once.
Other benefits, including the possibility of shifting increased costs arising from tax increases to the price of the renewable energy sold and exemptions established after the execution of said contracts. In the contracts
executed by CAMMESA, the generator has the right to request recognition of a new price for the energy supplied when there are increases in taxes, rates, contributions or federal, provincial or municipal charges. For
such purposes, CAMMESA must be provided with the information and documentation necessary to assess the adjustment of the value of the energy supplied. Decree No. 531/2016 details the definition and scope of
the above-mentioned fiscal increases. The request for recognition of the new price due to fiscal increases, together with proof of the information and documentation, is subject to an automatic expiration period.
Exemption from import duties and the statistical rate for the import of new capital assets, special equipment and related parts and components that are necessary for, among other things, the execution of the project.
This benefit was valid until December 31, 2017.
Exemption from special taxes, fees and royalties of any jurisdiction imposed on the access to and use of renewable sources of energy within participating jurisdictions until December 31, 2025, excluding potential fees
payable on the use of the state-owned land where the projects are based. Those who wish to participate in the Promotional Regime must waive the benefits afforded by previous systems under Laws No. 25,019 and
26,360, and the projects that benefitted from such systems may only have access to the Promotional Regime if the works committed under the contracts executed thereunder have not commenced as of the date of the
application.
Those interested in joining the Renewable Energy Promotion Regime must renounce the benefits provided for in previous regimes under Laws No. 25,019 and 26,360, while projects that have benefited from such regimes can only
access the Renewable Energy Promotion Regime if the works agreed upon under the relevant contracts have not commenced as of the date of submission of the application.
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The Renewable Energy Term Market in Argentina - Resolution No. 281-E/17
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On August 22, 2017, the former Ministry of Energy and Mining published Resolution No. 281-E/17 (“Resolution No. 281”) for the Renewable Energy Term Market (private PPAs between generators and Large Users, self-generation,
co-generation, traders and distributors). Resolution No. 281 was later modified by means of Resolutions SE No. 230/2019, No. 551/2021 and No. 14/2022, Resolution No. 370/2022 of the Ministry of Economy and Resolution SE
360/2023.
Resolution No. 281 seeks to promote and encourage a dynamic participation in the term market and to foster the increase of private agreements between the WEM’s agents and participants. Its aim is to provide a feasible alternative for
the purchase of energy to tenders by CAMMESA.
Resolution No. 281 makes it possible for Large Users to comply with their renewable energy consumption quotas through either (i) the joint purchase system (i.e., through CAMMESA), (ii) the execution of a private PPA or (iii) the
development of a self-generation project or a co-generation project.
As a general principle, PPAs executed in the term market (outside the joint purchase system) may be freely negotiated between the parties with respect to term, priorities, prices and other contractual conditions.
Section 7 of Resolution No. 281 provides that, in the case of curtailment, the following power generation plants will have (i) equal dispatch priority between them and (ii) first dispatch priority over renewable generation projects
operating in the term market without an assigned dispatch priority:
1.
2.
3.
4.
5.
run-of-the-river hydropower plants and renewable power plants having commenced commercial operation prior to January 1, 2017;
power plants supplying energy pursuant to PPAs executed in connection with Resolution SE No. 712/2009 or No. 108/2011 having commenced commercial operation prior to January 1, 2017;
renewable power plants supplying energy pursuant to PPAs executed with CAMMESA through the RenovAr Program (e.g., the La Castellana Project and the Achiras Project);
renewable power plants supplying energy pursuant to Resolution MINEM No. 202/2016 of the former Ministry of Energy and Mining; and
renewable power plants operating in the term market (e.g., private PPAs) which have obtained dispatch priority in accordance with the regime established pursuant to Resolution No. 281.
Only the expansion of the abovementioned projects needs to file the request for dispatch priority with CAMMESA, who will then evaluate submissions on a quarterly basis and prepare a list of granted dispatch priorities in
interconnection points or transmission corridors with restrictions to the transmission capacity.
Through Resolution No. 360/2023, new Dispatch Priority Assignment alternatives were established:
·
·
The possibility of requesting “Dispatch Priority Associated to Joint Projects of Incremental Demand with New Renewable Generation” is incorporated (new art. 6 bis, Annex I, Resolution No. 281).
The assignment of dispatch priority to new renewable generation projects that have an agreement with future large incremental power demands is allowed. It will be considered as “Incremental Demand Associated
Projects with New Renewable Generation” those whose incremental power demand is greater than or equal to 10 MW.
The priority is intended for large future demands that seek to ensure their expected consumption of electric energy totally or partially by means of renewable generation and that, due to their expected influence on the
transmission grid, produce an increase in the dispatch priority assignable capacities over the existing capacities at the time of the request.
CAMMESA will make the associated dispatch priority allocations only for the incremental transmission capacity associated with the entry of the aforementioned joint projects, provided that it does not compromise
the transmission capacity allocated to other projects and/or existing generation plants or those that are expected to enter.
The figure of “Dispatch Priority for Expansions Associated to MATER Projects” is incorporated (new article 6 ter, Annex I, Resolution No. 281).
The purpose is for generators to build and pay for transmission expansions in order to commercialize their energy under the MATER. Thus, the dispatch priority over the incremental transmission capacity may be
reserved to renewable generation projects that carry out the expansion works at their own cost.
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·
·
The “Dispatch Priority for Expansions Associated with MATER Projects” is incorporated (new art. 6 ter, Annex I, Resolution 281). The purpose is for generators to construct and finance transport expansions to
commercialize their energy under MATER. Thus, dispatch priority over incremental transport capacity may be reserved for renewable generation projects that carry out expansion works at their own cost.
CAMMESA is instructed to implement, for corridors where there is no availability to assign dispatch priority fully and for all hours of the year, a mechanism of “Referential Type A Dispatch Priority Assignment”. The
mechanism will allow generators to obtain Referential Type A Dispatch Priority, in which they foresee circumstantial limitations for their evaluations that allow them to inject energy with an expected probability of
92% over their characteristic annual energy under the foreseen operating conditions of the different nodes and corridors of the SADI, until transport works are carried out to avoid limitations. The conditions for
assignment and maintenance of Referential Type A Dispatch Priority shall be governed by the same mechanisms used for the assignment and maintenance of current Dispatch Priority.
Generators who, prior to the first call for Referential Type A Dispatch Priority, have commercially enabled capacity above their assigned Dispatch Priority, may adhere to this regime for their inclusion in the priority
assignment for up to that difference.
Non-compliance with requirements to maintain priority: In case of non-compliance with the committed deadline for entry or payments for the maintenance of dispatch priority, project owners who have requested extensions will not be
able to reiterate the request for dispatch priority for the following four (4) quarters. Additionally, projects that have not obtained commercial enablement for the entirety of the assigned capacity, once the committed deadline plus any
extensions have expired, will automatically lose dispatch priority for the capacity resulting from the difference between (i) the assigned priority capacity and (ii) the commercially enabled capacity, without any right to claim for
payments made (new art. 9 bis, Annex I, Resolution 281).
Extensions to obtain commercial enablement: The maximum period of twenty-four (24) months, or the commercial enablement period declared in case dispatch priority has been assigned by tiebreaker with the mechanism prior to
Resolution No. 14/2022, may be extended by CAMMESA under certain conditions (new article 11, Annex I, Resolution 281).
Use of proceeds: Proceeds collected by CAMMESA for payments made by generators corresponding to dispatch priority reservations, extensions, relocations, and MATER adhesions shall be allocated to a Separate Account for the
Expansion of the Transport System associated with renewable energies, administered by CAMMESA through the Trust for Electric Supply Transport Works (FOTAE) (new art. 13, Resolution No. 230/2019).
Partial enablement of projects with dispatch priority: Those who have obtained dispatch priority and carry out partial commercial enablements regarding the total capacity assigned with priority shall pay the Dispatch Priority
Reservation fee exclusively for the capacity that has not obtained commercial enablement at the beginning of the corresponding payment obligation period. For this, the accumulated commercially enabled capacity must be at least 50%
of the capacity assigned with dispatch priority (art. 20 Disposition 1/2019 of the former Subsecretariat of Renewable Energies).
RenovAR (Round 1, Round 1.5 and Round 2): Bidding Process for Renewable Energy Generation Projects
Resolution No. 136-E/16, issued by the former Ministry of Energy and Mining and published in the Official Gazette on July 26, 2016, launched the public auction process for submitting bids for Round 1 of the RenovAR Program.
Resolution No. 136-E/16 also approved both the bidding terms and conditions of the above-mentioned auction and the PPAs with CAMMESA.
According to the terms and conditions of such bid, the relevant PPAs shall include the following features and provisions:
1.
2.
3.
4.
5.
6.
7.
Table of Contents
8.
9.
10.
11.
12.
13.
Purpose: The purpose of the agreement must be to supply the amount of electric power associated with the new equipment for electric power generation from renewable sources to the WEM beginning on the date on
which the power plant is permitted to operate in the WEM until the termination of the contractual term.
Seller: The generation, co-generation or self-generation agent of the WEM whose bid is accepted pursuant to the provisions of this resolution and supplementary regulations set forth by the former Secretariat of
Electric Energy.
Buyer: CAMMESA, on behalf of the distribution agents and Large Users of the WEM (until such role is reassigned among distribution agents or Large Users of the WEM), to meet the goals of renewable energy
source contribution set since December 31, 2017, for the demand of electric power in the WEM.
Term: Up to twenty years from the date on which operations commence.
Type and technology of the energy to be supplied.
Electricity committed to be delivered per year.
Generation capacity of each unit and total installed capacity committed.
85
Remuneration to be received by the seller and paid by the buyer for the electric power to be supplied, determined on the basis of the bid price in U.S. dollars per megawatt/hour (US$/MWh).
The terms and conditions of the seller’s contractual performance guarantee.
The point of delivery of the electric power purchased shall be the connection node to the SADI.
The remedies for contractual breach.
The enforcement of the guarantee for payment through FODER’s escrow account.
Contracts for the purchase of electric power shall have first priority in payment and rank equally with payments to the WEM.
Pursuant to Resolution No. 213/16 of the former Minister of Energy and Mining, the results of the tender were published on October 7, 2016. A total of 29 projects with a total installed capacity of 1,141.51 MW, located in nine different
provinces were awarded:
·
·
·
·
·
12 wind projects for a total installed capacity of 707 MW, with a weighted average price of US$59.39/MWh, a minimum price of US$49.10/MWh and a maximum price of US$67.20/MWh;
four solar projects for total installed capacity of approximately 400 MW, with a weighted average price of US$59.75/MWh, a minimum price of US$59.00/MWh and a maximum price of US$60.00/MWh;
five small hydro projects for total installed capacity of 11.37 MW, all at a price of US$105/MWh;
six biogas projects with a total installed capacity of approximately 8.64 MW, with a weighted average price of US$154 /MWh, a minimum price of US$118/MWh and a maximum price of US$160/MWh; and
two biomass projects, for a total installed capacity of 14.5 MW, both at a price of US$110/MWh.
Round 1.5 of the RenovAr Program: Public Bid Process for New Renewable Energy Generation Units
In October 2016, the former Ministry of Energy and Mining also issued Resolution No. 252-E/16, calling for national and international bids under round 1.5 of the RenovAr Program to auction an additional 600 MW of renewable
energy (400 MW of wind and 200 MW of solar). On November 11, 2016, CAMMESA began analyzing the technical aspects of the bids that were filed, which included 47 projects totaling 2,486.4 MW.
Pursuant to Resolution No. 281-E/16 of the Minister of Energy and Mining, the results of the tender were published on November 25, 2016. A total of 30 projects with a total installed capacity of 1,281.53 MW, located in 12 different
provinces were awarded:
·
·
ten wind projects for a total installed capacity of 765.35 MW, with a weighted average price of US$53.34/MWh, a minimum price of US$46/MWh and a maximum price of US$59.38/MWh; and
20 solar projects for total installed capacity of approximately 516.18 MW, with a weighted average price of US$54.94/MWh, a minimum price of US$48.00/MWh and a maximum price of US$59.20/MWh.
Round 2 of the RenovAr Program: Public Bid Process for New Renewable Energy Generation Units
Following Rounds 1 and 1.5 of the RenovAR Program, the former Ministry of Energy and Mining pursuant to Resolution No. 275/17, launched Round 2 of the program on August 17, 2017 and granted awards in the amount of 2,043
MW of renewable power capacity.
We submitted bids for Round 2 of the RenovAR Program on October 19, 2017, and, on November 29, 2017, we were awarded a wind energy project called, “La Genoveva I,” which allowed us to add an additional capacity of 86.6 MW
to our portfolio.
Round 2.5 of the RenovAr Program: Public Bid Process for New Renewable Energy Generation Units
After Round 2.0, the former Ministry of Energy and Mining issued Resolution No. 473-E/2017 of November 30, 2017, which launched Round 2.5. The companies invited to participate in this new round were those companies that filed
bids in Round 2.0 and were unsuccessful due to a small margin.
As a result of Round 2.5 by means of Resolution No. 488-E/2017 of the former Ministry of Energy and Mining, issued on December 19, 2017, 22 additional projects (totaling 634.3 MW of projected power) were awarded.
Table of Contents
Round 3.0 of the RenovAr Program: Public Bid Process for New Renewable Energy Generation Units
86
Through Resolution No. 100/2018, dated November 14, 2018, the former Secretariat of Energy launched Round 3.0 of the RenovAr program and issued the bidding terms and conditions ruling such bidding contest.
In this new round, participants can submit bids with respect to electricity projects of no more than 10 MW of capacity each, regardless of the applicable technology (wind, solar, etc.). The total capacity to be awarded in this round is 400
MW of renewable energy.
On August 2, 2019, pursuant to Disposition SSERyEE 91/2019 the awarding of the PPAs was decided for a total of 259 MW.
Pursuant to the RenovAr regulatory framework, we were awarded with 3 wind projects: La Castellana I in Round 1, Achiras in Round 1.5, and La Genoveva I in Round 2.0. The wind farm La Castellana I reached commercial operation
date (COD), in August 2018, and Achiras reached commercial operation date on September 2018 while La Genoveva I on November 2020. The following table shows the main characteristics of each of the wind farms:
Location
Status
Commercial operation date / Expected commercial operation date
Awarded power capacity in the bidding process(1)
Current/Expected power capacity (1)
Regulatory Framework
Awarded price per MWh
Contract length
Power purchase agreement signing date
Number of units
Wind turbine provider
La Castellana I
Province of Buenos Aires
In operation
August 18, 2018
99 MW
100.80 MW
RenovAr 1.0
US$61.50
20 years, starting from commercial operation 20 years, starting from commercial operation 20 years, starting from commercial operation
January 2017
32 wind turbines
Acciona Windpower—Nordex
La Genoveva I
Province of Buenos Aires
In operation
November 21, 2020
86.60 MW
88.2 MW
RenovAr 2.0
US$40.90
Achiras
Province of Córdoba
In operation
September 20, 2018
48 MW
48 MW
RenovAr 1.5
US$59.38
May 2017
15 wind turbines
Acciona Windpower—Nordex
July 2018
21 wind turbines
Vestas
(1)
The companies that were awarded with project during the bidding process were authorized pursuant to the conditions of such bidding process to introduce minor changes in the power capacity of the project
Remuneration Scheme
The Current Remuneration Scheme for generators (Spot Sales)
On February 27, 2020, the Secretariat of Energy issued Resolution 31/20, establishing a remuneration scheme in Argentine pesos applicable as from February 1, 2020, for Authorized Generators in the Wholesale Electricity Market.
Resolution 31/20 was later modified by means of the following resolutions of the Secretariat of Energy: Resolution 440/21, Resolution 238/22, Resolution 826/22, Resolution 59/23, Resolution 750/23, Resolution 869/23 and Resolution
9/24. According to the emergency declared by Decree No. 55/2023, on February 8, 2024, the Secretariat of Energy issued Resolution No. 9/2024, replacing (starting from February 1, 2024) Annex I, II, III, IV and V of Resolution
869/23 and established (i) the values to be applied to determine the remuneration of thermal generation within the MEMSTDF; (ii) the remuneration of authorized thermal generation; (iii) the remuneration of authorized hydroelectric
generation and from other energy sources (e.g. renewables); (iv) the remuneration of hydroelectric plants managed by Binational Entities, and (v) the criteria applicable to the repayment/refund of financing for major and/or
extraordinary maintenance.
Through Resolution 59/2023 published in the Official Gazette on February 7, 2023, the Secretariat of Energy authorized generating agents who are owners of thermal power generation plants classified as “Combined Cycles” according
to the provisions of Resolution No. 826, and who are not bound by electricity supply contracts, to adhere to a “Power Availability and Efficiency Improvement Agreement” with CAMMESA (on behalf of Distributors and Large Users
of the Wholesale Electricity Market) with the aim of incentivizing the necessary investments in Major and Minor Maintenance of the machinery.
Agents who subscribed to the aforementioned agreement were required to submit the corresponding application to CAMMESA within 90 calendar days from the publication of Resolution 59/2023.
Table of Contents
The following is a chronological list of the latest Secretariat of Energy Resolutions for the Spot Market:
87
Secretariat of Energy Resolution #/year
Res.440/2021
Res.238/2022
Res.826/2022
Res.750/2023
Res.869/2023
Res.09/2024
Remuneration of thermal generators
Valid From
feb-21
feb-22
nov-22
sep-23
nov-23
feb-24
Through
jan-22
oct-22
aug-23
oct-23
jan-24
-
Regarding generation from thermal sources, that Authorized Thermal Generators will be remunerated for (i) monthly available capacity and (ii) energy.
Remuneration for Available Power (DRP) for generators that do not declare DIGO (Base Remuneration) compensates, at the Base Price, the average monthly available power (excluding scheduled maintenance hours agreed with
CAMMESA) of the unit to those generators that do not declare a Guaranteed Availability Commitment (DIGO). The Base Price is established by technology and unit scale.
Remuneration for the guaranteed availability of offered power (DIGO) for generators that declare DIGO (DIGO Remuneration) compensates, at the DIGO Price, the average monthly available power (excluding scheduled maintenance
hours agreed with CAMMESA) of the unit to those generators that declare a Guaranteed Availability Commitment (DIGO). The DIGO Price is established according to the season: summer/winter, and the others. A change is introduced
in the determination of the remuneration, compared to Resolution 238/2022, whereby the remuneration price is independent of the achieved available power value each month.
Remuneration for energy will be the sum of two items: (i) Generated Energy and (ii) Operated Energy (associated to the rotating power in each hour). The hourly volume of Operated Energy must correspond with the optimal dispatch
for the fulfilment of energy and reserves assigned. Remuneration for energy is determined at the connection node of the generator.
Finally, there is an additional remuneration concept for energy during peak-hours, which consists of recognizing income equivalent to twice the price of the energy generated for energy generated every day between 6:00 pm and 11:00
pm during the summer and winter months, and once the price for the energy generated during the same hours, during the spring and autumn months.
Remuneration for Available Capacity: the price to remunerate capacity from thermal sources will be determined pursuant to the following values of capacity base price (PrecBasePot), price of guaranteed capacity (PrecPotDIGO) and
Utilization Factor (FU) (discontinued in Resolution 283/22):
Technology / Scale
PrecBasePot (Ps./MW-month)
Combined-cycle Large > 150 MW
Combined-cycle Small <= 150 MW
Steam Turbine Large > 100 MW
Steam Turbine Small <= 100 MW
Gas Turbine Large > 50 MW
Gas Turbine Small <= 50 MW
Internal Combustion Engines>42 MW
Res. 440/21 jan
129,839
144,738
185,180
221,364
151,124
195,822
221,364
Res. 238/22 feb
168,791
188,159
240,734
287,773
196,461
254,569
287,773
Res. 238/22 jun
185,670
206,975
264,807
316,551
216,107
280,025
316,551
Res. 826/22 sep
222,804
248,370
317,769
379,861
259,329
336,031
379,861
Res. 826/22 dec
245,084
273,207
349,546
417,847
285,262
369,634
417,847
Res.826/23 feb
306,355
341,509
436,932
522,308
356,577
462,042
522,308
Res.826/23 aug
392,135
437,132
559,273
668,555
456,419
591,414
668,555
Technology / Scale
PrecPotDIGO Summer/Winter (Ps./MW-month)
Combined-cycle Large > 150 MW
Combined-cycle Small <= 150 MW
Steam Turbine Large > 100 MW
Steam Turbine Small <= 100 MW
Gas Turbine Large > 50 MW
Gas Turbine Small <= 50 MW
Internal Combustion Engines>42 MW
Res. 440/21 jan
464,400
464,400
464,400
464,400
464,400
464,400
464,400
Res. 238/22 feb
603,720
603,720
603,720
603,720
603,720
603,720
603,720
Res. 238/22 jun
664,092
664,092
664,092
664,092
664,092
664,092
664,092
Res. 826/22 sep
796,910
796,910
796,910
796,910
796,910
796,910
796,910
Res. 826/22 dec
876,601
876,601
876,601
876,601
876,601
876,601
876,601
Res.826/23 feb
1,095,752
1,095,752
1,095,752
1,095,752
1,095,752
1,095,752
1,095,752
Res.826/23 aug
1,402,562
1,402,562
1,402,562
1,402,562
1,402,562
1,402,562
1,402,562
Res.750/23
sep
482,326
537,672
687,906
822,323
561,395
727,439
822,323
Res.750/23
sep
1,725,151
1,725,151
1,725,151
1,725,151
1,725,151
1,725,151
1,725,151
Res.869/23 nov
617,377
688,220
880,520
1,052,573
718,586
931,122
1,052,573
Res.869/23 nov
2,208,193
2,208,193
2,208,193
2,208,193
2,208,193
2,208,193
2,208,193
Table of Contents
88
Technology / Scale
PrecPotDIGO Remaining Periods (Ps./MW-month)
Combined-cycle Large > 150 MW
Combined-cycle Small <= 150 MW
Steam Turbine Large > 100 MW
Steam Turbine Small <= 100 MW
Gas Turbine Large > 50 MW
Gas Turbine Small <= 50 MW
Internal Combustion Engines>42 MW
Res. 440/21 jan
348,300
348,300
348,300
348,300
348,300
348,300
348,300
Res. 238/22 feb
452,790
452,790
452,790
452,790
452,790
452,790
452,790
Res. 238/22 jun
498,069
498,069
498,069
498,069
498,069
498,069
498,069
Res. 826/22 sep
597,683
597,683
597,683
597,683
597,683
597,683
597,683
Res. 826/22 dec
657,451
657,451
657,451
657,451
657,451
657,451
657,451
Res.826/23 feb
821,814
821,814
821,814
821,814
821,814
821,814
821,814
Res.826/23 aug
1,051,922
1,051,922
1,051,922
1,051,922
1,051,922
1,051,922
1,051,922
Res.750/23
sep
1,293,864
1,293,864
1,293,864
1,293,864
1,293,864
1,293,864
1,293,864
Res.869/23 nov
1,656,146
1,656,146
1,656,146
1,656,146
1,656,146
1,656,146
1,656,146
In addition to the abovementioned, the remuneration for available capacity will also depend on the actual available capacity (DRP), which is the average monthly availability corresponding to the “m” month of each generation unit
(“g”) that is not under programmed and agreed maintenance and that will be calculated for Authorized Thermal Generators considering the hourly values registered during the month. The application in the calculation for the “m” month
will be made taking into consideration the values registered during the month.
Following the abovementioned, Resolution 440/21 sets forth that the monthly remunerating for available capacity shall be proportional to the monthly availability, the Utilization Factor of the generation unit and capacity price.
Capacity price depends on the option taken by the generator regarding DIGO declaration or Base capacity price.
In case of generators that do not declare DIGO, their capacity remuneration is determined by:
REM BASE (Ps./month) = PrecBasePot * DRP (MW) * kFM
Being kFM: hours of the month outside agreed maintenance/hours of the month
In case of generators that declare DIGO, their capacity remuneration is determined by using the following:
For Resolution 440/21 and Resolution 238/22:
a)
If DRP ≥ DIGO
REM DIGO (Ps./month) = (DRP – DIGO) (MW) * kFM * PrecMinPot + DIGO (MW) * kFM *
PrecPotDIGO
b)
If DRP < DIGO
REM DIGO (Ps./month) = MAX {REM BASE; DRP (MW) * kFM * PrecPotDIGO * DRP / DIGO}
Where:
kFM = hours of the month outside of agreed maintenance period/hours of the month
Valid for Resolution No. 826/22 and subsequent resolutions:
a)
REM DIGO (Ps./month) = DRP (MW) * kFM * PrecPotDIGO
The total remuneration for available capacity of generators will depend on whether they declared DIGO or not.
FU factor is only used when Resolution 440/21 applies:
Total Remuneration for Available Capacity for Generators that do not declare DIGO: Total remuneration for available capacity will be calculated, for generators that do not declare DIGO, exclusively pursuant to the concepts explained
above and its application will be made considering the Utilization Factor (FU):
·
·
·
If FU < 30% REM TOT (Ps./month) = REM BASE * 0.7
If 30 %<= FU < 70% REM TOT (Ps./month) = REM BASE * (FU * 0.75+0,475)
If FU >= 70% REM TOT (Ps./month) = REM BASE
Table of Contents
89
Total Remuneration for Available Capacity for Generators that declare DIGO: The sum of the remunerations mentioned above and its application will be made considering the Utilization Factor (FU):
·
·
·
If FU < 30% REM TOT (Ps./month) = REM DIGO * 0.7
If 30 %<= FU < 70% REM TOT (Ps./month) = REM DIGO * (FU * 0.75+0,475)
If FU >= 70% REM TOT (Ps./month) = REM DIGO
Energy Remuneration
Energy remuneration is comprised of two items: (i) generated energy and (ii) operated energy. This remuneration is determined at the connection node of the generator.
Remuneration for Generated Energy
For conventional thermal generation, a maximum value (depending on the kind of fuel used by the generation unit “g”) will be considered in concept of non-fuel variable costs (CostoOYMxComb), as indicated in the below chart, for the
energy delivered in each hour:
Energy price - Resolution 440/21 (jan)
Energy price - Resolution 238/22 (feb)
Energy price - Resolution 238/22 (jun)
Energy price - Resolution 826/22 (sep)
Table of Contents
Energy price - Resolution 826/22 (dec)
Technology/Scale
Combined-cycle Large > 150 MW
Combined-cycle Small <= 150 MW
Steam Turbine Large > 100 MW
Steam Turbine Small <= 100 MW
Gas Turbine Large > 50 MW
Gas Turbine Small <= 50 MW
Internal Combustion Engines>42 MW
Technology/Scale
Combined-cycle Large > 150 MW
Combined-cycle Small <= 150 MW
Steam Turbine Large > 100 MW
Steam Turbine Small <= 100 MW
Gas Turbine Large > 50 MW
Gas Turbine Small <= 50 MW
Internal Combustion Engines>42 MW
Technology/Scale
Combined-cycle Large > 150 MW
Combined-cycle Small <= 150 MW
Steam Turbine Large > 100 MW
Steam Turbine Small <= 100 MW
Gas Turbine Large > 50 MW
Gas Turbine Small <= 50 MW
Internal Combustion Engines>42 MW
Technology/Scale
Combined-cycle Large > 150 MW
Combined-cycle Small <= 150 MW
Steam Turbine Large > 100 MW
Steam Turbine Small <= 100 MW
Gas Turbine Large > 50 MW
Gas Turbine Small <= 50 MW
Internal Combustion Engines>42 MW
Technology/Scale
Combined-cycle Large > 150 MW
Combined-cycle Small <= 150 MW
Steam Turbine Large > 100 MW
Steam Turbine Small <= 100 MW
Gas Turbine Large > 50 MW
Gas Turbine Small <= 50 MW
Internal Combustion Engines>42 MW
Natural Gas
(Ps./MWh)
FuelOil/GasOil
(Ps./MWh)
BioComb
(Ps./MWh)
Mineral Coal
(Ps./MWh)
CostoOYMxComb
310
310
310
310
310
310
310
542
542
542
542
542
542
542
744
744
744
744
744
744
744
-
-
929
929
-
-
-
Natural Gas
(Ps./MWh)
FuelOil/GasOil
(Ps./MWh)
BioComb
(Ps./MWh)
Mineral Coal
(Ps./MWh)
CostoOYMxComb
403
403
403
403
403
403
403
705
705
705
705
705
705
705
1,006
1,006
1,006
1,006
1,006
1,006
1,006
-
-
1,208
1,208
-
-
-
Natural Gas
(Ps./MWh)
FuelOil/GasOil
(Ps./MWh)
BioComb
(Ps./MWh)
Mineral Coal
(Ps./MWh)
CostoOYMxComb
443
443
443
443
443
443
443
775
775
775
775
775
775
775
1,107
1,107
1,107
1,107
1,107
1,107
1,107
-
-
1,328
1,328
-
-
-
Natural Gas
(Ps./MWh)
FuelOil/GasOil
(Ps./MWh)
BioComb
(Ps./MWh)
Mineral Coal
(Ps./MWh)
CostoOYMxComb
532
532
532
532
532
532
532
930
930
930
930
930
930
930
1,328
1,328
1,328
1,328
1,328
1,328
1,328
-
-
1,594
1,594
-
-
-
90
Natural Gas
(Ps./MWh)
FuelOil/GasOil
(Ps./MWh)
BioComb
(Ps./MWh)
Mineral Coal
(Ps./MWh)
CostoOYMxComb
585
585
585
585
585
585
585
1,023
1,023
1,023
1,023
1,023
1,023
1,023
1,461
1,461
1,461
1,461
1,461
1,461
1,461
-
-
1,754
1,754
-
-
-
Energy price - Resolution No. 826/22 (feb.2023)
Technology/Scale
Natural Gas
(Ps./MWh)
FuelOil/GasOil
(Ps./MWh)
BioComb
(Ps./MWh)
Mineral Coal
(Ps./MWh)
CostoOYMxComb
Combined-cycle Large > 150 MW
Combined-cycle Small <= 150 MW
Steam Turbine Large > 100 MW
Steam Turbine Small <= 100 MW
Gas Turbine Large > 50 MW
Gas Turbine Small <= 50 MW
Internal Combustion Engines>42 MW
731
731
731
731
731
731
731
1,279
1,279
1,279
1,279
1,279
1,279
1,279
1,826
1,826
1,826
1,826
1,826
1,826
1,826
-
-
2,192
2,192
-
-
-
Energy price-Resolution No. 826/22 (aug.2023)
Energy price - Resolution 750/23 (sep)
Technology/Scale
Combined-cycle Large > 150 MW
Combined-cycle Small <= 150 MW
Steam Turbine Large > 100 MW
Steam Turbine Small <= 100 MW
Gas Turbine Large > 50 MW
Gas Turbine Small <= 50 MW
Internal Combustion Engines>42 MW
Technology/Scale
Combined-cycle Large > 150 MW
Combined-cycle Small <= 150 MW
Steam Turbine Large > 100 MW
Steam Turbine Small <= 100 MW
Gas Turbine Large > 50 MW
Gas Turbine Small <= 50 MW
Internal Combustion Engines>42 MW
Energy price - Resolution No. 869/23 (nov)
Technology/Scale
Combined-cycle Large > 150 MW
Combined-cycle Small <= 150 MW
Steam Turbine Large > 100 MW
Steam Turbine Small <= 100 MW
Gas Turbine Large > 50 MW
Gas Turbine Small <= 50 MW
Internal Combustion Engines>42 MW
91
Natural Gas
(Ps./MWh)
FuelOil/GasOil
(Ps./MWh)
BioComb
(Ps./MWh)
Mineral Coal
(Ps./MWh)
CostoOYMxComb
936
936
936
936
936
936
936
1,637
1,637
1,637
1,637
1,637
1,637
1,637
2,338
2,338
2,338
2,338
2,338
2,338
2,338
-
-
2,806
2,806
-
-
-
Natural Gas
(Ps./MWh)
FuelOil/GasOil
(Ps./MWh)
BioComb
(Ps./MWh)
Mineral Coal
(Ps./MWh)
CostoOYMxComb
1,151
1,151
1,151
1,151
1,151
1,151
1,151
2,014
2,014
2,014
2,014
2,014
2,014
2,014
2,876
2,876
2,876
2,876
2,876
2,876
2,876
-
-
-
3,451
3,451
-
-
Natural Gas
(Ps./MWh)
FuelOil/GasOil
(Ps./MWh)
BioComb
(Ps./MWh)
Mineral Coal
(Ps./MWh)
CostoOYMxComb
1,473
1,473
1,473
1,473
1,473
1,473
1,473
2,578
2,578
2,578
2,578
2,578
2,578
2,578
3,681
3,681
3,681
3,681
3,681
3,681
3,681
-
-
-
4,417
4,417
-
-
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Remuneration for Operated Energy
Operated Energy remuneration applies to the addition of rotating capacity along the month. When a generating unit is operating under forced condition, requested by the generator, Operated Energy remuneration will be determined
considering only 60% of its installed capacity.
Resolution No. 440/21 (jan)
Resolution No. 238/22 (feb)
Resolution No. 238/22 (jun)
Resolution No. 826/22 (sep)
Resolution No. 826/22 (dec)
Resolution No. 826/22 (feb)
Resolution No. 826/22 (aug)
Resolution 750/23 (sep)
Resolution 869/23 (nov)
Operated energy
(Ps./MWh)
108
140
154
185
204
255
326
401
513
Peaking Hours Generation (valid only for Resolution 826/22 and subsequent resolutions).
Peaking Hours Generation Remuneration applies to the generation achieved every day, during peak hours (6PM-11PM).
Peaking Hours Price would be two times the corresponding abovementioned energy price (CostoOYMxComb) in Winter and Summer months, and, once the energy price (CostoOYMxComb) for the rest of the months.
Remuneration of hydroelectrical generators
Resolution 440/21, valid from February 2021 until January 2022, Resolution No. 238/22 valid from February to October 2022, Resolution No. 826/22 valid since November 2022 to August 2023, Resolution No.750 valid from
September 2023 to October 2023, and Resolution 869 2023, valid from November 2023 to January 2024, established that Authorized Hydroelectrical Generators will be remunerated for (i) monthly available capacity and (ii) energy
(which is comprised of two items: (a) generated energy and (b) operated energy).
Finally, there is an additional remuneration concept for energy during peak-hours, which consists of recognizing income equivalent to twice the price of the energy generated for energy generated every day between 6:00 pm and 11:00
pm during the summer and winter months, and once the price of the same for the energy generated during the same hours, during the spring and autumn months.
Remuneration for Available Capacity.
This remuneration will depend on the DRP and a capacity base price. The latter will be determined pursuant to the following values considering the technology of the generation unit and its size.
Technology/Scale
Capacity Base Price (PrecBasePot) (Ps./MW-month)
Large HI Units with P > 300 MW
Medium size HI Units with P > 120 and < 300
MW
Small HI Units with P > 50 and < 120 MW
Renewable HI Units with P < 50 MW
Large HB pumping Units with P > 300 MW
Medium size HB pumping Units with P > 120
and < 300 MW
Res. 440/21 jan
134,096
Res. 238/22 feb
174,324
178,794
245,842
402,287
134,096
232,432
319,595
522,972
174,324
Res.
238/22 jun
191,756
255,675
351,554
575,270
191,756
Res.
826/22 sep
Res.
826/22
dec
230,108
253,118
306,810
421,865
690,324
230,108
337,492
464,051
759,355
253,118
Res. 826/23
feb
316,399
Res. 826/23
aug
404,990
421,865
580,064
949,195
316,399
539,987
742,481
1,214,970
404,990
Res.
750/23
sep
474,417
632,556
869,764
1,423,250
474,417
Res.
869/23
nov
607,254
809,672
1,113,298
1,821,760
607,254
178,794
232,432
255,675
306,810
337,492
421,865
539,987
632,556
809,672
________________________
Prices shown on table were increased by maintenance factor (1.05)
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92
DRP is the average monthly available capacity corresponding to the “m” month of each generation unit (“g”) that is not under programed and agreed maintenance and that will be calculated for hydroelectrical authorized generators
considering the monthly average real availability determined independently from the real level of the dam or the inputs and expenditures. The application in the calculations for month “m” is made taking into consideration the values
registered in the month. In the case of hydroelectrical pumping units (HB), it must be considered, for the evaluation of its availability, both the corresponding to its operation as a turbine in all the hours of the period, as well as its
availability as pump in all the hours of the period.
Following the abovementioned, remuneration of availability capacity (REM PBASE Ps./month) is calculated pursuant to the following formula:
REM PBASE (Ps./month) = PrecBasePot * DRP (MW) * kFM
Where:
kFM: hours of the month outside agreed maintenance period/hours of the month
Remuneration for Energy
This remuneration, which is determined at the connection node of the generator, is comprised of two items (i) remuneration for generated energy and (ii) remuneration for operated energy.
With respect to the remuneration for generated energy, in each hour, the price of the energy generated will be:
Resolution No. 440/21 (jan)
Resolution No. 238/22 (feb)
Resolution No. 238/22 (jun)
Resolution No. 826/22 (sep)
Resolution No. 826/22 (dec)
Resolution No. 826/22 (feb)
Resolution No. 826/22 (aug)
Resolution 750/23 (sep)
Resolution 869/23 (nov)
Generated energy
(Ps./MWh)
271
352
388
465
512
639
818
1,006
1,288
Regarding remuneration for operated energy, generators will receive a monthly remuneration, represented by the integration of hourly powers in the period. The hourly volume of operated energy must correspond to the optimal dispatch
for the fulfilment of energy and reservoirs assigned.
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With respect to the remuneration for operated energy, in each hour, the price of the energy operated will be:
93
Resolution No. 440/21 (jan)
Resolution No. 238/22 (feb)
Resolution No. 238/22 (jun)
Resolution No. 826/22 (sep)
Resolution No. 826/22 (dec)
Resolution No.826/22 (feb)
Resolution No. 826/22 (aug)
Resolution 750/23
Resolution 869/23
Operated energy
(Ps./MWh)
108
140
154
185
204
255
326
401
513
Maximum Hydroelectrical Dispatch Hours (valid only for Resolution 440/21 and Resolution 238/22)
This remuneration is applicable to the average operated available capacity of a hydroelectrical power plants during the 25 HMRT indicated as HMRT1 and HMRT2. As mentioned above, HMRT was replaced by Peak Hours
remuneration since November 2022 by means of Resolution 826/22. However, such resolution also allowed CAMMESA to adjust HMRT prices for September as a transition mechanism, in line with price adjustments for energy and
capacity.
HMRT Remuneration
Technology/Scale
Hydro >300 MW
Hydro >120 and <= 300 MW
Hydro > 50 and <= 120 MW
Renewable Hydro < 50 MW
Pump > 300 MW
Pump > 120 and <= 300 MW
Res. 440/21 jan
PrecPOHMRT
Ps./MW-HMRT
Res. 238/22 feb
Res. 238/22 jun
Res. 826/22 sep
35,475
41,925
41,925
45,150
35,475
41,925
46,118
54,503
54,503
58,695
46,118
54,503
50,729
59,953
59,953
64,565
50,729
59,953
60,875
71,944
71,944
77,478
60,875
71,944
Remuneration price “PrecPOHMRT,” is affected by seasonal factor FRPHMRT, as indicated in the following chart:
HMRT
HMRT-1
HMRT-2
FRPHMRT
Summer
Autumn
Winter
Spring
1.2
0.6
0.2
-
1.2
0.6
0.2
-
Remuneration during HMRT “RemPOHMRT” for hydroelectrical power plants is determined as follows:
RemPHMRT = Potopmhrt1 * PrecPOHRT * FRPHRT1 + Potopmhrt2 * PrecPOHRT * FRPHRT2
Where:
Potopmhrt1: average operated capacity during HMRT-1.
Potgemhrt2: average operated capacity during HMRT-2.
Peaking Hours Generation (valid for Resolution No. 826/22 and subsequent resolutions)
Peaking Hours Generation Remuneration applies to the generation achieved every day, during peak hours (6PM-11PM).
Peaking Hours Price would be two times the corresponding abovementioned energy price (CostoOYMxComb) in Winter and Summer months, and, once the energy price (CostoOYMxComb) for the rest of the months.
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Other generating technologies in the spot market
Energy generated form non-conventional resources (solar, eolic, biomass, biogas) will be priced:
94
Resolution No. 440/21 (jan)
Resolution No. 238/22 (feb)
Resolution No. 238/22 (jun)
Resolution No. 826/22 (sep)
Resolution No. 826/22 (dec)
Generated energy
(Ps./MWh)
2,167
2,817
3,099
3,719
4,090
Following this, the Non-Conventional Energy Remuneration will be calculated by the hourly integration in the month of the energy generated by generation unit “g” in each hour “h” (EGengh) by PENC in that hour:
Generation coming from units that are in a stage prior to commercial authorization will be granted 50% of the corresponding remuneration until reaching such authorization.
REM ENC ($/month) = ∑h.month (pENC * EGengh)
Temporary changes: due to extraordinary energy exportation requirements, Secretariat of Energy instructed CAMMESA to consider for all Authorized Thermal Generators, the use of “FU” equal to 70.00% for capacity remuneration
calculations, and also sets a plus in energy price (generated energy) that depends on monthly energy exportations. These changes are valid from September 2021 to February 2022 through Resolution No. 1037/2021.
In December 2022, Resolution No. 826/2022 was issued amending Resolution No. 238/22, increasing energy generation and capacity prices retroactively by 20.00% to September 2022 and by 10.00% to December 2022, while also
establishing future increments at 25.00% as of February 2023 and at 28.00% as of August 2023. Finally, in February 2023, through Resolution No. 59/2023 the Secretariat of Energy authorized generators with combined cycle units to
adhere to an agreement aimed at encouraging investments for major and minor maintenance activities in connection with these facilities (the “Agreement on Availability of Power and Improvement of Efficiency”). Through the
Agreement on Availability of Power and Improvement of Efficiency, the adhering generators undertake to achieve at least 85.00% availability of average monthly power in exchange for a new power and generation price in both U.S.
dollars and Argentine pesos.
In the case of power, the price was set at 2,000 USD/MW-month plus (i) 85.00% of the remuneration of power set forth in Resolution 826/22 (and subsequent resolutions) in Argentine pesos (during spring and autumn) or (ii) 65.00% of
the remuneration of power set forth in Resolution No. 826/22 in Argentine pesos (during summer and winter). In the case of energy, the price was set at 3.5 USD/MWh for units that use gas and at 6.1 USD/MWh for units that use
alternative fuels (i.e., diesel).
On April 25, 2023, CAMMESA accepted the subscription to an agreement presented by us for all of our combined cycle units, except for the Buenos Aires unit belonging to CECO. Therefore, as from the transactions of March 2023
there was an increase in the remuneration of such units for their sales to the spot market, as described in the previous paragraph.
In the case of the Buenos Aires combined cycle, CAMMESA accepted the subscription to the agreement on July 28, 2023 (effective as from the July 2023 transactions), once it had successfully requested the Energy Secretariat to
instruct CAMMESA the following regarding the aforementioned thermal unit: a) the conversion to single fuel, i.e. operation only with natural gas, eliminating the possibility of using gas oil, and b) the adaptation of the installed power
in line with the real technical possibility of electricity production of the combined cycle. During October 2023, the corrective maintenance tasks of this unit were concluded; therefore, the increases in the remuneration of this unit were
applied as from the transactions of October 2023.
In September 2023, the Secretariat of Energy issued Resolution 750/23, which updated the remuneration scheme set forth by Resolution 826/22, resulting in an increase as from September 2023 of 23%. In turn, Resolution 750/23 was
later modified by means of Resolution No. 869/23, issued in October 2023 and applicable as from November of that same year including an increase of 28%.
Finally, in February 2024, the Secretariat of Energy issued Resolution No. 9/2024, modifying Resolution 869/23, and setting forth a remuneration scheme applicable as from February 2024 including an increase of 74%.
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Evolution of Supply and Demand in the Argentine Energy Sector Structure
Structural Characteristics of the Energy Sector
95
The evolution of the demand and the energy consumption in Argentina is correlated with the evolution of the GDP, which implies that the higher the economic growth, the higher the energy demand. For example, the historical
compound annual growth rate (CAGR) of energy consumption was of 3.08% annually over the past 30 years, with an annual average of 2.35% since 2004, although between 2004 and 2022 the economic growth rose to an average of
2.14% annually (including exports and losses).
The growth of energy consumption during the last decade is similar to the historical average, since it was not driven by a large increase in consumption of the industrial sector, but predominantly by that of the residential and commercial
sectors, as noted in the consumption parameters of gas, gasoline and especially electric power.
The elasticity of energy consumption in relation to the GDP during the last two decades is lower than in earlier decades, so restrictions on energy demand or the need for energy imports, if domestic supply is insufficient, could increase
if the industrial sector expands in the future.
The restrictions on the supply of certain energy products such as natural gas in the last cycle of high economic growth and the relatively moderate growth in energy demand in broad terms, are based primarily on problems related to the
supply of these energy products and also on a significant growth of the demand of the residential and commercial segments in a context of weak industrial activity with few new expansions of greater productive capacity for large energy
consumers.
The structure of electric energy consumption in Argentina is strongly dependent on hydrocarbons, at approximately 51.64% in 2023, compared to 58.92% in 2022, 63.52% in 2021, 61.36% in 2020, 61.06% in 2019 and 63.86% in 2018.
Large amounts of natural gas liquefied natural gas and gas oil are imported in order to try to satisfy demand. During 2019 such imports decreased, mainly due to an increase in the domestic production of natural gas. However, demand
for natural gas is usually unsatisfied during the winter in the industrial segment and in the thermoelectric generation segment. In certain circumstances, the Argentine Government has imposed restrictions on consumption because of the
lack of adequate supply of gas to supply other segments that do not have the capacity to replace natural gas with other fuels (among others, propane, butane and fuel).
Although current energy consumption in Argentina signals a dependence on hydrocarbons, we believe that Argentina is currently undergoing an important shift to a more modern and diversified energy mix arising from the inclusion of
renewable energy into the mix, in accordance with the requirements set forth in Law No. 27,191 of 2015.
As a summary, the following characteristics are specific to energy demand and supply in Argentina:
Source: Secretariat of Energy
·
·
·
·
Atypical structure, with a bias towards oil and gas, which is a characteristic of countries with large reserves of hydrocarbons such as Middle Eastern countries, Russia, African oil-producing countries, and Venezuela.
47.00% of the energy supply is dependent on natural gas, which is higher than in most countries that have a large surplus production of natural gas.
Stagnation in the local energy supply since investments in recent years in the oil and gas sector have been insufficient to effectively increase domestic supply enough to satisfy the demand.
Enhanced demand due to the abnormally low prices of gas and electric power in the residential and commercial sectors during the 2012-2016 period, which caused the growth rate of residential energy consumption to
be higher than the usual trend, which was partially reverted during the 2017-2019 period.
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Structure of the Electric Power Supply in Argentina.
96
The nominal installed capacity in Argentina was reported by CAMMESA to be 43,773 MW as of December 31, 2023. Availability estimated by CAMMESA for thermal units is approximately 81% due to the lack of proper fuel supply,
difficulties in achieving nominal efficiency and unavailability of several generating units under maintenance. Moreover, the generation supply depends heavily on liquid fuel use that diminishes capacity availability and there are certain
transmission restrictions.
Over recent decades, the Argentine government (spanning administrations with different ideological orientation) has favored the deployment of thermoelectric generating units. One reason for this is that these units require smaller
capital investments and take less time to deploy compared to other types of generating units. The increased dependency on hydrocarbons for these new power plants was not considered a disadvantage since the required fuels have
always been produced in Argentina and the production has always been predictable and growing. However, the constant deployment of thermoelectric generation has increased the demand for fossil fuels, particularly those based on
natural gas, and has led to shortages and the imposition of certain restrictions on the provision to thermal generators of locally produced fuels.
During the 1990s, private sector investors also concentrated their investments in thermoelectric generation, almost without exception. The economic crisis of 2002 accelerated even more the tendency to invest in thermoelectric plants,
given their lower cost of startup. After the crisis of 2002, investments in the electrical sector continued mainly with state intervention, expanding the installed capacity based on thermoelectric generation but without meeting the
increasing demand. The financial constraints of the Argentine Government in the last decades, the high amount of capital needed and the long periods necessary to develop the projects have negatively impacted on the decision of the
Argentine Government to invest and deploy hydroelectric and nuclear power plants. In addition, the recurrent fiscal crises of the recent past have forced the Argentine Government to delay or cancel major projects that would have
increased and diversified Argentina’s generation capacity.
Nominal Power Generation Capacity
Nominal power generation capacity is dominated by thermoelectric generation. A considerable number of thermoelectric power units experience high levels of unavailability, especially during the winter, due to fuel provision
restrictions.
In the summer of 2023, the maximum power consumed reached 29,105 MW on March 13.
There are three main centers of electric power supply in Argentina:
·
·
·
Buenos Aires-Greater Buenos Aires-Coastline
Comahue
Northeast Argentina
Electric power supply and demand were linked in the past by a radial system to Buenos Aires. This system presented risks of instability in various regions whose demand had grown but had insufficient local generation (e.g., Cuyo,
Northwest Argentina in Salta, Central and Greater Buenos Aires). For this reason, the Argentine Government changed the system and now is using a peripheral system. The Argentine Government has made very large investments in a
substantial expansion of electric transmission, totaling 500 kV. Such investments include laying peripheral high voltage lines totaling 550 kV (that may not have an immediate economic impact but will have positive effects on the
system in the long-term) in the following locations:
·
·
·
Northeast and northwest Argentina
Comahue-Cuyo
Southern Patagonia
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The following chart shows the development of electric power generation by type of source:
97
The following chart shows the development of electric power generation capacity by type of source:
Source: CAMMESA
Renewable Energy Generation in Argentina
Source: CAMMESA
Certain regions of Argentina benefit from levels of wind or sunlight that provide a strong potential for renewable energy generation. The maps below show the mean wind speed at 80 meters of elevation and the average global
horizontal irradiance in Argentina, respectively.
Average Wind Speeds
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Source: Vaisala - 3Tier
98
Average Global Horizontal Solar Irradiance (GHI)
The Structure of Electric Power Demand in Argentina
Source: Vaisala - 3Tier
Electric power demand depends to a significant extent on economic and political conditions prevailing from time to time in Argentina, as well as seasonal factors. In general, the demand for electric power varies depending on the
performance of the Argentine economy, as businesses and individuals generally consume more energy and are better able to pay their bills during periods of economic stability or growth. For example, the historical compound annual
growth rate (CAGR) of energy consumption was 2.9% annually over the past 30 years, with an annual average of 2.30% since 2004, while between 2004 and 2023 the GDP rose to an average of 2.00% annually.
As a result, electric power demand is affected by Argentine Governmental actions concerning the economy, including with respect to inflation, interest rates, price controls, foreign exchange controls, taxes and energy tariffs.
The following chart shows the demand for electric power in 2023 by customer type:
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The following chart shows the evolution of the demand for electric power over the last several years:
Source: CAMMESA
99
The following chart shows the power demand from November 2006 to November 2023:
Source: CAMMESA
The correlation between the evolution of GDP and electric power demand is strong, although when there is a strong reduction of the GDP, electric power demand falls relatively little. It should also be noted that, in an environment of
low economic growth, electric power demand grows at rates higher than the GDP, as shown below:.
Source: CAMMESA
Source: CAMMESA, INDEC
100
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CAMMESA divides Argentina into regions that have similar characteristics in terms of demand, socio-economic characteristics and electric subsystems. Such regions are: (i) the City of Buenos Aires and its suburbs, (ii) the Province of
Buenos Aires, (iii) Santa Fe and Northwest Buenos Aires, (iv) the Center, (v) the Northwest, (vi) Cuyo, (vii) the Northeast, (viii) Comahue and (ix) Patagonia.
Demand is significantly concentrated in the areas of the City of Buenos Aires, the Province of Buenos Aires, Santa Fe and Northwest Buenos Aires, which comprises approximately 61.76% of the demand. Changes to the concentration
of the demand structure are not substantial over the period of measurement. The chart below shows electricity demand by region for 2023:
Source: CAMMESA
Seasonality also has a significant impact on the demand for electric power, with electric power consumption peaks in summer and winter. The impact of seasonal changes in demand is registered primarily among residential and small
commercial customers. The seasonal changes in demand are attributable to the impact of various climatological factors, including weather and the amount of daylight time, on the usage of lights, heating systems and air conditioners.
The impact of seasonality on industrial demand for electric power is less pronounced than on the residential and commercial sectors for several reasons. First, different types of industrial activity by their nature have different seasonal
peaks, such that the effect of climate factors on them is more varied. Second, industrial activity levels tend to be more significantly affected by the economy, and with different intensity levels depending on the industrial sector.
Between 2016 and 2018, electricity demand remained stable, and decreased in 2019 due to a general decrease of the economic activity in Argentina. For 2020, electricity demand continued to decrease due to a decline in economic
activity and the impact of COVID-19. In 2021, electricity demand recovered from the previous year, mainly due to an increase in industrial demand. During year 2023, residential and small commercial demand increased 3.34% and
1.04% respectively compared to the previous year, mainly due to the lack of substantial tariff increases for the residential demand.
A direct annual analysis—as opposed to a twelve-month moving average, which is useful to show inertial trend changes (i.e., the underlying trend that includes only a few months and therefore better shows gradual changes to stability)
—shows growth rates in energy demand during 2010 and early 2011, with an abrupt slowdown (including negative values) in 2012 and, after the winter of 2012, an increase in energy demand during 2013. In December 2013 and
January 2014, there was exponential growth in demand by residential and commercial consumers due to the heat wave that hit the central region of Argentina during those periods. In December 2014, the demand growth trend was
reversed with a sharp drop in demand with the return of normal temperatures. The demand for electric power in the residential sector resumed a high growth trend in 2015. In 2016, residential consumers demand increased 4.5%, despite
moderate increases in rates to a small portion of consumers. During 2017, 2018, 2019 and 2020, residential demand decreased 2.03%, increased 1.99%, decreased 2.80%, and increased 8.00%, respectively, as compared to the same
period the previous year, in the case of the decrease during 2019, due to a GRP drop of 2.20% in 2019. In 2020, due to the COVID-19 pandemic, the quarantine and other restrictive measures taken by the Argentine Government,
citizens had to work remotely and thus staying at their houses for longer periods of time. Schools and universities were closed for most part of 2020. On the other hand, during 2020 there was no residential electricity tariff increase and
services cuts due to non-payment was suspended, which may have contributed to residential users consuming more electricity. During 2021, as a consequence of the removal of restrictive measures associated with the COVID-19
pandemic, demand of electricity recovered from the previous year (+5.20%), mainly due to a 13.20% increase in industrial demand and a 4.40% increase in commercial demand. Residential demand in 2021 increased 9.50% compared
to 2020, mainly explained by the fact that there was not any increase in residential electricity tariffs, in a context of increasing energy generation costs for the entire system. During year 2023, residential and small commercial demand
increased 3.34% and 1.04%, respectively, compared to the previous year, mainly due to the lack of substantial tariff increases for the residential demand.
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101
In addition to the growth of energy demand during the 2011-2016, which placed pressure on the supply of fuels to thermal plants, demand also affects the availability of generation plants to meet peak demand for power at nighttime
during the winter or during the afternoon in the summer.
To minimize the risks of sudden interruptions to the residential and commercial segment in 2013, there were scheduled supply interruptions in December 2013 and January 2014, which was similar to what occurred in the winter of 2010
and 2011 but did not reach the extraordinary levels of the winter of 2007. No interruptions were necessary in 2012. During the summer and winter of 2015, it was not necessary to apply restrictions to industrial consumers to supply
residential electric power demand, although there were some forced interruptions due to certain problems with electrical distribution. However, during February 2016, certain restrictions to consumption of an approximate amount of
1,000 MW were applied by CAMMESA and the Ministry of Energy and Mining due to the above average temperatures recorded in February 2016.
During January and February 2016 there were successive high peaks of consumption of electric power for a business day, after two years of not surpassing the previous record reached in January 23, 2014. A peak of consumption of
25,380 MW was reached on February 12, 2016, but restrictions were implemented to the demand of the distributors of Buenos Aires, Greater Buenos Aires and La Plata. New peaks of consumption of 26,320 MW/544.4GWh were
reached on January 29, 2019, on December 12, 2022 of 27,484 MW/575.9GWh and lastly on May 13, 2023, with a consumption of 29,105 MW/590.7GWh without major demand restrictions.
Working day
Saturday
Sunday
Working day
Saturday
Sunday
New records
Mar 13, 2023
Mar 11, 2023
Mar 12, 2023
Mar 13, 2023
Mar 11, 2023
Mar 12, 2023
Power and energy consumption records
Previous records
Peak of electric power capacity (MW)
29,105
27,203
25,739
Energy (GWh)
590.7
599.8
543.6
Source: CAMMESA
Dec 6,2022
Jan 15, 2022
Dec 11, 2021
Jan 14, 2022
Jan 15, 2022
Jan 16, 2022
Variation
(%)
Variation
(MW)
Variation
(%)
2.91%
1.81%
8.49%
2.57%
7.30%
13.51%
Variation
(GWh)
822
484
2,015
14.80
40.80
64.70
28,283
26,719
23,724
575.9
559.0
478.9
The peak demand of power of March 13, 2023, was covered with a thermal supply of 16,836 MW, a hydroelectric supply of 6,878 MW, nuclear supply of 959 MW, renewable energy supply of 2,028 MW, and imports of 2,403.
As with the case of natural gas, the strong seasonality of electric power demand in Argentina—both in terms of energy and power—influences the needs for investment since investments are made to meet the maximum peak winter
demand, which generates significant surpluses at other times of the year that cause lower costs and competition in those periods. The maximum demand for electric power is during the afternoon or evening hours in summer. In the case
of winter, the maximum demand is generally during the evening, due to the high use of electric heaters that are preferred by consumers because of the differential cost and simplicity in comparison with natural gas heaters.
Not all the generation capacity is available at times of peak demand. Both in summer and especially in winter, there is an effective generation capacity to meet the demand. The effective capacity available (which means the capacity
available) is significantly lower than the nominal installed capacity.
Despite all efforts, it is unlikely for there to be complete nominal capacity available at any given time. Instead, the power generation capacity industry generally anticipates and considers a percentage of unavailability that can range
between approximately 20.00% and 25.00%.
This critical variable is central to the efforts made by CAMMESA and the generators to invest in the proper maintenance of the units. Although the unavailability factor over the long-term in the thermal plants in Argentina has
historically been approximately 30.00%, it fell below 20.00% for a period in the early 2000s. In general, the unavailability factor of the hydroelectric plants in Argentina is not significant. The Yacyretá hydropower plant capacity
considers the available power for Argentina, 2,745 MW. The total capacity of Yacyretá is 3100 MW, achievable at maximum level and with the units at full capacity. In the nuclear sector, historical unavailability has been important
because of the periodic maintenance that units have to go through. In particular, the Embalse nuclear plant commenced, starting in January 1, 2016, a two-year period in which it was not in operation. Additionally, the Atucha II nuclear
plant, which was generating energy on a trial basis since 2015, received its commercial authorization during the first half of 2016, adding a nominal capacity of 745 MW to the SADI. In 2022 the Atucha I Nuclear Plant was out of
service for almost 3 months due to maintenance. In 2023, Atucha II Nuclear Plant was out of service most of the year due to seasonal maintenance followed by a technical failure which was re-commissioned on August 2023. Embalse
Nuclear Plant also had seasonal maintenance that lasted for almost 2 months.
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102
In 2023, hydro generation grew 30% in comparison to 2022, which led to an overall decrease in fossil fuels demand for power generation. However, the newer rounds of the Plan Gas.Ar, coupled with the enabling of additional natural
gas transportation capacity through the first stage of the President Nestor Kirchner Gas Pipeline since July 2023, led to an overall increase in natural gas availability, which resulted in a significant decrease in fuel oil (-40%) and gas oil
consumption (-47%) for power generation.
Energy generation may be influenced by the physical and economic capacity to provide fuel to thermoelectric generators. In recent years and until 2014 fuel prices increased the generating cost, although the fall in oil and fuel prices
significantly reduced such cost in 2015 and 2016. The lack of local production of natural gas led to an increased use of fuel oil and gas oil in those generating plants with TS and TG units, in addition to imports of gas and LNG. Most of
the TS units are shipped with fuel oil, and only the Central Térmica San Nicolas can burn coal, in addition to fuel oil or natural gas. TS or TG groups that operate in combined-cycle are included in this area in previous tables.
Fuel availability is a factor that contributes to technical unavailability. The costs and logistics for importing and supplying fuel oil, gas oil, and coal instead of natural gas are key to the future availability of thermal units and will
continue to be important if the current international conditions are maintained. Since 2007 the limited supply of natural gas in winter caused a large increase in consumption of fuel oil and gas oil, with record prices in the first half of
2008. Prices of liquid fuels decreased in 2009 due to the international crisis and then increased between 2010 and mid-2014 from the third quarter of 2014 until the first quarter of 2016, liquid fuel prices decreased sharply, with
moderate increases after that (while remaining lower than the first half of 2014). Prices generally recovered through the years up to the first half of 2018, and since then have decreased. In the first quarter of 2020, there was a sudden
drop in the prices due to COVID-19. In 2022, during the first half of the year, there was a global rise in the prices of liquid fuels as a consequence of the international sanctions imposed on Russia after the invasion of Ukraine.
Nevertheless, fuel oil prices were less affected by the war than gas oil prices in almost every country. In addition, the scarcity of natural gas in Argentina also contributed to the substantial increase in the dispatch of our steam turbines
with fuel oil in 2022.
Fuel Consumption for Commercial Electric Power Generation.
In 2023, 43% of the energy supply was generated with natural gas, which is higher than in most countries that have a large surplus production of natural gas.
Source: CAMMESA, Company analysis
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103
The price for generation of CAMMESA constitutes an effective price only to certain segments of the electric power market, especially industrial consumers, with the exception of those that are commercially supplied by electric power
distributors.
Anti-Money Laundering
Anti-Money Laundering and Terrorism Financing Regime
The concept of money laundering is generally used to denote transactions aimed at introducing funds from illicit activities into the institutional system and thus transform gains from illegal activities into assets of a seemingly legitimate
source.
Terrorist financing is the act of providing funds for terrorist activities. This may involve funds raised from legitimate sources, such as personal donations and profits from businesses and charitable organizations, as well as from criminal
sources, such as drug trade, weapons and other goods smuggling, fraud, kidnapping and extortion.
On April 13, 2000, the National Congress passed Law No. 25,246, (subsequently amended and complemented, (the “AML/ CFT Law”), which created at the national level the Anti- Money Laundering and Terrorism Financing Regime
(“AML/CFT Regime”), criminalizing money laundering, creating and designating the Financial Reporting Unit (“UIF” for its acronym in Spanish) as the enforcement authority of the regime, and establishing the legal obligation for
various public and private sector entities and professionals to provide information and cooperate with the UIF.
The UIF is a decentralized agency that operates with autonomy and financial independency under the Ministry of Justice, and its mission is to prevent and deter the crimes of money laundering and terrorist financing.
The following are certain provisions relating to the AML/CFT Regime established by the AML/ CFT Law and its amending and complementary provisions, including regulations issued by the UIF, and the CNV and the Central Bank. It
is recommended that investors consult their own legal advisors and read the AML/ CFT Law and its complementary regulations.
Money laundering and terrorist financing in the Argentine Criminal Code
(a)
Money laundering
Section 303 of the Argentine Criminal Code (the “ACC”) defines money laundering as a crime committed whenever a person converts, transfers, manages, sells, encumbers, conceals or in any other way puts into
circulation in the market, property derived from an unlawful act, with the possible consequence that the origin of the original property or the subordinate property acquires the appearance of a lawful origin, either in a
single act or by the repetition of various acts linked to each other. Section 303 of the ACC establishes the following penalties:
(i)
If the amount of the operation exceeds 150 Minimum Living and Mobile Wages, being each Minimum Living and Mobile Wage, as of April 15, 2024, equal to Ps. 202,800, imprisonment for a term of three
(3) to ten (10) years and fines of two to ten times the amount of the operation shall be imposed. This penalty will be increased by one third of the maximum and half of the minimum, when:
(a)
(b)
the person performs the act on a habitual basis or as a member of an illicit association constituted for the continuous commission of acts of this nature;
the person is a public official who committed the act in the exercise or on the occasion of his/her functions. In this case, he/she shall also be subject to a penalty of special disqualification of three to
ten years. The same penalty shall be imposed to anyone who has acted in the exercise of a profession or occupation requiring special qualification.
(ii)
Anyone who receives money or other property from a criminal offense for the purpose of applying them in an operation as described above, which gives them the possible appearance of a lawful origin, shall
be punished with imprisonment for a term of six (6) months to three (3) years.
(iii)
If the value of the goods does not exceed 150 Minimum Living and Mobile Wages, the penalty shall be imprisonment for a term of six months to three years.
(b)
Penalties for legal persons.
Furthermore, Section 304 of the ACC provides that when the criminal acts have been committed in the name of, or with the intervention of, or for the benefit of a legal person, the following sanctions shall be imposed
to the entity jointly or alternatively:
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(i)
(ii)
(iii)
(iv)
(v)
(vi)
fine of two (2) to ten (10) times the value of the property subject to the offense;
total or partial suspension of activities, which in no case shall exceed ten (10) years;
104
debarment for public tenders or bidding processes or any other State-related activities, which in no case shall exceed ten (10) years;
dissolution and liquidation of the legal person when it was created for the sole purpose of committing the offense, or such acts constitute the main activity of the entity;
loss or suspension of any State benefit that it may have;
publication of an extract of the condemnatory sentence at the expense of the legal entity.
In order to calibrate these sanctions, the Court will take into account the failure to comply with internal rules and procedures, the omission of vigilance over the activity of the authors and participants; the extent of the
damage caused, the amount of money involved in the commission of the offense, the size, nature and economic capacity of the legal entity. In the cases in which it is essential to maintain the operational continuity of
the entity, or of a public work, or particular service, the sanctions of suspension of activities or dissolution and liquidation of the legal person shall not be applicable.
(c)
Terrorism financing
Section 306 of the ACC criminalizes the financing of terrorism. This offense is committed by any person who directly or indirectly collects or provides property or money, with the intention of it being used, or in the
knowledge that it will be used, in full or in part:
(i)
to finance the commission of acts which have the aim of terrorizing the population or compelling national public authorities or foreign governments or agents of an international organization to perform or
refrain from performing an act (according to Section 41.5 of the ACC);
(ii)
by an organization committing or attempting to commit crimes for the purpose set out in (i);
(iii)
by an individual who commits, attempts to commit or participates in any way in the commission of offenses for the purpose set out in (i).
The penalty is imprisonment for a term of five (5) to fifteen (15) years and a fine of two (2) to ten (10) times the amount of the operation. Likewise, the same penalties shall apply to legal persons as described for the
crime of money laundering.
Reporting Subjects obliged to inform and collaborate with the UIF
The AML/CFT Law, in line with international AML/CFT standards, not only designates the UIF as the agency in charge of preventing money laundering and terrorism financing, but also establishes certain obligations to various public
and private sector entities and individuals, which are designated as Reporting Subjects (“Sujetos obligados”), which are legally bound to inform and collaborate with the UIF.
In accordance with the AML/ CFT Law and the regulations complementing it, the following persons, among others, are Reporting Subjects before the UIF:
(i)
(ii)
(iii)
(iv)
banks, financial entities and insurance companies;
exchange agencies and natural and legal persons authorized by the Central Bank to intervene in the purchase and sale of foreign currency with funds in cash or checks issued in foreign currency or through the use of
debit or credit cards or in the transfer of funds within or outside the national territory;
settlement and clearing agents, trading agents; natural and/or legal persons registered with the CNV acting in the placement of investment funds or other collective investment products authorized by such agency;
crowdfunding companies, global investment advisors and the legal persons acting as financial trustees whose trust securities are authorized for public offering by the CNV, and the agents registered by the above
mentioned controlling agency that intervene in the placement of negotiable securities issued within the framework of the above mentioned financial trusts;
government organizations such as the Central Bank, the Federal Public Revenue Administration (“AFIP,” as per its acronym in Spanish), the Superintendence of Insurance of the Nation (“SSN,” as per its acronym in
Spanish), the CNV and the IGJ; and
(v)
professionals in the area of economic sciences and notaries public.
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The Reporting Subjects have the following duties:
(i)
(ii)
obtaining from clients’ documents that indisputably prove their identity, legal status, domicile and other information, concerning their operations needed to accomplish the intended activity (know your customer
policy);
conduct due diligence procedure on their clients and report any suspicious operation or fact (which, in accordance with the usual practices of the area involved, as well as the experience and competence of the
Reporting Subjects, are operations that are attempted or completed which were previously identified as unusual operations by the regulated entity, as well as any operation without economic or legal justification or of
unusual or unjustified complexity, whether performed in isolated or repeated manner, regardless of the amount); and
(iii)
refraining from disclosing to the client or third parties the actions being conducted in compliance with the AML/ CFT Law. Within the framework of suspicious operation report analysis, Reporting Subjects shall not
object disclosure to UIF of any information required from them alleging that such information is subject to banking, stock market or professional secrecy or confidentiality agreements of a legal or contractual nature.
Pursuant to Annex I of Resolution No. 61/2023 of the UIF (which establishes the supervision and inspection mechanism of the UIF), both the Central Bank and the CNV are considered “Specific Control Agencies” (“Órganos de
Contralor Específico”). In such capacity, they must collaborate with the UIF in the evaluation of compliance with AML/CFT procedures by the Reporting Subjects subject to their control. For these purposes, they are entitled to
supervise, monitor and inspect these entities. Denial or obstruction of inspections by the Reporting Subjects may result in administrative penalties by the UIF and criminal penalties.
The Central Bank and the CNV must also comply with the AML/CFT regulations established by the UIF, including the reporting of suspicious transactions. In turn, Reporting Subjects regulated by these agencies are subject to UIF
Resolutions No. 14/2023 and 78/2023, respectively. Such regulations provide guidelines that such entities shall adopt and apply to manage, in accordance with their policies, procedures and controls, the risk of being used by third
parties for criminal purposes of money laundering and financing of terrorism.
Essentially, the aforementioned regulations, change the formal regulatory compliance approach to a risk-based approach (“RBA”), based on the revised recommendations issued by the Financial Action Task Force (the “FATF”) in 2012,
in order to ensure that the implemented measures are proportional to the identified risks. Therefore, the Reporting Subjects shall identify and evaluate their risks and, based on this, adopt measures for the management and mitigation of
such risks, in order to more effectively prevent money laundering and terrorist financing. Likewise, the provisions of UIF Resolution No. 4/17 established the possibility of conducting special due diligence procedures with respect to
clients supervised abroad (formerly called “international investors”) and local clients who are Reporting Subjects to the UIF.
Asset Freezing Regime
Decree No. 918/2012 establishes the procedures for the freezing of assets linked to terrorism financing, and the creation and maintenance procedures (including the inclusion and removal of suspected persons) for registries created in
accordance with the relevant United Nations Security Council’s resolutions.
Additionally, UIF Resolution No. 29/2013, regulates the implementation of Decree No. 918/2012 and establishes: (i) the procedure to report suspicious transactions of terrorism financing and the persons obligated to do so, and (ii) the
administrative freezing of assets procedure on natural or legal persons or entities designated by the United Nations Security Council pursuant to Resolution No. 1267 (1999) and subsequent, or linked to criminal actions under Section
306 of the Argentine Criminal Code, both prior to the report issued pursuant to UIF Resolutions No. 14/2023 and 78/2023, and as mandated by the UIF after receiving such report.
In order to help the Reporting Subjects to fulfill these duties, Executive Decree No. 489/2019 created the Public Registry of Persons and Entities linked to acts of Terrorism and its Financing (RePET, for its acronym in Spanish), which
is an official database that includes the consolidated list of the United Nations Security Council.
Politically Exposed Persons
Resolution No. 35/2023 of the UIF establishes the rules that Reporting Subjects must follow regarding clients that are Politically Exposed Persons (PEPs).
Following the aforementioned RBA, Resolution No. 35/2023 establishes that Reporting Subjects must determine the level of risk at the time of beginning or continuing the contractual relationship with a PEP, and must take due
diligence measures, adequate and proportional to the associated risk and the operation or operations involved.
In addition, the UIF has issued the Guide for the management of risks of money laundering and financing of terrorism in relation to customers (and ultimate beneficiaries) that are PEPs.
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CNV Regulations
106
The CNV regulations stipulate, among other provisions, that the Reporting Subjects under its control shall only perform the operations provided for under the public offering system when these operations are performed or ordered by
persons constituted, domiciled or resident in countries, domains, jurisdictions, territories or associated states not considered to be non-cooperative or high risk by the FATF.
Similarly, they establish the payment modalities and control procedures for the reception and delivery of funds from and to clients.
Central Bank Rules
Pursuant to Communication “A” 6399 of the Central Bank, as amended and supplemented, including without limitation, by Communication “A” 6709, Reporting Subjects must keep - for a period of 10 years - written records of the
procedure applied in each case for the discontinuation of a client’s operations. Among these records, they shall keep a copy of any notification sent to the customer requesting further information and/or documentation, the
corresponding notices of receipt and the documents identifying the officials who took part in the decision, in accordance with the respective procedural manuals.
Tax Amnesty System
The voluntary system of declaration under the Tax Amnesty Law No. 27,260 and its Regulatory Decree No. 895/16 (jointly the “Tax Amnesty System”) established that the information voluntarily submitted under such system may be
used for the investigation and punishment of the crimes of money laundering and financing of terrorism. For such purpose, the UIF has the power to communicate information to other public intelligence or investigation agencies, based
on a previous resolution of the UIF’s President and provided that there are serious, precise and concordant indications of the commission of money laundering and/or terrorism financing crimes. Furthermore, the AFIP remains obliged
to report to the UIF suspicious operations detected within the framework of the Tax Amnesty System and to provide it with all information required by it, not being able to oppose fiscal secrecy.
Corporate Criminal Liability Law
The Corporate Criminal Liability Law No. 27,401 sets forth a criminal liability regime applicable to legal entities involved in certain corruption offenses directly or indirectly committed in their name, on their behalf or in their interest
and from which a benefit may arise. The individual offenders may be employees or third parties — even unauthorized third parties, provided that the company ratified the act, even tacitly.
For an extensive analysis of the money laundering regime in effect as of the date of this annual report, investors should consult legal counsel and read Title XIII, Book 2 of the Argentine Criminal Code and any regulations issued by the
UIF, the CNV and the Central Bank in their entirety. For such purposes, interested parties may visit the websites of the Argentine Ministry of Economy, at www.argentina.gob.ar/economia, the Argentine Ministry of Justice, at
https://www.argentina.gob.ar/justicia, the UIF, at www.argentina.gob.ar/uif, the CNV, at www.argentina.gob.ar/cnv, or the Central Bank, at www.bcra.gov.ar. The information found on such websites is not a part of this annual report.
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Item 4.C Organizational structure
107
The following diagram illustrates our organizational structure as of the date of this annual report. Percentages indicate the ownership interest held.
(1)
(2)
(3)
(4)
Percentages reflect our equity interests in the operating companies TJSM, TMB and CVO. For further information, see “Item 4.B. Business Overview—FONINVEMEM and Similar Programs”.
Percentages indicate direct and, through Inversora de Gas del Centro S.A. -IGCE-, indirect investments of the Company in DGCU, DGCE.
The percentage for Energía Sudamericana S.A., includes a 2.45% direct interest plus a 41.06% indirect interest in its capital stock, through our equity interest in IGCE. The percentage for Coyserv S.A. includes a 32.21%
indirect interest in its capital stock, through our equity interest in IGCE, DGCE and DGCU.
See “Item 4.B. Business overview—Our Subsidiaries”.
For further information on our subsidiaries, see “Item 4.B. Business overview—Our Subsidiaries”.
Item 4.D Property, plants and equipment
Property, Plant and Equipment
Most of our property, plant and equipment is intended to be used in the generation of electric power and in our forestry business, and 100.00% of them are located in Argentina.
We successfully participated in CAMMESA’s auction for 10 MW of dispatch priority for our Parque Solar San Carlos Project under the MATER framework, located in San Carlos, province of Salta.
As of the date of this annual report, works for the closing of the combined cycle of the Brigadier Lopez Plant have started. During the month of February 2024, the agreement with the constructor, SACDE, was formalized. Under such
agreement, all the works, services and works necessary to complete the closure of the cycle were defined, with the “notice to proceed” having been delivered on February 26, 2024. Works are expected to be completed during 2025. The
plant, which has a dual-fuel Siemens SGT5-4000 F gas turbine with a total nominal power of 292 MW, is expected to increase its capacity by 140 MW thanks to the closing cycle. This means that total power output is expected to reach
432 MW.
We have no significant assets under capital lease or lease agreements.
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The following table provides certain information regarding the operation of our power plants that we owned as of December 31, 2023:
108
Site
Puerto Complex
Plant
Unit
Puerto Nuevo plant
Nuevo Puerto plant
Puerto combined cycle plant
Central Costanera Plant
Central Costanera combined cycle plant
Buenos Aires combined cycle plant
Piedra del Águila plant
Luján de Cuyo plant
Brigadier López plant
San Lorenzo plant
La Genoveva II wind farm
La Genoveva II wind farm
La Castellana I wind farm
La Castellana II wind farm
Achiras wind farm
Manque wind farm
Los Olivos wind farm
Guañizuil II solar farm
PNUETV07
PNUETV08
PNUETV09
NPUETV05
NPUETV06
CEPUCC GE
COSTTV01
COSTTV02
COSTTV03
COSTTV04
COSTTV06
COSTTV07
COSTCC08
COSTCC09
COSTTV10
BSASCC01
PAGUHI
LDCUCC25
LDCUTG23
LDCUTG24
LDCUTV11
LDCUTV12
LDCUTG22
LDCUTG26
LDCUTG27
LDCUHI
BLOPTG01
TER6CC11
GNVEO
GNV2EO
LCASEO
LCA2EO
ACHIEO
MANQEO
OLIVEO
GZ2AFV
Costanera Complex(1)
Piedra del Águila
Luján de Cuyo
Brigadier López
San Lorenzo
La Genoveva
La Castellana (2)
Achiras
Manque
Los Olivos
PS Guañizuil II (3)
Fuel type
(if any)
NG / FO
NG / FO
NG / FO
NG / FO
NG / FO
NG / GO
NG / FO
NG / FO
NG / FO
NG / FO
NG / FO
NG / FO
NG / FO
NG / FO
NG / FO
NG
NG
NG / GO
NG / GO
NG / FO
NG / FO
NG / GO
NG / GO
NG
NG / GO
NG/ GO
Installed
capacity
1,747
589
145
194
250
360
110
250
798
798
2,259
1,131
123
116
112
120
350
310
851
264
264
323
277
277
1,440
1,440
1,440
576
290
23
23
60
60
24
47
48
1
281
391
130
88
42
116
101
15
48
57
23
105
MW
MW
MW
MW
MW
MW
MW
MW
MW
MW
MW
MW
MW
MW
MW
MW
MW
MW
MW
MW
MW
MW
MW
MW
MW
MW
MW
MW
MW
MW
MW
MW
MW
MW
MW
MW
MW
MW
MW
MW
MW
MW
MW
MW
MW
MW
MW
MW
MW
MW
Type
Thermal
Thermal
Thermal
Thermal
Thermal
Thermal
Thermal
Thermal
Thermal
Thermal
Thermal
Thermal
Thermal
Thermal
Thermal
Thermal
Hydroelectric
Thermal
Thermal
Thermal
Thermal
Thermal
Thermal
Thermal
Thermal
Hydroelectric
Thermal
Thermal
Wind
Wind
Wind
Wind
Wind
Wind
Wind
Solar
_____________________________
Reference: NG: natural gas; FO: fuel oil; GO: gas oil
(1)
(2)
Costanera complex is owned by Central Costanera S.A. which is 75.22% owned by Proener S.A.U., as of December 31, 2023. As of the date of this annual report, we own a 100% interest in Proener. See “Item 4.B.
Business Overview—Our Subsidiaries”. We consider Central Costanera’s information as of February 17, 2023. On February 22, 2024, the request submitted by Central Costanera for the decommissioning of the steam
generation units COSTTV04 and COSTTV06 -for a total installed capacity of 120 MW and 350 MW, respectively- was published in the Official Gazette of the Republic of Argentina.
La Castellana I, La Castellana II, Achiras, Manque, Los Olivos, La Genoveva II and La Genoveva I wind farms are owned by CP La Castellana S.A.U., CPR Energy Solutions S.A.U., CP Achiras S.A.U., CP Manque
S.A.U., CP Los Olivos S.A.U, Vientos La Genoveva II S.A.U, and Vientos La Genoveva I S.A.U., respectively, the first five of which are fully owned subsidiaries of CP Renovables S.A. while the last two are a fully
owned subsidiary of Central Puerto S.A. See “Item 4.B. Business Overview—Our Subsidiaries”.
(3)
PS Guañizuil II solar farm is owned by Cordillera Solar which is a fully owned subsidiary of Proener S.A.U., as of December 31, 2023. As of the date of this annual report, we own a 100% interest in Proener. See
“Item 4.B. Business Overview—Our Subsidiaries”. We consider Guañizuil II solar farm information as of October 18, 2023.
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We believe that all of our production facilities are in good operating condition. We believe that we have satisfactory title to our plants and that our facilities are in accordance with standards generally accepted in the electric power and
forestry industry. As of December 31, 2023, the consolidated net book value of our property, plant and equipment was Ps. 758.93 billion.
The following table lists the value of our property, plant and equipment as of December 31, 2023:
Main Item
Lands and buildings
Electric power facilities and other equipment
Wind turbines
Gas turbines
Construction in progress
Others
Total
As of December 31,
2023
(in thousands of Ps.)
168,883,652
356,371,626
166,651,546
15,897,683
43,724,396
7,404,718
758,933,621
For information on our forestry assets, see “Item 4.B. Business Overview—Forestry Assets” and Note 2 to our financial statements.
For information on our plants under construction, see “Item 5.A. Operating Results—Expansion of Our Generating Capacity”.
For information on environmental issues that may affect our utilization of assets, see “Item 3.D.—Risk Factors—Risks relating to Our Business—Climate change and energy transition could affect our business”, and “—Our ability to
operate wind and solar farms profitably is highly dependent on suitable wind or sun and associated weather conditions, climate change and energy transition could affect our business”.
Item 4.E Unresolved Staff Comments
Not applicable.
Item 5. Operating and Financial Review and Prospects
Item 5.A Operating Results
This section contains forward‑looking statements that involve risks and uncertainties. Our actual results may differ materially from those discussed in the forward‑looking statements as a result of various factors, including, without
limitation, those set forth in “Forward‑looking Statements,” “Item 3.D Risk Factors,” and the matters set forth in this annual report generally.
This discussion should be read in conjunction with our Audited Consolidated Financial Statements which are included elsewhere in this annual report.
Financial Presentation
We maintain our financial books and records and publish our consolidated financial statements in Argentine pesos, which is our functional currency. Our Audited Consolidated Financial Statements are prepared in Argentine pesos and
in accordance with the IFRS as issued by the IASB.
Factors Affecting Our Results of Operations
Argentine Economic Conditions
We are an Argentine sociedad anónima (corporation). Substantially all of our assets and operations and our customers are located in Argentina. Accordingly, our financial condition and results of operations depend to a significant extent
on macroeconomic and political conditions prevailing from time to time in Argentina.
As Central Puerto is affected by the conditions of Argentina’s economy, which have historically been volatile, and have negatively and materially affected the financial condition and prospects of multiple industries, including the
electric power sector, the following discussion may not be indicative of our future results of operations, liquidity or capital resources.
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The following table sets forth information about certain economic indicators in Argentina for the periods indicated.
110
Economic activity
Nominal GDP in current US$(1) (in millions of US$)
Real gross GDP (% change) (2)
Domestic investment as % of GDP
Price indexes and exchange rate information
INDEC CPI (% change)
Economic activity
Inflation (as measured by the City of Buenos Aires CPI) (% change)(3)
Wholesale price index (WPI) (% change)
Nominal exchange rate(4) (in Ps./US$ at period end)
2019
2020
2021
2022
2023
441,817
(2.00%)
14.20%
53.83%
50.57%
58.49%
59.89
377,809
(9.90%)
14.28%
36.14%
30.47%
35.38%
84.15
496,026
10.72%
17.63%
50.94%
49.20%
51.34%
102.72
589,084
4.96%
17.88%
94.79%
93.40%
94.78%
177.16
385,102
(1.55%)
19.07%
211.41%
198.40%
276.35%
808.45
___________________________
Sources: Ministry of Public Works of Argentina, Banco de la Nación Argentina and Instituto Nacional de Censos y Estadísticas (INDEC).
(1)
(2)
(3)
Calculations based on the nominal GDP in pesos as reported by INDEC, divided by the average nominal Ps./US$ exchange rate for each period as reported by the Banco de la Nación Argentina for wire transfers (divisas).
Base on GDP in pesos of 2004 (INDEC).
On January 8, 2016, based on its determination that the INDEC had failed to produce reliable statistical information, including with respect to CPI, the previous administration declared the national statistical system and the
INDEC in a state of administrative emergency through December 31, 2016. The INDEC implemented certain methodological reforms and adjusted certain macroeconomic statistics on the basis of these reforms”. During the
first six months of this reorganization period, the INDEC published official CPI figures published by the City of Buenos Aires and the Province of San Luis for reference, which we include here.
Pesos to U.S. dollars exchange rate as quoted by the Banco de la Nación Argentina for wire transfers (divisas).
(4)
During 2019, as compared to 2018, Argentina’s GDP decreased 2.00%, primarily as the result of a 15.95% decrease in capital goods investments, a 6.13% decrease in private sector consumption, and a 6.40% decrease in public
consumption. These factors were partially offset by a 9.75% increase in exports. Aggregate domestic supply also shrank given the 18.70% decrease in imports. Aggregate economic activity was mainly affected by periods of volatility in
the exchange rate and financial indicators, which increased after the primary elections held in August. After a modest economic recovery registered through the second quarter of the year, the financial turmoil in the third quarter
generated a double dip in the activity. In general terms, most economic sectors were adversely affected by the general macroeconomic context to different degrees (with the exception of the agricultural sector that outperformed
significantly).
During 2020 as compared to 2019, Argentina’s GDP decreased 9.90%, primarily as the result of a 13.07% decrease in capital goods investments, a 12.17% decrease in private sector consumption, a 2.02% decrease in public
consumption and a 17.30% decrease in exports. Aggregate domestic supply also shrank given the 17.21% decrease in imports. Aggregate economic activity was mainly affected by COVID-19 and the lock-down measures imposed
causing a sharp drop in activity as many industries closed. In the third quarter of 2020 and due to more flexible lock-down measures, aggregate economic activity started to recover by with levels below the ones before que COVID-19
crisis.
During 2021 as compared to 2020, Argentina’s GDP increased 10.72%, primarily as the result of a 33.80% increase in capital goods investments, a 10.35% increase in private sector consumption, a 6.31% increase in public
consumption, and a 8.50% increase in exports. Aggregate domestic supply also rose given the 20.44% increase in imports. Aggregate economic activity was mainly affected by periods of volatility in exchange rates and financial
indicators, a high rate of inflation and macroeconomic uncertainty, mainly explained by the lack of foreign exchange reserves in the Central Bank and by the need to reach an agreement with the IMF regarding payments to be made
during 2022. Economic activity in Argentina in 2021 was also affected by the COVID-19 pandemic and the diverse measures adopted by the Argentine government to address its consequences.
During 2022 as compared to 2021, Argentina’s GDP increased 4.96%, primarily as the result of a 11.06% increase in capital goods investments, a 9.67% increase in private sector consumption, a 1.90% increase in public consumption,
and a 5.77% increase in exports. Aggregate domestic supply also rose given the 17.88% increase in imports. Along 2022, monthly inflation rate and its volatility increased considerably, as well as the instability of the foreign exchange
and financial markets. The lack of foreign exchange reserves in the Central Bank prompted the government to offer a better exchange rate to agricultural exporters (an alternative to the official foreign exchange rate). Further, the
government proposed an exchange offer to local bondholders in order to address the instability in the domestic bond market and the difficulties to cover the fiscal deficit. The Central Bank was forced to intervene in that market to
counteract the volatility and price collapse. As a result, the macroeconomic environment became highly uncertain.
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During 2023 as compared to 2022, Argentina’s GDP decreased 1.55 %, primarily as the result of a 1.88% decrease in capital goods investments, and a 6.69% decrease in exports. These performances were partially offset by a 1.12% rise
in private sector consumption, and a 1.16 % growth in public consumption. Aggregate domestic supply also decreased despite the 2.16% rise in imports. The inflation rate increased steadily along the first quarter of the year, reaching an
outstanding 8.40% in April. Concerns regarding inflation increased as well, foreseeing a double-digit rate in the near future. The volatility in the foreign exchange market also rose, as well as the spread between official and financial
exchange rates. The volatility and uncertainty were reinforced by the presidential election, which were scheduled for August (the primaries) and October (general elections). The government increased social expenditures and grants to
utilities and transport companies and tightened price controls to counteract the inflation burden and sustain its image in the race for elections. While inflation slowed during the second quarter, after the primary election carried out on
August 13 the government devaluated the Argentine Peso by 18%, which was almost instantly reflected in prices. Inflation rate was 12.44% in August and 12.75% in September and uncertainly increased in line with the primary
election results, where the official candidate got the third position, the opposition the second and an outlier candidate the first position. Economic activity deteriorated by the end of year as inflation continued to rise, fueled by a new
devaluation officialized by the new administration in December.
As of the date of this annual report, the country faces significant challenges, and the future remains uncertain. The new administration is committed to eliminating the fiscal deficit, which is basically explained by economic grants to
utilities and transport enterprises. The balance sheet of the Central Bank improved substantially but total restructuring would be accomplished when money printing disappears (as of today, fiscal deficit and its monetization have been
cut. A suitable solution for the Central Bank debt remains to be accomplished). The economic policy might reduce inflationary pressures in the long term while it may hit economic activity in the short term. The promotion of
investments, the renegotiation of utility contracts and the establishment of a new regulatory framework, which would include tariff adjustments, are both key goals and major challenges for the near future.
See “Item 3.D. Risk Factors—Risks relating to our business— Factors beyond our control may affect or delay the completion of the awarded projects or alter our plans for the expansion of our existing plants”.
Inflation
Argentina has faced and continues to face inflationary pressures. From 2012 to date, Argentina experienced increases in inflation as measured by CPI and WPI that reflected the continued growth in the levels of private consumption and
economic activity (including exports and public and private sector investment), which applied upward pressure on the demand for goods and services.
During periods of high inflation, effective wages and salaries tend to fall and consumers adjust their consumption patterns to eliminate unnecessary expenses. The increase in inflationary risk may erode macroeconomic growth and
further limit the availability of financing, causing a negative impact on our operations. See “Item 3.D. Risk Factors—Risks Relating to Argentina—Substantially all of our revenues are generated in Argentina and thus are highly
dependent on economic and political conditions in Argentina”.
Inflation increases also have a negative impact on our cost of sales, selling expenses and administrative expenses, in particular our payroll and social security charges. We cannot give any assurance that increased costs as a result of
inflation will be offset in whole or in part with increases in prices for the energy we produce.
IAS 29, Financial Reporting in Hyperinflationary Economies, requires that financial statements of any entity whose functional currency is the currency of a hyperinflationary economy, whether based on the historical cost method or on
the current cost method, be stated in terms of the measuring unit current at the end of the reporting period. Even though the standard does not establish an absolute rate at which hyperinflation is deemed to arise, it is common practice to
consider there is hyperinflation where changes in price levels are close to or exceed 100% on a cumulative basis over the last three years, along with other several macroeconomic-related qualitative factors.
Due to macroeconomic factors, the triennial inflation was above that figure in 2018 and Argentina has been considered hyperinflationary since July 1, 2018. Such conditions remained during 2021, 2022 and 2023. See “Risks Relating to
Argentina—As of July 1, 2018, the Argentine Peso qualifies as a currency of a hyperinflationary economy and we are required to restate our historical financial statements to apply inflationary adjustments, which could adversely affect
our results of operations and financial condition and those of our Argentine subsidiaries”.
Therefore, our consolidated financial statements as of and for the year ended December 31, 2023, including the figures for the previous periods (this fact not affecting the decisions taken on the financial information for such periods),
and unless otherwise stated, the financial information included elsewhere in this annual report, have been restated to consider the changes in the general purchasing power of our functional currency (Argentine peso) pursuant to IAS 29
and General Resolution no. 777/2018 of the CNV.
Furthermore, as a consequence of the application of IAS 29, maintaining net monetary assets generates loss of purchasing power, while maintaining net monetary liabilities generates improvement of purchasing power, provided that
such items are not subject to an adjustment mechanism that compensates to some extent such loss or improvement. This loss or income is booked in the statement of comprehensive income.
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Accordingly, we have recognized a loss regarding the effect of adjustment by inflation of Ps.126.51billions for 2023, a loss of Ps.94.86 billion for 2022 and a loss of Ps.10.03 billion for 2021. See Note 2.2.2 to our consolidated financial
statements.
On June 16, 2021, the Argentine Executive Power passed Law No. 27,630, which established changes in the corporate income tax rate for the fiscal periods commencing as from January 1, 2021. Such law establishes payment of
corporate income tax based on a structure of staggered rates regarding the level of accumulated taxable net income. The current progressive rates, applicable for fiscal periods commencing on January 1, 2024, are as follows: (i) net
taxable income accumulated up to Ps.34,703,523.08 will be subject to a rate of 25%; (ii) net taxable income accumulated over Ps.34,703,523.08 up to Ps.347,035,230.79 will incur a payment of Ps.8,675,880.77 plus 30% on the excess
over Ps.347,035,230.79; and (iii) net taxable income accumulated from Ps.347,035,230.79 onwards will be subject to a payment of Ps.102,375,393.08 plus 35% on the excess over Ps.347,035,230.79.
Foreign Currency Fluctuations
We are exposed to exchange rate risk in connection with the U.S. dollar to the Argentine peso exchange rate, as part of our capital expenditures, financial obligations and operating expenditures are denominated in U.S. dollars. See
“Item 3.D. Risk Factors—Risks Relating to Argentina—Significant fluctuations in the value of the peso could adversely affect the Argentine economy and, in turn, adversely affect our results of operations” and “Item 10.D. Exchange
Controls”.
Exchange rate risk is the risk that the fair value or future cash flows of a financial instrument will fluctuate due to changes in exchange rates. We are exposed to currency risk regarding the relationship between the Argentine peso and
the US dollar, mainly due to our operating activities, the investment projects defined by us and our financial liabilities with banking entities.
The devaluation of the peso with respect to the U.S. dollar totaled 50.53% in 2018, 37.05% in 2019, 28.83% in 2020, 18.08% in 2021, 42.02% in 2022 and 78.09% in 2023.
As of December 31, 2023, we did not have derivatives that met the requirements established by IFRS to be designated as an effective hedge for this particular risk. As of December 31, 2023, we had trade receivable, other financial
assets, cash and short-term deposits denominated in foreign currency totaling US$442.50 million, while at the same time we had liabilities denominated in foreign currency totaling US$466.48 million.
Any significant depreciation of the peso would result in an increase in the cost of servicing our debt and in the cost of imported supplies or equipment and, therefore, may have a material adverse effect on our results of operations. With
respect to fuel used in connection with the energy we sell under the Spot Sales (which represented around 49.60% of our energy sales in terms of output in 2023), the exposure to changes in fuel prices is not material since, under current
applicable regulation, the fuel for the electric power sold under the Spot Sales is required to be acquired from and supplied by CAMMESA, free of any cost to us; hence, it is not currently an integral part of the price charged by the
generator.
The Argentine Government has taken measures to stabilize the foreign exchange situation, restrictions to the purchase of foreign currency, and in some cases, an additional tax. For further information, see “Item 10.D. Exchange
Controls”.
Our Revenues
The following chart shows a breakdown of our revenues for the periods indicated:
Spot Sales(1)
Sales under contracts(2)
Steam sales (3)
Resale of gas transport and distribution capacity
Revenues from CVO thermal plant management
Forestry Segment
Total revenues from ordinary activities
________________________
2023
2022
2021
(in thousands
of Ps.)
155,523,697
131,012,781
14,789,842
1,858,093
4,568,538
5,815,213
313,568,164
Percentage
of revenues
49.60%
41.78%
4.72%
0.59%
1.46%
1.85%
100.00%
(in thousands
of Ps.)
125,095,966
167,719,171
15,283,685
2,188,445
5,457,370
-
315,744,637
Percentage
of revenues
39.62%
53.12%
4.84%
0.69%
1.73%
0.00%
100%
(in thousands
of Ps.)
144,468,508
182,679,073
10,409,047
1,868,300
6,818,833
-
346,243,761
Percentage
of revenues
41.72%
52.76%
3.01%
0.54%
1.97%
0.00%
100%
(1)
(2)
(3)
Includes sales of energy and power to CAMMESA remunerated under Resolution No. 95/13, Resolution No. 19/2017, Resolution of the Secretariat of Energy No.1/2019, Resolution No. 31/20, Resolution No. 440/21,
Resolution No. 238/22, Resolution No. 826/22, Resolution No. 59/23, Resolution No. 750/23, Resolution 869/2023 and Resolution No. 9/2024 (See “Item 4.B. Business Overview—The Argentine Electric Power Sector—
Remuneration Scheme”).
Includes (i) term market sales under contracts, (ii) energy sold under the Energía Plus, (iii) contracts under the MATER framework and (iv) RenovAr Program sales under contracts (for further information regarding term
market sales under contract, see “Item 4.B. Business Overview—Our Customers”).
Includes steam sold under steam sale contract with YPF from the Luján de Cuyo Plant and with Terminal 6 Industrial S.A. from San Lorenzo site.
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During 2023, Spot Sales were regulated by Resolution 826/22, Resolution 750/23, Resolution 869/23 and Resolution 859/23. During 2022, Spot Sales were regulated by Resolution 440/21, Resolution 238/22 and Resolution 826/22.
During 2021, Spot Sales were regulated by Resolution 31/20 and Resolution 440/21. In the year ended December 31, 2021, we sold over 81.00% of the electric power we generated and derived 41.72% of our revenues under the Spot
Sales. In the year ended December 31, 2022, we sold over 76.00% of the electric power we generated and derived 39.62% of our revenues under the spot market. In the year ended December 31, 2023, we sold over 80% of the electric
power we generated and derived 49.60% of our revenues under the spot market. We also continue to sell a portion of electric power in the spot market under the regulatory framework established prior to the Spot Sales which is Energía
Plus. For further information see “Item 4.B. Business Overview—The Argentine Electric Power Sector—Remuneration Scheme—The Current Remuneration Scheme.
In addition, we sell generation capacity and electric power under negotiated contracts with private sector counterparties under the Energía Plus and other outstanding contracts with private sector counterparties that were entered into
prior to the implementation of the Spot Sales (both shown under the line item “Sales under contracts”). Sales under contracts generally involve PPAs with customers and are contracted in U.S. dollars. The prices in these contracts
include the price of fuel used for generation, the cost of which is assumed by the generator. For terms longer than one year, these contracts typically include electric power price updating mechanisms in the case of fuel price variations
or if the generator is required to use liquid fuels in the event of a shortage of natural gas.
Below we summarize key aspects of our most significant sources of revenue, which include: (i) the Spot Sales, (ii) Sales under contracts (iii) steam supply contracts with YPF and Terminal 6 Industrial S.A, (iv) Resale of natural gas
transportation capacity, (v) Forestry sales.
Spot Sales (also known as Energía Base)
The Spot Sales accounts for our largest source of revenue. Resolution SE No. 95/13, which was enacted in February 2013, changed the manner in which electric power was remunerated in the spot market and established the Spot Sales.
Since the issuance of Resolution SE No. 95/13, the applicable regulatory entity (as of the date of this annual report, the Secretariat of Energy) set electric power prices and updated them annually until Resolution No. 238/22. Since this
resolution, prices are updated multiple times throughout the year.
Amendments to Resolution SE No. 95/2013
Effective February 2014 and 2015, prices were increased by the enforcement authority through Resolution SE No. 529/14 and Resolution SE No. 482/15, respectively. These increases were intended to allow generators to cover, at least
in part, increases in business costs resulting from inflation and the currency devaluation. However, in light of the fact that the resolutions failed to provide a pricing mechanism with a pre-established frequency, the adjustments were
discretionary.
Within this framework, in March 2016, the former Secretariat of Electric Energy enacted Resolution No. 22/16, whereby it adjusted the electric power prices established through Resolution SE No. 95/13. These adjustments became
effective as of February 2016. In reference to the rationale for this resolution, the former Secretariat of Electric Energy noted that it was enacted “for the sole purpose of supporting the operation and maintenance of affected equipment
and power plants on a provisional basis, until the regulatory measures being considered by the Executive branch come into force progressively with the aim of returning the WEM to normal”.
Resolution 19/2017(repealed by Resolution 1/19)
On January 27, 2017, the former Secretariat of Electric Energy issued Res. 19/17 (published in the Official Gazette on February 2, 2017).
Pursuant to this resolution, which was in effect until February 28, 2019 (included), the former Secretariat of Electric Energy established that electric power generators, co-generators and self-generators acting as agents in the WEM and
which operate conventional thermal power plants, may make guaranteed availability offers (ofertas de disponibilidad garantizada) in the WEM. Pursuant to these offers, these generation companies may commit specific capacity and
power output of the generation, provided that such capacity and energy had not been committed under PPAs entered into in accordance with (i) Resolutions Nos. 1193/05, 1281/06, 220/07, 1836/07 and 200/09 of the Secretariat of
Energy, (ii) Resolution SEE No. 21/16 and (iii) Resolutions Nos. 136‑E/16 and 213‑E/16 of the former Ministry of Energy and Mining, as well as PPAs subject to a differential remuneration scheme established or authorized by the
former Ministry of Energy and Mining. The offers must be accepted by CAMMESA (acting on behalf of the WEM agents demanding electric power), which entity will be the purchaser of the power under the guaranteed availability
agreements (compromisos de disponibilidad garantizada). Resolution 19/17 established that such agreements may be assigned to electricity distribution companies and Large Users of the WEM once the state of emergency of the
electric power sector in Argentina has ended (according to Decree No. 134/1995, such emergency was declared until December 31, 2017). Generator agents in which the Argentine government has fully or major ownership were
excluded from the scope of Resolution 19/17.
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The term of the guaranteed availability agreements in Resolution 19/17 was 3 years, and their general terms and conditions were established in Resolution 19/17.
114
The remuneration in favor of the generator was calculated in U.S. dollars pursuant to the formulas and values set forth in the aforementioned resolution and comprises of (i) a price for the monthly capacity availability and (ii) a price for
the power generated and operated.
Resolution 19/17 also established that WEM agents that operate conventional hydroelectric power plants, pumped hydroelectric power plants and power plants using other energy resources shall be remunerated for the energy and
capacity of their generation units in accordance with the values set forth in such resolution, and provided that such energy and capacity has not been committed under PPAs entered into in accordance to Resolutions SE No. 1193/05,
1281/06, 220/07, 1836/07 and 200/09, Resolution SEE No. 21/16, and Resolutions No. 136-E/16 and 213 E/16 of the former Ministry of Energy and Mining.
Fuel Purchases
On November 11, 2018, the Secretariat of Energy issued Resolution SGE No. 70/2018, which substitutes Art. 8 of Resolution 95/2013. This new resolution allows electric energy generators, self-generators, and cogenerators acting in
the WEM to purchase their own fuel. However, prior commitments assumed by generators with CAMMESA for energy supply contracts are not altered by this new regulation. If generation companies opt to take this option,
CAMMESA will value and pay the generators their respective fuel costs in accordance with the Variable Costs of Production (CVP) declared by each generator to CAMMESA. According to CAMMESA’s procedure, the machines with
the lower CVPs are dispatched first, and consequently, may produce more electric energy. The Agency in Charge of Dispatch (Organismo Encargado del Despacho or “OED” using the Spanish acronym) -CAMMESA- will continue to
supply the fuel for those generation companies that do not elect to take this option.
On December 27, 2019, the Ministry of Productive Development issued Resolution MDP No. 12/2019, repealing Resolution SGE No. 70/2018 and restoring Art. 8 of Resolution SE 95/2013. Beginning January 2020, CAMMESA
became the only fuel supplier for generation companies, except for (i) thermal units that had prior commitments with CAMMESA for energy supply contracts with their own fuel management and (ii) thermal units under the Energía
Plus regulatory framework, authorized under Resolution SE No.1281/06 to supply energy to large private users.
During 2023, 2022 and 2021 Central Puerto purchased the necessary fuel (natural gas) for the operation of some of its thermal units, as shown below:
2023
Month
CTM m3
Jan
Feb
Mar
Apr
May
Jun
Ju
Aug
Sep
Oct
Nov
Dec
Total
14,881,340
13,218,212
13,847,079
12,087,791
12,286,031
15,856,441
15,951,415
18,852,520
14,838,468
14,251,843
13,927,745
13,673,579
173,672,464
San Lorenzo m3
5,201,755
4,029,560
6,085,248
6,183,619
6,215,019
7,371,532
5,275,497
6,491,747
2,411,319
178,063
6,519,998
4,980,000
60,943,357
2022
CTM m3
15,819,284
16,532,233
18,642,353
17,627,279
15,372,168
16,704,685
16,013,669
17,412,873
14,748,176
14,056,107
14,037,683
14,463,834
191,430,344
San Lorenzo m3
-5,144,019
4,558,623
7,071,553
7,148,204
6,369,824
8,010,750
7,829,394
8,755,000
4,592,574
4,396,792
3,820,000
2,480,000
70,176,733
2021
CTM m3
18,504,503
16,781,755
18,445,797
17,989,779
17,437,714
18,243,763
19,058,930
18,786,859
18,478,034
18,972,571
16,962,509
15,961,667
215,623,882
San Lorenzo m3
--
-
-
-
-
-
-
3,800,800
7,297,078
3,312,013
3,034,497
2,060,498
19,504,886
Prices for sales of energy under Resolution SE No. 95/13 framework were set and paid in pesos, while prices under Resolution 19/17 were set in U.S. dollars and paid in pesos at the exchange rate as of day prior to the due date of each
monthly sale of energy under Resolution 19/17. In both cases, prices do not include the cost of fuel as, under these regulations, they are provided to the applicable generation company by CAMMESA free of charge.
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Payments by CAMMESA to generators related to the sale of energy under the Spot Sales during each month are due 42 days following the end of such month. As a result of delays in payments from distributors due to frozen tariffs,
since 2012 we have seen a delay in the full payment for the monthly transactions by CAMMESA, which completes their monthly payment up to 80 days following the end of the relevant month, and on occasion as many as 101 days
following the end of the month. There are periods in which CAMMESA experienced delays in paying (for further information on the duration of these delays see “Item 11. Quantitative and Qualitative Disclosures about Market Risk—
Credit Risk”).
Resolution 1/19, amended by Resolution 31/20 and subsequent regulations
On March 1, 2019, the former Secretariat of Renewable Resources and Electricity Market issued Resolution 1/19. This resolution repealed Resolution No. 19/17 in its entirety, although it maintained a remuneration scheme fixed in US
Dollars.
From February 1, 2020, a new remuneration scheme for Spot Sales came into force with Resolution 31/20, the main changes were:
·
·
·
·
·
·
·
·
·
Prices are set in Argentine pesos.
Initial variable energy price although denominated in Argentine pesos, remained almost unchanged. The applicable exchange rate between the new price in Argentine pesos and the previous price in U.S. dollars was
Ps.60 per U.S. dollar, similar to the average exchange rate during January 2020, of Ps.60.01 per U.S. dollar.
Initial power price for energy from thermal units were approximately reduced by 16.00% and set in Argentine pesos.
Generation units with less than 30% Utilization Factor in the last twelve months receive 60.00% of the price, compared to up to 70.00% before. Additionally, if the Utilization Factor is between the 30.00-70.00%
threshold the generation units receive a linear proportion between 60.00% and 100.00% of the power price, and if the Utilization factor is 70.00% or greater, the generation units receive 100.00% of the price.
Initial fixed power price for hydroelectric plants was approximately reduced by 45% and set in Argentine pesos.
A new remuneration scheme for peak demand hours generation was established to partially mitigate the fixed power price, taking into consideration the equipment the generating company has.
Since February 2021, remuneration prices described above, were updated by about 29.00% by Resolution 440/21. This new resolution also introduced other changes regarding generation revenues.
Since February 2022, remuneration had another update, by means of Resolution No. 238/22, with a 30.00% increase since February and an additional 10.00% increase since June 2022.
In December 2022, Resolution 826/22 adjusted the Spot Sales remunerations, providing for a retroactive 20.00% increase as of September 2022 and additional increases of 10.00%, 25.00% and 28.00% as of
December 2022, February 2023 and August 2023, respectively, while also introducing changes in methodology.
In February 2023, through Resolution No. 59/2023 the Secretariat of Energy authorized generators with combined cycle units to adhere to an agreement aimed at encouraging investments for major and minor maintenance activities in
connection with these facilities (the “Agreement on Availability of Power and Improvement of Efficiency”). Through the Agreement on Availability of Power and Improvement of Efficiency, the adhering generators undertake to
achieve at least 85.00% availability of average monthly power in exchange for a new power and generation price in both U.S. dollars and Argentine pesos.
In the case of power, the price was set at 2,000 USD/MW-month plus (i) 85.00% of the remuneration of power set forth in Resolution No. 826/22 in Argentine pesos (during spring and autumn) or (ii) 65.00% of the remuneration of
power set forth in Resolution No. 826/22 in Argentine pesos (during summer and winter). In the case of energy, the price was set at 3.5 USD/MWh for units that use gas and at 6.1 USD/MWh for units that use alternative fuels (i.e.
diesel).
On April 25, 2023, CAMMESA accepted the subscription to an agreement presented by us for all of our combined cycle units, except for the Buenos Aires unit belonging to CECO. Therefore, as from the transactions of March 2023
there was an increase in the remuneration of such units for their sales to the spot market, as described in the previous paragraph.
In the case of the Buenos Aires combined cycle, CAMMESA accepted the subscription to an agreement on July 28, 2023 (effective as from the July transactions), once it had successfully requested the Energy Secretariat to instruct
CAMMESA the following regarding the aforementioned thermal unit: a) the conversion to single fuel, i.e. operation only with natural gas, eliminating the possibility of using gas oil, and b) the adaptation of the installed power in line
with the real technical possibility of electricity production of the combined cycle. During October 2023, the corrective maintenance tasks of this unit were concluded; therefore, the increases in the remuneration of this unit were applied
as from the transactions of October 2023.
In September 2023, the Secretariat of Energy issued Resolution 750/23, which updated the remuneration scheme set forth by Resolution 826/22 as from September 2023 of 23%.
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In turn, Resolution 750/23 was later modified by means of Resolution No. 869/23, issued in October 2023 and applicable as from November of that same year including an increase of 28%.
Finally, in February 2024, the Secretariat of Energy issued Resolution No. 9/2024, modifying Resolution 869/23, and setting forth a remuneration scheme applicable as from February 2024 including an increase of 74%.
In short, in recent years, Spot Sales have been regulated by the following Resolutions:
·
·
·
·
·
·
·
·
·
·
Res. 19/17: from February 2017 to February 2019;
Resolution Res. 1/19: from March 2019 to January 2020;
Res. 31/2020: from February 2020 to January 2021;
Res. 440/21: from February 2021 to January 2022 (included);
Res. 238/22: from February 2022 to August 2022;
Res. 826/22: published in December 2022, which adjusted the Spot Sales remunerations, providing for a retroactive 20.00% increase as of September 2022 and additional increases of 10.00%, 25.00% and 28.00% for
December 2022, February 2023 and August 2023, respectively;
Res. 59/23: issued in February 2023. This resolution partially dollarize the remuneration for combined cycle units and is still in place.
Res. 750/23: from September to October 2023, which entails a 23% increase if compared with Res. 826/22;
Res. 869/23: from November 2023 to January 2024, which entails a 28% increase if compared with Res.750/23; and
Res. 9/24: as from February 2024, which entails a 74% increase if compared with Res. 869/23.
For further information see “Item 4.B. Business Overview—The Argentine Electric Power Sector—Remuneration Scheme—The Current Remuneration Scheme” and “—The Previous Remuneration Schemes”.
Sales Under Contracts, Steam Sales and Others
Sales under contracts
We have sales under contracts, including (i) term market sales under contract, (ii) MATER sales under contracts, (iii) Energía Plus sales under contract; and (iv) sales of energy under the RenovAr Program. Term market sales under
contract and Energía Plus sales under contract include power and energy sales from conventional sources under agreements signed with both private enterprises and government agencies. MATER sales under contracts and sales of
energy under the RenovAr Program include sales of electricity generated exclusively from non-conventional sources under negotiated contracts with private and public sector counterparties, respectively. La Castellana II, Manque, Los
Olivos and La Genoveva II have PPAs under the MATER framework and La Castellana I, Achiras, La Genoveva I and Guañizuil II A have PPAs under the RenovAr Program.
Steam supply to YPF—Luján de Cuyo plant
On December 15, 2017, we signed a new steam supply contract with YPF for a period of 15 years. New cogeneration units were set in place, in order to provide YPF Lujan de Cuyo refinery with 180 tn/h of steam. Commercial
operation started on October 5, 2019, this contract is denominated and invoiced in U.S. dollars. For further information on the steam supply agreements with YPF for the Luján de Cuyo plant, see “Item 5.A. Operating Results—Factors
Affecting Our Results of Operations—Sales Under Contracts, Steam Sales and Others —Steam supply to YPF—Luján de Cuyo plant”.
Steam supply to T6 Industrial S.A.— San Lorenzo plant
On December 27, 2017, we entered into a 15-year steam supply agreement with T6 Industrial S.A. for the new co-generation unit at our San Lorenzo plant. The new cogeneration can supply up to 370 tn/h of steam to T6 Industrial S.A.
Commercial operation started on October 31, 2021. On September 2, 2022, the parties entered into an amended and restated steam supply agreement, through which certain amendments and the purchase by Central Puerto of the real
estate property in which the plant is located were agreed.
Resale of natural gas transportation capacity
The contract between us and TGS for the natural gas transportation capacity has remained effective after the La Plata Plant Sale in 2018. Pursuant to the terms of our agreement with YPF EE, we resell our gas transportation capacity to
YPF EE through the resale system established by Resolution ENARGAS 419/97. The resale under such system is open to third parties and consequentially does not ensure that YPF EE will receive the gas transportation capacity needed
to operate the La Plata plant. Therefore, on January 25, 2018, we requested to be registered with the Ministry of Energy and the ENARGAS as a natural gas seller to permit the resale of our gas transportation capacity to YPF EE
without the risk of intervention from interested third parties. On July 20, 2018, we were effectively registered as natural gas sellers.
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Forestry sales
117
As a result of our acquisitions in the forestry industry, carried out in December 2022 and May 2023, we have another source of revenues provided by five subsidiaries: Forestal Argentina S.A., Loma Alta Forestal S.A., EVASA,
Estancia Celina S.A. and Las Misiones S.A. The year 2023 is the first one with forestry sales since Forestal Argentina S.A. and Loma Alta Forestal S.A. were acquired on December 27, 2022, and EVASA, Estancia Celina S.A. and Las
Misiones S.A. were acquired on May 3, 2023.
Electric Power Demand and Supply
Demand for electric power depends, to a significant extent, on economic and political conditions prevailing from time to time in Argentina, as well as seasonal factors. In general, the demand for electric power varies depending on the
performance of the Argentine economy, as businesses and individuals generally consume more energy and are better able to pay their bills during periods of economic stability or growth. As a result, electric power demand is affected by
Argentine Governmental actions concerning the economy, including with respect to inflation, interest rates, price controls, taxes and energy tariffs.
Following the 2001-2002 economic crisis, demand for electric power in Argentina grew consistently each year driven by the economic recovery and frozen tariffs. During 2014, electric power demand grew 0.98% compared to 2013,
from 125,239 GWh to 126,467 GWh. During 2015, electric power demand grew 4.45% compared to 2014, from 126,467 GWh to 132,110 GWh, while during 2016, electric power demand grew 0.65% to 132,970 GWh. A new 26,320
MW record of capacity load was registered on February 8, 2018, which was 3.70% above the peak for 2016. On January 29, 2019 there was a new record for energy demand for a business day of 544.4 GWh which was surpassed by the
peak of January 14, 2022, which was 5.80% above the peak for 2019.
Electricity generation increased by 1.92% in 2023, from 138,741GWh in 2022 to 141,398 GWh in 2023. The chart below shows the supply of electric power in Argentina by source, including generation within Argentina from
hydroelectric, thermal, nuclear, renewables, as well as electric power imported from neighboring countries (net of exports):
Source: CAMMESA.
Table of Contents
The following chart shows the demand of energy for the year ended December 31, 2023:
118
Demand
by
region
for year
2023
Total
Energy
Demand MWh
Puerto Complex
(1)
Costanera
Complex
Luján de Cuyo
Plant(1)
%
MWh
%
MWh
%
Brigadier
López
Plant(1)
MWh %
San Lorenzo
Plant(1)
Piedra del Águila
Plant(1)
MWh
%
MWh
%
La Castellana
MWh %
La
Castellana II
MWh %
Achiras
MWh %
Los Olivos
MWh %
Manque
MWh %
La Geno
MWh
Generation of Central Puerto plants
16,933,249
52,961,427
Great
Buenos
Aires
Province
Buenos
Aires
Litoral
Center
17,115,264
Northwest 12,486,373
Northeast 11,797,806
Cuyo
10,479,879
Patagonia 8,421,646
Comahue 5,545,962
5,370,838
10.1%
3,366,758
6.4%
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
66,764 0.4% 2,037,373 12.0%
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
3,137,980 37.3%
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
5,173,586 100.6%
-
-
-
-
-
-
-
398,035
-
-
-
-
-
-
-
2.3%
-
-
-
-
-
-
-
69,801
-
-
-
-
-
-
-
0.4%
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
187,612 1.5% 99,567 0.8% 237,830 1.9%
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
377,597
-
-
-
-
-
-
-
__________________
(1)
Generation by Central Puerto plants.
During 2023, thermal generation continued to be the main source of electricity supply for Argentina, contributing 73,018 GWh (52.00%), followed by hydroelectric generation net of pumping, which contributed 39,332 GWh (28.00%),
renewable generation, which contributed 20,085 GWh (14.00%) and nuclear generation, which contributed 8,963 GWh (6.00%). There were also imports to cover domestic demand, in the amount of 6,241 GWh (4.23% of the total
energy supplied, 1.10% lower than in 2022) from Uruguay, Paraguay and Brazil. Hydroelectric generation in 2023 registered a 30.00% increase when compared to 2022, mainly due to an increase of water levels, while thermal
generation registered a decrease of 11.00% mainly due to lower dispatch related to increased hydro dispatch. Nuclear generation registered a 20.00% increase when compared to 2022, driven by the re-commissioning of the Atucha II
power plant since August 2023 and the higher generation from the Embalse power plant as compared to 2022. In this sense, thermal generation continued to be the main source for the supply of electric power, fueled both by natural gas
and by liquid fuels (diesel oil and fuel oil), as well as mineral coal, mainly during the winter months. Finally, renewable energy generation increased 4.00% as compared to 2022, mainly due to the introduction of new wind and solar
farms.
During 2023, generation facilities increased their overall installed capacity from 42,927 MW in 2022 to 43,773 MW. This increase was caused mainly by an increase of 280 MW in solar farms, 396 MW in wind power plants, and 735
MW in combined cycles. There were no new hydro or nuclear projects in 2023. Regarding renewable sources, the system’s capacity was increased by 685 MW, where 396 MW corresponds to new wind farms, 280 MW to solar
photovoltaic projects, 6 MW to biogas and 3 MW of biomass.
The State of Emergency of the Argentine Electric Power Sector
The electric power sector has been significantly affected by the Public Emergency Law and the measures adopted as a consequence thereof. The emergency has been subsequently declared by means of (i) Decree No. 134/2015, (ii) the
Solidarity Law and (iii) recently, Decree No. 55/2023 that shall be effective until December 31, 2024. See “Item 4.B. Business Overview—The Argentine Electric Power Sector—Structure of the Industry—Emergency of the Electric
Power Sector”.
Public Bid Process for Thermal Energy Generation Units
Pursuant to Resolution SEE No. 21/16, the former Secretariat of Electric Energy called for bids to install new thermal generation units to become operational between Summer 2016/2017 (some of which are now operational) and
Summer 2017/2018. The power generation companies awarded the bids entered into a PPA with CAMMESA, denominated in U.S. dollars, and electric power and capacity from these units will be remunerated at the price indicated in
the bid and under the terms established in Resolution SEE 21/16. See “Item 4.B. Business Overview—The Argentine Electric Power Sector—Renewable Energy—Call for Bids for New Thermal Generation Capacity and Associated
Electricity Generation”.
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119
Pursuant to Resolution SEE No. 287-E/17, the Argentine Government called for proposals for the supply of electric power to be generated through existing units, the conversion of open combined cycle units into closed combined cycle
units or the installation of co-generation units. The main objectives behind this process were to (i) increase the supply of electric power generation from thermal generation units and (ii) strengthen the reliability of the Argentine electric
power system with efficient generation units that have their own permanent and guaranteed fuel supply thus reducing the need for electric transportation and lowering the costs of the Argentine Government and the WEM. See “Item
4.B. Business Overview—The Argentine Electric Power Sector—Renewable Energy—Thermal Power Tender Offer – SEE Resolution 287/2017”.
Public Bid Process for New Renewable Energy Generation Units
On March 22, 2016, the Secretariat of Electric Energy called for bids to install 1,000 MW of new renewable energy units (the “RenovAR Program”). This bid process is governed by Law No. 27,191 and Decree No. 531/16, which
encouraged the increase of energy generation from renewable sources by providing, among other things, significant tax benefits. See “Item 4.B. Business Overview—The Argentine Electric Power Sector—Structure of the Industry—
RenovAR (Round 1, Round 1.5 and Round 2): Bidding Process for Renewable Energy Generation Projects”.
During 2015, electric power generation from renewable sources was 0.40% of the total supply of electric power in Argentina. As established in Section 2 of the Law referenced above, the purpose of this law is to have these renewable
energy sources account for, at least, 8.00% of Argentina’s electric power consumption by December 31, 2017. During the second stage of the “National System for the Promotion of the Use of Renewable Energy Sources for Electricity
Production,” the goal is to have renewable energy sources account for 12.00% of Argentina’s electric power consumption by December 31, 2019, 16.00% by December 31, 2021, 18.00% by December 31, 2023, and 20.00% by
December 31, 2025, pursuant to Law No. 27,191.
The above framework provides a significant growth opportunity in the field of clean and renewable energies, especially considering that Large Users will be required to purchase energy from renewable sources in the same percentages
mentioned above and will be subject to penalties if they do not comply with these requirements.
Resolution No. 136-E/16, issued by the former Ministry of Energy and Mining and published in the Official Gazette on July 26, 2016, launched the public auction process for submitting bids for Round 1 of the RenovAR Program. On
October 7, 2016, the former Ministry of Energy and Mining finalized the auction process for the installation of new renewable energy units and, under Resolution No. 136-E/16, granted awards in the amount of 1,108.65 MW, with an
average price of US$59.58, including one biomass project, 12 wind energy projects and four solar energy projects. Of these, we were awarded one wind energy project for 99 MW of generating capacity at the price of US$61.50 per
MWh, as further explained below in “Expansion of Our Generating Capacity”.
On October 31, 2016, the former Ministry of Energy and Mining, pursuant to Resolution No. 252/16, launched Round 1.5 of the RenovAR Program as a continuation of Round 1. On November 25, 2016, the former Ministry of Energy
and Mining finalized the auction process for the installation of new renewable energy units and, under Resolution No. 281-E/16, granted awards in the amount of 1,281.5 MW, with an average price of US$53.98 per MWh, including 10
wind energy projects and 20 solar energy projects. Of these, we were awarded one wind energy project for 48 MW of generating capacity at the price of US$59.38 per MWh, as further explained below in “Proposed Expansion of Our
Generation Capacity”.
Following Rounds 1 and 1.5 of the RenovAR Program, the former Ministry of Energy and Mining pursuant to Resolution No. 275‑E/17, launched Round 2 of the programs on August 17, 2017, and granted awards in the amount of
2,043 MW of renewable power capacity.
We submitted bids for Round 2 of the RenovAR Program on October 19, 2017, and, on November 29, 2017, we were awarded a wind energy project called, “La Genoveva I,” which allowed us to add an additional capacity of 86.6 MW
to our portfolio and to continue to build a presence in the renewable energies sector.
Table of Contents
Expansion of Our Generating Capacity
The chart below shows the evolution of our power generating capacity since 2017:
120
Source: Central Puerto
________________________
(1)
(2)
(3)
Effective as of January 5, 2018, we sold the La Plata plant to YPF EE. For further information, see “Item 4.A. History and development of the Company—La Plata Plant Sale”.
On June 14, 2019 we purchased the Brigadier López plant.
On February 17, 2023, Proener acquired 75.68% of the capital and voting stock of Central Costanera. On February 22, 2024, the request submitted by Central Costanera for the decommissioning of the steam generation units
COSTTV04 and COSTTV06 -for a total installed capacity of 120 MW and 350 MW, respectively- was published in the Official Gazette of the Republic of Argentina.
On October 18, 2023, our subsidiary Proener, acquired 100% of the capital stock and votes of Cordillera Solar and Scatec Equinor Solutions Argentina S.A. (currently, CP Servicios Renovables S.A.), owner and operator,
respectively, of a photovoltaic plant located in the Province of San Juan.
(4)
As of December 31, 2023, we have an aggregate installed capacity of 7,173 MW. Installed capacity increased to 7,173 MW from 4,809 MW as a result of the acquisition of Central Costanera and of the acquisition of the solar power
plant Guañizuil II A.
Currently, although power capacity is considered to be enough to supply the demand, there is a need for the incorporation of new efficient capacity in Argentina, from both conventional and renewable sources, in order to replace old
inefficient units.
In recent years, we acquired 130 hectares of land in the north of the Province of Buenos Aires, in a convenient location for fuel delivery and future potential connection to power transmission lines. However, we cannot predict if or
when the Argentine Government will open new auctions of new capacity and because of the competition among generation companies in these auction processes, we cannot predict whether we will be awarded the projects and whether
we will be able to utilize these assets as intended.
We are also currently exploring several other options to diversify our generation assets to include sustainable power generation sources, including the following:
·
·
·
·
We successfully participated in CAMMESA’s auction for 10 MW of dispatch priority for our Parque Solar San Carlos Project under the MATER framework, located in San Carlos, province of Salta.
As of the date of this annual report, works for the closing of the combined cycle of the Brigadier Lopez Plant have started in February 2024, the agreement with the constructor, SACDE, was formalized. Under such agreement,
all the works and services necessary to complete the closure of the cycle were defined, with the “notice to proceed” having been delivered on February 26, 2024. Works are expected to be completed during 2025. The plant,
which has a dual-fuel Siemens SGT5-4000 F gas turbine with a total nominal power of 292 MW, is expected to increase its capacity by 140 MW thanks to the closing cycle. This means that total power output will reach 432
MW.
On February 17, 2023, Proener acquired from Enel Argentina 75.68% of the capital and voting stock of Central Costanera. As of the date of this annual report, the Central Costanera thermal power plant located in the city of
Buenos Aires consists of six turbo-steam units with an installed capacity of 1,131 MW and two combined cycle power plants with a capacity of 1,128 MW. On February 22, 2024, the request submitted by Central Costanera for
the decommissioning of the steam generation units COSTTV04 and COSTTV06 -for a total installed capacity of 120 MW and 350 MW, respectively- was published in the Official Gazette of the Republic of Argentina.
On October 18, 2023, our subsidiary, Proener, acquired 100% of the capital stock and votes of Cordillera Solar and Scatec Equinor Solutions Argentina S.A. (currently, CP Servicios Renovables S.A.), owner and operator,
respectively, of a photovoltaic plant located in the Province of San Juan.
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121
We believe we are well-positioned to identify and execute new growth opportunities. However, we cannot assure you that the Argentine Government will open new auction processes or that our bids will be successful or that we will be
able to enter into new PPAs in the future. See “Item 3D. Risk Factors—Risks Relating to our Business— Factors beyond our control may affect or delay the completion of the awarded projects or alter our plans for the expansion of our
existing plants”.
Sale of the La Plata Plant
On December 20, 2017, YPF EE accepted our offer to sell the La Plata plant for a total sum of US$31.5 million (without VAT), subject to certain conditions. On February 8, 2018, after such conditions were met, the plant was
transferred to YPF EE, including generation assets, personnel and agreements related to the operation and/or maintenance of La Plata plant’s assets, with effective date January 5, 2018. Consequently, as of December 31, 2017, the La
Plata plant was classified as a disposal group held for sale and its respective results were classified for the years ended December 31, 2018, and 2017 as a discontinued operation.
Presentation of Financial Statements in Pesos
Critical Accounting Policies
This discussion and analysis of our financial condition and results of operations is based upon our Audited Consolidated Financial Statements, which have been prepared in accordance with IFRS. The preparation of our Audited
Consolidated Financial Statements requires us to make estimates and judgments that affect the reported amounts of assets, liabilities, revenues and expenses and related disclosure of contingent liabilities.
Critical accounting policies are those that reflect significant judgments, estimates or uncertainties and could potentially lead to materially different results under different assumptions and conditions. We base our estimates on historical
experience and on various other assumptions that we believe to be reasonable under the circumstances, the results of which form the basis for making judgments about the carrying values of assets and liabilities that are not readily
apparent from other sources. Existing circumstances and assumptions about future developments, however, may change due to market changes or circumstances arising beyond our control. Such changes are reflected in the assumptions
when they occur. Therefore, actual results may differ from these estimates under different assumptions or conditions. These assumptions are reviewed at the end of each reporting period.
We have described below what we believe are our most critical accounting policies that involve a high degree of judgment and/or estimates and the methods of their application. For further information on the accounting policies and the
methods used in the preparation of the Audited Consolidated Financial Statements, see Note 2.2 to our Audited Consolidated Financial Statements.
Business Combinations
Business combinations are accounted using the acquisition method when the Group takes effective control of the acquired company. The Group will recognize in its financial statements the acquired identifiable assets, the assumed
liabilities, any non-controlling interest and, if any, goodwill according to IFRS 3.
The acquisition cost is measured as the aggregate of the transferred consideration, measured at fair value on that date, and the amount of any non-controlling interest in the acquiree. The Group will measure the non-controlling interest
in the acquiree at fair value or at the proportional interest in the identifiable net assets of the acquiree.
If the business combination is made in stages, the Group will measure again its previous holding at fair value at the acquisition date and will recognize income or loss in the consolidated statement of comprehensive income.
Goodwill is measured at cost, as excess of the transferred consideration regarding the acquired identifiable assets and the net assumed liabilities of the Group. If this consideration is lower than the fair value of the identifiable assets and
of the assumed liabilities, the difference is recognized in the consolidated statement of income. If the fair value of the net assets acquired is higher than the consideration paid, the Group reassesses whether it has properly identified all
the assets acquired and all the liabilities assumed and reviews the procedures used to measure the amounts to be recognized at the acquisition date. If the reassessment still results in an excess of the fair value of the net assets acquired in
comparison to the consideration paid, then the gain is recognized in the consolidated statement of income.
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122
As described in Note 20.5 of our Consolidated Financial Statements, on February 17, 2023, the Company acquired the company Central Costanera S.A. The fair value of the identifiable assets and liabilities transferred at the date of the
acquisition, which was determined in accordance with IFRS 3, is as follows:
Assets
Property, plant and equipment
Other non-financial assets
In thousands of
Pesos
80,546,470
2,156,269
Trade and other receivables
Other financial assets
Cash and cash equivalents
Liabilities
Trade and other payables
Interest-bearing debts and loans
Other non-financial liabilities
Compensation and employee benefits liabilities
Provisions
Deferred income tax liabilities
Total identifiable net assets measured at fair value
25,171,582
1,173,060
6,736,561
(5,359,654)
(22,077,936)
(3,779,158)
(3,743,777)
(1,288,155)
(809,380)
78,725,882
On the other hand, the Group decided to measure the non-controlling interest in the acquired company based on its proportional interest of the identifiable net assets of the acquired company.
The business combination was accounted for using the “acquisition method” set forth in IFRS 3. As a result of the application of such method, the Company considers that the consideration transferred amounting to Ps. 25.49 billion
plus the value of the non-controlling interest in the acquired company of Ps.19.15 billion is lower than the fair value of the assets acquired and liabilities assumed at the acquisition date. The Company reassessed whether it has properly
identified all the assets acquired and all the liabilities assumed and reviewed the procedures used to measure the amounts to be recognized at the acquisition date. After the reassessment there was still an excess of the fair value of the
net assets acquired in comparison to the sum of consideration paid and the value of the non-controlling interest.
Therefore, the Company recognized a gain from bargain purchase amounting to Ps. 34.08 billion in the statement of income for the year ended December 31, 2023.
The Company performed the allocation of the price and the valuation at fair value of the identifiable assets and the liabilities assumed with the assistance of assessment services performed by an independent specialist. Revenues and
loss before income tax accrued after the acquisition date amounted to Ps. 37.04 billion and Ps. 16.51 billion, respectively, and were included in the consolidated statement of income for the fiscal year ended December 31, 2023.
If the business combination had been made at the beginning of the fiscal year, revenues and loss before income tax for the period starting January 1, 2023 and ending December 31, 2023 would have amounted to Ps. 46.65 billion and
Ps. 1.32 billion respectively.
As described in Note 20.6 of our Consolidated Financial Statements, on May 3, 2023, the Company acquired the companies Empresas Verdes Argentina S.A., Las Misiones S.A. and Estancia Celina S.A. The fair value of the
identifiable assets and liabilities transferred at the date of the acquisition, which was determined in accordance with IFRS 3, is as follows:
Assets
Property, plant and equipment
Biological assets
Other non-financial assets
Trade and other receivables
Other financial assets
Cash and cash equivalents
Liabilities
Trade and other payables
Other non-financial liabilities
Compensation and employee benefits liabilities
Deferred income tax liabilities
Total identifiable net assets measured at fair value
In thousands of
Pesos
21,083,378
39,820,532
340,028
81,516
314,165
60,310
(56,897)
(190,277)
(149,632)
(6,901,257)
54,401,866
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123
The business combination was accounted for using the “acquisition method” set forth in IFRS 3. As a result of the application of such method, the Company considers that the consideration transferred amounting to Ps. 15.84 billion is
lower than the fair value of the assets acquired and liabilities assumed at the acquisition date.
The Company reassessed whether it has properly identified all the assets acquired and all the liabilities assumed and reviewed the procedures used to measure the amounts to be recognized at the acquisition date.
After the reassessment there was still an excess of the fair value of the net assets acquired in comparison to the consideration paid. Therefore, the Company recognized a gain from bargain purchase amounting to Ps.38.56 billion in the
consolidated statement of income for the year ended December 31, 2023.
The Company has made the purchase price allocation and the valuation at fair value of the identifiable assets and the liabilities assumed with the assistance of an independent specialist. The fair value of the biological assets
corresponding to mature plantations has been determined based on the price existing in the active market in which they operate, whereas the fair value of the biological assets corresponding to young plantations has been determined
based on the discounted cash flow.
Revenues and the Income before income tax after the acquisition date amounted to Ps. 2.54 billion and Ps. 9.65 billion respectively and were included in the consolidated statement of income for the fiscal year ended December 31,
2023.
The Company does not have the necessary information to disclose the foregoing figures as if the acquisition took place at the beginning of this fiscal year.
As described in Note 20.6 of our Consolidated Financial Statements, on December 27, 2022, the Company acquired the companies Forestal Argentina S.A. and Loma Alta Forestal S.A. The business combination was accounted for
using the “acquisition method” set forth in IFRS 3. As a result of the application of such method, the Company considered that the consideration transferred was lower than the fair value of the assets acquired, and liabilities assumed at
the acquisition date. Therefore, the Company recognized a gain from bargain purchase amounting to Ps. 37.91 billion in the consolidated statement of income for the year ended December 31, 2022. During 2023, the Company reviewed
the preliminary allocation of the price and the valuation at fair value of identifiable assets and assumed liabilities in 2022, and no modifications were identified.
Impairment of Property, Plant and Equipment and Intangible Assets
The Group assesses at each reporting period-end whether an existing event or one that took place after year end and provides additional evidence of conditions that existed at the end of the reporting period, indicates that an individual
component or a group of property, plant and equipment and/or intangible assets with limited useful lives may be impaired. If any indication exists, the Group estimates the asset’s recoverable amount. An asset’s recoverable amount is
the higher of the fair value less costs to sell, and the value-in-use. That amount is determined for an individual asset, unless the asset does not generate cash inflows that are largely independent of those from other assets or groups of
assets; in which case, the cash flows considered are the ones from the cash-generating unit (“CGU”) where such asset belongs. Where the carrying amount of an individual asset or CGU exceeds its recoverable amount, the individual
asset or CGU, as the case may be, is considered impaired and is written down to its recoverable amount.
In assessing value in use of an individual asset or CGU, the estimated future cash flows are discounted to their present value using a discount rate that reflects current market assessments of the time value of money and the risks specific
to the individual asset or CGU, as the case may be.
In determining fair value less costs to sell, recent market transactions are taken into account, if available. If no such transactions can be identified, an appropriate valuation model is used. These calculations are verified by valuation
multiples, quoted values for similar assets on active markets and other available fair value indicators, if any. The Group bases its impairment calculation on detailed budgets and forecast calculations which are prepared separately for
each of the Group’s CGU to which the individual assets are allocated. Impairment losses of continuing operations are recognized in a specific line of the consolidated statement of income.
In addition, for the assets for which an impairment loss had been booked, as of each reporting period-end, an assessment is made whether there is any indication that previously recognized impairment losses may no longer exist or may
have decreased.
Should there be such triggering event, the Group makes an estimate of the recoverable amount of the individual asset or of the cash generating unit, as the case may be.
A previously recognized impairment loss is reversed only if there has been a change in the assumptions used to determine the individual assets or CGU’s recoverable amount since the last impairment loss was recognized. The reversal
is limited so that the carrying amount of the asset or CGU does not exceed its recoverable amount, nor exceed the carrying amount that would have been determined, net of the related depreciation or amortization, had no impairment
loss been recognized for the asset or CGU in prior periods. Such reversal is recognized in the statement of income in the same line in which the related impairment charge was previously recognized , unless the asset is carried at a
revalued amount, in which case, the reversal is treated as a revaluation increase.
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124
The Group has identified a triggering of potential impairment of its property, plant and equipment and/or intangible assets with finite useful lives due to the uncertainty over the evolution of the rates denominated in Argentine pesos for
the spot market sales in relation to the evolution of the increase of costs due to inflation. On the other side, the Group has also identified a triggering of potential impairment reversal related to the evolution of the exchange rate in
comparison with the evolution of inflation.
As a result of the recoverability analysis, the Group determined that the net book value of the assets, did not exceed their recoverable, except for the assets comprising the cash generating unit corresponding to the Brigadier Lopez
thermoelectric power plant. On the other hand, the Group has reversed losses due to impairment in the following cash- generating units: combined cycle Luján de Cuyo, cogeneration unit Terminal 6 San Lorenzo, wind farms Manque
and La Genoveva, land of the thermoelectric power plants Puerto Nuevo and Nuevo Puerto, and a gas turbine.
CGUs Brigadier Lopez thermoelectrical plant, Luján de Cuyo Combined Cycle, Terminal 6 San Lorenzo cogeneration unit and Manque and La Genoveva wind farms
The Group estimated that the book value of the assets related to the Brigadier Lopez thermoelectrical plant exceeded its recoverable value by Ps.18.84 billion. Therefore, an impairment loss was determined in property, plant and
equipment for Ps.16.63 billion under "Electric power facilities and other equipment", "Land and buildings", "Construction in progress" and "Others" and in intangible assets for Ps. 2.21 billion which was charged to "Impairment of
property, plant and equipment and intangible assets" in the consolidated statement of income for the year ended December 31, 2023. After recognizing such impairment, the net book value of property, plant and equipment and
intangible assets of Brigadier Lopez thermoelectrical plant is Ps. 46,85 billion and Ps. 6.22 billion respectively. The Group estimated that the book value of the assets that form the cash-generating unit corresponding to the cogeneration
unit Terminal 6 San Lorenzo is lower than its recoverable value, therefore an impairment reversal of property, plant and equipment was determined for Ps. 25.52 billion in the items “Electric power facilities and other equipment”,
“Lands and buildings” and “Others”, and was recorded under the item “Reversal of impairment of property, plant and equipment and intangible assets” in the consolidated income statement for the fiscal year ended December 31, 2023.
After the recognition of the impairment reversal, the book value of the property, plant and equipment corresponding to the cogeneration unit Terminal 6 San Lorenzo amounts to Ps. 212.76 billion.
The Group estimated that the book value of the assets that form the cash-generating unit corresponding to the Lujan de Cuyo combined cycle is lower than its recoverable value, therefore an impairment reversal of property, plant and
equipment was determined for Ps. 4.21 billion in the items “Electric power facilities and other equipment”, “Lands and buildings” and “Others”, and was recorded under the item “Reversal of impairment of property, plant and
equipment and intangible assets” in the consolidated income statement for the fiscal year ended December 31, 2023. After the recognition of the impairment reversal, the book value of the property, plant and equipment corresponding to
the Lujan de Cuyo combined cycle amounts to Ps. 19.82 billion. Also, the Group estimated that the book value of the assets that form the cash-generating unit corresponding to the wind farm Manque is lower than its recoverable value.
Therefore an impairment reversal in property, plant and equipment was determined for Ps. 7.39 billion in the items “Lands and buildings”, “Wind turbines”, “Electric power facilities and other equipment” and “Others” and an
impairment reversal in intangible assets was determined for Ps. 3,182 million, both of which were recorded under the item “Reversal of impairment of property, plant and equipment and intangible assets” in the consolidated income
statement for the fiscal year ended December 31, 2023. After the recognition of the impairment reversal, the book value of the property, plant and equipment and intangible assets corresponding to the wind farm Manque amounts to Ps.
38.57 billion and Ps. 16,540 million. Finally, the Group estimated that the book value of the assets that form the cash-generating unit corresponding to the wind farm La Genoveva is lower than its recoverable value. Therefore an
impairment reversal of property, plant and equipment was determined for Ps. 16.14 billion in the items “Lands and buildings”, “Wind turbines”, "Electric power facilities and other equipment" and "Others", and an impairment reversal
of intangible assets was determined for Ps. 95,212 million, both of which were recorded under the item “Reversal of impairment of property, plant and equipment and intangible assets” in the consolidated income statement for the fiscal
year ended December 31, 2023. After the recognition of the mentioned impairment reversal, the book value of the property, plant and equipment and intangible assets corresponding to the wind farm La Genoveva amounts to Ps. 62.82
billion and Ps. 368.76 million, respectively.
In order to assess the recoverability of Brigadier Lopez thermoelectric plant, the Lujan de Cuyo combined cycle, the Terminal 6 San Lorenzo cogeneration unit and the Manque and La Genoveva wind farms, the value in use was
applied.
Key assumptions to estimate the value in use are the following:
Revenues: The revenues have been determined for the budgeted period based on the energy prices arising from the resolutions in force issued by the SE adjusted for projections of price increases and considering the energy supply
signed agreements, as applicable. In this sense, the Group considered different weighted alternatives in relation to the evolution of energy and power prices that remunerate the conventional energy generation units, which implied
the preparation of different scenarios with different estimates of expected cash flows and assigning probabilities of occurrence based on the Group's experience and expectations on the outcome of the uncertainties involved.
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Other relevant assumptions are described below:
125
Discount rate: it represents the current market assessment of the specific risks of the Company, taking into consideration the time-value of money. Discount rate calculation is based on the circumstances of the market participants and it
is derived from the weighted average cost of capital (WACC). The WACC rate takes into consideration both debt and equity. The cost of equity is derived from the expected return on investment by market participant investors, whereas
the cost of debt is based on the conditions of the debt which market participants could access to. The specific risks of the operational segment are incorporated by applying individual beta factors, which are annually assessed from the
available public information of the market.
Discount rates used to determine the value in use as of December 31, 2023 were 15.2% and 14.9%, depending on the term of the future cash flows. Any increase in the discount rate would entail an additional impairment loss for the
cash-generation unit Brigadier López thermoelectric plant.
Operational costs: Costs were estimated based on operation costs incurred in the past, being the most relevant cost the plants in maintenance, which was estimated based on the provisions from the agreements in force with the suppliers
Siemens Energy and Vestas Argentina.
Macroeconomic variables: estimated inflation and devaluation rates, as well as exchange rates, were obtained from external sources, which are well known consulting firms dedicated to the local and global economic analysis, widely
experienced in the market. Brigadier López thermoelectric plant, Luján de Cuyo Combined Cycle and Terminal 6 San Lorenzo cogeneration unit belong to the electric power generation from conventional sources operating segment
while wind farms Manque and La Genoveva belong to the electric power generation from renewable sources operating segment.
Land
The Group estimated that the book value of the land where the thermoelectrical plants Puerto Nuevo and Nuevo Puerto are located is lower than its recoverable value. Therefore, an impairment reversal of property, plant and equipment
was determined for Ps. 3.33 billion under the item “Lands and buildings” and recorded under the item “Reversal of impairment of property, plant and equipment and intangible assets” of the consolidated income statement for the fiscal
year ended December 31, 2023. After the recognition of the impairment reversal, the book value of the mentioned assets amounts to Ps. 16.58 billion.
To determine the recoverable value, the Group has used the fair value less costs to sell.
Gas Turbines
The Group revised during the fiscal year 2023 the recoverability of the turbines as individual assets and estimated that the book value of the gas turbine General Electric, which is stored in the facilities of Nuevo Puerto thermoelectrical
plant is lower than its recoverable value. Therefore, a partial reversal of impairment was recognized in property, plant and equipment for Ps. 6.14 within the item “Turbines” and was recorded under the item “Reversal of impairment of
property, plant and equipment and intangible assets” of the consolidated income statement for the fiscal year ended December 31, 2023.
To determine the recoverable value, the Group has used the fair value less costs to sell.
After the recognition of the impairment reversal, the book value of the gas turbine General Electric amounts to Ps. 15.90 billion.
New standards and interpretations adopted
As from the fiscal year beginning January 1, 2023, the Group has applied for the first time certain new and/or amended standards and interpretations as issued by the IASB. Below is a brief description of the new and/or amended
standards and interpretations adopted by the Group and their impact on these consolidated financial statements.
Definition of Accounting Estimates – Amendments to IAS 8
In February 2021, the IASB issued amendments to IAS 8, in which it introduces a definition of ‘accounting estimates’. The amendments clarify the distinction between changes in accounting estimates and changes in accounting
policies and the correction of errors. Also, they clarify how entities use measurement techniques and inputs to develop accounting estimates.
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126
The amendments are effective for annual reporting periods beginning on or after 1 January 2023 and apply to changes in accounting policies and changes in accounting estimates that occur on or after the start of that period.
The amendments did not have a significant impact on the Group´s consolidated financial statements.
Disclosure of Accounting Policies – Amendments to IAS 1 and IFRS Practice Statement 2
In February 2021, the IASB issued amendments to IAS 1 and IFRS Practice Statement 2 Making Materiality Judgements, in which it provides guidance and examples to help entities apply materiality judgements to accounting policy
disclosures. The amendments aim to help entities provide accounting policy disclosures that are more useful by replacing the requirement for entities to disclose their “significant” accounting policies with a requirement to disclose their
“material” accounting policies, and adding guidance on how entities apply the concept of materiality in making decisions about accounting policy disclosures.
The amendments to IAS 1 are applicable for annual periods beginning on or after January 1, 2023, with earlier application permitted. Since the amendments to the Practice Statement 2 provide non-mandatory guidance on the
application of the definition of “material” to accounting policy information, an effective date for these amendments is not necessary.
The Group has revisited their accounting policy information disclosures to ensure consistency with the amended requirements. These amendments did not have a significant impact on the Group’s consolidated financial statements.
Deferred Tax related to Assets and Liabilities arising from a Single Transaction–- Amendments to IAS 12
The amendments to IAS 12 Income Tax, narrow the scope of the initial recognition exception, so that it no longer applies to transactions that give rise to equal taxable and deductible temporary differences such as leases and
decommissioning liabilities. The amendments had no impact on the Group’s consolidated financial statements.
International Tax Reform - Pillar Two Model Rules - Amendments to IAS 12
The amendments to IAS 12 have been introduced in response to the OECD’s BEPS Pillar Two rules and
include:
A mandatory temporary exception to the recognition and disclosure of deferred taxes arising from the jurisdictional implementation of the Pillar Two model rules; and Disclosure requirements for affected entities to help users of the
financial statements better understand an entity’s exposure to Pillar Two income taxes arising from that legislation, particularly before its effective date.
The mandatory temporary exception -the use of which is required to be disclosed- applies immediately. The remaining disclosure requirements apply for annual reporting periods beginning on or after January 1, 2023, but not for any
interim periods ending on or before December 31, 2023.
As of the date of these financial statements, the adoption of the above-mentioned amendments has not taken any effects as there is no tax regulatory framework in the jurisdictions in which the Company operates related to said Reform
and additionally the Group does not exceed sales revenues in euros 750 million.
IFRS issued but not yet effective
The following new and/or amended standards and interpretations have been issued but were not effective as of the date of issuance of these consolidated financial statements of the Group. In this sense, only the new and/or amended
standards and interpretations that the Group expects to be applicable in the future are indicated. In general, the Group intends to adopt these standards, as applicable when they become effective.
On August 15, 2023, General Resolution CNV No. 972/2023 was published in the Official Gazette which indicates that the early application of IFRS and/or their amendments will not be allowed, unless specifically admitted by the
CNV.
Amendments to IAS 1: Classification of Liabilities as Current or Non-current
In January 2020 and October 2022, the IASB issued amendments to paragraphs 69 to76 of IAS 1 to specify the requirements for classifying liabilities as current or non-current. The amendments clarify:
·
·
·
·
(i) what is meant by a right to defer settlement;
(ii) that a right to defer must exist at the end of the reporting period;
(iii) that classification is unaffected by the likelihood that an entity will exercise its deferral right; and
(iv) that only if an embedded derivative in a convertible liability is itself an equity instrument would the terms of a liability not impact its classification. In addition, a requirement has been introduced to require disclosure when
a liability arising from a loan agreement is classified as non-current and the entity’s right to defer settlement is contingent on compliance with future covenants within twelve months.
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127
The amendments are effective for annual reporting periods beginning on or after 1 January 2024 and must be applied retrospectively. The Group is currently assessing the impact the amendments will have on current practice.
Supplier Finance Arrangements - Amendments to IAS 7 and IFRS 7
In May 2023, the IASB issued amendments to IAS 7 Statement of Cash Flows and IFRS 7 Financial Instruments: Disclosures to clarify the characteristics of supplier finance arrangements and require additional disclosure of such
arrangements. The disclosure requirements in the amendments are intended to assist users of financial statements in understanding the effects of supplier finance arrangements on an entity’s liabilities, cash flows and exposure to
liquidity risk.
A supplier finance arrangement is an arrangement where (i) a financial supplier pay the amount that a company owe to its commercial supplier and (ii) the mentioned company pays to the financial supplier in accordance with the
agreement terms.
The amendments will be effective for annual reporting periods beginning on or after 1 January 2024. Early adoption is permitted, but will need to be disclosed.
The amendments are not expected to have a material impact on the Group’s financial statements
IAS 21 "Effects of Changes in Foreign Currency Exchange Rates" - Absence of Convertibility
In August 2023, the IASB issued Lack of Exchangeability (Amendment to IAS 21). The amendment to IAS 21 specifies how an entity should assess whether a currency is exchangeable and how it should determine a spot exchange rate
when exchangeability is lacking.
If a currency is not exchangeable into another currency, an entity is required to estimate the spot exchange rate at the measurement date. An entity’s objective in estimating the spot exchange rate is to reflect the rate at which an orderly
exchange transaction would take place at the measurement date between market participants under prevailing economic conditions. The amendments note that an entity can use an observable exchange rate without adjustment or another
estimation technique.
When an entity estimates a spot exchange rate because a currency is not exchangeable into another currency, it discloses information that enables users of its financial statements to understand how the currency not being exchangeable
into the other currency affects, or is expected to affect, the entity’s financial performance, financial position and cash flows.
The amendments will be effective for annual reporting periods beginning on or after 1 January 2025. Early adoption is permitted, but will need to be disclosed. When applying the amendments, an entity cannot restate comparative
information.
The Enhancement and Standardization of Climate-Related Disclosures for Investors
On March 6, 2024, the Securities and Exchange Commission (SEC) issued the final rule on The Enhancement and Standardization of Climate-Related Disclosures for Investors. This rule mandates the disclosure of information
regarding a registrant’s climate-related risks that have materially impacted, or are reasonably likely to have a material impact on, its business strategy, results of operations, or financial condition.
In April 2024. the SEC voluntarily stayed its climate-related disclosure rules pending judicial review by the US Court of Appeals for the Eighth Circuit of the consolidated challenges to the rules. The SEC said in its order the stay will
facilitate the judicial resolution of the challenges and that it will continue to vigorously defend the rules’ validity in court.
IASB issues IFRS 18 Presentation and Disclosure in Financial Statements
IFRS 18 was issued on 9 April 2024 and becomes effective for reporting periods beginning on or after 1 January 2027. IFRS 18 introduces new requirements on presentation within the statement of profit or loss, including specified
totals and subtotals. It also requires disclosure of management-defined performance measures and includes new requirements for aggregation and disaggregation of financial information based on the identified ‘roles’ of the primary
financial statements and the notes. In addition, there are consequential amendments to other accounting standards.
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Segment Reporting
128
As of December 31, 2023, we divided our business into four segments: electric power generation from conventional sources, electric power generation from renewable sources, natural gas transport and distribution, and forest activity.
Management and operations of thermal plants are not included in these segments given that such information is not material for our business operations.
Results of Operations for the Years Ended December 31, 2023, 2022 and 2021
We discuss below: (i) our results of operations for the year ended December 31, 2023, as compared with our results of operations for the year ended December 31, 2022; and (ii) our results of operations for the year ended December 31,
2022, as compared with our results of operations for the year ended December 31, 2021.
Revenues
Cost of sales
Gross income
Administrative and selling expenses
Other operating income
Other operating expenses
Impairment reversal / (Impairment) of property, plant and equipment and
intangible assets
Operating income
(Loss) Gain on net monetary position
Finance income
Finance expenses
Share of the profit of associates
Gain from bargain purchase
Income before income tax
Income tax for the year
Net (loss) income for the year
Revenues
from Ordinary Activities
2023
313,568,164
(210,166,444)
103,401,720
(31,753,694)
237,706,231
(15,128,790)
43,994,536
338,220,003
(126,511,590)
230,203,826
(356,774,380)
6,115,780
72,645,358
163,898,997
(17,938,127)
145,960,870
Year ended December 31,
2022
(in thousands of Ps.)
315,744,637
(166,051,558)
149,693,079
(23,253,248)
111,837,412
(1,875,144)
(43,670,460)
192,731,639
(94,864,437)
79,527,910
(135,316,228)
347,325
37,911,293
80,337,502
(20,927,229)
59,410,273
2021
2023/2022
2022/2021
Change December 31,
(in percentages)
346,243,761
(179,326,913)
166,916,848
(25,183,782)
66,235,117
(4,899,121)
(47,102,661)
155,966,401
(10,033,044)
11,784,114
(108,067,187)
(3,424,273)
-
46,226,011
(50,155,953)
(3,929,942)
(0.69%)
26.57%
(30.92%)
36.56%
112.55%
706.81%
(200.74%)
75.49%
33.36%
189.46%
163.66%
1660.82%
91.62%
104.01%
(14.28%)
145.68%
(8.81%)
(7.40%)
(10.32%)
(7.67%)
68.85%
(61.72%)
(7.29%)
23.57%
845.52%
574.87%
25.21%
(110.14%)
100.00%
73.79%
(58.28%)
(1,611.73%)
Year ended December 31,
Change December 31,
Revenues from Spot Sales(1)
Sales under contracts(2)
Steam sales(3)
Resale of gas transport and distribution capacity
Revenues from CVO thermal plant management
Forestry Segment
Total revenues from ordinary activities
2023
155,523,697
131,012,781
14,789,842
1,858,093
4,568,538
5,815,213
313,568,164
2022
(in thousands of Ps.)
125,095,966
167,719,171
15,283,685
2,188,445
5,457,370
-
315,744,637
2021
2023/2022
2022/2021
144,468,508
182,679,073
10,409,047
1,868,300
6,818,833
-
346,243,761
(in percentages)
24.32%
(21.89%)
(3.23%)
(15.10%)
(16.29%)
n.a.
(0.69%)
(13.41%)
(8.19%)
46.83%
17.14%
(19.97%)
n.a.
(8.81%)
___________________________
(1)
Includes sales of energy and power to CAMMESA remunerated under Resolution No. 31/20, Resolution No. 440/21, Resolution No. 238/22 ,Resolution No. 826/22, Resolution No. 59/23, resolution No. 750/23, and
Resolution No. 869/23 (see “Item 4.B. Business Overview—The Argentine Electric Power Sector—Remuneration Scheme”).
Includes (i) term market sales under contracts and, (ii) energy sold under the Energía Plus, (iii) contracts under the MATER framework and (iv) RenovAr Program sales under contracts (for further information regarding term
market sales under contract, see “Item 4.B. Business Overview—Our Customers”).
Includes steam sold under steam sale contract with YPF from the Luján de Cuyo Plant and Terminal 6 Industrial S.A. from San Lorenzo cogeneration plant.
(2)
(3)
Table of Contents
Revenues
from Segments
Electric power generation from conventional sources
Electric power generation from renewable sources
Resale of gas transport and distribution capacity
Forestry Segment
Others net of adjustments and eliminations
Total revenues
2023 Compared to 2022
129
2023
Year ended December 31,
2022
(in thousands of Ps.)
251,232,057
56,866,766
165,127,506
-
(157,481,692)
315,744,637
246,099,601
55,226,719
148,154,740
5,815,213
(141,728,109)
313,568,164
2021
2023/2022
2022/2021
Change December 31,
268,729,908
68,826,723
186,722,670
-
(178,035,540)
346,243,761
(in percentages)
(2.04%)
(2.88%)
(10.28%)
n.a.
(10.00%)
(0.69%)
(6.51%)
(17.38%)
(11.57%)
n.a.
(11.54%)
(8.81%)
Revenues in 2023 totaled Ps. 313.57 billion, a 0.69% decrease from Ps. 315.74 billion in 2022. This decrease was primarily attributable to:
·
·
·
a 21.89% decrease in Sales under contracts, which amounted to Ps. 131.01 billion during 2023, as compared to Ps. 167.72 billion in 2022, mainly due to the ending of Brigadier López PPA, and to a lesser extent a
lower generation from our wind farms on the back of a lesser generation due to lower wind resource, being partially offset by the recent acquisition of the solar farm Guañizuil II A which contributed with sales of Ps.
1.8 billion in the fourth quarter of 2023.
a 16.29% decrease in revenues from CVO thermal plant management fees, which amounted to Ps. 4.57 billion during 2023, as compared to Ps. 5.46 billion in 2022.
a 15.10% decrease in resales of gas transport and distribution capacity, which totaled Ps. 1.86 billion in 2023, compared to Ps. 2.19 billion in 2022. The decrease in sales is merely an accounting matter. Prices and
quantities were stable during 2023, the decrease is basically explained by the dynamics of inflation and currency devaluation. During 2023, inflation was greater than currency devaluation, so when 2022 revenues are
adjusted by inflation to be restated in Pesos as of December 2023, the final amount is greater than the 2023 revenues.
A 3.23% decrease in steam sales, which totaled Ps.14.79 billion in 2023, compared to Ps.15.28 billion in 2022, despite a 2.95% increase in volumes, which is primarily explained by a non-cash effect prompted by the
aforementioned special combination of inflation and currency devaluation.
The decrease in revenues in 2023 was partially offset by a 24.32% increase in Spot Sales, which amounted to Ps. 155.52 billion during 2023, as compared to Ps. 125.10 billion in 2022, driven by a combination of the consolidation of
Central Costanera’s figures, the ending of Brigadier Lopez’s PPA contract, which began to be remunerated in the spot market and a higher energy dispatch from Piedra del Aguila hydro power plant, which was offset by the
aforementioned effect prompted by the combination of inflation and currency devaluation, a lower remuneration measured in US dollars, a lower generation from thermal units on the back of the lower demand of the period and the
higher availability of hydro resource.
Revenues attributable to forestry activities in the year ended December 31, 2023, totaled Ps. 5.82 billion. There were no forestry revenues during the years ended on December 31, 2022, and on December 31, 2021, since Forestal
Argentina S.A. and Loma Alta Forestal S.A. were acquired on December 27, 2022, and EVASA, Estancia Celina S.A. and Las Misiones S.A. were acquired on May 3, 2023 and financial results are applicable starting on January 1,
2023.
When we break revenues by segment, we can see that sales of electric power generation from conventional sources in the year ended December 31, 2023, totaled Ps. 246.10 billion, a 2.04% decrease from Ps. 251.23 billion in the year
ended December 31, 2022. This decrease is mainly attributable to the fact that the remuneration increases for spot energy sales during 2023 were not enough to compensate the increase in the inflation adjustment for 2022 sales.
Revenues attributable to electric power generation from renewable sources in the year ended December 31, 2023, totaled Ps.55.23 billion, a 2.88% decrease from Ps.56.87 billion in the year ended December 31, 2022. This decrease is
mainly attributable to the effect prompted by the combination of inflation and currency devaluation and to a lower generation from our wind farms on the back of a lesser wind resource.
Revenues attributable to resale of gas transport and distribution capacity sources in the year ended December 31, 2023, totaled Ps. 148.15 billion, a 10.28% decrease from Ps. 165.13 billion in the year ended December 31, 2022. As
mentioned above, the decrease in sales is merely an accounting matter, prompted by the aforementioned special combination of inflation and currency devaluation.
Revenues from the forestry segment were previously explained.
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2022 Compared to 2021
130
Revenues in 2022 totaled Ps. 315.74 billion, an 8.81% decrease from Ps. 346.24 billion in 2021. This decrease was primarily attributable to:
·
·
·
a 13.41% decrease in Spot Sales, which amounted Ps. 125.10 billion during 2022, as compared to Ps. 144.47 billion in 2021, mainly due to price adjustments behind inflation rates during 2022, partially offset by
higher generation from Piedra del Águila hydroelectric plant and the combined cycles located in the provinces of Mendoza and Buenos Aires.
a 8.19% decrease in Sales under contracts, which amounted Ps. 167.72 billion during 2022, as compared to Ps. 182.68 billion in 2021, mainly due to the ending of Brigadier López PPA, lower generation from Luján
de Cuyo cogeneration units and a decrease in the generation of La Genoveva I and CPR wind farms (Manque, Los Olivos and La Castellana II).
a 19.97% decrease in revenues from CVO thermal plant management fees, which amounted to Ps. 5.46 billion during 2022, as compared to Ps. 6.82 billion in 2021.
The decrease in revenues in 2022 was partially offset by:
·
·
a 46.83% increase in steam sales, which totaled Ps. 15.28 billion in 2022, compared to Ps. 10.41 billion in 2021, due to a 26.77% increase in the production of the thermal plant located in the Province of Mendoza and
a 2,197.47% increase in the San Lorenzo facility.
a 17.14% increase in resales of gas transport and distribution capacity, which totaled Ps. 2.19 billion in 2022, compared to Ps. 1.87 billion in 2021.
Revenues attributable to electric power generation from conventional sources in the year ended December 31, 2022, totaled Ps. 251.23 billion, a 6.51% decrease from Ps. 268.73 billion in the year ended December 31, 2021. This
decrease is mainly attributable to the decrease in Spot Sales and CVO fees described above, which was partially offset by the abovementioned increase in steam sales.
Revenues attributable to electric power generation from renewable sources in the year ended December 31, 2022, totaled Ps.56.87 billion, a 17.38% decrease from Ps.68.83 billion in the year ended December 31, 2021. This decrease is
mainly attributable to lower generation from La Genoveva I and CPR wind farms (Manque, Los Olivos and La Castellana II).
Revenues attributable to resale of gas transport and distribution capacity sources in the year ended December 31, 2022, totaled Ps.165.13 billion, a 11.57% decrease from Ps.186.72 billion in the year ended December 31, 2021. Prices
and quantities were stable during 2022, the decrease is basically explained by the dynamics of inflation and currency devaluation. During 2022, inflation was greater than currency devaluation, so when 2021 revenues are adjusted by
inflation to be restated in Pesos as of December 2022, the final amount is greater than the 2022 revenues. The decrease in sales is merely an accounting matter.
Cost of Sales
Inventories and biological assets at beginning of each year
Acquisition of biological assets
Purchases for each period
Employee compensation expense
Other long-term employee benefits
Depreciation of property, plant and equipment
Amortization of intangible assets
Energy and power purchase
2023
Year ended December 31,
2022
(in thousands of Ps.)
2021
2023/2022
2022/2021
Change December 31,
(in percentages)
73,976,337
39,820,532
31,399,079
41,700,159
2,894,147
63,605,059
6,145,363
1,466,205
11,094,075
48,101,462
34,188,222
26,389,627
1,072,843
48,238,614
12,334,159
948,672
13,389,501
-
37,456,133
26,288,224
1,248,486
46,330,005
18,645,411
1,170,600
566.81%
(17.22%)
(8.16%)
58.02%
169.76%
31.86%
(50.18%)
54.55%
(17.14%)
n.a.
(8.72%)
0.39%
(14.07%)
4.12%
(33.85%)
(18.96%)
Fees and remuneration for services
Maintenance expenses
Consumption of materials and spare parts
Insurance
Fees and royalties
Taxes and contributions
Taxes on bank credits and debits
Miscellaneous
Transfers to property, plant and equipment
Forestry and forestry production expenses
Forestry growth and revaluation of biological assets
Change in inventories
Inventories and biological assets at the end of year
Total cost of sales
Table of Contents
Electric power generation from conventional sources
Electric power generation from renewable sources
Resale of gas transport and distribution capacity
Forestry Segment
Others net of adjustments and eliminations
Total cost of sales
2023 Compared to 2022
9,273,477
21,606,026
13,173,185
9,232,370
4,036,400
432,537
45,643
790,984
(13,217,277)
2,469,707
12,658,919
(419,994)
(110,922,414)
210,166,444
131
9,486,361
17,216,231
7,603,566
5,625,912
2,303,666
395,394
57,922
190,367
-
-
-
14,780,802
(73,976,337)
166,051,558
8,499,454
22,053,818
6,988,271
7,788,489
2,334,782
540,507
55,686
79,913
(2,448,293)
-
-
-
(11,094,075)
179,326,913
(2.24%)
25.50%
73.25$%
64.10%
75.22%
9.39%
(21.20%)
315.50%
n.a.
n.a.
n.a.
(102.84%)
49.94%
26.57%
11.61%
(21.94%)
8.80%
(27.77%)
(1.33%)
(26.85%)
4.02%
138.22%
n.a.
n.a.
n.a.
n.a.
566.81%
(7.40%)
2023
Year ended December 31,
2022
(in thousands of Ps.)
179,457,000
19,409,265
120,530,232
5,395,181
(114,625,234)
210,166,444
139,936,949
20,199,641
134,093,751
-
(128,178,783)
166,051,558
2021
2023/2022
2022/2021
Change December 31,
152,779,050
20,495,496
143,806,932
-
(137,754,566)
179,326,913
(in percentages)
28.24%
(3.91%)
(10.11%)
n.a.
(10.57%)
26.57%
(8.41%)
(1.44%)
(6.75%)
n.a.
(6.95%)
(7.40%)
Cost of sales during the year ended December 31, 2023, totaled Ps.210.17 billion, a 26.57% increase from Ps.166.05 billion in 2022. This increase was mainly the result of a 32.26% increase in costs of production, mainly due to the
acquisition of companies made during the year and to the maintenance performed at the Lujan de Cuyo and Costanera power plants, resulting in higher (i) Employee compensation expenses and Other long-term employee benefits, (ii)
Depreciations of property, plant and equipment (iii) Consumption of materials and spare parts, (iv) Maintenance expenses and, (v) Insurance; being partially offset by lower Amortization of intangible assets.
Cost of sales attributable to electric power generation from conventional sources in the year ended December 31, 2023, totaled Ps.179.46 billion, a 28.24% increase from Ps.139.94 billion in the year ended December 31, 2022. This
increase is mainly explained by the cost consolidation from the acquisition of Central Costanera, which increased employee compensation expenses. Cost of sales attributable to electric power generation from renewable sources in the
year ended December 31, 2023, totaled Ps.19.41 billion, a 3.91% decrease from Ps.20.20 billion in the year ended December 31, 2022. This decrease is mainly attributable to lower (i) energy and power purchases, (ii) raw materials and
spare parts consumption and (iii) taxes and contributions, all partially offset by higher employee compensation expenses.
Cost of sales attributable to resale of gas, transport and distribution capacity in the year ended December 31, 2023, totaled Ps. 120.53 billion, a 10.11% decrease from Ps. 134.09 billion in the year ended December 31, 2022. The
decrease is merely an accounting matter, prompted by a special combination of inflation and currency devaluation. During 2023, inflation was greater than currency devaluation, so when 2022 costs are adjusted by inflation to be
restated in Pesos as of December 2023, the final amount is greater than the 2023 costs.
Cost of sales attributable to the forestry segment in the year ended December 31, 2023, totaled Ps.5.40 billion. There were no Cost of Sales attributable to the forestry segment during the years ended on December 31, 2022, and on
December 31, 2021, since the Forestry Segment was acquired on December 27, 2022, and financial results are applicable starting on January 1, 2023.
2022 Compared to 2021
Cost of sales during the year ended December 31, 2022, totaled Ps. 166.05 billion, a 7.40% decrease from Ps. 179.33 billion in 2021. This decrease was mainly the result of a 7.15% decrease in costs of production, mainly due to lower
(i) maintenance expenses, (ii) purchases of energy and power, (iii) insurance and (iv) depreciation and amortization, partially offset by (i) fees and compensation for services and (ii) consumption of materials and spare parts.
Cost of sales attributable to electric power generation from conventional sources in the year ended December 31, 2022, totaled Ps. 139.94 billion, an 8.41% decrease from Ps. 152.78 billion in the year ended December 31, 2021. This
decrease is mainly attributable to the decrease in maintenance expenses and purchases of energy and power, as described above.
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132
Cost of sales attributable to electric power generation from renewable sources in the year ended December 31, 2022, totaled Ps. 20.20 billion, a 1.44% decrease from Ps. 20.50 billion in the year ended December 31, 2021.
Cost of sales attributable to resale of gas transport and distribution capacity in the year ended December 31, 2022, totaled Ps. 134.09 billion, a 6.75% decrease from Ps. 143.81 billion in the year ended December 31, 2021. The decrease
is merely an accounting matter, prompted by a special combination of inflation and currency devaluation. During 2022, inflation was greater than currency devaluation, so when 2021 costs are adjusted by inflation to be restated in Pesos
as of December 2022, the final amount is greater than the 2022 costs.
Gross Income
2023 Compared to 2022
Gross income during the year ended December 31, 2023, totaled Ps. 103.40 billion, a 30.92% decrease from Ps. 149.69 billion during the year ended December 31, 2022, due to the above-mentioned reasons. Gross margin for the year
ended December 31, 2023, was 32.98% compared to a gross margin of 47.41% during the same period in 2022.
2022 Compared to 2021
Gross income during the year ended December 31, 2022, totaled Ps. 149.69 billion, a 10.32% decrease from Ps. 166.92 billion during the year ended December 31, 2021, due to the above-mentioned reasons. Gross margin for the year
ended December 31, 2022, was 47.41%, compared to a gross margin of 48.21% during the same period in 2021.
Administrative and Selling Expenses
Electric power generation from conventional sources
Electric power generation from renewable sources
Resale of gas transport and distribution capacity
Forestry Segment
Others net of adjustments and eliminations
Total administrative and selling expenses
2023 Compared to 2022
2023
Year ended December 31,
2022
(in thousands of Ps.)
2021
2023/2022
2022/2021
Change December 31,
28,222,382
1,921,495
31,126,116
1,609,817
(31,126,116)
31,753,694
21,064,610
2,188,638
28,993,257
-
(28,993,257)
23,253,248
21,910,617
3,273,162
37,701,469
-
(37,701,466)
25,183,782
(in percentages)
33.98%
(12.21%)
7.36%
n.a.
7.36%
36.56%
(3.86%)
(33.13%)
(23.10%)
n.a.
(23.10%)
(7.67%)
Administrative and selling expenses during the year ended December 31, 2023, totaled Ps.31.75 billion, a 36.56% increase from Ps.23.25 billion during the year ended December 31, 2022. This increase was primarily driven by the
consolidation of administrative cost from the acquired companies, resulting in an increase in (i) Maintenance expenses (ii) Employee compensation expenses, and (iii) Fees and remuneration for services, being partially offset by a
decrease in Insurance expenses.
2022 Compared to 2021
Administrative and selling expenses during the year ended December 31, 2022, totaled Ps. 23.25 billion, a 7.67% decrease from Ps. 25.18 billion during the year ended December 31, 2021. This decrease was primarily the result of a
reduction in taxes, maintenance expenses and fees and compensation for services during the year ended December 31, 2022.
Other Operating Income
Electric power generation from conventional sources
Electric power generation from renewable sources
Resale of gas transport and distribution capacity
Forestry Segment
Others net of adjustments and eliminations
Total other operating income
2023
Year ended December 31,
2022
(in thousands of Ps.)
211,721,234
10,829,622
6,283,765
15,021,037
(6,149,427)
237,706,231
106,181,448
5,518,119
4,255,737
-
(4,117,892)
111,837,412
2021
2023/2022
2022/2021
Change December 31,
63,549,986
2,564,834
6,101,706
-
(5,981,409)
66,235,117
(in percentages)
99.40%
96.26%
47.65%
n.a.
49.33%
112.55%
67.08%
115.15%
(30.25%)
n.a.
(31.16%)
68.85%
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133
Other operating income in the year ended December 31, 2023, totaled Ps. 237.71 billion, a 112.55% increase from Ps. 111.84 billion in the year ended December 31, 2022. This increase was primarily the result of an increase in foreign
exchange rates mainly due to a 78.09% devaluation of the peso with respect to the U.S. dollar in 2023 where the gain in the exchange rate difference is mainly associated with the CVOSA credit and the revaluation of biological assets
related to the forestry business segment.
2022 Compared to 2021
Other operating income in the year ended December 31, 2022 totaled Ps. 111.84 billion, a 68.85% increase from Ps. 66.24 billion in the year ended December 31, 2021. This increase was primarily the result of an increase in foreign
exchange rates mainly due to a 72.47% devaluation of the peso with respect to the U.S. dollar in 2022 where the gain in the exchange rate difference is mainly associated with the CVOSA credit.
Other Operating Expenses
Electric power generation from conventional sources
Electric power generation from renewable sources
Resale of gas transport and distribution capacity
Forestry Segment
Others net of adjustments and eliminations
Total other operating expenses
2023 Compared to 2022
2023
Year ended December 31,
2022
(in thousands of Ps.)
10,959,900
222,386
1,775,586
3,928,976
(1,758,058)
15,128,790
1,850,316
24,330
1,467,013
-
(1,466,515)
1,875,144
2021
2023/2022
2022/2021
Change December 31,
4,963,256
(64,134)
1,411,710
-
(1,411,711)
4,899,121
(in percentages)
492.33%
814.04%
21.03%
n.a.
19.88%
706.81%
(62.72%)
(137.94%)
3.92%
n.a.
3.88%
(61.72%)
Other operating expenses in the year ended December 31, 2023, totaled Ps. 15.13 billion, a 706.81% increase from Ps. 1.88 billion in the year ended December 31, 2022. This increase was primarily the result of an increase of (i) asset
retirement and (ii) Forestry expenses.
2022 Compared to 2021
Other operating expenses in the year ended December 31, 2022, totaled Ps.1.88 billion, a 61.72% decrease from Ps.4.90 billion in the year ended December 31, 2021. This decrease was primarily the result of a decrease in (i) the net
charge related to the provision for lawsuits and claims, (ii) the charge related to the allowance for doubtful accounts, and (iii) trade and interest.
Impairment of property, plant and equipment and intangible assets
Electric power generation from conventional sources
Electric power generation from renewable sources
Total impairment of property, plant and equipment and intangible assets
20,360,769
23,633,767
43,994,536
(18,592,606)
(25,077,854)
(43,670,460)
(47,102,661)
-
(47,102,661)
2023 Compared to 2022
2023
Year ended December 31,
2022
(in thousands of Ps.)
2021
2023/2022
2022/2021
Change December 31,
(in percentages)
209.51%
194.24%
200.74%
60.53%
(100.00%)
7.29%
In 2023, we recorded a Ps. 43.99 billion recovery gain related to the impairment reversal for the following assets: the Luján de Cuyo combined cycle power plant, the San Lorenzo cogeneration unit, the Manque and La Genoveva wind
farms, the GE turbine (Machinery and equipment and Others) and Other Land and Buildings, partially offset by the Brigadier Lopez thermoelectric power plant impairment. For further information, see “Item 5.A. Operating Results—
Critical Accounting Policies—Impairment of property, plant and equipment and intangible assets”.
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134
In 2022, we recorded a Ps. 43.67 billion impairment of property, plant and equipment and intangible assets charge, related to a reduction in the assessed value-in-use of the following assets that exceeded their previously recorded book
value: San Lorenzo cogeneration unit and La Genoveva and Manque wind farms.
2022 Compared to 2021
In 2022, we recorded a Ps. 43.67 billion impairment of property, plant and equipment and intangible assets charge, related to a reduction in the assessed value-in-use of the following assets that exceeded their previously recorded book
value: San Lorenzo cogeneration unit and La Genoveva and Manque wind farms. The main factor that influenced this impairment was the evolution of macroeconomic variables that led to an increase in the interest rates. For further
information, see “Item 5.A. Operating Results—Critical Accounting Policies—Impairment of property, plant and equipment and intangible assets”.
In 2021, we recorded a Ps. 47.10 billion impairment of property, plant and equipment and intangible assets charge, related to a reduction in the assessed value-in-use of the following assets that exceeded their previously recorded book
value: Thermal Station Brigadier López, Luján de Cuyo Combined Cycle Power Plant, Nuevo Puerto combined cycle power plant and San Lorenzo cogeneration unit. Some of the factors that influenced this reduction were the limited
useful life of some of these assets, the current economic uncertainties, and the effects from the repeal of the spot market price update mechanism established by Resolution No. 440/21 of the Secretariat of Energy.
Operating Income
Electric power generation from conventional sources
Electric power generation from renewable sources
Resale of gas transport and distribution capacity
Forestry Segment
Others net of adjustments and eliminations(1)
Total operating income
2023 Compared to 2022
2023
Year ended December 31,
2022
(in thousands of Ps.)
2021
2023/2022
2022/2021
Change December 31,
259,542,322
68,136,962
1,006,571
9,902,276
(368,128)
338,220,003
175,969,024
14,894,422
4,829,222
-
(2,961,029)
192,731,639
105,524,310
47,687,033
9,904,264
-
(7,149,206)
155,966,401
(in percentages)
47.49%
357.47%
(79.16%)
n.a.
(87.57 %)
75.49%
66.76%
(68.77%)
(51.24%)
n.a.
(32.19%)
23.57%
Operating income in the year ended December 31, 2023, totaled Ps 338.22 billion, a 75.49% increase from Ps. 192.73 billion in the year ended December 31, 2022. This results as a combination of (i) lower sales as previously explained
and (ii) higher operating cost related to the consolidation of acquired companies, being fully offset by (i) the impairment reversal recorded in the year, and (ii) the positive exchange differences of the CVOSA credit.
2022 Compared to 2021
For the reasons explained above, operating income in the year ended December 31, 2022, totaled Ps. 192.73 billion, a 23.57% increase from Ps. 155.97 billion in the year ended December 31, 2021. This is mainly explained by (i) an
increase in steam sales and resale of gas transport and distribution capacity, offset by a decrease in CVO management fees and Spot Sales, (ii) an increase and changes in currency exchange references, and (iii) a decrease in the costs of
sales, primarily driven by lower (x) maintenance expenses, (y) purchases of energy and power and a significant minor growth in (a) depreciation and (b) consumption of materials and spare parts.
(Loss) Gain on net monetary position
2023 Compared to 2022
Loss on net monetary position in the year ended December 31, 2023, totaled Ps. 126.51 billion, a 33.36% increase from Ps. 94.86 billion in the year ended December 31, 2022.
2022 Compared to 2021
Loss on net monetary position in the year ended December 31, 2022, totaled Ps. 94.86 billion, an 845.52% increase from Ps. 10.03 billion in the year ended December 31, 2021.
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Finance Income
2023 Compared to 2022
Finance income in the year ended December 31, 2023, totaled Ps. 230.20 billion, a 189.46% increase from Ps. 79.53 billion in the year ended December 31, 2022. This increase was primarily the result of (i) a 237.34% increase in
earned interest from Ps. 1.72 billion in 2022 to Ps. 5.80 billion in 2023, (ii) a 213.71% increase in net income on financial assets at fair value through profit or loss, which increased from Ps. 69.97 billion in 2022 to Ps. 219.49 billion in
2023 and partially offset by (iii) a 37.37% decrease in results of interest rates swaps, which decreased from Ps. 7.84 billion in 2022 to Ps. 4.91 billion in 2023.
2022 Compared to 2021
Finance income in the year ended December 31, 2022, totaled Ps. 79.53 billion, a 574.87% increase from Ps. 11.78 billion in the year ended December 31, 2021. This increase was primarily the result of (i) a 628.98% increase in earned
interest from Ps. 0.24 billion in 2021 to Ps. 1.72 billion in 2022, (ii) a 730.34% increase in net income on financial assets at fair value through profit or loss, which increased from Ps. 8.43 billion in 2021 to Ps. 69.97 billion in 2022 and
(iii) a 151.19% increase in results of interest rates swaps, which increased from Ps. 3.12 billion in 2021 to Ps. 7.84 billion in 2022.
Finance Expenses
2023 Compared to 2022
Finance expenses in the year ended December 31, 2023, totaled Ps. 356.77 billion, a 163.66% increase from Ps. 135.32 billion in the year ended December 31, 2022. This increase was primarily the result of a higher foreign exchange
difference, which increased from Ps. 113.17 billion in 2022 to Ps. 328.25 billion in 2023, mainly due to a higher depreciation of the Argentine peso.
2022 Compared to 2021
Finance expenses in the year ended December 31, 2022 totaled Ps. 135.32 billion, a 25.21% increase from Ps. 108.07 billion in the year ended December 31, 2021. This increase was primarily the result of a higher foreign exchange
difference, which increased from Ps. 74.99 billion in 2021 to Ps. 113.17 billion in 2022, mainly due to a higher depreciation of the Argentine peso.
Share of the Profit of Associates
2023 Compared to 2022
Share of the profit of associates in the year ended December 31, 2023, totaled a gain of Ps.6.12 billion during 2023 compared to a gain of Ps. 0.35 billion in 2022, mainly due to the gains resulting from the operations of Ecogas in 2023.
2022 Compared to 2021
Share of the profit of associates in the year ended December 31, 2022, totaled a gain of Ps.0.35 billion during 2022 compared to a loss of Ps. 3.42 billion in 2021, mainly due to the gains resulting from the operations of Ecogas in 2022.
Gain from bargain purchase
2023 Compared to 2022
In the year ended December 31, 2023, a bargain purchase for Ps. 72.65 billion was recorded, resulting from the acquisitions of Central Costanera S.A, Empresas Verdes Argentina S.A., Las Misiones S.A. and Estancia Celina S.A. See
Note 2.3.20 to our Audited Consolidated Financial Statements for the year ended on December 31, 2023. See “Item 5. Business Combinations”.
2022 Compared to 2021
In the year ended December 31, 2022, a bargain purchase for Ps. 37.91 billion was recorded, resulting from the acquisitions of Forestal Argentina S.A. and Loma Alta Forestal S.A. See Note 2.2.20 to our Audited Consolidated
Financial Statements for the year ended on December 31, 2022.
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Income Tax
2023 Compared to 2022
136
Income tax in the year ended December 31, 2023, totaled Ps. 17.94 billion, a 14.28% decrease from Ps. 20.93 billion in the year ended December 31, 2022. Our effective tax rate for the year ended December 31, 2023, and 2022 was
10.94% and 26.05%, respectively. This decrease was mainly due to accounting positive results, mainly explained by the fact that the result from the acquisition of participation in companies does not generate income tax charge and, in
turn, due to a decrease in the balance of deferred liabilities resulting from tax losses recognized during the year.
2022 Compared to 2021
Income tax in the year ended December 31, 2022, totaled Ps. 20.93 billion, a 58.28% decrease from Ps. 50.16 billion in the year ended December 31, 2021. Our effective tax rate for the year ended December 31, 2022, and 2021 was
26.05% and 108.50%, respectively. This decrease was mainly due to the changes in tax rate of the corporate income tax that took place in 2021, business combination tax effects and effects related to the discount of income tax payable.
Net Income (loss) for the Year
2023 Compared to 2022
For the reasons described above, net income for the year ended December 31, 2023, totaled Ps. 145.96 billion, compared to a net income of Ps. 59.41 billion in the year ended December 31, 2022.
2022 Compared to 2021
For the reasons described above, net income for the year ended December 31, 2022, totaled Ps. 59.41 billion, compared to a net loss of Ps. 3.93 billion in the year ended December 31, 2021.
Significant balance sheet variations discussion
Property, plant & equipment
Our PP&E balance at the end of the year 2023 amounted to Ps.758.93 billion, increasing 23.14% compared to the Ps.616.32 billion at the end of the year 2022, mainly as a result of the acquisitions carried out during 2023, which
include the purchase of Central Costanera S.A, the forestry companies Empresas Verdes Argentina S.A (EVASA), Estancia Celina S.A. and Las Misiones S.A. and Cordillera Solar VIII S.A.
Biological assets
The company's biological assets increased by 102.19% to Ps.96.00 billion in 2023 from Ps.47.48 billion in 2022, basically as a result of the acquisitions of Empresas Verdes Argentina S.A. (EVASA), Las Misiones S.A. and Estancia
Celina S.A. and the revaluation of the biological assets of the companies Forestal Argentina S.A. and Loma Alta Forestal S.A.
Trade and other receivables
Trade and other receivables during the year ended December 31, 2023, totaled Ps.315.88 billion, a 17.66% increase from Ps.268.47 billion in 2022. This increase was primary the result of higher foreign exchange rates due to the peso
depreciation during 2023, that have a direct impact on those receivables denominated in US$, mainly on those related to the CVOSA credit, the consolidation of receivables from Central Costanera and longer delays in CAMMESA's
collections.
Loans and borrowings
Loans and borrowing jumped by 69.70% during the year 2023, reaching Ps.335.18 billion, from Ps.197.52 billion in 2022. This increase was mainly the result of a combination of the consolidation of the financial debt from the
acquisition of Central Costanera and Cordillera Solar VIII S.A, the issuance of the senior notes series A and B and the depreciation of the Peso, being all partially offset by the maturity of the Manque and Olivos dollar-linked notes and
the precancellation of the Brigadier Lopez syndicated loan (fully amortized in January 2024).
Item 5.B Liquidity and Capital Resources
As of December 31, 2023, we had cash and cash equivalents of Ps.13.47 billion, and other current financial assets of Ps. 89.84 billion. See Notes 13 and 10.5 to our Audited Consolidated Financial Statements.
Our primary sources of liquidity have been cash flows from operating activities.
Our receivables from CAMMESA also are an important source of liquidity for us. As of December 31, 2023, our current trade and other receivables from CAMMESA totaled Ps. 137.37 billion.
Our primary cash requirements have been in connection with payments under loans and other financing agreements, employees’ salaries, operating and maintenance expenses and fixed assets investments, taxes, overhead expenses and
contributions to affiliates (used in acquisitions of subsidiaries and associates). See “Item 5.A.—The State of Emergency of the Argentine Electricity Sector—Expansion of our Generating Capacity”.
Over the last years we used part of our surplus funds for dividend payments. During 2023, we also approved and distributed dividends to our shareholders. See “Item 8— Financial Information — Dividends and Dividend Policy”.
Our loans and other borrowings contain customary covenants for facilities of each type, including: (i) certain limitations on consolidations, mergers, and sales of assets; (ii) restrictions on incurring additional indebtedness; (iii)
restrictions on paying dividends; (iv)limitations on making capital expenditures; and (v) restrictions on the incurrence of liens. Certain events of default and covenants are subject to certain thresholds and exceptions. We do not expect
these restrictions to have a material impact on our ability to meet our cash obligations. As of the date of this annual report, we are in compliance with all of our debt covenants.
We do not discard the option to pursue potential financing alternatives, if the conditions are favorable.
As of the date of this annual report, we also have uncommitted lines of credit with commercial banks, totaling approximately Ps. 89.8 billion.
On July 31, 2020, our Special Shareholders’ Meeting approved the creation of a new global issuance program of corporate bonds for a maximum amount of up to US$500,000,000 (or its equivalent in other currency), which shall be
issued at short, mid or long term, simple, not convertible into shares, under the terms of the Corporate Bonds Act (the “Program”). Moreover, the Board of Directors was granted the powers to determine and establish the conditions of
the Program and of the corporate bonds to be issued under it provided they had not been expressly determined at the Shareholders’ Meeting. On October 29, 2020, CNV approved the creation of such program, which shall expire on
October 29, 2025, in accordance with the regulations in force.
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Within this Program’s framework, we issued two types of corporate bonds. On the one hand, the integration and settlement of the Class A Corporate Bond (CB) denominated, integrated and payable in US dollars abroad took place on
September 17, 2023. The characteristics of this CB are the following: (i) face value issued: US$37,232,818, (ii) interest rate, determined by bidding: 7%, (iii) periodicity of the interest coupon: six months, (iv) amortization: bullet, (v)
term: 30 months to be counted as from September 17, 2023, and (vi) applicable law and deposit place: Argentina, Caja de Valores S.A. On the other hand, the integration and settlement of the international bond denominated “10%
Senior Notes due 2025” (Class B CB) took place on October 17, 2023. Such bond is denominated, integrated and payable in US dollars abroad, under the Reg S scheme. The characteristics of this bond are the following: (i) face value
issued: US$50,000,000, (ii) interest rate, determined by bidding: 10%, (iii) periodicity of the interest coupon: six months, (iv) amortization: bullet, (v) term: 24 months to be counted as from October 17, 2023, and (vi) applicable law
and deposit place: New York, Euroclear.
Finally, on October 20, 2023, we decided to reopen the Class A CB. This procedure allows to offer in the market a security which replicates the conditions of the security already offered, incorporating the interest rate determined in the
original offer (7%) and to bid the price. As a result of this process, we issued additional US$10,000,000 for the Class A CB, with an issuance price of 102.9%.
On October 19, 2023, we made a prepayment to the syndicated loan celebrated with Citibank N.A., JP Morgan Chase Bank N.A. and Morgan Stanley Senior Funding INC for an amount of US$49,043,078. This prepayment allowed
Central Puerto to make dividend payments that were restricted by this loan. As of the date of this annual report, the Company has no restrictions associated with this loan to pay dividends. After such payment, the principal due
amounted to US$6,056,922,which was fully paid on January 12, 2024.
As for CP Manque S.AU. and CP Los Olivos S.A.U. Corporate Bonds Class I were fully paid on September 2, 2023.
We believe that our sources of liquidity, which are mainly the result of operations, will be sufficient to meet our debt service and working capital requirements for the foreseeable future. We do not expect to have any material
requirements regarding capital expenditures except for the requirements for the Brigadier Lopez close cycle, the San Carlos (capital expenditures) and Guañizuil II A (debt repayments to Equinor Wind Power AS) solar farm projects
and the above mentioned payments.
For the year 2024, our debt repayment flows are of about USD 58.9 million.
However, any further deterioration of the current economic situation may result in a deterioration of our finances, in a context of lack of access or substantial reduction of credit availability in the financial markets, which could affect
our financial condition and results of operation.
Receivables from CAMMESA
We hold receivables in the form of LVFVD for the unpaid balances from CAMMESA relating to the sale of electric power to CAMMESA from 2008 to 2011. For further information, see “Item 4.B. Business Overview—
FONINVEMEM and Similar Programs”. Under the FONINVEMEM and similar arrangements, we are entitled to collect our receivables, including interest, in monthly installments over ten years starting from, the commercial launch
date of the CVOSA combined cycle. For further information, see “Item 4.B. Business Overview—FONINVEMEM and Similar Programs”.
Following the commercial authorizations granted to the Manuel Belgrano power plant (on January 7, 2010) and the San Martín power plant (on February 2, 2010), we started to collect monthly payments of the receivables relating to the
sale of electric power to CAMMESA from January 2004 through December 2007.
As of March 20, 2018, CAMMESA granted the CVO Commercial Approval in the WEM, as a combined cycle, of the thermal plant Central Vuelta de Obligado, which entitled us to receive the collection of the trade receivables under
the CVO Agreement. A PPA between the CVO Trust and CAMMESA, through which the CVO Trust makes energy sales and, consequently, receives the cash flow to pay the trade receivables, had to be signed in order to start the
collections. The PPA agreement was signed on February 7, 2019, with retroactive effect to March 20, 2018. As a result, the original amortization schedule from the CVO Agreement is in full force and effect. As of December 31, 2023,
the CVO “LVFVD 2008-2011 receivables” totaled Ps. 205.08 billion.
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After the CVOSA power plant became operational, in the case of receivables accrued between 2008 and September 2010, the amount due was converted into U.S. dollars at the exchange rate effective at the date of the CVO Agreement
(i.e., November 25, 2010), which was Ps.3.97 per U.S. dollar. Additionally, certain receivables that accrued after September 2010 and that were also included in the CVO Agreement, were converted into U.S. dollars at the exchange rate
effective at the due date of each monthly sale transaction. The total estimated amount due was US$548.0 million plus accrued interests after the CVO Commercial Approval. The U.S. denominated monthly payments under the CVO
Agreement are payable in pesos, converted at the applicable exchange rate in place at the time of each monthly payment.
Credits under the framework of the CVO Agreement are included in the CAMMESA Trade Debtors line. CVO Credits are denominated in US dollars and bear a one-month TERM SOFR + Credit Adjustment Spread (CAS) of
0.11448% interest rate plus 5%.
As a result of the Central Costanera acquisition, we have incorporated the portion of the CVO agreement that this company was entitled to receive for the LVFVD 2008-2011 receivables. Starting on February 17,2023 the total estimated
amount due to us was US$17.86 million.
During 2022, we collected Ps. 38.64 billion in CVO receivables, measured in current amounts as of December 31, 2023. During 2023, we collected Ps. 36.94 billion in CVO receivables, measured in current amounts as of December 31,
2023.
Additionally, we held receivables in the form of LVFVD for the unpaid balances from CAMMESA relating to the sale of electric power to CAMMESA under the additional trust remuneration concept since 2012. On September 3, 2019,
CAMMESA and Central Puerto (in accordance with a general offer made to all generators) entered into a final agreement to settle the LVFVD receivables balance. As a result, a 18% reduction of principal amount and accrued interest
as of such date was achieved. Moreover, we waived any complaint related to such receivables.
For further information regarding sales relating to additional trust remuneration and non-recurring maintenance, see “Item 5.A. Operating Results—Our Revenues—The Spot Sales” and “Item 4.B. Business Overview—The Argentine
Electric Power Sector—Remuneration Scheme—The Previous Remuneration Schemes”.
Cash Flows
The following table sets forth our cash flows from our operating, investing and financing activities for the periods indicated:
Net cash flows provided by operating activities
Net cash flows used in investing activities
Net cash used in financing activities
(Decrease) Increase in cash and cash equivalents, net
Net Cash Provided by Operating Activities
2023 Compared to 2022
Year ended December 31,
(in thousands of Ps.)
2022
2023
125,614,776
(63,577,512)
(79,753,979)
(17,716,715)
173,261,569
(97,345,541)
(50,780,490)
25,135,538
2021
157,934,095
(42,002,152)
(116,266,519)
(334,576)
Net cash provided by operating activities decreased by 27.50% to Ps. 125.61 billion for the year ended December 31, 2023, from Ps. 173.26 billion for the year ended December 31, 2022. The result was primarily driven by (i) an
income for the year before income tax of Ps. 163.90 billion, and (ii) Ps 29.32 billion in interest received from clients, including the ones from the FONI program, being partially offset by (iii) Ps 34.34 billion in income tax paid in the
period, (iv) non-cash adjustments in the operating income of Ps. 27.34, and (v) Ps 5.09 billion in negative working capital variations.
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2022 Compared to 2021
139
Net cash provided by operating activities increased by 9.70% to Ps.173.26 billion for the year ended December 31, 2022, from Ps.157.93 billion for the year ended December 31, 2021. The result was primarily driven by (i) an income
for the year before income tax of Ps.80.34 billion, (ii) non-cash adjustments in the operating income of loss Ps. 65.67 billion (a) Ps. 60.57 billion in depreciations and amortizations, (b) Ps. 43.67 billion in impairment of property, plant
and equipment and intangible assets charge, (c) Ps. 20.71 billion in interest earned from customers, (d) Ps. 55.79 billion loss in finance income/costs, net from finance costs, (e) Ps. 37.91 billion in gain from bargain purchase, (f) Ps.
85.08 billion in foreign exchange difference on trade receivables, (g) Ps. 52.08 billion for the loss on net monetary position, (h) Ps. 4.17 billion gain from insurance recoveries, (i) Gain on sale of property, plant and equipment of Ps.
0.06 billion, (j) Allowance for impairment on materials of Ps. 1.59 billion, (k) Movement in provisions and charge to long-term employee benefit plan of Ps. 1.07 billion, (l) Ps. 0.82 billion in deduction of tax credits, and (m) Ps. 0.35
billion gain on equity in net income of associates, (iii) a decrease of Ps. 31.26 billion of the stock of trade receivables, mainly related to the FONI collections, (iv) a decrease of Ps. 10.56 billion in other non-financial assets and
inventories, (v) Ps. 18.03 billion in collection of interests from clients, including the ones from FONI and (vi) Ps. 3.92 billion in insurance recovery collected, which was partially offset by (vii) Ps. 25.06 billion from income tax
recovered and (viii) Ps. 11.47 billion in trade and other payables, other non-financial liabilities and liabilities from employee benefits.
Net Cash Used in Investing Activities
2023 Compared to 2022
Net cash used in investing activities decreased by 34.69% to Ps. 63.58 billion for the year ended December 31, 2023, from Ps. 97.35 billion for the year ended December 31, 2022. The result was primarily driven by (i) Ps. 22.79 billion
from the acquisition of short-term financial assets, net, that were lower than during 2022 and 2021, (ii) Ps. 36.02 billion in payments for the acquisition of subsidiaries and associates, net of cash acquired, mainly related to the
acquisition of CECO, Empresas Verdes Argentina S.A., Las Misiones S.A. and Estancia Celina S.A. companies, (iii) Ps. 9.83 billion in purchase of property, plant and equipment and inventories, (iv) Ps. 1.66 billion in the Share
Buyback program, which was partially offset by (v) Ps. 6.73 billion in dividends collected.
2022 Compared to 2021
Net cash used in investing activities increased by 131.76% to Ps. 97.35 billion for the year ended December 31, 2022, from Ps. 42.00 billion for the year ended December 31, 2021. The result was primarily driven by (i) Ps. 55.59 billion
from the acquisition of short-term financial assets, net, that were greater than during 2021, (ii) Ps. 32.25 billion in payments for the acquisition of subsidiaries and associates, net of cash acquired, mainly related to acquisition of Forestal
Argentina S.A./Loma Alta Forestal S.A. companies, (iii) Ps. 10.43 billion in purchase/sell of property, plant and equipment and inventories, and (iv) Ps. 0.09 billion in the Share Buyback program, which was partially offset by (v) Ps.
0.88 billion in dividends received.
Net Cash Used in Financing Activities
2023 Compared to 2022
Net cash used in financing activities increased by 57.06% to Ps. 79.75 billion for the year ended December 31, 2023, compared to Ps. 50.78 billion for the year ended December 31, 2022. The result was primarily driven by (i) long-term
loans payments, which totaled Ps. 93.10 billion, (ii) interest and financial costs payments, mainly related to long-term loans, which totaled Ps. 25.36 billion, (iii) dividends paid, which totaled Ps. 21.91 billion, and (iv) Ps. 4.81 billion in
bank and investment accounts overdrafts received, net. (v) Ps. 6.47 billion in payments for Manque and Los Olivos bond repurchase, which was partially offset by (vi) loans received by Ps. 71.91 billion.
2022 Compared to 2021
Net cash used in financing activities decreased by 56.32% to Ps. 50.78 billion for the year ended December 31, 2022, compared to Ps. 116.27 billion for the year ended December 31, 2021. The result was primarily driven by (i) long-
term loans payments, which totaled Ps. 26.33 billion, (ii) interest and financial costs payments, mainly related to long-term loans, which totaled Ps. 19.83 billion, and (iii) dividends paid, which totaled Ps. 11.17 billion; which was
partially offset by (iv) Ps. 6.34 billion in bank and investment accounts overdrafts received, net.
Capital Expenditures
The following table sets forth our capital expenditures for the years ended December 31, 2023, 2022 and 2021.
Land and buildings
Electric power facilities and other equipment
Wind turbines
Turbines
Construction in progress
Other
Total
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Year ended December 31,
(in thousands of Ps.)
2022
36,254,648
11,282
-
-
3,155,466
747,715
40,169,111
2023
67,571,064
70,465,725
201,382
-
15,447,919
2,137,433
155,823,523
2021
30,440
-
-
8,785
30,761,900
728,037
31,529,162
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In the year ended December 31, 2023, we made total capital expenditures of Ps.155.82 billion, compared to Ps. 40.17 billion in 2022. During 2023, the main additions to fixed assets and land were in connection with the acquisition of
Central Costanera S.A, Empresas Verdes Argentina S.A., Las Misiones S.A., Estancia Celina S.A., Cordillera Solar VIII and CP Servicios Renovables S.A. The Cordillera Solar VIII and CP Servicios Renovables S.A. acquisition have
been accounted for as an asset acquisition in accordance with IFRS 3, and the Central Costanera S.A, Empresas Verdes Argentina S.A., Las Misiones S.A., and Estancia Celina S.A. acquisitions are subject to business combination rules.
We have funded our capital expenditures with proceeds from debt issuances and cash generated from our operations.
Depending on the timing for the construction of the Brigadier Lopez closing and the San Carlos solar farm project, we may finance these capital expenditures using cash flows from our operations and/or using external financing
sources. See “Item 3D. Risk Factors—Risks Relating to our Business— Factors beyond our control may affect or delay the completion of the awarded projects or alter our plans for the expansion of our existing plants”.
Equity interests in DGCU and DGCE
In addition to the expenditures on physical assets, on July 23, 2014, we executed agreements to purchase, directly and indirectly, subject to certain conditions, equity interests in DGCU and DGCE, jointly with an investment
consortium. On January 7, 2015, all acquisition-related conditions established in the agreement were met, and the shares were transferred to us.
Taking into account both direct and indirect interests involved, we acquired (i) an interest equivalent to 21.6% of DGCU’s capital stock and (ii) an interest equivalent to 40.60% of DGCE’s capital stock.
In addition, as provided for by Argentine Capital Markets Law and CNV regulations and given our controlling interest in DGCU shared with the consortium of buyers described above, our Board of Directors decided to proportionally
participate in a tender offer by the consortium of buyers for all of DGCU’s outstanding shares issued and not owned, directly or indirectly, by us or by of any of the members of the consortium of buyers. On October 30, 2015, the board
of directors of the CNV approved the tender offer. Upon termination of the tender offer in January 2016, since no acceptances were tendered, no shares were acquired in this tender offer.
Indebtedness
As of December 31, 2023, our total indebtedness was Ps. 342.37 billion of which 100.00% was denominated in U.S. dollars. The following table shows our indebtedness as of such date:
Non-Current debt
Current debt
December 31,
2023
(in thousands of US$)
363,490
60,002
(in thousands of Ps.)
293,863,593
48,508,515
The fair value of interest-bearing debts and loans is equivalent to their book value, except for the loan granted by Mitsubishi Corporation to the controlled company CECO.
Borrowing from Kreditanstalt für Wiederaufbau (“KfW”)
On March 26, 2019 we entered into a loan agreement with KfW for an amount of US$56 million in relation to the acquisition of two gas turbines, equipment and related services relating to the Luján de Cuyo project. In accordance with
the terms of the agreement, the loan accrues an interest equal to LIBOR plus 1.15%. As a consequence of the suspension of LIBO rate, occurred on June 30, 2023, we amended the loan agreement – together with KfW – on June 30,
2023, replacing LIBO rate with the Secured Overnight Financing Rate (SOFR) plus a fixed Credit Adjustment Spread (CAS) of 0.26161%. The loan is amortizable quarterly in 47 equal and consecutive installments as from the day
falling six months after the commissioning of the gas turbines and equipment.
Pursuant to the loan agreement, among other obligations, Central Puerto has agreed to maintain a debt ratio of (a) as of December 31, 2019, of no more than 4.00:1.00 and (b) as from that date, no more than 3.5:1.00. As of December
31, 2023, we have complied with that requirement.
During fiscal year 2019, the planned disbursements for this loan were completed for a total of US$55.2 million.
As of December 31, 2023, the balance of this loan amounts to US$30.34 million, approximately equivalent to Ps. 24.53 billion, net of transaction costs.
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Loan from Citibank N.A., JP Morgan Chase Bank N.A. and Morgan Stanley Senior Funding INC.
141
On September 12, 2019, we entered into a loan agreement with Citibank N.A., JP Morgan Chase Bank N.A. and Morgan Stanley Senior Funding INC. for US$180.0 million to fund the acquisition of the Thermal Plant Brigadier (the
“Brigadier Lopez Loan”).
According to the terms of the agreement, this loan accrues at a variable interest rate based on the LIBO rate plus a margin. Due to the suspension of the LIBO rate on June 30, 2023, we amended – together with Citibank N.A., JP
Morgan Chase Bank N.A. and Morgan Stanley Senior Funding INC – the loan agreement on August 16, 2023, replacing the LIBO rate with the Secured Overnight Financing Rate (SOFR) plus a Credit Adjustment Spread (CAS) of
0.26161% applicable as from September 12, 2023.
Pursuant to the loan agreement, among other obligations, Central Puerto has agreed to maintain (i) a debt ratio of no more than 2.25:1.00, (ii) an interest coverage ratio of no more than 3.50:1.00 and (iii) and a minimum equity of
US$500.0 million. As of December 31, 2023, we have complied with such obligations.
As of June 14, 2019, the loan proceeds had been fully disbursed.
On September 15, 2020, BCRA issued Communication “A” 7106 (“FX Regulatory Restrictions 7106”) pursuant to which any Argentine debtor that has scheduled principal payments of indebtedness due between October 15, 2020 and
March 31, 2021 and payable in foreign currency (subject to certain exceptions), is required, in order to access to the official exchange market, to file with the BCRA a refinancing plan in respect of such indebtedness, which shall fulfill
certain conditions established in the regulation, such as the following (i) the net amount for which the debtor shall have access to the official foreign exchange market to meet its foreign currency denominated payments of principal shall
not exceed 40.00% of the aggregate principal amount due between October 15, 2020 and March 31, 2021 and (ii) the remaining principal amount is required to be deferred such that the repayment of the deferred principal amounts is
due on average two years later than the originally scheduled principal amortization payments. The installments under Brigadier Lopez Loan becoming due between December 2020 and March 2021 were under the scope of such
regulation.
In compliance with FX Regulatory Restrictions 7106, we presented to the BCRA a new repayment schedule for the Brigadier Lopez Loan, which included the refinancing of the first two principal installments, each for a sum of US$36
million, which were payable on December 14, 2020, and March 12, 2021. On December 14, 2020, we entered into a forbearance agreement with the creditors of the Brigadier Lopez Loan by means of which the creditors agreed not to
take any judicial or extrajudicial action to claim their rights of collection under such loan and to negotiate in good faith certain modifications. On December 22, 2020, we signed a waiver and amendment to the Brigadier Lopez Loan,
modifying, among others, the amortization schedule so as to comply with the requirements established by Communication “A” 7106, partially postponing installments becoming due in December 2020 and March 2021, extending the
final payment term to June 2023, including monthly amortizations as from January 2021 until January 2022, and keeping the amortizations in the initial schedule for June, September and December 2021, each of them equal to 20.00%
of capital. In December 2020, 40% of the installment for such month was paid, complying with the regulations in force and the abovementioned amendment. Amongst others, the amendment involves a 200 basis points increase in the
interest rates as from December 12, 2020.
The amendment of the Brigadier Lopez Loan contains a more restrictive covenant package than under the original loan, which includes a prohibition to make dividends payment during 2021 and a US$25.0 million maximum allowed
for dividends payment in 2022. Moreover, a collateral agreement was signed, which includes the pledge on turbines of Brigadier López Thermal Station, a mortgage on the land in which such power station is located and a LVFDV
passive collection collateral assignment.
FX Regulatory Restrictions 7106 were extended until December 31, 2021, by Communication “A” 7230. The installments under the Brigadier Lopez Loan due in June, September and December 2021 were under the scope of the
provisions of such regulation. As a consequence, we signed a new amendment, which changed the amortization schedule, rescheduling 60.00% of installments, whose original maturity date operated in June, September and December
2021, and extending the loan’s final term up to January 2024. The schedule in force, which includes this amendment and the one dated December 22, 2020, foresees monthly amortizations until January 2022, one amortization in June
2023 for the amount of US$34,128 million and the last amortization in January 2024 for the amount of US$55.1 million. Moreover, the financial commitments and obligations undertaken in the first amendment remained unchanged.
This new amendment also implied a 125 basis points increase in the applicable interest rate as from June 12, 2021, and the dividend payment restriction was maintained until 2021, as well as the US$25.0 million limitation for 2022.
During 2023, the maximum dividend payment allowed is US$20.0 million.
On October 19, 2023, we made a prepayment to the syndicated loan celebrated with Citibank N.A., JP Morgan Chase Bank N.A. and Morgan Stanley Senior Funding INC for an amount of US$49,043,078. This prepayment allowed
Central Puerto to make dividend payments that were restricted by this loan. As of the date of this annual report, the Company has no restrictions associated with this loan to pay dividends After such payment, the principal due amounted
to US$6,056,922,which was fully paid on January 12, 2024.
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On December 23, 2022 and May 3, 2023 we subscribed two limited consents, by means of which the creditor financial entities agreed to the acquisition by Proener of the companies Forestal Argentina S.A., Loma Alta Forestal S.A.,
Empresas Verdes Argentina S.A., Las Misiones S.A. and Estancia Celina S.A. In addition, it was established that CPSA and Proener should keep a minimum amount of “Cash and short-term investments” corresponding to the
established payment in the next maturity of principal and interest.
As of the date of this annual report, all payments provided in the amendments have been made.
As of December 31, 2023, the balance of the loan amounted to US$6.08 million, equivalent to approximately Ps. 4.92 billion net of transaction costs. As of the date of this annual report, this financing has been fully paid.
See “Item 3.D. Risk Factors—Risks Relating to Argentina—Exchange controls and restrictions on capital inflows and outflows could limit the availability of international credit and could threaten the financial system, adversely
affecting the Argentine economy and, as a result, our business” and “ —Risks Relating to Our Business—We may be unable to refinance our outstanding indebtedness, or the refinancing terms may be materially less favorable than their
current terms, which would have a material adverse effect on our business, financial condition and results of operations”.
Loans from the IIC—IFC Facilities
CP La Castellana
On October 20, 2017, CP La Castellana entered into a common terms agreement with (i) the Inter-American Investment Corporation, (ii) the Inter-American Investment Corporation, acting as agent for the Inter-American Development
Bank, (iii) the Inter-American Investment Corporation, as agent of the Inter-American Development Bank, in its capacity as administrator of the Canadian Climate Fund for the Private Sector of the Americas, and (iv) the International
Finance Corporation (collectively, the “senior lenders”) to provide loans for a total amount of up to US$100,050,000 (the “IIC—IFC Facility I”), from which US$5 million will accrue interest at an annual rate equal to LIBOR plus
3.50% and the rest at LIBOR plus 5.25%. As a consequence of the suspension of LIBO rate, occurred on June 30, 2023, CP La Castellana S.A.U., together with IDB Group and IFC amended loan agreements on June 29, 2023, replacing
LIBO rate with the Secured Overnight Financing Rate (SOFR) plus a fixed Credit Adjustment Spread (CAS) of 0.26161% applicable as from August 15, 2023. The loan is amortizable quarterly in 52 equal and consecutive installments
as from February 15, 2019. Several other agreements and related documents, such as the guarantee and sponsor support agreement, where we will fully, unconditionally and irrevocably guarantee, as primary obligor, all payment
obligations assumed and/or to be assumed by CP La Castellana until the project reaches the commercial operation date (the “Guarantee and Sponsor Support Agreement I”), hedge agreements, guarantee trust agreements, a share pledge
agreement, an asset pledge agreement over the wind turbines, direct agreements and promissory notes have been executed.
Pursuant to the Guarantee and Sponsor Support Agreement I, among other customary covenants for this type of facilities, we committed, until the La Castellana project completion date, to maintain (i) a leverage ratio of (a) until (and
including) December 31, 2018, not more than 4.00:1.00; and (b) thereafter, not more than 3.5:1.00; and (ii) an interest coverage ratio of not less than 2.00:1.00. In addition, our subsidiary, CP Renovables, and we, upon certain
conditions, agreed to make certain equity contributions to CP La Castellana.
We also agreed to maintain, unless otherwise consented to in writing by each senior lender, ownership and control of the CP La Castellana as follows: (i) until the La Castellana project completion date, (a) we shall maintain (x) directly
or indirectly, at least seventy percent (70.00%) beneficial ownership of CP La Castellana; and (y) control of CP La Castellana; and (b) CP Renovables shall maintain (x) directly, ninety-five percent (95.00%) beneficial ownership of CP
La Castellana; and (y) control of CP La Castellana. In addition, (ii) after La Castellana project completion date, (a) we shall maintain (x) directly or indirectly, at least fifty and one tenth percent (50.10%) beneficial ownership of each of
CP La Castellana and CP Renovables; and (y) control of each of CP La Castellana and CP Renovables; (b) CP Renovables shall maintain control of CP La Castellana; and (c) we have a restriction on cash excess withdrawal, to perform
cash withdrawals that could be used for dividend payments we must have a Restricted Payment Debt Service Coverage Ratio of at least 1.25:1.00, also the request of excess withdrawal must be 30 days prior the interest payment date
and the amount to be withdrawn must not be larger than the balance of the Restricted Payment Account as of the next Interest Payment Date.
On August 18, 2018, La Castellana I wind farm reached the commercial operation date.
On February 16, 2023, CP La Castellana met all the requirements and conditions required to achieve the project completion date, for which the Guarantee Agreement granted by CPSA was released. La Castellana “project completion
date” is defined in the common terms agreement as the date in which the commercial operation date has occurred and certain other conditions have been met, which is expected to occur several months after the commercial operation
date. For further information on La Castellana project see “Item 5.A. Operating Results—Factors Affecting Our Results of Operations—Expansion of Our Generating Capacity”. As of the date of this annual report, the IIC-IFC Facility
disbursements have been fully received.
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As of the date of this annual report, the IIC-IFC Facility disbursements have been fully received. Our loans under the IIC—IFC Facilities (see “Item 5.B.—Loans from the IIC—IFC Facilities”) contain customary covenants for facilities
of this type, including: (i) certain limitations on consolidations, mergers and sales of assets; (ii) restrictions on incurring additional indebtedness; (iii) limitations on paying dividends; (iv) limitations on making capital expenditures and
(v) restrictions on the incurrence of liens. Certain events of default and covenants in the IIC—IFC Facilities are subject to certain thresholds and exceptions described in the agreements relating to the IIC—IFC Facilities. We do not
expect these restrictions to have a material impact on our ability to meet our cash obligations. As of the date of this annual report, we are in compliance with all of our debt covenants.
CP Achiras
On January 17, 2018, CP Achiras entered into a common terms agreement with (i) the Inter-American Investment Corporation, (ii) the Inter-American Investment Corporation, acting as agent for the Inter-American Development Bank,
(iii) the Inter-American Investment Corporation, as agent of the Inter-American Development Bank, in its capacity as administrator of the Canadian Climate Fund for the Private Sector of the Americas, and (iv) the International Finance
Corporation (collectively, the “senior lenders”) to provide loans for a total amount of up to US$50,700,000 (the “IIC—IFC Facility II” and together with the IIC—IFC Facility I, the “IIC—IFC Facilities”). In accordance with the terms
of the agreement entered into by CP Achiras, US$40.7 million accrue a fixed annual interest rate equal to 8.05%, and the rest accrue a 6.77% fixed annual interest rate. The loan is amortizable quarterly in 52 equal and consecutive
installments as from May 15, 2019. Several other agreements and related documents, such as the guarantee and sponsor support agreement, where we will fully, unconditionally and irrevocably guarantee, as primary obligor, all payment
obligations assumed and/or to be assumed by CP Achiras until the project reaches the commercial operation date (the “Guarantee and Sponsor Support Agreement II” and together with Guarantee and Sponsor Support Agreement I, the
“Guarantor and Sponsor Support Agreements”), guarantee trust agreements, a share pledge agreement, a mortgage, an asset pledge agreement over the wind turbines, direct agreements and promissory notes have been executed.
Pursuant to the Guarantee and Sponsor Support Agreement II, among other customary covenants for this type of facilities, we committed, until the Achiras project completion date, to maintain (i) a leverage ratio of (a) until (and
including) December 31, 2018, not more than 4.00:1.00; and (b) thereafter, not more than 3.5:1.00; and (ii) an interest coverage ratio of not less than 2.00:1.00. In addition, our subsidiary, CP Renovables, and we, upon certain
conditions, agreed to make certain equity contributions to CP Achiras.
We also agreed to maintain, unless otherwise consented to in writing by each senior lender, ownership and control of the CP Achiras as follows: (i) until the Achiras project completion date, (a) we shall maintain (x) directly or
indirectly, at least seventy percent (70%) beneficial ownership of CP Achiras; and (y) control of CP Achiras; and (b) CP Renovables shall maintain (x) directly, ninety-five percent (95%) beneficial ownership of CP Achiras; and (y)
control of CP Achiras. In addition, (ii) after Achiras project completion date, (a) we shall maintain (x) directly or indirectly, at least fifty and one tenth percent (50.1%) beneficial ownership of each of CP Achiras and CP Renovables;
and (y) control of each of CP Achiras and CP Renovables; and (b) CP Renovables shall maintain control of CP Achiras.
On September 20, 2018, the Achiras wind farm reached the commercial operation date.
On February 16, 2023, CP Achiras met all the requirements and conditions required to achieve the project completion date, for which the Guarantee Agreement granted by CPSA was released. The Achiras “project completion date” is
defined in the common terms agreement as the date in which the commercial operation date has occurred and certain other conditions have been met, which is expected to occur several months after the commercial operation date. For
further information on the Achiras project see “Item 5.A. Operating Results—Factors Affecting Our Results of Operations—Expansion of Our Generating Capacity”.
As of the date of this annual report, the IIC-IFC Facility disbursements have been fully received. Our loans under the IIC—IFC Facilities (see “Item 5.B.—Loans from the IIC—IFC Facilities”) contain customary covenants for facilities
of this type, including: (i) certain limitations on consolidations, mergers and sales of assets; (ii) restrictions on incurring additional indebtedness; (iii) limitations on paying dividends; (iv) limitations on making capital expenditures and
(v) restrictions on the incurrence of liens. Certain events of default and covenants in the IIC—IFC Facilities are subject to certain thresholds and exceptions described in the agreements relating to the IIC—IFC Facilities. We do not
expect these restrictions to have a material impact on our ability to meet our cash obligations. As of the date of this annual report, we are in compliance with all of our debt covenants.
As of December 31, 2023, the balance under the CP Achiras and CP La Castellana Loans from the IIC—IFC Facilities, was US$92.62 million, approximately equivalent to Ps. 74.88 billion, net of transaction costs.
Loan from the IFC to the subsidiary Vientos La Genoveva S.A.U.
On June 21, 2019, Vientos La Genoveva S.A.U., a subsidiary of ours, entered into a loan agreement with IFC on its own behalf, as Eligible Hedge Provider and as an implementation entity of the Managed Co-Lending Portfolio
Program (MCPP) administered by IFC, for the construction of the wind Farm La Genoveva I, for a principal amount of US$76.1 million.
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Pursuant to the terms of the agreement subscribed with Vientos La Genoveva S.A.U., this loan accrues an interest rate equal to LIBOR plus 6.50%. As a consequence of the suspension of LIBO rate, occurred on June 30, 2023, Vientos
La Genoveva S.A.U. together with IFC amended this agreement on June 14, 2023, replacing LIBO rate with the Secured Overnight Financing Rate (SOFR) plus a fixed Credit Adjustment Spread (CAS) of 0.26161% applicable as from
August 15, 2023. The loan is amortizable quarterly in 55 installments as from November 15, 2020.
Other related agreements and documents, such as the Guarantee and Sponsor Support Agreement (the “Guarantee Agreement” by which Central Puerto completely, unconditionally and irrevocably guarantees, as the main debtor, all
payment obligations undertaken by Vientos La Genoveva S.A.U until the project reaches the project completion date) hedging agreements, guarantee trusts, guarantee agreements on shares, guarantee agreements on wind turbines,
direct agreements and promissory notes have been signed.
Pursuant to the Guarantee Agreement, among other customary covenants for this type of facilities, Central Puerto has committed, until the project completion date, to maintain: (i) a leverage ratio of not more than 3.5:1.00; and (ii) an
interest coverage ratio of not less than 2.00:1.00. In addition, Central Puerto, upon certain conditions, agreed to make certain equity contributions to Vientos La Genoveva S.A.U. As of December 31, 2023, we have met the requirements
described in (i) and (ii) above. Finally, there are certain requirements to be fulfilled in order to distribute dividends from Vientos La Genoveva S.A.U.
On November 22, 2019, Vientos La Genoveva S.A.U. received a disbursement of US$76.1 million for the total amount of the loan.
As of December 31, 2023, balance of this loan, was US$62.06 million, approximately equivalent to Ps.50.17 billion, net of transaction costs.
Loan from Banco de Galicia y Buenos Aires S.A.U. to CPR Energy Solutions S.A.U. (wind farm La Castellana II)
On May 24, 2019, CPR Energy Solutions S.A.U. (a subsidiary of ours) entered into a loan agreement with Banco de Galicia y Buenos Aires S.A.U. to fund the construction of the wind farm “La Castellana II” for a principal amount of
US$12.5 million.
According to the agreement, the loan accrues interest at an annual fixed rate equal to 8.5% during the first twelve months, and has a 0.5% step-up each year, up to 11% on the 61st monthly interest payment date, where it remains until
maturity, and it is amortizable in 25 quarterly installments as from May 24, 2020. Other agreements and related documents, like the Collateral (in which Central Puerto totally, unconditionally and irrevocably guarantees, as main debtor,
all the payment obligations assumed by CPR Energy Solutions S.A.U. until total fulfillment of the guaranteed obligations or until the project reaches the commercial operation date, what happens first), guarantee agreements on shares,
guarantee agreements on wind turbines, promissory notes and other agreements have been executed.
Pursuant to the Collateral, among other obligations, Central Puerto has agreed to maintain a debt ratio of no more than 3.75:1.00 until the date of completion of the project. In addition, Central Puerto, under certain conditions, agreed to
make capital contributions, directly or indirectly, to subsidiary CPR Energy Solutions S.A.U. Moreover, Central Puerto has agreed to maintain, unless otherwise consented to in writing by the lender, the ownership (directly or indirectly)
and control over CPR Energy Solutions S.A.U. As of September 3, 2021, CPR Energy Solutions S.A.U. has fulfilled all the requirements and conditions to achieve project’s completion date. As a result, the collateral posted by us was
released and CPSA is no longer subject to the obligations previously described.
On May 24, 2019, the loan was fully disbursed. As of December 31, 2023, the balance of this loan was US$5.57 million, approximately equivalent to Ps. 4.50 billion, net of transaction costs.
Loan from Banco Galicia y Buenos Aires S.A.U. to subsidiary Vientos La Genoveva II S.A.U.
On July 23, 2019, subsidiary Vientos La Genoveva II S.A.U. entered into a loan agreement with Banco de Galicia y Buenos Aires S.A.U. for the construction of the La Genoveva II wind farm for a principal amount of US$37.5 million.
According to the executed agreement, this loan accrues LIBOR plus 5.95%. As a consequence of the suspension of LIBO rate, occurred on June 30, 2023, Vientos La Genoveva II S.A.U. and Banco de Galicia y Buenos Aires S.A.U.
entered into an amendment agreement on July 21, 2023, whereby the interest rate changed to the Secured Overnight Financing Rate (SOFR) plus a fixed Credit Adjustment Spread (CAS) of 0.42826% applicable as from the next
interest payment. The loan is amortizable quarterly in 26 installments starting on the ninth calendar month counted from the disbursement date.
Other agreements and related documents, like the Collateral (in which Central Puerto totally, unconditionally and irrevocably guarantees, as main debtor, all the payment obligations assumed by Vientos La Genoveva II S.A.U. until total
fulfillment of the guaranteed obligations or until the project reaches the commercial operation date, what happens first), guarantee agreements on shares and promissory notes have been signed, while guarantee agreements on wind
turbines and direct agreements are in the process of being issued, as per the terms defined by the loan agreement.
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Pursuant to the Collateral, among other obligations, Central Puerto has agreed, until the project termination date, to maintain a debt ratio of no more than 3.75:1.00. Moreover, Central Puerto, under certain conditions, agreed to make
capital contributions to subsidiary Vientos La Genoveva II S.A.U. Moreover, Central Puerto has agreed to maintain, unless otherwise consented to in writing by the lender, the ownership (directly or indirectly) and control over Vientos
La Genoveva II S.A.U. As of September 3, 2021, Vientos La Genoveva II S.A.U. has fulfilled all the requirements and conditions to achieve the project’s completion date. As a result, the Collateral posted by us was released and CPSA
is no longer subject to the obligations previously described.
On July 23, 2019, the loan was fully disbursed. As of December 31, 2023, the balance of this loan, was US$16.54 million, approximately equivalent to Ps.13.37 billion, net of transaction costs.
Loan from Mitsubishi Corporation to subsidiary Central Costanera S.A.
On November 29, 1996, the company CECO entered into an Agreement with Mitsubishi Corporation for the installation of a combined cycle power station. The original agreement includes a US$192.5 million financing in 12 years
counted as from the provisional reception of the project, with an annual 7.42 % fixed rate and a semester capital and interest amortization.
On October 27, 2014, Central Costanera S.A. and Mitsubishi Corporation agreed on the restructuring of such liabilities. Among the main restructuring conditions, the following stand out: accrued and accumulated interest remission as
of September 30, 2014 for the amount of US$66,061,897; the rescheduling of capital due date for the amount of US$120,605,058 for an 18-year term, with a 12-month grace period, which must be totally paid before December 15,
2032; a minimum annual payment of US$3,000,000 in concept for capital, in quarterly installments; an annual 0.25% fixed rate; and certain dividend payment restrictions were agreed on.
Considering the restrictions imposed by the Argentine Central Bank described on Note 20 of our consolidated financial statements, several amendments to the loan agreement were entered into as from September 30, 2020. On May 13,
2022, an amendment was signed to pay the June 2022 principal payment in two monthly and consecutive installments of US$2,000,000 in June 2022, and US$861,116 in July 2022, the other conditions remaining unaltered. On August
23, 2022, a new amendment was signed to pay the September 2022 capital in two monthly and consecutive installments of US$2,000,000 in September 2022, and US$861,116 in October 2022, the other conditions remaining unaltered.
On November 21, 2022, a new amendment was signed to pay the December 2022 capital in two monthly and consecutive installments of US$2,000,000 in December 2022, and US$861,116 in January 2023, the other conditions
remaining unaltered.
The loan considers certain financial restrictions, which as of December 31, 2023 have been completely fulfilled by CECO. Moreover, as guarantee of the obligations undertaken, CECO has a pledge in favor of Mitsubishi Corporation
with a first degree recording on the financed asset.
As of December 31, 2023, the balance of this loan was US$42.22 million, approximately equivalent to Ps. 34.1 billion, net of transaction costs.
As a result of the solar farm acquisition described in Note 20.7, the Group assumed the liabilities corresponding to the loan granted to the subsidiary Cordillera Solar by its previous shareholder Equinor Wind Power AS for a capital
amount of US$ 62,199,879 and interest for US$ 8,983,951. As a guarantee for such loan, Cordillera Solar gave a first-grade pledge over certain properties, plant, and equipment of such company in favor of Equinor Wind power AS.
On October 18, 2023, both parties agreed on a refinancing plan for a 24-month term counted as from the refinancing date at a 9% annual rate. In addition, on such dates, Cordillera Solar paid an amount of USD 40 million with funds
obtained through the loan described on Note 13.3.13.
Moreover, as a result of the acquisition, the Group acquired the liabilities for the loan Junior Shareholder Loan Agreement granted to CSVIII for a USD 1,768,897 balance, which on October 18, 2023, was refinanced at a 9% annual rate
to be paid 24 months after the refinancing date.
As of December 31, 2023, the loans balance amounts to Ps.14.63 billion.
Loan from Equinor Wind Power AS to subsidiary Cordillera Solar VIII S.A.
As a result of the solar farm acquisition described in Note 20.7, we have consolidated the liabilities corresponding to the loan granted to the subsidiary Cordillera Solar by its previous shareholder Equinor Wind Power AS for a capital
amount of US$ 62,199,879 and interest for US$ 8,983,951. As a guarantee for such loan, Cordillera Solar gave a first-grade pledge over certain properties, plant, and equipment of such company in favor of Equinor Wind power AS.
On October 18, 2023, Proener and the previous shareholder Equinor Wind Power AS agreed on a refinancing plan for a 24-month term counted as from the refinancing date at a 9% annual rate. In addition, on such dates, Cordillera
Solar paid an amount of USD 40 million with funds obtained through the loan described on Note 13.3.13.
Moreover, as a result of the acquisition, we have also consolidated the liabilities for the Junior Shareholder Loan Agreement granted to Cordillera Solar for a USD 1,768,897 balance, which on October 18, 2023, was also refinanced at a
9% annual rate to be paid 24 months after the refinancing date.
As of December 31, 2023, the loans balance amounts to Ps.14.63 billion.
Loan from Banco Santander International to subsidiary Cordillera Solar VIII S.A.
On October 18, 2023, our subsidiary Cordillera Solar agreed to enter, as borrower, into a financing with Banco Santander International for an amount of US$40 million at an annual rate of 6.5%, with a 24-month maturity. As of
December 31, 2023, the outstanding amount under this loan is US$40.54 million, equivalent to approximately Ps. 32.78 billion, which is guaranteed with financial securities.
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Central Puerto S.A. Program of Corporate Bonds
146
On July 31, 2020, our Special Shareholders’ Meeting approved the creation of a new global issuance program of corporate bonds for a maximum amount of up to US$500,000,000 (or its equivalent in other currency), which shall be
issued at short, mid or long term, simple, not convertible into shares, under the terms of the Corporate Bonds Act (the “Program”). Moreover, the Board of Directors was granted the powers to determine and establish the conditions of
the Program and of the corporate bonds to be issued under it provided they had not been expressly determined at the Shareholders’ Meeting. On October 29, 2020, CNV approved the creation of such program, which shall expire on
October 29, 2025, in accordance with the regulations in force.
Within this program framework, we issued two types of corporate bonds. On the one hand, on September 17, 2023, the paying in and liquidation of the Class A Corporate Bond (CB) took place, denominated, paid-in and payable in US
dollars abroad. The characteristics of this CB are the following: (i) face value issued: US$37,232,818, (ii) interest rate, determined by bidding: 7%, (iii) periodicity of the interest coupon: six months, (iv) amortization: bullet, (v) term:
30 months to be counted as from September 17, 2023 and (vi) applicable law and deposit place: Argentina, Caja de Valores S.A. On the other hand, on October 17, 2023, the paying in and liquidation of the international bond
denominated “10% Senior Notes due 2025” (Class B CB) took place. Such bond is denominated, paid-in and payable in US dollars abroad, under the Reg S scheme. The characteristics of this bond are the following: (i) face value
issued: US$50,000,000, (ii) interest rate, determined by bidding: 10%, (iii) periodicity of the interest coupon: six months, (iv) amortization: bullet, (v) term: 24 months to be counted as from October 17, 2023 and (vi) applicable law and
deposit place: New York, Euroclear.
Finally, on October 20, 2023, we decided to reopen the Class A CB. This procedure allows to offer in the market a security which replicates the conditions of the security already offered, incorporating the interest rate determined in the
original offer (7%) and to bid the price. As a result of this process, we issued additional US$10,000,000 for the Class A CB, with an issuance price of 102.9%.
CP Manque S.AU. and CP Los Olivos S.A.U. Program of Corporate Bond
On August 26, 2020, under Resolution No. RESFC-2020 – 20767 – APN.DIR#CNVM, the public offering of the Global Program for the Co-Issuance of Simple Corporate Bonds (not convertible into shares) by CP Manque S.A.U. and
CP Los Olivos S.A.U. (both subsidiaries of CPR, and together the “Co-issuers”) for the amount of up to US$80,000,000 was authorized. By virtue of such program, the Co-Issuers may issue corporate bonds, of different class and/or
series, that may qualify as social, green and sustainable marketable securities under the criteria established by CNV in that regard.
Within the framework of the mentioned program, dated September 2, 2020, Corporate Bonds Class I were issued for an amount of US$35,160,000 at a fix 0% interest rate expiring on September 2, 2023. Such bonds were fully repaid at
maturity; and Corporate Bonds Class II were issued for 1,109,925 at a variable interest rate equivalent to BADLAR rate, plus an applicable margin of 0.97% expiring on September 2, 2021, which was fully cancelled on that date.
On June 24, 2020, the Board of Directors of CPSA decided to guarantee unconditionally the co-emission of corporate bonds of its subsidiaries CP Manque S.A.U. and CP Los Olivos S.A.U. (the “Guarantee”). The Guarantee is an
obligation with a common guarantee, not subordinated and unconditional of ours, and shall have at all times, the same priority rank regarding our non-guaranteed and unsubordinated obligations, present and future. The Guarantee was
instrumented through our signature in our capacity as co-signer of the permanent global certificates deposited in Caja de Valores S.A., in which the Corporate Bonds Class I and Corporate Bonds Class II of CP Manque S.AU. and CP
Los Olivos S.AU. are represented.
As of December 31, 2023, Corporate Bonds Class I and Class II were fully repaid.
Item 5.C Research and Development, patents and licenses, etc.
We do not have any significant policies or projects relating to research and development, and we own no patents or licenses.
Item 5.D Trend Information
The following discussion includes forward-looking statements based on our management’s current beliefs, expectations and estimations. Forward-looking statements involve inherent risks and uncertainties. Our future operating and
financial performance may differ materially from these forward-looking statements, including due to many factors outside of our control. We do not undertake any obligation to update forward-looking statements in the event of changed
circumstances or otherwise. For further information, see “Forward-Looking Statements” and “Item 3.D.—Risk Factors” in this annual report.
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We expect our operating and financial performance in the future to benefit from the increase of our power generation capacity.
147
Works for the closing cycle of the Brigadier Lopez Plant have started and are pending completion. In February 2024, the agreement with the constructor, SACDE was formalized. Under such agreement, all the necessary works and
services to convert the plant into a combined cycle were defined, with the “notice to proceed” having been delivered on February 26, 2024. Works are expected to be completed during 2025. The plant, which has a dual-fuel Siemens
SGT5-4000 F gas turbine with a total nominal power of 292 MW, is expected to increase its capacity by 140 MW thanks to the closing cycle, reaching a total power output of 432 MW, increasing its efficiency and consequently its
dispatching. The steam turbine has a 10-year PPA with CAMMESA.
Several factors have affected our plans for our prospect projects: (a) the economic recession in Argentina, (b) the decrease in demand of electric energy, and (c) the lack of available financing. These circumstances have affected and may
continue to affect not only the Brigadier López project but also the possibility of new expansion projects and opportunities. We purchased one General Electric gas turbine with a capacity of 373 MW and 130 hectares of land in the
north of the Province of Buenos Aires, the new General Electric gas turbine could either be applied to new or existing projects. See “Item 5.A Operating Results—Factors Affecting our Results from Operations—Expansion of Our
Generating Capacity”.
The changes made to the Spot Sales Regulatory Framework may help the Argentine Government’s fiscal deficit reduction, since it may reduce the subsidies needed for the sector. We have no control over tariffs and cannot assure that
the Argentine Government will restore term market sales under contracts for conventional energy. See “Item 3.D. Risk Factors—Risks Relating to the Electric Power Sector in Argentina—The Argentine Government has intervened in
the electric power sector in the past and is likely to continue intervening” and “Item 3.D.—Risk Factors—Risks Relating to Our Business—Our results depend largely on the compensation established by the Secretariat of Energy and
received from CAMMESA”.
In terms of the performance of our plants, we estimate that our existing plants will achieve availability factors consistent with their average historical performances over the past ten years and in the case of our combined cycle units that
the plants will achieve availability factors consistent with the assurances provided by our vendors. We also estimate that the capacity factor of our hydro plant will be consistent with its historical average performance since the plant was
awarded its concession in 1994 and that the capacity factor of our wind farm projects will be consistent with our wind studies that have been certified by renowned international experts. However, we cannot assure you that the expected
availability factors and capacity factor will be consistent with past performance or with the assurances provided by vendors.
A substantial portion of our remuneration is currently based on fixed capacity and not generation levels. Our power plants are subject to the risk of mechanical or electrical failures and any resulting unavailability may affect our ability
to fulfill our contractual and other commitments and thus adversely affect our business and financial performance”.
The HPDA Concession Agreement executed between us and the Argentine Government, pursuant to which we were permitted to operate our Piedra del Águila plant, expired on December 28, 2023, and did not provide for an automatic
renewal. Resolution No. 574/2023, published on July 11, 2023, extended for 60 days (extendable for another 60 days) the termination date of the HPDA Concession Agreement, among other national hydroelectric power plants whose
concession term expired during 2023. Another renewal of such period was established by Resolution 02/24, issued by the Secretariat of Energy, which was set to expire on April 27, 2024. In addition, on March 15, 2024, Resolution
33/24, issued by the Secretariat of Energy, extended once again the transition period for 60 days setting the expiration date on June 28, 2024.
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We currently intend to continue renewing the HPDA Concession Agreement. The government is supposed to determine a new regulatory framework for the whole electricity market, and this would foster a decision regarding the future
of all hydroelectric concessions, where a new tender offer is one possible alternative. If this is case, we would carefully evaluate the terms and conditions to determine if we participate or not. Any government’s decision regarding the
future of hydroelectric concessions may adversely affect our results of operations (“Item 3.D.—Risk Factors—Risks Relating to Our Business).
Regarding the collections from CAMMESA, from September 2016 to November 2017 CAMMESA has paid without delays, and since then, there were periods in which CAMMESA experienced certain delays in paying up to 90 days
(for further information on the duration of these delays see “Item 11. Quantitative and Qualitative Disclosures about Market Risk—Credit Risk”). For these delays, we are entitled to receive interests from CAMMESA. Payments related
to PPAs under the Renovar Regulatory Framework have not suffered delays. CAMMESA may once again be unable to make payments to generators both in respect of energy dispatched and generation capacity availability on a timely
basis or in full, which may substantially and adversely affect our financial position and the results of our operations.
We also assume an increase in our number of employees related to our recent acquisitions and expansion projects, but we believe that wages will remain in line with current levels. We cannot assure you that our operating or other costs
will not increase at higher rates. See “Item 3.D. Risk Factors—Risks Relating to Argentina—Government measures, as well as pressure from labor unions, could require salary increases or added benefits, all of which could increase
companies’ operating costs,” “Item 3.D.—Risk Factors Relating to Our Business—We could be affected by material actions taken by the trade unions,” “Item 3.D.—Risk Factors—Risks Relating to the Electric Power Sector in
Argentina—We operate in a heavily regulated sector that imposes significant costs on our business, and we could be subject to fines and liabilities that could have a material adverse effect on our results of operations” and “Item 3.D.—
Risk Factors—Risks Relating to Our Business—Our ability to generate electricity at our thermal generation plants partially depends on the availability of natural gas and, to a lesser extent, liquid fuel”.
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We intend to continue focusing on improving our efficiency, not only with regards to the management of the generation units, but also in the administration of our resources, in order to continue working towards positioning ourselves as
one of the leading companies in the electrical and forestry sectors in Argentina. In this sense, during fiscal year 2023 we have acquired: a) the thermal generation plants belonging to CECO, made up of six turbo-steam units with an
installed capacity of 1,131 MW and two combined cycle power plants whose power is 1,173 MW; later on, during 2023, we requested CAMMESA to derate the installed capacity of the Buenos Aires combined cycle to 277 MW and, in
February 2024, we asked for the decommissioning of the steam generation units COSTTV04 and COSTTV06, for a total installed capacity of 120 MW and 350 MW, respectively; b) the companies Empresas Verdes Argentina S.A., Las
Misiones S.A. and Estancia Celina S.A. which own more than 88,000 hectares of forestry assets and c) a solar farm located in the province of San Juan with an enabled power of 105 MW. In this way, we will continue to focus on the
expansion of our electricity generation and forestry production capacity, thus consolidating ourself as a leading company in the electricity and forestry sector. In addition, we have recently made our first step into the mining industry
with the acquisition of a 4% stake in AbraSilver, which will allow us to enhance our understanding of the industry and potentially continue to expand in this sector. See Item 4 - Recent Developments - Acquisition of interest in
AbraSilver.
Item 5.E Critical Accounting Estimates
See Item 17 - Financial Statements - Note 2.3 - Significant accounting estimates and assumptions.
Item 6 Directors, Senior Management and Employees
Item 6.A Directors and senior management
Board of Directors
We are managed by our Board of Directors in accordance with the Argentine Corporate Law. Our Board of Directors makes management decisions, as well as those expressly set forth in the Argentine Corporate Law, our bylaws and
other applicable regulations. In addition, our Board of Directors is responsible for carrying out shareholders’ resolutions and fulfilling particular tasks expressly delegated by the shareholders.
According to our bylaws, our Board of Directors must be composed of nine directors for three-year periods and its composition shall be renewed by one-third of the members. Our shareholders may also appoint an equal or lesser
number of alternate directors. As of the date of this annual report, and until the shareholders meeting approving our consolidated financial statements for the fiscal year ended December 31, 2023, is held, our Board of Directors is
composed of nine directors and nine alternate directors. All of our directors reside in Argentina.
In the above mentioned shareholders meeting, the appointment of the members of our Board of Directors will proceed in such a way that it is integrated in accordance with article 17 of our bylaws and the directors will be appointed
with differentiated terms of office. Directors and their alternates are appointed for a term of one year by our shareholders during our annual shareholders’ meetings. Directors may be reelected. Shareholders are entitled to elect up to
one-third of the vacant seats by cumulative voting pursuant to Section 263 of the Argentine Corporate Law. Pursuant to Section 257 of the Argentine Corporate Law, the directors maintain their positions until the following annual
ordinary shareholders’ meeting where directors are appointed.
The latest election relating to our Board of Directors took place at the ordinary shareholders’ meeting held on April 28, 2023, and the latest version of our bylaws was approved on December 29, 2022. See “Item 10.B. Memorandum
and articles of association—Statutory Provisions concerning our Board of Directors”.
During the first board meeting after directors have been appointed, they must appoint a chairman and vice-chairman of the board. The vice-chairman would automatically and temporarily replace the chairman in the event that the
chairman is absent, resigns, dies, is incapacitated or disabled, removed or faces any other impediment to serve as chairman. A new chairman must be elected within ten days from the seat becoming vacant. The election of a new
chairman must take place only if the situation that gives rise to the re-election is expected to be irreversible during the remaining term of office.
According to Section 26 of our bylaws, our Board of Directors has the broadest powers and authorities in connection with our direction, organization and administration, with no limitations other than those set forth by the applicable
laws and regulations. The chairman is our legal representative.
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The following table sets forth the current composition of our Board of Directors:
150
Name
Miguel Dodero
Guillermo Rafael Pons*
Martina Blanco
José Luis Morea*
Martin Lhez*
Diego Gustavo Petracchi
Tomás José White*
Jorge Eduardo Villegas*
Marcelo Atilio Suvá
Mario Elizalde
Martin Orozco*
Ramon Nazareno Ulloa*
Adrián Gustavo Salvatore
Rubén Omar López
José Manuel Pazos
José Manuel Ortiz*
Gabriel Enrique Ranucci*
Alejo Villegas*
Title
Chairman of
the Board
Director
Director
Director
Director
Director
Director
Director
Director
Alternate Director
Alternate Director
Alternate Director
Alternate Director
Alternate Director
Alternate Director
Alternate Director
Alternate Director
Alternate Director
Date of first appointment
to the board
Date of expiration of
current term
September 21, 2015
April 30, 2020
April 29, 2022
April 30, 2019
April 29, 2022
April 27, 2018
April 27, 2018
April 28, 2017
July 22, 2008
July 11, 2007
April 28, 2023
April 29, 2022
April 27, 2018
April 27, 2018
September 21, 2015
April 29, 2022
April 30, 2020
April 30, 2021
December 31, 2025
December 31, 2023
December 31, 2023
December 31, 2025
December 31, 2023
December 31, 2023
December 31, 2025
December 31, 2024
December 31, 2024
December 31, 2024
December 31, 2025
December 31, 2023
December 31, 2025
December 31, 2023
December 31, 2024
December 31, 2025
December 31, 2023
December 31, 2023
Date of birth
February 16, 1955
September 22, 1964
October 18, 1987
October 19, 1954
April 21, 1968
July 17, 1972
May 18, 1957
January 9, 1949
July 27, 1948
July 26, 1954
October 1, 1965
August 13, 1960
April 26, 1967
April 17, 1964
September 14, 1971
August 6, 1960
April 7, 1974
February 16, 1980
* Independent directors according to CNV rules, which differ from NYSE requirements for U.S. issuers.
Note: Notwithstanding expiration of current term, under the company, bylaws, directors continue to serve in their capacity until the next shareholders’ meeting.
The following are the academic and professional backgrounds of the members of our Board of Directors. The business address of each of the members of our Board of Directors is Avda. Thomas Edison 2701, Buenos Aires, Argentina.
Miguel Dodero holds a degree in Business Administration from the Universidad de Buenos Aires. He has been a member of our Board of Directors since 2015. He has previous work experience at Agencia Marítima Dodero S.A. and
Compañía Argentina de Navegación Intercontinental S.A. He served as chairman of Dodero Inmobiliaria y Mandataria S.A. from 1990 to September 2014. Mr. Dodero has been chairman of M. Dodero Compañía de Servicios S.A.
since 1989 and of Full Logistics S.A. since 2008, as well as a shareholder of both companies. In addition, he currently serves as a director of IGCE, DGCU and DGCE.
Guillermo Rafael Pons holds a degree in Accounting from the National University of Comahue, completed a master’s in Business Administration at the International Business School, and has a postgraduate degree in Comprehensive
Risk Management at the University of San Andres. He served as Secretary of Finance of the Municipality of Neuquén and was Director General of Administration of the Ministry of Government and Justice of Neuquén and
Administrative Manager of the Executing Unit of External Financing, in the Province of Neuquén. He was hired as a Consultant by the Superintendency of Economic Management of the Province of Rio Negro, by the IDB, Aguas
Rionegrinas, Legislature of Rio Negro, UNDP, and was an Accounting Advisor at Banco Provincia del Neuquén S.A. He was Director of the Pension Fund for Professionals in Economic Sciences and Vice President of the College of
Accountants of Cipolletti, both in the Province of Rio Negro. He joined Banco Provincia del Neuquén S.A. in 2012, as Assigned to the General Management, and in 2013 he was appointed Deputy General Manager of Risk
Management and Regulatory Compliance. On December 10, 2019, he was appointed Minister of Economy and Infrastructure of the Province of Neuquén.
Martina Blanco holds a degree in Business Administration and a postgraduate degree in Marketing from the Universidad Católica Argentina. She has worked as marketing manager in the food industry for 10 years and currently serves
as a creative strategist at a digital agency.
José Luis Morea holds a degree in Political Science from the Universidad Católica Argentina. He completed postgraduate studies in SME Management at IAE. Between 1980 and 1990 he held executive positions in communication
companies, mainly in Editorial Atlántida and Videomega. From 1990 to 1995 he served as Executive Director in San Ciriaco, with operations in the agricultural sector, and later as General Manager of Espro S.A., a company dedicated
to the production and export of agriculture products. From 1999 to 2001 he became General Manager of Tecnovital S.A., a fruit export company. In 2001, he founded North Bay Argentina S.A., a company in which he serves as
Chairman and General Manager. North Bay S.A. has become one of the main blueberry exporters and producers in Argentina. Together with other partners, he created Servifrío Ezeiza SA, a logistics and cold storage company in which
he serves as Director. He is also Director of North Bay Peru S.A. and of North Bay Produce Inc. in the United States. He served in this group until 2013. In 2014 he joins La Gloriosa SA as Blueberries Project Manager, developing a
high-tech enterprise in Virasoro, Corrientes, until December 2018. Between 2016 and 2018 he served as Director of Transportadora de Gas Cuyana. He has been a member of our Board of Directors since 2019. Since 2020, he has been
a consultor in projects and high-tech agricultural developments for Adblick Hidroponia S.A. and Club Agtech S.A. and as Project Leader in Vegetable Proteins.
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Martin Lhez holds a degree in Architecture from the Universidad de Buenos Aires. He is an independent contractor with more than 25 years of experience in the architecture and construction sector. He is currently a partner at Brick
Studio Buenos Aires, architecture and design.
Diego Gustavo Petracchi holds a degree in Economics from the Universidad Católica Argentina and a master’s degree in Science of Management (Sloan Program) from Stanford University. He is the founder and currently serves as
Chief Executive Officer of Yugen S.A. (We Care), a premium Senior Living company. From 2006 to 2015, he was a director of NDM Holding (Valle de las Leñas S.A.), a Company engaged in tourism, real state and agribusiness. He
has also served as a director of Nieves de Mendoza S.A., Santa Rosa del Monte S.A., Rio Lobo S.A., Valles Mendocinos S.A. In addition, from 1995 to 2006, he worked in different positions, including Vice President, in Prefinex S.A.,
a company that provides financial advisory services.
Tomás José White holds a degree in Accounting from the Universidad Católica Argentina. From 1977 to 1984 he served as director in several private companies in the construction industry, such as Bemba S.A., Sumarge S.A. and Din
S.A. From 1996 to 1998 he also served as a director of Empresa Amanco SA. Since 2000 he is the chairman of Celestal SAIC. Since 2019 he owns interests and is the chairman of BEP SRL, a company involved in the plastic industry.
Jorge Eduardo Villegas holds a degree in Law from the Universidad de Buenos Aires. Since his graduation, he has worked as a lawyer in the private sector, independently through his own law firm, Estudio Jorge Villegas & Asociados.
Mr. Villegas also currently serves as the chairman of Agropecuaria Los Potros S.A.
Marcelo Suvá holds a degree in Economics from the Universidad Católica Argentina. He has served as alternate director of our Board of Directors since 2008. Since 2020 he has served as vice president of CPSA. He was shareholder of
Coinvest SA, a private equity company, as well as of MBA Banco de Inversiones S.A. (currently known as Lazard Argentina SA), a leading Argentine investment bank, where he was also member of its Board of Directors and took part
in various M&A transactions. He also served as Director of HNQ. Distrilec Inversora S.A. He also serves as director of Distrilec Inversora S.A. and alternate Director of IGCE SA, DGCU SA, DGCE SA and RPS Consultores S.A. He
currently serves as chairman of the Governing Board at Universidad Austral.
Mario Elizalde is an Agricultural Production Engineer, graduated from the Argentine Catholic University, holds a Master of Science degree from Texas A&M University and in 2018 graduated as a Secondary and University Professor
at the Austral University. Between 1995 and 1999, Mr. Elizalde served as General Manager of Call Center S.A., a Citicorp Equity Investments (CEI) Value Added Telecommunications Services company. From 1982 to 2010, he was
Manager and Agricultural Advisor of Sociedad Lanz, for the Administration of Agribusiness in the provinces of Buenos Aires and La Pampa. In addition, from 2000 to 2007, he served as Executive Director of Telinver S.A., a
Telefónica Group company. Subsequently and after the merger by absorption of Telinver S.A. in 2008, he served as Executive Director and Property Manager of the company’s operations in Chile, Peru and Argentina until 2015. From
July 2007 to September 2015, he held the position of Director of Central Puerto S.A, as well as Member of the Audit Committee and President of the same during the years 2012 and 2013. During 2017 and 2018 he was Alternate
Director of Compañías Central Puerto S.A. and Distribuidora de Gas Cuyana. Since 2019 he has been teaching History of Economic Thought classes at the Faculty of Business Sciences of the Austral University. As of May 2022, he is
the Independent Principal Director of Central Puerto S.A.
Martín Orozco is a public auctioneer, he previously graduated from the high school Escuela Argentina Modelo. He currently works as an Agricultural and forestry producer. In the past he founded Fundación ZORBA which is an
organization for the purpose of Environmentalism and Animal Rescue and is a columnist for the newspaper LA NACION since 2022.
Ramon Ulloa is an engineer graduated from the Universidad Tecnológica Nacional Argentina, with an MBA from the Instituto de Altos Estudios Empresariales (IAE). He is also an insurance producer registered in the National
Superintendence of Insurance -Mat 47.816. He is a businessman, Vice President of La Suerte Rural SA, an agricultural and livestock company and partner of Triptico 2021 SRL, a company dedicated to real estate projects. He is also a
founding partner of Xtreme RU Broker de seguros SRL. He is an insurance advisor, with more than 40 years of experience in the market, where he has worked in insurance companies as well as in international insurance brokers. He is
currently working with Aon Broker as a business advisor.
Adrián Gustavo Salvatore holds a degree in law from the Universidad de Buenos Aires and an MBA in a joint degree from the Universidad del Salvador (Argentina) and the Universidad de Deusto (Spain). From 1993 to 1997 he
worked at the legal and regulatory department of ESEBA, where he was in charge of the process of privatizing the company. From 1997 to 2003, he worked as legal manager at COMESA, Comercializadora de Energía, and in 2003 he
joined the law firm Bruchou, Fernández Madero, Lombardi & Mitrani, as part of their regulatory and public services department. He has worked in the regulatory department of Central Puerto since 2008, he served as a Director in
CAMMESA (Compañía Administradora del Mercado Mayorista Eléctrico) from 2008 to 2014 and he currently serves as Institutional Relations Director. He has served as President in CP Renovables S.A., Proener S.A.U., Forestal
Argentina S.A., Loma Alta S.A., Empresas Verdes Argentinas S.A., Estancia Celina S.A., Las Misiones S.A., Cordillera Solar VIII S.A., and CP Servicios Renovables S.A. since 2024. He has also served as Vicepresident in CP Manque
S.A.U., and CP Olivos S.A.U. since 2024, and in Vuelta de Obligado S.A. since 2023. He has served as Director in CP Achiras S.A.U., CP Energy Solutions S.A.U., Vientos La Genoveva S.A.U., Vientos La Genoveva S.A.U. II, CP La
Castellana S.A.U., and Puerto Energia S.A.U. since 2024, and in Termoelectrica Jose de San Martin S.A. since 2023.
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Rubén Omar López holds a degree in Electrical Engineering from the Universidad Tecnológica Nacional. He also holds a postgraduate degree in Business Management from Universidad de Buenos Aires. From 2013 to 2019, he was
our planning and regulation manager, from 2019 to April 2020 he was our Strategic Planning Director. Since April 2020, he is our Renewable Energy Manager. He has more than 30 years of experience in the utilities sector, where he
has held different positions both in technical and commercial areas. In addition, he currently serves as alternate director of EDESUR S.A. and director of Distrilec Inversora S.A. and Central Puerto S.A. He currently serves as Chairman
of: CP Achiras S.A.U., CP La Castellana S.A.U., CPR Energy Solutions S.A.U., Vientos La Genoveva S.A.U., Vientos La Genoveva II S.A.U., CP Manque S.A.U. and CP Los Olivos S.A.U., In addition, he has been a director in
Compañía Administradora del Mercado Mayorista Eléctrico (CAMMESA) since 2015 to August 2019.
José Manuel Pazos holds a degree in law from the Universidad Católica Argentina. He also holds a postgraduate degree in Utilities’ Economic Regulation from the Universidad Austral. He has served as General Counsel, Head of
Legal Area and alternate director of our Board of Directors since 2015. From 1997 to 2002, he served as lawyer of the Argentine Secretariat of Energy and Emprendimientos Binacionales S.A. (EBISA), and, from 2003 to 2014, he
worked for the law firm, Bruchou, Fernández Madero & Lombardi. Between 2007 and 2008, he worked for Simpson Thacher & Bartlett LLP in New York. Currently he serves as director of CP Manque S.A.U and alternate director of
Central Puerto S.A., Distrilec Inversora S.A., CP Renovables S.A., CP Achiras S.A.U., CPR Energy Solutions S.A.U., CP La Castellana S.A.U., Puerto Energía S.A.U., Vientos La Genoveva S.A.U., Vientos La Genoveva II S.A.U., CP
Manques S.A.U. and CP Los Olivos S.A.U.
José Manuel Ortiz holds a degree in Industrial Engineering from Universidad Católica Argentina and holds a Master of Business Administration from the University of Michigan at Ann Arbor. Mr. Ortiz is a co-founder of Cono Sur
Capital, a private equity firm with investments in transportation and logistics in Uruguay and in the pharmaceutical sector in Argentina. Since 2016 he serves as Principal of Cono Sur Inversiones, a commercial bank regulated by
Argentina’s CNV. In 2000, he co-founded Coinvest Argentina, a private equity firm that invested in power distribution and generation, consumer retail, and telecommunication companies. From mid-1992, soon after its incorporation,
and until December 1999, Mr. Ortiz acted as Managing Director of The Exxel Group. At Exxel, he had responsibility of analyzing, negotiating and closing acquisitions in diverse business sectors, as well as monitoring investments,
including the design and execution of roll-up strategies. From 1984 to 1992, Mr. Ortiz held operations, planning and financial management positions, including the development and subsequent negotiation of steel supply, logistics and
transportation agreements with U.S., European and Brazilian companies, for the Techint Group, one of the largest corporations in Argentina.
Gabriel Enrique Ranucci holds a Law degree from the University of Belgrano in 1999. Since 2001 he joined as Legal Advisor of the Subsecretariat of Public Revenues of the Province of Neuquén, until 2012. From 2012 to 2015 he
was appointed Director General of Legal of the Provincial Directorate of Revenues of the Province of Neuquén.From 2015 to 2017 he was appointed Provincial Director of Legal Affairs and Concessions dependent on the Subsecretariat
of Public Revenues of the Province of Neuquén.From December 10, 2017, to the present, he has been appointed as Administrative Technical Coordinator of the Ministry of Energy and Natural Resources of the Province of Neuquén.
Alejo Villegas is a lawyer graduated from the Universidad Católica Argentina in 2006. Since then, he has worked as an independent professional advising clients in the private sector. He has been part of the Jorge Eduardo Villegas Law
Firm since 2002, specializing in advising on Civil and Commercial Law. He is registered with the Federal Capital Bar Association and with the San Isidro Bar Association. He is currently a member of the Directory of commercial
companies that develop activities related to agriculture and tourism.
Family Relationships
Mr. Juan Antonio Nicholson is the father of Lucas Nicholson, and serve as Syndic and Alternate Syndic, respectively, on our Supervisory Committee
Duties and Liabilities of Directors
Directors have the obligation to perform their duties with the loyalty and the diligence of a prudent businessperson. Under Section 274 of the Argentine Corporate Law, directors are jointly and severally liable to the company, the
shareholders and third parties for the improper performance of their duties, for violating any law or the bylaws or regulations, if any, and for any damage to these parties caused by fraud, abuse of authority or gross negligence. The
following are considered integral to a director’s duty of loyalty: (i) the prohibition on using corporate assets and confidential information for private purposes; (ii) the prohibition on taking advantage, or allowing another to take
advantage, by action or omission, of the business opportunities of the corporation; (iii) the obligation to exercise board powers only for the purposes for which the law, the corporation’s bylaws or the shareholders’ or the board of
directors’ resolutions were intended; and (iv) the obligation to take strict care so that acts of the board do not go, directly or indirectly, against the corporation’s interests. A director must inform the board of directors and the Supervisory
Committee of any conflicting interest he or she may have in a proposed transaction and must abstain from voting thereon.
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In general, a director will not be held liable for a decision of the board of directors, even if that director participated in the decision or had knowledge of the decision, if (i) there is written evidence of the director’s opposition to the
decision and (ii) the director notifies the Supervisory Committee of that opposition. However, both conditions must be satisfied before the liability of the director can be contested before the board of directors, the Supervisory
Committee or the shareholders or relevant authority or the commercial courts.
Section 271 of the Argentine Corporate Law allows directors to enter into agreements with the company that relate to such director’s activity and under arms’ length conditions. Agreements that do not satisfy any of the foregoing
conditions must have prior approval of the board of directors (or the Supervisory Committee in the absence of board quorum) and must be notified to the shareholders at a shareholders’ meeting. If the shareholders reject the agreement,
the directors or the members of the supervisory committee, as the case may be, shall be jointly and severally liable for any damages to the company that may result from such agreement. Agreements that do not satisfy the conditions
described above and are rejected by the shareholders are null and void, without prejudice to the liability of the directors or members of the Supervisory Committee for any damages to the company.
The acts or agreements that a company enters into with a related party involving a relevant amount shall fulfill the requirements set forth in Section 72 and 73 of Argentine Capital Markets Law. Under Section 72, the directors and
syndics (as well as their ascendants, descendants, spouses, brothers or sisters and the companies in which any of such persons may have a direct or indirect ownership interest) are deemed to be a related party. A relevant amount is
considered to be that which exceeds 1.00% of the net worth of the company as per the latest balance sheet. The board of directors or any of its members shall require from the audit committee a report stating if the terms of the
transaction may be reasonably considered adequate in relation to normal market conditions. The company may proceed with the report of two independent evaluating firms that shall have informed them about the same matter and about
the other terms of the transaction. The board of directors shall make available to the shareholders the report of the audit committee or of the independent evaluating firms, as the case may be, at the main office on the business day after
the board’s resolution was adopted and shall communicate such fact to the shareholders of the company in the respective market bulletin. The vote of each director shall be stated in the minutes of the board of directors approving the
transaction. The transaction shall be submitted to the approval of the shareholders of the company when the audit committee or both evaluating firms have not considered the terms of the transaction to be reasonably adequate in relation
to normal market conditions. In the case where a shareholder demands compensation for damages caused by a violation of Section 73, the burden of proof shall be placed on the defendant to prove that the act or agreement was in
accordance market conditions or that the transaction did not cause any damage to the company. The transfer of the burden of proof shall not be applicable when the transaction has been approved by the board of directors with the
favorable opinion of the audit committee or the two evaluating firms.
We may initiate causes of action against directors if so decided at a meeting of the shareholders. If a cause of action has not been initiated within three months of a shareholders’ resolution approving its initiation, any shareholder may
start the action on behalf of and on the company’s account. A cause of action against the directors may be also initiated by shareholders who object to the approval of the performance of such directors if such shareholders represent,
individually or in the aggregate, at least 5.00% of the company’s capital stock.
Except in the event of our mandatory liquidation or bankruptcy, shareholder approval of a director’s performance, or express waiver or settlement approved by the shareholders’ meeting, terminates any liability of a director vis-à-vis the
company, provided that shareholders representing at least 5.00% of the company’s capital stock do not object and provided further that such liability does not result from a violation of law or the company’s bylaws.
Under Argentine law, the board of directors is in charge of the company’s management and administration and, therefore, makes any and all decisions in connection therewith, as well as those decisions expressly provided for in the
Argentine Corporate Law, the company’s bylaws and other applicable regulations. Furthermore, the board of directors is responsible for the execution of the resolutions passed in shareholders’ meetings and for the performance of any
particular task expressly delegated by the shareholders.
Meetings, Quorum, Majorities
Pursuant to Section 23 of our bylaws, our Board of Directors’ meetings require a quorum of an absolute majority of its members. Our Board of Directors functions and acts upon the majority vote of its members present at its meetings
either physically or via videoconferencing.
Our Board of Directors’ minutes must be drafted and signed by directors and syndics who are present at the meeting within five days from the date on which it was held. Members of our Supervisory Committee must register in the
minutes the names of the directors who have participated in the meeting remotely and that the decisions made therein were made in accordance with the law. The minutes must include the statements from directors participating in
person and remotely and must state their respective votes on each decision made.
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The chairman, or the individual acting in lieu of the chairman pursuant to applicable law, may call meetings when deemed convenient, or when so required by any director or the supervisory committee. The meeting must be called
within five days from the request; otherwise, the meeting may be called by any of the directors. Our Board of Directors’ meetings must be called in writing and notice thereof must be given to the address reported by each director. The
notice must indicate the date, time and place of the meeting and the meeting agenda. Business that is not included in the notice may be discussed at the meeting only to the extent all permanent directors are present and have cast their
unanimous vote.
Independence Criteria of Directors
In accordance with the provisions of Section 4, Chapter I, Title XII “Transparencia en el Ámbito de la Oferta Pública” and Section 11, Chapter III, Title II “Órganos de Administración y Fiscalización, Auditoría Externa” of the CNV
rules, we are required to report to the shareholders’ meeting, prior to vote the appointment of any director, the status of such director as either “independent” or “non-independent”. At present José Luis Morea, Tomas José White, Jorge
Eduardo Villegas, Oscar Luis Gosio, Guillermo Rafael Pons, Alejo Villegas, Martín Lhez, Mario Elizalde, José Manuel Ortiz, Ramón Nazareno Ulloa and Gabriel Enrique Ranucci are independent members of our Board of Directors
according to the criteria established by the CNV, which may differ from the independence criteria of the NYSE and NASDAQ. See “Item 6. —Audit Committee” for further details about independence requirements of the members of
our Audit Committee at the time of the offering.
Corporate Governance
We have adopted a corporate governance code to put into effect corporate governance best practices, which are based on strict standards regarding transparency, efficiency, ethics, investor protection and equal treatment of investors.
The corporate governance code follows the guidelines established by the CNV. We have also adopted a Code of Business Conduct designed to establish guidelines with respect to professional conduct, morals and employee
performance.
Senior Officers
The following table sets forth the current composition of our management team:
Name
Fernando Roberto Bonnet
Enrique Terraneo
Alberto Francisco Minnici
José María Saldungaray
Justo Pedro Sáenz
José Manuel Pazos
Rubén Omar López
Gabriel Omar Ures
Leonardo Marinaro
Javier Alejandro Torre
Adrián Gustavo Salvatore
Martín Fernández Barbiero
Leonardo Katz
Title
CEO
CFO
Date of first appointment to position
2021
2021
Production and Combined Cycle Plant
Manager
Fuel Supply Planning Manager
Administration Manager
General Counsel, Head of Legal Area
Renewable Energy Manager
Commercial Director
Legal Affairs Manager
Human Resources Manager
Institutional Relations Director
Compliance and Internal Audit Manager
Director de Planificación Estratégica
2015
2014
2007
2015
2019
2018
2007
2016
2019
2009
2020
Date of Birth
March 23, 1977
October 13, 1974
April 14, 1965
February 18, 1967
May 2, 1958
September 14, 1971
April 17, 1964
December 31, 1978
April 25, 1963
April 19, 1967
April 26, 1967
April 28, 1971
March 24, 1970
The following are the academic and professional backgrounds of our senior management. The business address of each of the members of our senior management team is Avda. Thomas Edison 2701, Buenos Aires, Argentina.
Fernando Roberto Bonnet holds a degree in Accounting from the Universidad Nacional de Buenos Aires. In addition, from 2009 to 2010, he completed a graduate level course in Executive Business Administration by the IAE
Business School, Universidad Austral. Since April 1, 2021, he serves as the Chief Executive Officer of the Company, having served from March 2020 to March 202 as our Chief Operating Officer, from 2010 to March 2020, as our
Chief Financial Officer and from 2008 to 2010 as our tax manager. Previously he also served as tax manager of Ernst & Young Argentina. Mr. Bonnet currently serves as alternate director of CP Achiras S.A.U., CPR Energy Solutions
S.A.U., Puerto Energía S.A.U., Vientos La Genoveva S.A.U., Vientos La Genoveva II S.A.U., CP Manque S.A.U. and CP Los Olivos S.A.U.
Enrique Terraneo holds a degree in Accounting from the Universidad Nacional de Buenos Aires. In addition, from 2009 to 2010, he completed a graduate level course in Executive Business Administration in IAE Business School,
Universidad Austral. Since April 2021, he serves as our Chief Financial Officer. Previously, he served as new business manager in Lartirigoyen y Cia. From 2019 to 2020, he served as CFO of Banco de Inversion y Comercio Exterior.
Between 2006 and 2019, he served as our finance manager. Previously he also served as audit manager of Ernst & Young Argentina.
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Alberto Francisco Minnici holds a degree in Electrical Engineering from the Universidad Tecnológica Nacional. Mr. Minnici has 37 years of experience in the electric power industry. He has served as Central Puerto’s Production and
Combined Cycle Plant Manager since 2015. Previously, he served as Plant Operations Manager of the Puerto Complex from 2012 to 2015 and as Plant Operations Manager of the combined cycle plant of the Puerto Complex located in
the City of Buenos Aires from 2008 to 2012, among other positions within Central Puerto.
José María Saldungaray holds a degree in Electrical Engineering from the Universidad Nacional del Sur, Bahía Blanca, Argentina. He has been our planning manager since 2014. He currently serves as alternate director of Proener
S.A.U., Vientos la Genoveva S.A.U. and Vientos La Genoveva II S.A.U. He also served as commercial manager of HPDA and was a member of the board of directors of Centrales Térmicas Mendoza S.A. and LPC.
Justo Pedro Sáenz completed the “Advanced Management Program” at The Wharton School, University of Pennsylvania in the United States. He has served as alternate director of Central Puerto´s Board of Directors since 2008. From
2007 to 2016, he served as administration and human resources manager of Central Puerto, and since 2016 he serves as administration manager of Central Puerto. From 2005 to 2007, he worked at Cima Investments in the new business
area. From 2003 to 2005, he served as Chief Financial Officer of Banco de Servicios y Transacciones S.A. In 2002, he co-founded Idun Inversiones S.A. From 2000 to 2001, he held the position of partner and finance manager of
Softbank Latin America Ventures, Venture Capital Fund. From 1984 to 2000, he worked at Merchant Bankers Asociados, MBA Banco de Inversiones and MBA Sociedad de Bolsa. He has been a partner of Merchant Bankers Asociados
since 1992, which was affiliated with Salomon Brothers and the investment company of Nicholas Brady, former U.S. Secretary of Treasury. In addition, he currently serves as a director of Proener S.A.U., Vientos La Genoveva S.A.U. y
Vientos La Genoveva II S.A.U., and as an alternate director of IGCE, DGCU, DGCE, CP Renovables S.A., CP Patagones S.A.U., CP Achiras S.A.U., CP La Castellana S.A.U., CPR Energy Solutions S.A.U., CP Manque S.A.U. and
CP Los Olivos S.A.U.
Gabriel Omar Ures holds a degree in Systems Engineering from the Universidad Abierta Interamericana. He also holds a Postgraduate degree in Gas and Electricity Administration in Instituto Tecnológico de Buenos Aires (ITBA) and
a Management Program from the Darden Business School of the University of Virginia, United States. He started his professional career in 1997 and has over 24 years of experience working in the Argentine power sector. Among other
positions, he held managerial positions in Hidroeléctrica Alicura, was commercial director of AES Argentina Generación, General Manager of Termoeléctrica Manuel Belgrano (from 2013 to 2018), Commercial Manager in Central
Dock Sud (YPF EE). Additionally, he was a director of various companies and industry chambers, including AGEERA (Asociación de Generadores de Energía Eléctrica de la República Argentina) where he has been elected as
President for 5 consecutive terms (2012/2017) after holding the Vice Presidency. He currently serves as director of CAMMESA and Termoeléctrica Manuel Belgrano S.A.
Leonardo Marinaro holds a degree in law from the Universidad Católica Argentina. He has been our legal affairs manager since 2007. Mr. Marinaro has served as director of LPC, CTM and Edesur S.A. He is currently a director of CP
Renovables S.A., Vientos La Genoveva S.A.U. and Vientos La Genoveva II S.A.U., and alternate director of Proener S.A.U., Central Vuelta de Obligado S.A., TMB, TJSM, Distrilec Inversora S.A., DGCE, IGCE, and Energía
Sudamericana S.A.
Javier Alejandro Torre holds a degree in Human Resources from the University of Buenos Aires and a Master in Business Administration from the University of Buenos Aires. From 2011 to 2016, he was human resources manager of
Argentine operations in LyondellBasell. He has been our human resources manager since 2016. He previously worked at ExxonMobil for almost 20 years, where he held different positions in the commercial and human resources areas.
Martín Fernández Barbiero holds a degree in Accounting from the Universidad Nacional de Buenos Aires and a master’s degree in Business Administration (MBA) from Universidad de San Andrés. He also completed an international
certification program in Compliance from the Universidad Austral (IAE). He has served as Internal Auditor Manager of Central Puerto since 2008 and since 2018, he was also appointed as Compliance Officer. Before Central Puerto he
worked for CMS Energy as Internal Auditor Manager and SOX Compliance Manager among other positions between 1999 and 2007.
Leonardo Katz holds a degree in Industrial Engineering from the Universidad Nacional de Salta. He also received an MBA degree in 2001 from Universidad del CEMA. He has more than 20 years of experience in the Generation
sector. He has been the General Manager of Central Vuelta de Obligado S.A., in charge of the completion of the project and the closing of commercial litigation, currently remain as a Chairman. Previously Mr. Katz served in Central
Puerto as Planning and Investments Manager (Dec’15 to Dec’19), Head of Internal Investment Planning (Apr’07-Dec’15). He served as Latam Senior Market Analyst since Set’97 in CMS Energy an American company who used to
have assets in Argentina and Latam. He is a Director in the FONINVEMEN Projects since its completion.
For the biography of Mr., José Manuel Pazos, Rubén Omar López, and Adrián Salvatore see “Item 6. —Board of Directors”.
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Item 6.B Compensation
Compensation of our Board of Directors
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Our shareholders fix our directors’ compensation, including their salaries and any additional wages arising from the directors’ permanent performance of any administrative or technical activity. Compensation of our directors is
regulated by the Argentine Corporate Law and the CNV regulations. Any compensation paid to our directors must have been previously approved at an ordinary shareholders’ meeting. Article 261 of the Argentine Corporate Law
provides that the compensation paid to all directors and syndics in a year may not exceed 5.00% of net income for such year, if the company is not paying dividends in respect of such net income. The Argentine Corporate Law increases
the annual limitation on director compensation to up to 25.00% of net income based on the amount of dividends, if any, that are paid. In the case of directors that perform duties at special commissions or perform administrative or
technical tasks, the aforementioned limits may be exceeded if a shareholders’ meeting so approves, such issue is included in the agenda, and is in accordance with the regulations of the CNV. In any case, the compensation of all
directors and members of the Supervisory Committee requires shareholders’ ratification at an ordinary shareholders’ meeting. Certain of our directors perform managerial, technical and administrative functions. We compensate
directors who perform such functions for their roles both as directors and as executive officers.
During the annual ordinary shareholders’ meeting convened for April 30, 2024, the shareholders will consider the approval of the directors’ fees that amounted to a total of Ps. 48,716,126.00 for services rendered in 2023. As of the date
of this annual report, neither we, nor any of our affiliates, have entered into any agreement that provides for any benefit or compensation to any director after expiration of his or her term.
Compensation of our Senior Officers
In 2023, our management received compensation and fees totaling Ps. 1,215.4 million (in nominal values), of which Ps. 439.3 million consisted of an annual bonus. The annual bonus to management is normally between three and four
times their salaries and is based on certain performance thresholds related to the amount of work performed and the importance of such work to our business. We also compensate directors who perform managerial, technical and
administrative functions for their roles both as directors and as executive officers.
Senior Officers are entitled to the revenue sharing staff participation bonus described on article 33 of our By-laws.
Compensation of our Supervisory Committee
During the annual ordinary shareholders’ meeting convened for April 30, 2024, the shareholders will consider the approval of the Supervisory Committee’s fees of Ps. 5,533,500.00 (in nominal terms) for services rendered in 2023.
Executive Remuneration Clawback Policy
On November 30, 2023, our Board of Directors/ approved a new clawback policy (the “Clawback Policy”) in accordance with the listing requirements of the NYSE. The Clawback Policy, which became effective immediately, provides
for the recovery of erroneously awarded incentive-based compensation received by current and former executive officers in connection with a financial restatement. A copy of our Clawback Policy is attached hereto as Exhibit No. 6.1.
Item 6.C Board practices
As of the date of this annual report, we do not have contracts with our directors providing benefits upon termination of employment.
Audit Committee
Under the SEC rules applicable to corporate governance, we are required to maintain an audit committee.
Pursuant to Argentine Capital Markets Law and its implementing regulations, we are required to have an audit committee consisting of at least three members of our Board of Directors with experience in business, finance, accounting,
banking and audit matters. Under CNV regulations, at least a majority of the members of the audit committee must be independent directors under CNV standards.
On April 16, 2017, CNV issued Resolution No. 730/2018, which modified the criteria and requirements applicable for directors of companies admitted to the public offering regime of its shares. The main changes introduced by
Resolution No. 730/2018 are as follows:
·
·
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Independent directors will cease to be independent after 10 years of holding a position of director but will be eligible to return to their independent status three years after leaving office.
The threshold constituting a “significant participation” has been reduced from a 15% holding of capital stock to a 5.00% holding of capital stock.
157
The following criteria preclude a person from being considered “independent”: (i) being connected with the company or the company´s shareholders that have (direct or indirect) significant participations, or being connected with
companies in which the aforementioned shareholders have (direct or indirect) significant participations; (ii) maintaining a frequent professional relation, of relevant nature and volume, with, or receiving remuneration or fees from, the
company, its shareholders who have a (direct or indirect) significant participation, or companies in which the aforementioned shareholders have (direct or indirect) significant participations; (iii) maintaining a significant participation,
through the possession of shares of the capital stock and/or the votes, in the company and/or in another company in which the company has a significant participation; (iv) on a regular basis, selling and/or providing goods and/or
services of relevant nature and volume (directly or indirectly) to the company or to shareholders that have (direct or indirect) significant participations; (v) being the director, CEO, administrator or principal executive for a non-profit
organization which has received funds in amounts exceeding those established by Resolution No. 30/2011 of the UIF (currently equivalent to 150 Minimum Living and Mobile Wages) from the company or its parent company; (vi)
receiving any payments from the company or companies of the same group other than fees as a director or dividends as shareholder; and (vii) being a member of the administrative or supervisory committee and/or holding a significant
participation (directly or indirectly) with respect to one or more companies that are registered as Agente de Negociación, Agente de Liquidación y Compensación y/o Agente de Corretaje de Valores Negociables.
It is necessary to comply with all the conditions of independence set forth above for at least three years before the appointment. Our Audit Committee is composed of three members designated by our Board of Directors. Mr. Tomás
José White, Mr. José Luis Morea and Mr. Jorge Eduardo Villegas are independent under Rule 10A-3 of the Exchange Act (“Rule 10A-3”) and applicable NYSE standards, which are different from the general test for independence of
board and committee members. Our board of directors has determined that Mr. Tomas White qualifies as a financial expert within the meaning of the rules adopted by the Commission relating to the disclosure of financial experts on
audit committees in periodic filings pursuant to the Exchange Act.
Independence Requirements under Commission Rule 10-A3
Pursuant to NYSE Rule 303A.06, we are required to have an audit committee that complies with Rule 10-A3. Under rule 10-A3, we are required to comply with certain independent standards. Each member of the audit committee must
be independent and a member of the board of directors. Pursuant to Rule 10-A3, in order to be considered “independent,” a member of an audit committee of a listed issuer may not, other than in his or her capacity as a member of the
audit committee, the board of directors, or any other board committee:
·
·
accept directly or indirectly any consulting, advisory, or other compensatory fee from the issuer or any subsidiary thereof. Compensatory fees do not include the receipt of fixed amounts of compensation under a
retirement plan (including deferred compensation) for prior service with the listed issuer (provided that such compensation is not contingent in any way on continued service); or
be an affiliated person of the issuer or any subsidiary thereof.
Additionally, as of the date of this annual report, all members of our Audit Committee satisfy the independence requirements of the Commission and NYSE applicable to the audit committees of foreign private issuers. The members of
our Audit Committee are entitled to annual compensation in the form of a fixed salary. Our Audit Committee also has two alternate members, and both are independent under Rule 10A-3 and applicable NYSE standards.
A quorum for a decision by the Audit Committee will require the presence of a majority of its members and matters will be decided by the vote of a majority of those present at the meeting. A chairman of the committee must be
appointed during the first meeting after members of the committee have been appointed. The chairman of the committee may cast two votes in the case of a tie. Pursuant to our bylaws, the committee will pass resolutions by the
affirmative vote of the majority of members present. Decisions of the Audit Committee will be recorded in a special corporate book and will be signed by all members of the committee who were present at the meeting. Pursuant to
Section 17 Chapter III Title II of the CNV rules, the Audit Committee must hold at least one regularly scheduled meeting every three months.
Pursuant to Argentine Capital Markets Law, the Audit Committee, among other things:
·
·
·
·
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·
·
·
·
advises on the Board of Directors’ proposal for the designation of external independent accountants and ensure their independence;
oversees our internal control mechanisms and administrative and accounting procedures and assesses the reliability of all financial and other relevant information filed with the CNV and other entities to which we
report;
oversees our information policies concerning risk management;
provides the market with complete information on transactions in which there may be a conflict of interest with members of our various corporate bodies or controlling shareholders;
158
advises on the reasonableness of fees or stock option plans for our directors and managers proposed by the Board of Directors;
advises on our fulfillment of legal requirements and the reasonableness of the terms of the issuance of shares or other instruments that are convertible into shares in cases of capital increase in which pre-emptive rights
are excluded or limited;
verifies the fulfillment of any applicable rules of conduct; and
issues opinions on related-party transactions under certain circumstances and files such opinions with regulatory agencies as required by the CNV in the case of possible conflicts of interest.
Additionally, the Audit Committee is required to prepare an annual working plan and present it to the Board of Directors and the Supervisory Committee. Members of the Board of Directors, members of the Supervisory Committee and
external independent accountants are required to attend the meetings of the Audit Committee if the Audit Committee so requests it and are required to grant the Audit Committee full cooperation and information. The Audit Committee
is entitled to hire experts and counsel to assist it in its tasks and has full access to all of our information and documentation.
The following chart shows the members of our Audit Committee according to the resolution passed at the Board of Directors’ meeting held on April 28, 2023:
Name
Title
Date of first appointment to position
Date of birth
Status(1)
Tomás José White
Jorge Eduardo Villegas
José Luis Morea
Mario Elizalde
José Manuel Ortíz
Member
Member
Chairman
Alternate Director
Alternate Director
May 14, 2018
May 11, 2017
May 13, 2019
July 11, 2007
April 29, 2022
May 18, 1957
January 9, 1949
October 19, 1954
July 26, 1954
August 6, 1960
Independent
Independent
Independent
Independent
Independent
(1)
Status based on rules of the CNV and the Commission.
For the biographies of the members of our Audit Committee, see “Item 6. —Board of Directors”.
Supervisory Committee
We have a monitoring body called the supervisory committee (“Supervisory Committee”). Our Supervisory Committee consists of three syndics and three alternate syndics appointed by shareholders at our annual ordinary shareholders’
meeting. The syndics and their alternates are elected for a period of one year, and are vested with the powers set forth by the Argentine Corporate Law and other applicable legal provisions. Any compensation paid to our syndics must
have been previously approved at an ordinary shareholders’ meeting. The term of office of the members of the Supervisory Committee expired on December 31, 2023, the election of the new members will be held on April 30, 2024.
Members of our Supervisory Committee are also authorized to attend Board of Directors’ and shareholders’ meetings, call extraordinary shareholders’ meetings and investigate claims brought in writing by shareholders who own more
than 2.00% of our outstanding shares. Pursuant to the Argentine Corporate Law, only lawyers and accountants admitted to practice in Argentina and domiciled in Argentina or civil partnerships composed of such persons may serve as
syndics in an Argentine sociedad anónima, or limited liability corporation. Following the registration of the 2016 Merger, members of our Supervisory Committee may call for an ordinary shareholders’ meeting, in the specific cases
provided by law, as deemed necessary by any of them, or otherwise when so required by shareholders representing no less than 5.00% of our capital stock. Pursuant to Section 294 of the Argentine Corporate Law, our Supervisory
Committee must review our books and records, when deemed convenient and at a minimum on a quarterly basis.
Following the registration of the amendment to our bylaws dated June 3, 2015, our Supervisory Committee holds meetings and makes decisions with the presence and affirmative vote of at least two of its members, notwithstanding the
rights granted by law to the dissenting syndic. Before the registration of the 2016 Merger, meetings of the Supervisory Committee could be called by any of its members, its meetings were held with the attendance of all of its members
and decisions were adopted by a majority of votes, notwithstanding the rights granted by law to the dissenting syndic.
Our Supervisory Committee must hold meetings at least once a month. Meetings may also be called at the request of any of its members within five days from the date the request is submitted to the chairman of our Supervisory
Committee or our Board of Directors, as the case may be. Notice of all meetings must be given in writing to the address indicated by each syndic at the time of holding office.
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159
Our Supervisory Committee must be presided over by one of its members, elected by a majority of votes, at the first meeting held every year. At that time, the member who will act in lieu of the chairman in his or her absence shall also
be elected. The chairman represents our Supervisory Committee before our Board of Directors.
The following chart shows the members of our Supervisory Committee according to the resolution passed at the annual ordinary shareholders’ meeting held on April 30, 2021. According to Technical Resolution No. 15 of the Argentine
Federation of Professional Counsel of Economic Sciences and Section III, Chapter III of Title II of the CNV rules, all of our syndics and alternate syndics are independent.
Name
Carlos C. Adolfo Halladjian
Eduardo Antonio Erosa
Juan Antonio Nicholson
Cristina Margarita De Giorgio
Carlos Adolfo Zlotnitzky
Lucas Nicholson
Office
Syndic
Syndic
Syndic
Alternate Syndic
Alternate Syndic
Alternate Syndic
Date of first appointment to position
April 16, 2013
April 16, 2013
April 27, 2018
April 30, 2021
September 21, 2015
April 27, 2018
Profession
Public Accountant
Public Accountant
Lawyer
Public Accountant
Public Accountant
Lawyer
Date of birth
March 8, 1977
October 6, 1958
July 21, 1947
March 7, 1961
April 4, 1981
October 9, 1985
The following are the academic and professional backgrounds of our Supervisory Committee members:
Carlos C. Adolfo Halladjian holds a degree in Accounting, magna cum laude, from the Universidad de Buenos Aires. He has served as a syndic of our Supervisory Committee since 2013. He has been a partner of the Halladjian y
Asociados accounting firm since 2010. He serves as syndic of the following companies: Proener S.A.U., CVOSA, TJSM, Empresa Distribuidora Sur Sociedad Anónima (EDESUR S.A), CP Renovables, CP La Castellana S.A.U., CP
Achiras S.A.U., CPR Energy Solutions S.A.U., Distrilec Inversora S.A., Hidrodistribución S.A, PB Distribución S.A, RPE Distribución S.A., Puerto Energía S.A.U., Estudio Halladjian SRL, Vientos La Genoveva S.A.U. and Vientos
La Genoveva II S.A.U., as well as an alternate syndic of the following companies: DGCU, CP Manque S.A.U. and CP Los Olivos S.A.U.
.Eduardo Antonio Erosa holds a degree in Accounting from the Universidad Católica Argentina in 1985. He has served as a syndic of our Supervisory Committee since 2013. He currently is President of the Board of Directors of
Compañía Argentina de Navegación de Ultramar S.A. In addition, he is an alternate syndic of LE Capital S.R.L
Juan Antonio Nicholson holds a degree in law from the Universidad de Buenos Aires, where he also was adjunct professor of Commercial Law. He is partner at the law firm Nicholson y Cano Abogados. He served as a director and
syndic of several companies. Since 2005 he has been a syndic of HSBC Bank Argentina. He is also president of el Tunalito S.A. Since 2018 he serves as a member of our Supervisory Committee
Cristina Margarita De Giorgio holds a degree in Accounting from the Universidad Católica Argentina in 1985. She also holds postgraduate degrees in Management of Small and Medium Enterprises, Ontological Coaching, Human
Resources and Leadership from Universidad Católica Argentina, Universidad de Belgrano, Universidad del Salvador and IAE, respectively. She worked as Head of Accounting in a private firm, and from 1983 to 1988 she worked at
Balzarotti and Associates Studio (Touch Ross International) Small and Medium Enterprises Subdivision. From 1985 to 2005 she served as Professor of Accounting I and II at Universidad Católica Argentina, and, from 1985 to 1990, as
Professor of Ethics at Universidad Católica Argentina.
Carlos Adolfo Zlotnitzky holds a degree in Accounting from the Universidad de Buenos Aires. He has served as an alternate syndic of our Supervisory Committee since 2015. He works as an independent accountant and tax and
accounting advisor for both legal entities and individuals. He currently serves as alternate syndic of DGCE, DGCU, IGCE, ESSA, CP Manque S.A.U. and CP Los Olivos S.A.U.
Lucas Nicholson holds a degree in law from the Universidad del Salvador. In addition, he took a graduate level course in legal framework of agribusiness in the Universidad Austral. From 2011 to 2016, he worked at the law firm
Nicholson & Cano in their corporate and competition law departments. In 2016, together with Santiago Williams and Agustín Ibarzábal, he founded WIN Abogados. In addition, he currently serves as syndic of IGCE, Energía
Sudamericana S.A., DGCE, COyServ S.A., and, since 2018, alternate syndic of Central Puerto S.A.
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Item 6.D Employees
160
We had 1,181 employees as of December 31, 2023, 865 employees as of December 31, 2022, and 861 employees as of December 31, 2021. The number of our employees has been increased due to our recent acquisitions, for more
information see “Item 4. Information on the Company—Recent Developments”. The following table breaks down the number of our employees and their affiliation with unions for the periods indicated:
Puerto
Complex
116
Luján de
Cuyo plant
9
Piedra del
Águila
plant
4
Brigadier
López plant
1
San Lorenzo
plant
11
Costanera
Complex
—
—
89
302
—
—
391
507
136
—
89
286
—
—
375
511
161
—
—
—
82
16
98
107
8
—
—
—
80
16
96
104
11
—
—
—
43
5
48
52
5
—
—
—
38
5
43
48
14
—
—
—
67
—
67
68
5
—
—
—
67
—
67
72
13
6
—
—
25
2
33
44
7
6
—
—
25
3
34
41
7
—
—
—
—
—
—
—
—
—
—
—
—
—
—
—
19
2021
Subtotal
outside CBA
APJAE
APSEE
LYF
FATLYF
APUAYE
Subtotal under
CBA
Total
2022
Subtotal
outside CBA
APJAE
APSEE
LYF
FATLYF
APUAYE
Subtotal under
CBA
Total
2023
Subtotal
CP La
Castellana CP Achiras
1
—
—
—
—
—
—
1
1
—
—
—
—
—
—
1
1
1
—
—
—
—
—
—
1
1
—
—
—
—
—
—
1
1
Vientos La
Genoveva
1
—
—
—
—
—
—
1
1
—
—
—
—
—
—
1
1
Vientos La
Genoveva II CP Manque
—
—
—
—
—
—
—
—
—
—
—
—
—
—
—
—
1
2
—
—
—
—
—
—
2
1
—
—
—
—
—
—
1
1
Forestry
Segment
—
Cordillera
Solar VIII
—
CVOSA
31
—
—
—
—
—
—
—
—
—
—
—
—
—
—
—
22
—
—
—
—
—
—
—
—
—
—
—
—
—
—
—
5
6
—
—
34
7
47
78
34
6
—
—
35
10
51
85
31
outside CBA
APJAE
APSEE
LYF
FATLYF
APUAYE
Subtotal under
CBA
Total
—
93
291
—
—
384
545
—
—
—
82
17
99
110
—
—
—
30
5
45
49
—
—
—
64
—
64
77
6
—
—
23
4
33
40
—
73
263
—
—
336
355
Note: APSEE: Asociación del Personal Superior de Empresas de Energía.
LYF: Luz y Fuerza.
FATLYF: Federación Argentina de Trabajadores de Luz y Fuerza.
APUAYE: Asociación de Profesionales del Agua y la Energía Eléctrica.
—
—
—
—
—
—
1
161
—
—
—
—
—
—
1
—
—
—
—
—
—
1
—
—
—
—
—
—
1
—
—
—
—
—
—
1
—
—
—
—
—
—
22
—
—
—
—
—
—
5
7
—
—
36
9
52
83
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The CBA entered into with the several unions that have members working at our sites include the terms and conditions that govern the employment contracts of the workers affiliated with each of these unions. Some of the most relevant
terms and conditions of these agreements include the positions that are included in and excluded from bargaining, work schedules, salary levels and additional amounts payable on the basis of the worker’s job, working days and leaves,
among other things.
Matters that are not specifically agreed upon in collective bargaining are governed by the applicable labor laws in Argentina.
The CBAs are entered into for a specific term and may be renewed by the parties. If not renewed, they may remain in place under the principle of survival of repealed laws set forth in the CBA Law No. 14,250.
Item 6.E Share Ownership
Share Ownership
The table below sets forth information concerning the share ownership of our directors and members of our administrative, supervisory or management bodies as of April 29, 2024:
Name
Marcelo Suvá
Fernández Barbiero, Martín
Leonardo Katz
Enrique Terraneo
Mario Elizalde
Item 6.F Disclosure of a registrant’s action to recover erroneously awarded compensation
Not Applicable
Item 7. Major Shareholders and Related Party Transactions
Item 7.A. Major Shareholders
Title
Director
Compliance and Internal Audit Manager
Strategic Planning Director
CFO and Alternate Director
Alternate Director
Shares
% of shares
1,500,000
285
2,675
4,000
28,600
0.10%
0.00%
0.00%
0.00%
0.00%
As of April 29, 2024, we had 1,514,022,256 outstanding shares of common stock with a par value of Ps.1.00 per share. Each share of common stock is entitled to one vote. We do not have any preferred shares outstanding and only have
one class of common shares outstanding. Of the 11,277,623 common shares held by Central Puerto and subsidiaries, 8,851,848 are held by Proener S.A.U., 125,782 are held by CP Renovables S.A, and 2,299,993 are held by Central
Puerto S.A.
The following table sets forth certain information known to us concerning the beneficial ownership over 5.00% or more of our common shares as of April 29, 2024 (except as set forth below).
Beneficial Owner
Plusener S.A.(1)
Argentine Government
Guillermo Pablo Reca(2)
Eduardo José Escasany(3)
Senior Management and Directors**
Other Shareholders(4)
Total
Shares
% of shares
158,073,984
124,949,112
172,737,169
78,837,913
1,535,560
977,888,518
1,514,022,256
10.44%
8.25%
11.41%
5.12%
0.10%
64.68%
100.00%
**
Marcelo Suvá, Enrique Terraneo, Leonardo Katz, Mario Elizalde and Martín Fernández Barbiero each own less than 1.00% of the outstanding common stock.
(1)
(2)
(3)
(4)
According to Schedules 13G filed with the Commission by Plusener S.A. on February 6, 2020.
According to Schedules 13G filed with the Commission by Guillermo Pablo Reca on February 9, 2022.
According to Schedules 13G filed with the Commission by Eduardo José Escasany on February 14, 2021.
No other shareholder has beneficial ownership of more than 5.00% of our common shares. None of our senior officers own any of our common shares.
As of April 19, 2024, we had approximately 28,806,187 ADSs outstanding.
We are not able to determine the number of record holders of our ADSs as of such date, as we are only aware of the Depositary Trust Company and its nominee as record holders. In addition, it is not practicable for us to determine the
number of our ADSs, or common shares beneficially owned in the United States. Likewise, we cannot readily ascertain the domicile of the final beneficial holders represented by ADS record holders in the United States or the domicile
of any of our foreign shareholders who hold our common shares, either directly or indirectly.
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As of the date of this annual report, there are no agreements in place which, if enforced on a subsequent date, may result in a change of control.
162
On December 16, 2016, at a meeting of our shareholders, our shareholders decided to reduce the voluntary reserve by Ps. 1,324,769,474 and capitalize such funds through the payment of a dividend in shares of seven new shares of
common stock with a par value of Ps. 1.00 per share for each outstanding share of common stock. Following such capitalization and dividend of shares, and as of the date of this annual report, we have 1,514,022,256 outstanding shares
of common stock with a par value of Ps.1.00 per share.
The table below represents the evolution of our capital stock since January 1, 2015:
Date
March 11, 2016
December 16, 2016
Item 7.B Related Party Transactions
Capital stock (Ps.)
Event
189,252,782 2016 Merger (and related capital decrease)
1,514,022,256 Capital Increase and Share Dividend Distribution
Controlling
shareholders
N/A
N/A
Argentine corporate law permits directors of a corporation to enter into transactions with such corporation provided that any such transactions are consistent with prevailing market practice. The Argentine Securities Law provides that
corporations whose shares are publicly listed in Argentina must submit to their respective audit committees for approval of any transaction with a related party involving an amount that exceeds 1.00% of the corporation’s net worth.
Except as set forth below and as otherwise permitted under applicable law, we are currently not party to any transactions with, and have not made any significant loans to, any of our directors, key management personnel or other related
persons, and have not provided any guarantees for the benefit of such persons, nor are there any such transactions contemplated with any such persons.
Management Assistance Agreement
RMPE provides certain administrative, financial, commercial, human resources , Strategic planning and general management services to us under the terms of the management assistance proposal as amended and assigned (the
“Assistance Proposal”). Guillermo Pablo Reca currently serves as regular director and holds equity in RMPE. The Assistance Proposal was formally extended in 2022 for a five-year term, with this agreement now terminating on
December 2027. We must pay a fee equal to one and a half percent (1.50%) of our consolidated annual gross sales revenues . The amount accrued under this agreement in year ended December 31, 2023, was Ps. 3,282,121 million .
Other than the management assistance services, we receive from RMPE, a lease between us, as lessor, and RMPE, as lessee, involving a monthly payment of Ps.108,000.
For more information on the related party transactions, see Note 18 to our Audited Consolidated Financial Statements.
CP Renovables Stock Option Agreement
On January 18, 2017, CP Renovables entered into a stock option agreement with its then chairman and general manager (or CEO), Guillermo Pablo Reca (“the minority shareholder”), pursuant to a stock option plan approved by CP
Renovables’ shareholders on April 28, 2016. Under the stock option agreement, the minority shareholder had the obligation, for a three-year term, to (i) develop the CP Renovables business by, among other things, facilitating
investments, proposing acquisitions and business opportunities for the expansion of renewable energy projects, and (ii) lead the development of the existing projects of CP Renovables. In addition, the minority shareholder has the right
to purchase up to 10% of the fully diluted capital stock of CP Renovables, in whole or in part, in one or more acquisitions, at any time prior to the seventh anniversary of the date of execution of the stock option agreement. This latter
right to purchase up to 10% of the fully diluted capital stock of CP Renovables is composed by the right to acquire (a) 63,058,342 class B shares of CP Renovables (the “Initial Option Shares”), and (b) an additional number of class B
shares which, in the aggregate with the Initial Option Shares, should be equal to 10% of any capital stock increase made since the execution of the stock option agreement (the “Additional Option Shares”). The aggregate price for the
Initial Option Shares (assuming all are purchased) has been agreed in US$3,963,690, while the purchase price of any Additional Option Shares will be the U.S. dollar equivalent (based on the exchange rate at the time of the relevant
capital increase) of the subscription price per share paid for the shares of CP Renovables issued pursuant to such capital increases. The stock option agreement includes adjustments and anti-dilution protections, including with respect to
in-kind capital increases and dividend distributions by CP Renovables, and other transactions such as stock splits and redenomination of par value. In addition, the minority shareholder can assign his rights under the stock option
agreement without the consent of CP Renovables.
On November 15, 2023, the minority shareholder exercised the option and acquired the Initial Option Shares and the Additional Option Shares which, in the aggregate, amount to 3,216,342,299 class B shares, representing 10% of the
capital stock of CP Renovables. The stock option was excercised within the term established in the contract.
Table of Contents
Item 7.C Interests of experts and counsel
Not applicable.
Item 8. Financial Information
Item 8.A. Consolidated Statements and Other Financial Information
163
See Item 18 and our Audited Consolidated Financial Statements as of December 31, 2023, and for the years ended December 31, 2023, 2022, and 2021 included in this annual report.
Legal Proceedings
Income Tax Return for Fiscal Year 2014
In February 2015 we filed income tax returns for the nine-month period ended September 30, 2014, applying the adjustment for inflation mechanism established by the Argentine Income Tax Law. In addition, we filed our income tax
return for the three-month period ended December 31, 2014, applying the same adjustment for inflation mechanism.
Later on, on July 27, 2021, the Argentine Tax Authorities issued a resolution through which it implemented an infringement investigation in relation to the income tax for the irregular fiscal periods ended September 30, 2014, and
December 31, 2014, for the alleged omission included in Section 45, Law No. 11,683. On September 8, 2021, we submitted the corresponding deposition and the corresponding evidence. Based on the Tax Determination issued by AFIP
on April 28, 2022, we appealed before the Argentine Fiscal Court (TFN) on May 23, 2022. By virtue of this appeal, the TFN declared the admittance of evidence through the resolution dated March 29, 2023; and to that effect, on
October 26, 2023, the accounting expert’s report was furnished as evidence.
Action for Recovery—Income Tax Refund for Fiscal Period 2010
In December 2014, we, as merging company and continuing company of HPDA, raised a recourse action before fiscal authorities regarding the income tax for the fiscal period 2010,. This recourse action seeks to recover the income tax
entered by HPDA in accordance with the lack of application of the inflation- adjustment mechanism established by the Income Tax Law. In December 2015, since the term stated by Law No. 11,683 elapsed, we brought a contentious-
administrative claim before the National Court to ask for its right to obtain the income tax recovery.
In October 2018, the Company was served notice of the judgment issued by the Federal Contentious- Administrative Court No. 5, which granted the right to recourse. The judgment ordered tax authorities to return the amount of 67,612
(at historical values) to the Company plus the interest stated in the BCRA Communication 14290 and ordered that legal cost must be borne by the defendant. Such judgment was appealed by the National Tax Administration, and on
September 9, 2019, Division I of the National Court of Appeals of the Federal Contentious- Administrative Court (“CNACAF”) confirmed the appealed judgment. On September 24, 2019, the National Tax Administration raised
Federal Extraordinary Appeal (“REF”) against CNACAF judgment, which was replied by the Company. On October 29, 2019, CNACAF granted the REF and sent the file to the Argentine Supreme Court. On October 25, 2022, the
Argentine Supreme Court (CSJN) confirmed the appealed decision. On March 21, 2024, CPSA collected the amount claimed plus the corresponding interest.
Action for recovery–Income Tax Refund for Fiscal Years 2009, 2011 and 2012
In December 2015, the Company filed a petition with the Argentine Tax Authorities for the recovery of income tax for the fiscal year 2009, in the amount of 20,395 at historical values which had been incorrectly paid by the Company
in excess of our income tax liability. By filling such action, the Company seeks to recover the excess income tax paid by CPSA due to the failure to apply the adjustment for inflation set forth in the Argentine Income Tax Law.
On April 22, 2016, after the term required by Law No. 11,683 expired, the Company filed an action for recovery for the amount claimed with the Argentinean Court. On September 27, 2019, the judge entered judgment rejecting the
complaint filed by the Company. Such judgment was appealed by the Company last October 4, 2019. Room I of CNACAF (Argentine Appeal Court for Federal Contentious Administrative Matters) granted the appeal presented by the
Company on March 11, 2020. Against this resolution, the Argentine Tax Authorities raised an Extraordinary Appeal. On October 25, 2022, the Argentine Supreme Court confirmed the decision made by the CNACAF and on November
27, 2023, CPSA collected the amount claimed plus the corresponding interest.
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In December 2017, the Company, as merging company and continuing company of HPDA, filed a petition with the Argentine Tax Authorities for the recovery of 52,783 at historical values paid in excess by HPDA for payment of
Income Tax for 2011 fiscal period. The purpose of such action is to recover the income tax paid by HPDA due to the failure to apply the adjustment for inflation mechanism aforementioned. On April 1, 2019 such claim was rejected by
national fiscal authorities. Therefore, the Company filed an administrative and legal action on April 25, 2019. On September 13, 2022, the Company obtained a favorable first-instance judgment. This judgment was appealed by AFIP
and it is still pending resolution.
In December 2018, the Company brought two administrative complaints of recovery before the Argentine Tax Authorities: the first one was filed by the Company, as merging company and continuing company of HPDA, regarding the
income tax for the fiscal period 2012 that amounted to 62,331 at historical values, which was entered in excess by HPDA. The second complaint was filed by the Company regarding the income tax for the same fiscal period that
amounted to 33,265 at historical values, which was entered in excess by the Company.
These recourse actions seek to recover the income tax entered by HPDA and the Company in accordance with the lack of application of the inflation-adjustment mechanism aforementioned. On September 12, 2019, the Company filed
both recourse actions before the Federal Contentious- Administrative Court against the Argentine Tax Authorities in accordance with Section 82, paragraph “c” of Law no. 11,683 (restated text 1998 as amended), as the term established
in the second paragraph of Section 81 of such law had elapsed.
Action for recovery–Income Tax for the fiscal year 2015
On December 23, 2020, we submitted before the fiscal authorities an action for recovery of the income tax for the fiscal year 2015 for the amount of Ps. 129,231 thousand (at historical values) unduly paid by us. The purpose of the
action for recovery is to obtain reimbursement of the income tax paid by us based on the lack of application of the inflation adjustment mechanism set forth in the Argentine Income Tax Law. On April 22, 2021, we filed a recovery
lawsuit before the Court for Contentious Administrative Matters against the Argentine Tax Authorities pursuant to the provisions of Section 82, subsection c of Law No. 11,683 (restated and amended 1998), on the grounds that the term
established in the second paragraph of Section 81 of that body of rules had elapsed.
Action for recovery–Income Tax for the fiscal year 2016
On January 24, 2022, the Company filed before the tax authorities a recovery action of the income tax for the fiscal year 2016, for the amount of 189,376 (at historical values) unduly paid by CPSA. Such recovery action is aimed at
obtaining the reimbursement of the income tax paid by CPSA based on the lack of application of the inflation adjustment mechanism set for by the Argentine Income Tax Act.
The Group considered the following, based on the opinion of its legal advisors and on the IFRIC 23 accounting guidelines:
1)
2)
that it is probable that authorities will accept the Company's position and, therefore, it is not required to register a liability under such item, and
regarding recourse actions for income tax, except for the case of recourse action by HPDA for the fiscal period 2011, that it is also probable that the positions adopted by the Company will be accepted in court;
therefore, an asset has been recognized for such recourse actions.
The corresponding asset is included in the item “Other non-financial assets” of Non-Current Assets under “Income Tax Credits” and it amounts to Ps. 156,882 thousand and Ps.750,327 thousand as of December 31,
2023 and 2022, respectively.
Other taxes related to sales and to bank account transactions
Revenues from recurring activities, expenses incurred, and assets are recognized excluding the amount of sales tax, as in the case of value-added tax or turnover tax, or the tax on bank account transactions, except:
– where the tax incurred on a sale or on a purchase of assets or services is not recoverable from the taxation authority, in which case the sales tax is recognized as part of the cost of acquisition of the asset or as part of the expense item
as the case may be.
– receivables and payables are stated including value-added tax.
The charge for the tax on bank account transactions is presented in the administrative and selling expenses line within the consolidated statement of income.
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The net amount of the tax related to sales and to bank account transactions recoverable from, or payable to, the taxation authority is included as a non-financial asset or liability, as the case may be.
Dividends and Dividend Policy
The holders of ADSs are entitled to receive dividends to the same extent as the owners of our common shares. The information below describes the latest dividend distributions. Please bear in mind that the pesos informed are equivalent
to the pesos distributed in that moment in time and are not adjusted by inflation as of December 31, 2023.
·
·
·
·
·
On December 23, 2022, we approved and made available dividends for Ps. 2.88 in cash per ordinary share which were paid on December 30, 2022. For ADR holders, dividends were paid on January 3, 2023.
On November 2, 2023, we announced the payment of dividends equivalent to Ps. 29.72 per share payable 93% in sovereign bonds and 7% in cash in Ps., distributed on November 16, 2023.
On December 1, 2023, we announced the payment of dividends equivalent to Ps. 32.43 per share payable 91.68% in sovereign bonds, 7% in cash in Ps. and 1.32% in cash in US$ distributed on December 18, 2023.
On December 15, 2023, we announced the payment of dividends equivalent to Ps. 11.00 per share payable 93% in cash in US$ and 7% in cash in Ps. distributed on December 27, 2023.
On January 2, 2024, we announced the payment of dividends equivalent to Ps. 5.75 per share payable 93% in cash in US$ and 7% in cash in Ps. distributed on January 11, 2024.
In the future, we could decide to pay dividends in accordance with applicable law and based on various factors then existing, including:
·
·
·
·
·
·
our financial condition, operating results and current and anticipated cash needs;
our strategic plans, business prospects and expansion capital expenditures;
general economic and business conditions;
our strategic plans and business prospects;
legal, contractual and regulatory restrictions on our ability to pay dividends; and
other factors that our Board of Directors may consider to be relevant.
Under the Argentine Corporate Law, the declaration and payment of annual dividends, to the extent that the company presents retained earnings in accordance with IFRS and CNV regulations, are determined by shareholders at the
annual ordinary shareholders’ meeting. In addition, under the Argentine Corporate Law, 5.00% of the net income for the fiscal year calculated in accordance with IFRS and CNV regulations must be appropriated by resolution adopted
at shareholders’ meetings to a legal reserve until such reserve equals 20.00% of the capital stock. This legal reserve is not available for distribution.
According to the amendments introduced to the Income Tax Law by means of the current laws and regulations, the taxation applicable on the distribution of dividends from Argentine companies would be as follows:
1. Dividends originated in profits obtained during fiscal years initiated on or after January 1, 2018, and up to December 31, 2020: dividends on Argentine shares paid to Argentine resident individuals and/or non-Argentine residents
would be subject to a 7.00% income tax withholding on the amount of such dividends (“Dividend Tax”). Note that according to Section 48 of Law No. 27,541, the application of the corporate 25.00% rate was suspended for one tax
period; thus the 7.00% rate would also apply for dividend distributions involving profits obtained during fiscal years initiated on or after January 1, 2018, and up to December 31, 2021. However, if dividends are distributed to Argentine
Entities (in general, entities organized or incorporated under Argentine law, certain traders and intermediaries, local branches of non-Argentine entities, sole proprietorships and individuals carrying on certain commercial activities in
Argentina), no Dividend Tax should apply. Equalization Tax (as defined below) is not applicable.
Argentine individuals and undivided estates located in Argentina are not allowed to offset income arising from the distribution of dividends on Argentine shares with other losses arisen in other type of operations.
2. Dividends originated in profits obtained during fiscal years initiated on or after January 1, 2021, onward: due to the amendments introduced by Law 27,630; dividends on Argentine shares paid to Argentine resident individuals and/or
non-Argentine residents would be subject to a 7.00% income tax withholding on the amount of such dividends. However, if dividends are distributed to Argentine Entities, no Dividend Tax should apply. Equalization Tax is not
applicable.
3. Dividends originated in profits obtained during tax periods before those contemplated above: no Argentine income tax withholding would apply on dividend distributions except for the application of the Equalization Tax.
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The equalization tax (the “Equalization Tax”) is applicable when the dividends distributed are higher than the “net accumulated taxable income” of the immediate previous fiscal period from when the distribution is made. In order to
assess the “net accumulated taxable income” from the income calculated by the Income Tax Law, the income tax paid in the same fiscal period should be subtracted and the local dividends received in the previous fiscal period should
be added to such income. The Equalization Tax would be imposed as a 35.00% withholding tax on the shareholder receiving the dividend. Dividend distributions made in property (other than cash) would be subject to the same tax rules
as cash dividends. Stock dividends on fully paid shares (“acciones liberadas”) are not subject to Equalization Tax.
For Argentine individuals and undivided estates not registered before the Argentine tax authorities as taxpayers for income tax purposes as well as for non-Argentine residents, the Dividend Tax withholding will be considered a final
payment. Argentine individuals and undivided estates are not allowed to offset income arising from the distribution of dividends on Argentine shares with losses from other types of operations.
Pursuant to the terms of the amendment to the Brigadier Lopez Loan between us and Citibank N.A., JP Morgan Chase Bank N.A. and Morgan Stanley Senior Funding INC. dated December 22, 2020, we were precluded from making
dividend payments during 2021 and limited to a maximum of US$25.0 million and US$20.0 million in dividends payment for 2022 and 2023, respectively.
On October 19, 2023, we made a prepayment to the syndicated loan celebrated with Citibank N.A., JP Morgan Chase Bank N.A. and Morgan Stanley Senior Funding INC for an amount of US$49,043,078. This prepayment allowed
Central Puerto to make dividend payments that were restricted by this loan. As of the date of this annual report, the Company has no restrictions associated with this loan to pay dividends After such payment, the principal due amounted
to US$6,056,922,which was fully paid on January 12, 2024.
As of the date of this report, in accordance with the Central Bank regulations, we are required to obtain a prior authorization in order to have access to the FX Market to purchase the foreign currency (a step necessary to make
international transfers) to pay dividends. However, as of the date of this annual report, there are no restriction from Central Bank to use the cash and equivalents in foreign currency that the company may hold in order to pay dividends
to its shareholders.
Furthermore, as from January 17, 2020, in accordance with Central Bank regulations, access is granted to the FX Market exchange market to pay dividends to non-resident shareholders, subject to the requirement that the total amount
of transfers executed through the FX Market for payment of dividends to non-resident shareholders may not exceed 30.00% of the total value of any new capital contributions made in the company that had been entered and settled
through such exchange market. The total amount paid to non-resident shareholders may not exceed the corresponding amount denominated in Argentine Pesos that was determined by the related shareholders’ meeting.
Amount Available for Distribution
Dividends may be lawfully declared and paid only out of our earnings stated in our annual consolidated financial statements approved by the annual ordinary shareholders’ meeting. Under the Argentine Corporate Law, listed companies
(such as ourselves) may distribute provisional dividends or dividends in advance resulting from interim financial statements.
Under the Argentine Corporate Law and our bylaws, our annual net income (as adjusted to reflect changes in prior years’ results) is allocated in the following order: (i) to comply with our legal reserve requirement of 5.00% of our net
income until such reserve equals 20.00% of the capital stock; (ii) for voluntary or contingent reserves, as may be resolved from time to time by our shareholders at the annual ordinary shareholders’ meeting; (iii) the remainder of the net
income for the year may be distributed as dividends on common shares; and/or (iv) as otherwise decided by our shareholders at the annual ordinary shareholders’ meeting.
Our Board of Directors submits our consolidated financial statements for the preceding fiscal year, together with reports thereon by our Supervisory Committee and the independent accountants, at the annual ordinary shareholders’
meeting for approval. Within four months of the end of each fiscal year, an ordinary shareholders’ meeting must be held to approve our annual consolidated financial statements and determine the appropriation of our net income for
such year.
Under applicable CNV regulations, cash dividends must be paid to shareholders within 30 days of the shareholders’ meeting approving such dividends. In the case of stock dividends, shares are required to be delivered within three
months of our receipt of notice of the authorization by the CNV for the public offering of the shares relating to such dividends. The statute of limitations in respect of the right of any shareholder to receive dividends declared by the
shareholders’ meeting is three years from the date on which it has been made available to the shareholder.
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Item 8.B Significant Changes
167
The main subsequent events occurred after the closing date of the annual consolidated financial statements (December 31, 2023) are the following:
·
·
·
On January 2, 2024 our Board of Directors resolved to partially release the optional reserve for the payment of dividends, and to distribute dividends equivalent to the sum of Ps. 5.75 per share, payable 93% in cash in
US$ and 7% in cash in Ps. distributed on January 11, 2024.
On February 7, 2024, the Secretariat of Energy issued Resolution No. 9/2024, which modified the remuneration scheme for capacity and energy applicable from February 1, 2024, to Authorized Generators (electricity
generators which do not have contracts in the term market in any of its modalities) acting in the WEM. For further information on Resolution No. 9/2024, see “Item 4.B. Business Overview—The Argentine Electric
Power Sector—Remuneration Scheme—The Current Remuneration Scheme”.
On April 22, 2024, Proener S.A.U. entered into a share subscription contract granting it a 4% interest in the share capital of the Canadian company AbraSilver Resource Corp. See “Item 4. Information on the
Company—Recent Developments— Acquisition of interest in AbraSilver”.
Item 9. The Offer and Listing
Item 9.A. Offer and listing details
Our shares are listed on the BYMA and, since February 2, 2018, have been listed on the NYSE under the symbol “CEPU”.
Item 9.B. Plan of Distribution
Not applicable.
Item 9.C. Markets
Our common shares are listed on the BYMA under the symbol “CEPU”. During 2023, the volume traded on the BYMA amounted to 204,128,301 shares. The total number of shares subscribed and integrated on December 31, 2023,
was 1,514,022,256, of which 100% were listed and available to trade on the Buenos Ares Stock Exchange.
On February 1, 2018, we completed our IPO and on February 2, 2018, our ADSs representing our common shares began to trade on the NYSE under the symbol “CEPU”. From January 1, 2023, to December 31, 2023, the volume of
ADRs traded on the NYSE amounted to 70,397,414, equivalent to 703,974,140 common shares.
Consequently, the total trading volume of our common shares during 2023 was 908,102,441.
Item 9.D. Selling Shareholders
Not applicable.
Item 9.E. Dilution
Not applicable.
Item 9.F. Expenses of the issue
Not applicable.
Item 10. Additional Information
Item 10.A. Share capital
Not applicable.
Item 10.B. Memorandum and articles of association
Below we provide certain information on our capital stock and a brief summary of certain significant provisions of our bylaws and the applicable laws and regulations in Argentina. This summary is not intended to be comprehensive
and is qualified in its entirety by our bylaws and the applicable laws and regulations in force in Argentina.
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Capital Stock
168
As of the date of this annual report, our capital stock amounts to Ps.1,514,022,256 and is represented by 1,514,022,256 common shares with a par value of Ps. 1.00 and one voting right each, all of them having been fully paid in and
admitted to public offering.
As of the date of this annual report, two of our subsidiaries hold 11,277,623 of our common stock.
As of the date of this annual report, we are not aware of any individuals who hold, or who have agreed to hold, conditionally or otherwise, stock options, with respect to our common shares.
Articles of Incorporation and Bylaws
We are a corporation (sociedad anónima) organized and existing pursuant to the laws of Argentina. Our registered offices are domiciled in the City of Buenos Aires, Argentina. Central Puerto was created through Executive Decree No.
1222/92 dated February 26, 1992, in connection with the privatization process of SEGBA, and was registered with the Public Registry of Commerce on March 13, 1992, under No. 1,855 of Book 110, Volume A (Sociedades Anónimas).
Central Puerto was created for a term of 99 years as from its registration with the Public Registry of Commerce.
Corporate Purpose
Pursuant to Section 4 of our bylaws, Central Puerto was created to be engaged in any of the following activities, either on its own account, or through or in association with third parties, in Argentina or abroad:
(a)
(b)
(c)
(d)
(e)
(f)
(g)
(h)
(i)
(j)
(k)
producing, transforming, carrying, distributing and selling electric power in any of its forms, including, but not limited to, thermoelectric power from non-renewable sources (coal, oil derivatives, natural gas, uranium)
and renewable sources, or from usable waste, hydroelectric power (including mini and micro power plants), thermonuclear power, wind power, geothermal power, offshore energy (tidal power, wave power, ocean
currents, ocean-thermal energy, osmosis energy), solar energy (photovoltaic and thermal power) and bioenergy (plant and animal biomass);
preparing, developing, planning and executing projects related to the capture and/or reduction of carbon emissions, including the issuance, negotiation, purchase and sale, among others, of certificates and any related
activity;
producing, storing and using hydrogen technologies in any of its available forms of energy;
engaging in the exploration, exploitation, processing, purification, transformation, refining, industrialization, storage, sale, transportation, distribution, import and export of liquid (such as oil) and/or gaseous
hydrocarbons (such as natural gas), minerals (such as mineral coal) and metals (such as uranium and lithium, among others) and their respective direct or indirect derivatives;
engaging in the production and exploitation of raw materials for biofuel production (biodiesel and bioethanol), including their manufacturing, storage, sale, distribution and transportation;
engaging in the processing, storage, sale, distribution and transportation and/or use of: (i) agricultural waste and urban solid waste as a renewable energy source and (ii) ordinary and special waste (solid, semisolid and
liquid) as a source of energy;
obtaining, storing, selling, distributing, carrying and/or using biogas as a renewable energy source;
processing raw materials from fossil fuels (natural gas, raw gasoline) to obtain basic (synthesis gas, benzene, toluene, etc.), intermediate (ammoniac, ethanol, methanol, ethyl-benzene, etc.) and final petrochemicals
(fertilizers, resins, polyurethanes, detergents, PET, etc.);
engaging in the research and development of energy technologies;
developing, investing and exploiting all kinds of undertakings and direct, related and complementary activities, related to agricultural and forestry production and its direct and indirect derivatives; and
the acquisition and administration of shares and investments in companies incorporated both in the country and abroad.
With respect to the activities described above, and within the limitations set forth in our corporate purpose, we have full legal capacity to (i) acquire rights, assume obligations, and carry out any kind of acts that are not otherwise
prohibited by the applicable laws or by our bylaws; (ii) establish, incorporate, partner with, or hold interests in legal entities of whatsoever nature incorporated in Argentina or abroad by any available means, including but not limited to,
capital contributions, purchase of shares, bonds, debentures, notes or other debt or equity securities, whether publicly or privately held; and (iii) render services and/or undertake representations, commissions, consignments, services
and/or agencies for our benefit or for the benefit of third parties.
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Statutory Provisions concerning our Board of Directors
169
According to our bylaws, which were amended in September 2022, our Board of Directors is comprised by 9 directors that will hold office for three fiscal years and a third of its members shall be renewed annually. Our shareholders
may also appoint an equal or lower number of alternate directors. As of the date of this annual report, and until the shareholders meeting approving the consolidated financial statements for the fiscal year ended December 31, 2023, our
Board of Directors is comprised by 9 directors and 9 alternate directors. In the abovementioned shareholders meeting, the directors will be appointed with different terms of office to enable the implementation of the system of staggered
terms of office set forth in Article 17 of our bylaws. Shareholders are entitled to elect up to one third of vacant seats on the board of directors by cumulative voting as set forth in Section 263 of the Argentine Corporate Law. The
outcome of such voting will be computed per candidate, specifying the number of votes for each of them.
At the first meeting held following the shareholders’ meeting at which the members of the Board of Directors are renewed, the Board of Directors will elect a chairman and a vice-chairman from among its members. The vice-chairman
will act in lieu of the chairman upon the latter’s resignation, death, incapacity, disability, removal or temporary or definitive absence, with a new chairman having to be elected within ten days from the seat becoming vacant. The
election of a new chairman will take place only if the situation that gives rise to the reelection is expected to be irreversible during the remaining term of office. Pursuant to Section 23 of our bylaws, Board of Directors’ meetings will be
held with the presence of an absolute majority of its members and decisions will be made by majority of present votes. Board of Directors’ meetings may also be held by videoconferencing, in which case directors participating in
person and remotely will be computed in the calculation of the required quorum. Minutes of Board of Director’s meetings will be drafted and signed by directors and statutory auditors who were present at the meeting within five days
from the date in which it was held. Members of our Supervisory Committee will register in the minutes the names of the directors who have participated in the meeting remotely, and that the decisions made therein were passed in
accordance with the law. The minutes will include the statements from directors participating in person and remotely and will state their respective votes on each decision made. If a Board of Director’s meeting cannot be validly held
because of the number of vacant seats, even with the attendance of all deputy directors of the same class, the Supervisory Committee will designate substitutes to hold office until the election of permanent members takes place, to which
end an ordinary or class shareholders’ meeting will be called for, as the case may be, within ten days from the Supervisory Committee having made the designations.
There are no requirements as to the minimum number of meetings to be held by the Board of Directors.
The chairman, or the individual acting in lieu of the chairman pursuant to the law, may call for meetings when so deemed convenient, or when so required by any director or the supervisory committee. The meeting will be called for
within five days from the request; otherwise, the meeting may be called for by any of the directors. The Board of Director’s meetings will be called for in writing and notice thereof must be given to the address reported by each director.
The notice will indicate the date, time and place of the meeting and the meeting agenda. Business that is not included in the notice may be discussed at the meeting only to the extent all permanent directors are present and have cast
their unanimous vote.
Our Board of Directors may hold meetings with the attendance of its members in person or by videoconference or other simultaneous sound, imaging or voice broadcasting media. The Board of Directors may hold meetings with the
attendance of its chairman or its substitute. Our Board of Directors’ meetings will be held with the presence of an absolute majority of its members and decisions will be made by majority of present votes.
According to Section 26 of our bylaws, our Board of Directors has the broadest powers and authority in connection with our direction, organization and administration, with no limitations other than those set forth in the applicable laws
and regulations. The chairman of the board is our legal representative.
Statutory Provisions concerning our Supervisory Committee
The Company’s oversight shall be in charge of a Supervisory Committee to be comprised by three (3) permanent and three (3) alternate statutory auditors. Statutory auditors will be elected for one (1) fiscal year and will be vested with
the powers set forth by Argentine Corporate Law and other applicable legal provisions.
Our Supervisory Committee holds meetings and adopts decisions with the presence and favorable vote of, at least, two of its members, notwithstanding the rights granted by law to the dissenting statutory auditor. Meetings of our
Supervisory Committee may be called for by any of its members. Prior to the registration of the amendments to the bylaws of June 3, 2015, meetings of our Supervisory Committee were held with the attendance of all of its members,
and decisions were adopted by majority of votes, notwithstanding the rights granted by law to the dissenting statutory auditor.
Members of our Supervisory Committee are also authorized to attend Board of Director’s and shareholders’ meetings, call for extraordinary shareholders’ meetings and investigate written claims brought by shareholders who own more
than two percent (2%) of our outstanding shares. In accordance with the applicable laws, members of the Supervisory Committee are required to be certified public accountants or lawyers. Members of our Supervisory Committee may
call for an ordinary shareholders’ meeting, in the specific cases provided by law, at any time at their discretion, or otherwise when so required by shareholders representing no less than five percent (5%) of our capital stock.
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Members of our Supervisory Committee are designated at the annual ordinary shareholders’ meeting and will remain in office for one (1) year. Pursuant to Section 294 of the Argentine Corporate Law, our Supervisory Committee is
required to review our books and records, when deemed convenient and, at least, on a quarterly basis.
Our Supervisory Committee will hold meetings at least once a month; meetings may be also called for at the request of any of its members, within five days from the date the request is submitted to the Chairman of the Supervisory
Committee or the Board of Directors, as the case may be. Notice of all meetings shall be given in writing to the address indicated by each Statutory Auditor at the time of holding office.
Our Supervisory Committee shall be presided over by one of its members, elected by majority of votes, at the first meeting held every year. At that time, the member who will act in lieu of the chairman in his/her absence will also be
elected. The chairman represents our Supervisory Committee before the Board of Directors.
Rights, Preferences and Restrictions attached to our Shares
According to our bylaws, realized and liquid profits will be allocated in the following order: (i) 5.00% to the legal reserve until reaching at least 20% of our subscribed capital; (ii) Directors’ fees, within the amounts set forth by Section
261 of the Argentine Corporate Law, which may not be exceeded, and Statutory Auditors’ fees; (iii) payment of dividends in connection with the employee stock ownership plan; (iv) optional reserves and provisions, at the discretion of
the shareholders’ meeting; and (v) the remaining balance shall be distributed as dividends among shareholders, regardless of their class.
Shareholders’ Meetings
Shareholders’ meetings will be called for by publishing notices in the Official Gazette and in one of Argentina’s major newspapers for five days, no less than 20 and no more than forty-five (45) days in advance of the scheduled date for
the meeting. The notice will include the type of meeting, as well as the date, time and place where it will be held and the agenda. Ordinary and extraordinary shareholders’ meetings are subject to the quorum and majorities required by
Section 79 of the Capital Market Law and Sections 243 and 244 of the Argentine Corporate Law.
Shareholders’ Liability
In conformity with Argentine law, shareholders’ liability for a company’s losses is limited to the payment of their subscribed equity holdings. However, shareholders who voted for a decision that was then rendered null by a court for its
being inconsistent with the Argentine laws or the corporate bylaws (or operating agreement, if any) might be held personally and jointly and severally liable for the damages that may arise from such decision.
Conflicts of Interest
Under the Argentine laws, if a shareholder casts a vote in connection with a matter in which it may have, directly or indirectly, interests that are contrary to ours, such shareholder will be liable for damages, but only to the extent such
matter had not been approved but for the vote of such shareholder. The Argentine laws also set forth that if a member of our Board of Directors has interests in a business operation that are contrary to our interests, such director will
report so to the Board of Directors and the Supervisory Committee and will refrain from engaging in the discussion of that issue. If that director acts in a manner that is contrary to the law, it will be held personally and jointly and
severally liable for the damages that may arise from such director’s acts or omissions.
Preemptive and Accretion Rights
Pursuant to Section 194 of the Argentine Corporate Law, upon a potential capital increase, each holder of common shares will be entitled to preemptive rights in respect of the newly issued common shares on a proportional basis to the
number of shares already held. Preemptive rights can be exercised beginning on the last notice posted in the Official Gazette and in a major Argentine newspaper 30 days; provided, however, that such 30-day period may be reduced to
no less than ten (10) days, if so approved at an extraordinary shareholders’ meeting.
Liquidation
Pursuant to our bylaws, liquidation will be carried out by our Board of Directors or the liquidators appointed at the shareholders’ meeting, under the oversight of the Supervisory Committee.
Once liabilities have been settled, including the expenses incurred in the liquidation, the remaining balance will be distributed among shareholders on a proportional basis to their respective holdings, without regard to classes or
categories.
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Neither Argentine law, our bylaws nor other corporate documents provide limitations as to share ownership that might apply to us.
Term
171
According to our bylaws, our company was created for a term of 99 years since the registration date with the Public Registry of Commerce. Such term may be extended by a decision made at an extraordinary shareholders’ meeting.
Mandatory Tender Offer Regime
We are subject to the mandatory tender offer rules set forth in Argentine Capital Markets Law, which provide that in certain circumstances a mandatory tender offer (“OPA”) must be launched at an equitable price with respect to some
or all of a company’s outstanding shares. Such circumstances giving rise to an OPA include instances where a person individually or through concerted action, has effectively acquired a controlling interest in a company whose shares
are admitted to the public offering regime. The Argentine Capital Markets Law also provides that a person acquires a controlling interest, individually or in concert with other persons when (i) directly or indirectly reaches a percentage
of voting rights equal to or greater than 50.00% of the company, excluding from the basis of calculation the shares that belong, directly or indirectly, to the offeree company; or (ii) has reached a shareholding of less than 50.00% of the
voting rights of a company, but acts as a controlling shareholder (a controlling shareholder being understood as one that directly or indirectly, individually or jointly, holds a shareholding that grants it the necessary votes to form the
corporate will in ordinary meetings or to elect or revoke the majority of the directors or supervisory directors).
In line with the above CNV regulations set forth that an OPA applies in case of a person effectively acquiring, individually or in concert with other persons, a controlling interest in a listed company whether:
·
·
through the acquisition of shares or subscription rights or options granted by the issuing company itself on those shares, convertible securities or other similar securities which, directly or indirectly, may give the right
to the subscription and/or acquisition of securities, or conversion of those shares with voting rights in that company;
through agreements with other holders of securities that, in a concerted manner, grant the necessary votes to form the corporate will in ordinary meetings or to elect or revoke the majority of the directors or members
of the supervisory committee, as well as any other agreement that, for the same purpose, regulates the exercise of voting rights in the administrative organ or to whom the latter delegates the management. The CNV
regulations clarifies that (a) this assumption will be applicable when (i) the parties to the agreement have acquired the voting shares of the company, acting individually or in concert within the 12 months prior to the
signing of the agreement; or (ii) when a new shareholder promotes and subscribes an agreement with others in order to establish joint control of the affected company by reason of its entry as a shareholder; and (b)
this situation shall not apply when a shareholding of less than 50.00% is acquired in a controlling company of a listed company and there is a prior agreement to which the new shareholder adheres, occupying the
position held by the selling shareholder, without any change in the controlling company’s shareholding in the target company; or
·
in an indirect or supervening manner, including the cases of mergers or other corporate reorganizations.
In accordance with the above, CNV regulations further provide that once the controlling interest is reached such situation must be immediately disclosed to the market by the affected company.
·
The Argentine Capital Markets Law provides that the OPA procedure must be carried out after the takeover and the deadline for submitting the tender offer documents is one month from the moment the controlling
interest is reached. Accordingly the OPA must be made within 90 calendar days from the date it becomes mandatory
Determination of the OPA Price
For an OPA in the case of a change in control, the Argentine Capital Markets Law and CNV regulations establish that the “equitable price” to be offered will be determined as the higher of the following:
(a)
the highest price that the offeror has paid or agreed for the marketable securities subject to the offer during the 12 months prior to the date of the agreement or payment that allowed reaching the controlling interest,
without considering acquisitions of not significant volumes ─5.00% or less of the total trading volume on the trading floor of the day of arrangement─, made at the quoted price, and including any other additional
consideration paid or agreed in relation to such securities. For this assumption, the CNV regulations clarify that, in case the final price is increased by subsequent adjustments, the offered price must be recalculated
and adjusted if it yields a higher value. When such adjustment occurs after the end of the offer period, the difference must be paid to those who accepted the offer within ten calendar days from the effective payment
of the increase and the average price of the marketable securities must be adjusted.
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(b)
the average price of the marketable securities subject to the offer during the six-month period immediately prior to the date on which the offeror is obliged to publish the announcement of the OPA by which the change
in the controlling interest is agreed. This last guideline will not apply when the percentage of shares listed in a market authorized by the CNV represents at least 25.00% of the issuer’s capital stock and the liquidity
conditions set forth in CNV regulations are met.
In the event of a public offer for residual shareholdings due to near total control or withdrawal of the public offer, the Argentine Capital Markets Law establishes that the following price criteria must be considered:
(a)
(b)
(c)
(d)
(e)
the highest price that the offeror has paid or agreed to pay for the marketable securities subject to the offer during the 12 months prior to the intimation of the minority shareholder or the unilateral declaration of
acquisition in the cases of companies subject to near-total control or since the agreement to withdraw the public offer;
the average price of the marketable securities subject to the offer during the six-month period immediately preceding the intimation of the minority shareholder or the unilateral declaration of acquisition in the case of
companies subject to near-total control or since the agreement to withdraw the public offer;
the equity value of the shares, considering a special delisting balance sheet, as the case may be;
the value of the company valued according to discounted cash flow criteria and/or indicators applicable to comparable companies or businesses; and
the liquidation value of the company.
In these cases, the “equitable price” offered may not be lower than the highest of those indicated in points (a) and (b) of this paragraph.
The CNV has a period of 20 business days to decide on the request for authorization of the OPA and to object to the price offered. This period will be counted from the date all the documentation is gathered and no new observations and
requests for information are made. The refusal of authorization and/or objection to the offered price by the CNV may be challenged by the offeror by means of a direct appeal before the Federal Courts of Appeals with jurisdiction over
commercial matters within 30 business days of notification of the refusal. Minority shareholders may also object to the price from the date of the announcement of the offer or the filing of the withdrawal request and until the CNV’s
objection period described above.
The offeror must publish the OPA prospectus within five calendar days after the CNV’s formal approval of the tender offer. The period granted to investors to accept or not the offer will be set between a minimum of 10 business days
and a maximum of 20 business days. In addition, the offeror may grant an additional term of not less than 5 business days to the general closing date of the offer.
In order to comply with the provisions of the Capital Markets Law and the CNV Rules, on March 17, 2023, Proener made a mandatory tender offer to all the holders of voting shares of CECO (the “Tender Offer”). The Tender Offer
commenced on May 30, 2023, and expired on June 12, 2023. On June 13, 2023, Proener published a notice of results of the Tender Offer, reporting that 65,100 shares of CECO were tendered in the Tender Offer, representing
approximately 0.0093% of the issued and outstanding shares of CECO, which were acquired by Proener at a price of Ps. 94,189 per share. As a result of the Tender Offer, Proener’s shareholding in CECO increased from 531,273,928
shares to 531,344,028 shares, representing 75.69% of CECO’s share capital.
Penalties for Breach
The Argentine Capital Markets Law provides that purchases in violation of such regime will be declared irregular and ineffective for administrative purposes by the CNV and cause the auction of the shares acquired in violation of the
applicable regulation, without prejudice to the penalties that may correspond under CNV regulations, such as restriction in the use of political rights derived from its shares in the company.
Tender Offer Regime in the Case of a Voluntary Withdrawal from the Public Offering and Listing System in Argentina
Argentine Capital Markets Law and CNV regulations also established that when a company whose shares are publicly offered and listed in Argentina agrees to withdraw voluntarily from the public offering and listing system in
Argentina, it must follow the procedures provided for in the CNV’s regulations and it must likewise launch an OPA for its aggregate shares or subscription rights or securities convertible into shares of stock options under the terms
provided for in such regulation. It is not necessary to extend the public offering to those shareholders that voted for the withdrawal at the shareholders’ meeting.
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The acquisition of one’s own shares must be made with liquid and realized profits or with free reserves, whenever paid up in full, and for the amortization or disposition thereof, within the term set forth in Section 221 of the Argentine
Corporate Law and the company must present the CNV with evidence that it has the necessary solvency to effect such purchase and that the payment for the shares will not affect its solvency.
According to Section 98 of Argentine Capital Markets Law the price offered in the case of a voluntary withdrawal from the public offering and listing system in Argentina should be “equitable value” as described above and take into
account the relevant criteria of Section 88 of Argentine Capital Markets Law.
Mandatory or Voluntary Tender Offer in the Case of Near-total Control
When a publicly traded Argentine company becomes subject to near-total control any minority shareholder may, at any time, request the controlling person to make a tender offer to all the minority shareholders at an “equitable price”
under the terms of Section 88 of this Argentine Capital Markets Law for near-total control scenarios. In addition, within six months from the date on which the company has come under the near-total control of another person, the latter
may issue a unilateral declaration of willingness to acquire all the remaining capital stock held by third parties.
For the purposes of the above, “near-total control” shall mean a shareholder (or group of shareholders) becomes holder, directly or indirectly, of 95% or more of the outstanding capital stock of a publicly traded Argentine company, and
“minority shareholder” shall mean the holders of shares of any kind or class, as well as the holders of all other securities convertible into shares other than those of the controlling person(s). For voluntary offers the price offered may be
set by the offeror at its discretion, but the guidelines and criteria applied for its determination must be disclosed and, in such case, the valuation report(s) taken into account must be published. The CNV shall not issue an opinion in
relation to the offered price, but shall only formally approve the offer if it complies with the requirements established by CNV regulations.
Item 10.C Material contracts
For information concerning our material contracts, see “Item 4. Information on the Company,” “Item 7.B. Related Party Transactions” and “Item 5. B. Liquidity and Capital Resources”.
Item 10.D Exchange Controls
On September 1, 2019, after the market disruptions caused by the results of the primary elections, with the purpose of strengthening the normal functioning of the economy, fostering a prudent administration of the exchange market,
reducing the volatility of financial variables and containing the impact of the variations of financial flows on the real economy, the Argentine government issued Decree No. 609/2019 whereby foreign exchange controls were
temporarily reinstated. The decree: (i) reinstated, originally until December 31, 2019, the exporters’ obligation to repatriate the proceeds from exports of goods and services in the terms and conditions set forth by the Central Bank’s
implementing regulations and settle those proceeds for Pesos through the FX Market; and (ii) authorized the Central Bank to (a) regulate access to the FX Market for the purchase of foreign currency and outward remittances; and (b) set
forth regulations to avoid practices and transactions aimed to circumvent, through the use of securities and other instruments, the measures adopted through the decree. On the same date, the Central Bank issued Communication “A”
6770, which was subsequently amended and supplemented by further Central Bank communications.
As of the date of this annual report, the restrictions for the payment of imports made from December 13, 2023 have been reduced. while some of the restrictions imposed by the BCRA on access to the foreign exchange market and
operations in the exchange market remain in force.
For the purposes of this section, (i) “foreign currency” means any currency other than the Argentine peso; and (ii) “Foreign Exchange Regulations” means the foreign exchange regulations issued by the Central Bank pursuant to
Communication “A” 7,953 as amended and supplemented from time to time.
Specific provisions for income from the foreign exchange market
Entry and settlement of the proceeds from the export of goods through the foreign exchange market
The Argentine exchange regime established that proceeds from exports of goods must be entered and settled in Argentine pesos through the foreign exchange market within five business days following their collection.
Decree No. 28/2023, published on December 13, 2023, established: (i) the export countervalue of the services included in subsection c) of paragraph 2 of Article 10 of the Law No. 22,415 (“Customs Code”) and its amendments (which
refers to services rendered in the country, whose effective use or exploitation is carried out abroad); and (ii) the countervalue of the export of goods included in the Common Nomenclature of MERCOSUR (“NCM”), including pre-
financing and/or post-financing of exports from abroad or a liquidation advance; 80% brought into the country in foreign currency and/or negotiated through the foreign exchange market, and for the remaining 20% must be carried out
through purchase and sale transactions involving negotiable securities acquired with liquidation in foreign currency and sold with liquidation in local currency.
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In the case of funds received or credited abroad, the deposit and liquidation of the amount equivalent to the usual expenses debited by financial entities abroad for the transfer of funds to the country may be considered completed.
There are some exceptions to the obligation to settle through the foreign exchange market, including, but not limited to: (i) collections from exporters under the Regime for the Promotion of Knowledge Economy Exports (established by
Decree No. 679/2022); and (ii) certain collections from exports of services provided by human beings, as established by Article 2.2.2.2.1. of the Ordered Text.
Amounts collected in foreign currency for claims related to exported goods must also be entered and settled in Argentine pesos in the foreign exchange market, up to the amount of the insured exported goods.
The exporter must designate a financial entity to oversee each export transaction. The obligation to enter and settle foreign currency corresponding to a shipment permit through the foreign exchange market will be considered satisfied
when the designated financial entity certifies that the entry and settlement has taken place.
Local charges for exports under the regime of farms to foreign-flagged means of transport
With respect to local charges for exports under the regime of farms to foreign-flagged means of transport, it shall be deemed to be fully or partially compliant with the shipment permit tracking, for an amount equivalent to that paid
locally in Argentine pesos and/or foreign currency to the exporter by a local agent of the company owning the foreign-flagged means of transport, provided that the following conditions are met:
(i)
(ii)
(iii)
The documentation must show a) that the delivery of the exported goods took place in the country; b) that the local agent of the company owning the foreign-flagged means of transport made the payment to the
exporter locally; and c) the currency in which such payment was made.
The company must have a certification issued by a financial entity stating that the above-mentioned local agent would have had access to the foreign exchange market for the equivalent amount in foreign currency
that is intended to be imputed to the permit.
The financial entity issuing such certification must previously verify compliance with all the requirements established by the exchange regulations for access to the foreign exchange market by Article 3.2.5.2. of the
Exchange Regime, with the exception of the provisions of Article 3.16.1 of such regulations. The financial entity must also have a sworn statement from the referred local agent stating that it has not transferred and
will not transfer funds abroad for the proportional part of the transactions included in the certification.
(iv)
In the event that the amounts were received in the country in foreign currency, the company must have the certification of settlement of the funds in the foreign exchange market.
The local agent of the company owning the foreign-flagged means of transport must not have used this mechanism for an amount exceeding US$2,000,000 in the charged calendar month.
Obligation to settle foreign currency from exports of services
Payments received for the provision of services by residents to non-residents must be entered and settled through the foreign exchange market within five business days from the date of their collection abroad or in the country, or its
crediting to foreign accounts.
In the case of funds received or credited abroad, the collection and liquidation may be considered completed for the amount equivalent to the usual expenses debited by the financial entities abroad for the transfer of funds to the country.
The aforementioned provisions of Decree No. 28/2023 are also applicable to the export of services (see “—Entry and settlement of the proceeds from the export of goods through the foreign exchange market”).
Application of export revenues
The Argentine exchange regime authorizes the application of export revenues to the repayment of: (i) pre-financing of exports and export financing granted or guaranteed by local financial entities; (ii) pre-financing of exports and
export advances settled in the foreign exchange market, provided that the corresponding transactions were executed through public deeds or public registries; (iii) financial indebtedness under contracts entered into prior to August 31,
2019, that provide for the cancellation thereof through the application of export funds abroad; (iv) other foreign financial indebtedness subject to certain requirements as set forth in Articles 7.9 and 7.10 of the Exchange Regime; and (v)
advances, pre-financing and post-financing from abroad with partial liquidation under the provisions of Decrees No. 492/2023, No. 549/2023, No. 597/2023 and No. 28/2023. Likewise, it allows keeping export revenues abroad to
guarantee the payment of new indebtedness, provided certain requirements are met.
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According to Article 2.4 of the Exchange Regime, for resident debtors to be able to access the foreign exchange market to repay financial indebtedness with foreign countries disbursed as from September 1, 2019, the loan proceeds
must have been settled through the foreign exchange market and the transaction must have been declared in the External Assets and Liabilities Survey (“Relevamiento de Activos y Pasivos Externos”). Accordingly, although settlement
of the loan proceeds is not mandatory, failure to settle will preclude future access to the foreign exchange market for repayment purposes.
Access to the foreign exchange market to make such payments more than three days in advance of the due date is, as a general rule, subject to the BCRA’s prior authorization. Prepayments made with funds from new foreign loans duly
settled or in connection with debt refinancing or liability management processes may be exempt from such prior authorization from the BCRA to the extent they comply with several requirements as set forth in Article 3.5 of the
Exchange Regime.
Until December 31, 2024, prior BCRA approval is required for local residents to access the foreign exchange market to make principal and interest payments under cross-border financial borrowings with related parties. Certain specific
exceptions apply and are included in item 3.5.6. of the Ordered Text (unless the loan proceeds were settled through the foreign exchange market after October 1, 2020, and the loan has an average life of at least two years).
Specific provisions on access to the foreign exchange market
General requirements
As a general rule, and in addition to the specific rules of each transaction, certain general requirements must be complied with by a local company or individual to access the foreign exchange market for the purchase of foreign currency
or its transfer abroad (i.e., payments of imports and other purchases of goods abroad; payment of services rendered by non-residents; distribution of profits and dividends; payment of principal and interest on foreign indebtedness and
interest payments on debts for the import of goods and services, among others) without requiring prior approval from the BCRA. In this regard, the local company or individual must file a sworn statement stating that:
(a)
(b)
(c)
(i) At the time of access to the foreign exchange market, all of its foreign currency holdings in the country are deposited in accounts in financial institutions, and (ii) at the beginning of the day on which it requests access to the
foreign exchange market, it does not hold Argentine certificates of deposit (for its acronym in Spanish, “CEDEARs”) representing foreign shares and/or available liquid foreign assets that together have a value greater than
US$100,000 (funds deposited abroad that constitute reserve or guarantee funds under debt contracts with foreign countries, or funds granted as guarantee for derivatives arranged abroad are excluded from this limit). If the
customer is a local government, foreign currency holdings deposited with local financial institutions must also be accounted up to December 31, 2024. For these purposes, “liquid foreign assets” are considered to be holdings
of banknotes and coins in foreign currency, cash in gold coins or bars of good delivery, demand deposits in financial institutions abroad and other investments that allow immediate availability of foreign currency. On the other
hand, funds deposited abroad that cannot be used by the client because they are reserve or guarantee funds created by virtue of the requirements set forth in foreign debt contracts or funds created as guarantee for derivative
transactions arranged abroad should not be considered as liquid foreign assets. In the event that the client is a local government and exceeds the established limit, the institution may also accept an affidavit from the client
stating that the excess was used to make payments through the foreign exchange market through swap and/or arbitrage operations with the deposited funds.
It undertakes the obligation to settle in the foreign exchange market, within five business days of their availability, the funds received abroad from the collection of loans granted to third parties, time deposits, or the sale of any
type of asset, to the extent that the asset subject to the sale was acquired, the deposit constituted or the loan granted after May 28, 2020.
On the date of access to the foreign exchange market and in the previous 90 calendar days in the case of securities issued under Argentine Law and in the previous 180 calendar days in the case of transactions that are not
carried out with securities issued under Argentine Law, it: (i) did not arrange sales in the country of securities with settlement in foreign currency; (ii) did not exchange securities issued by residents for foreign assets; (iii) did
not transfer securities to depository entities abroad, (iv) did not acquire in the country securities issued by non-residents with settlement in Argentine pesos, (v) did not acquire CEDEARs representing foreign shares; (vi) did
not acquire securities representing private debt issued in foreign jurisdiction, and (vii) did not deliver funds in local currency or other local assets (except funds in foreign currency deposited in local financial institutions) to any
entity (whether human or legal, resident or non-resident, related or not), receiving as prior or subsequent consideration, directly or indirectly, by itself or through a related, controlled or controlling entity, foreign assets, crypto-
assets or securities deposited abroad.
(d)
It undertakes the obligation not to enter into any of the transactions described in paragraph (c) above from the time it requests access to the foreign exchange market and for 90 calendar days thereafter in the case of securities
issued under Argentine Law and for the following 180 calendar days in the case of transactions that are not carried out with securities issued under Argentine Law.
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(e)
Article 3.16.3 of the Exchange Regime adds that, in the event that the customer requesting access to the exchange market is a legal entity, in order for the transaction not to be covered by the requirement of prior approval by
the BCRA the following documents must be submitted to the corresponding financial institution:
(A)
a sworn statement evidencing that within the term provided in section 3.16.3.4. (180 days prior to accessing the foreign exchange market) it has not delivered in the country any funds in local currency or other liquid
local assets, except funds in foreign currency deposited in local financial institutions, to any person or legal entity, except those directly associated with regular transactions in the course of its business (this sworn
statement shall be called “Sworn Statement - Section 1”); or
(B)
(i) as required by Article 3.16.3.3. of the Exchange Regime, an affidavit stating details of the human or legal persons exercising a direct control relationship over the client and of other legal persons with which it is
part of the same economic group. In determining the existence of a direct control relationship, the types of relationships described in item 1.2.2.1 of the Large Exposures rules should be considered. Companies sharing
a control relationship of the type defined in items 1.2.1.1 and 1.2.2.1 of the Large Exposures rules should be considered as members of the same “economic group” (the “Economic Group Description Affidavit”); and
(ii) as required by Article 3.16.3.4 of the Exchange Regime, an affidavit stating that on the day on which it requests access to the market and in the 180 days prior to that date, it has not delivered in the country any
funds in local currency or other liquid local assets, except funds in foreign currency deposited in local financial institutions, to any individual or legal entity that exercises a direct control relationship over it, or to other
companies with which it is part of the same economic group, except those directly associated with regular transactions between residents for the acquisition of goods and/or services (the “Sworn Statement of Non-
Delivery of Pesos to the Economic Group”). Furthermore, for legal entities that are part of the same economic group but did not exercise a direct control relationship over the customer as of May 11, 2023, the
provisions shall be applicable only for deliveries made as of May 12, 2023.
(C)
The provisions of item 3.16.3.4. (as detailed in (B)(ii) above) may be deemed to have been complied with if the customer seeking access has submitted:
(i)
(ii)
(iii)
an affidavit initialed by each human or legal person detailed in item 3.16.3.3. to whom the client has delivered funds under the terms provided in item 3.16.3.4., recording what is required in items 3.16.3.1.,
3.16.3.2. and 3.16.3.4.; or
an Economic Group Affidavit of each person or legal entity declared in the affidavit indicated in item 3.16.3.3. (i.e., all Direct Controlling Entities and the declared members of the economic group), stating
the provisions of Articles 3.16.3.1. and 3.16.3.2. of the Exchange Regime; or
a statement from each of the individuals or legal entities declared in the sworn statement indicated in item 3.16.3.3 (i.e., all the Direct Controlling Entities and the declared members of the economic group),
stating that within the term set forth in item 3.16.3.4. it has not received in the country any funds in local currency or other liquid local assets, except for funds in foreign currency deposited in local financial
entities, except for those directly associated to usual transactions between residents for the acquisition of goods and/or services, which have come from the client or from any person detailed in item 3.16.3.3.
to whom the client has delivered funds under the terms set forth in item 3.16.3.4.
Article 3.16.4. of the Exchange Regime establishes that companies shall require the prior approval of the BCRA to grant access to the foreign exchange market to individuals or legal entities included by the AFIP in the database of
invoices or equivalent documents classified as apocryphal by such agency. This requirement will not be applicable for access to the foreign exchange market for the cancellation of foreign currency financing granted by local financial
institutions, including payments for foreign currency consumption made by credit or purchase cards.
Imports payments
Article 3.1 of the Exchange Regime allows access to the foreign exchange market for the payment of imports of goods, establishing different conditions depending on whether they are payments of imports of goods with customs entry
registration, or payments of imports of goods with pending customs entry registration. It also provides for the reestablishment of the “SEPAIMPO”, the import payment tracking system, for the purpose of monitoring import payments,
import financing and the demonstration of the entry of goods into the country.
In addition, the local importer must designate a local financial entity to act as a monitoring bank, which will be responsible for verifying compliance with applicable regulations, including, among others, the settlement of import
financing and the entry of imported goods.
Communication “A” 7,917 issued on December 13, 2023, later amended by Communication “A” 7,953 issued on January 26, 2024, substantially modified the regime of access to the foreign exchange market for the payment of imports
of goods and services, establishing the following, effective as of December 13, 2023:
(a)
Entities may provide access the foreign exchange market to make deferred payments for imports of goods with customs entry registration as from December 13, 2023, when in addition to the other applicable
regulatory requirements, it is verified that the payment respects the following schedule, according to the type of goods:
(i)
(ii)
from its customs entry registration, the payment of the FOB value corresponding to the following goods may be made: (a) petroleum or bituminous mineral oils, their preparations and residues (subchapters
2709, 2710 and 2713 of the NCM); (b) petroleum gases and other gaseous hydrocarbons (subchapter 2711 of the NCM); (c) bituminous coal without agglomeration (subchapters 2701.12.00 of the NCM),
when the importation is carried out by an electric generation plant; or (d) electric energy (subchapters 2716.00.00 of the NCM);
after 30 days from the date of registration of customs entry, payment of the FOB value corresponding to the following goods may be made: (a) pharmaceutical products and/or inputs used in their local
processing, other goods related to health care or food for human consumption covered by the provisions of the Article 155 Tris of the Argentine Food Code, whose tariff positions according to the NCM are
detailed in Article 12.3. of the Exchange Regime; (b) fertilizers and/or phytosanitary products and/or inputs that may be intended for local processing, whose tariff positions are detailed in Article 12.2. of the
Exchange Regime. The entity must have the importer’s affidavit stating that the goods will be used for the purposes foreseen in this item.
(iii)
from 180 calendar days from the date of registration of customs entry, payment of the FOB value corresponding to the following goods may be made: (a) finished automobiles (subchapter 8703 of the NCM);
(b) those corresponding to the tariff positions detailed in Article 12.1 of the Exchange Regime that are not covered in the preceding Articles, regardless of their FOB unit value;
(iv)
for the remaining goods, the payment of their FOB value may be made within the following terms counted from the registration of the customs entry of the goods:
(a)
(b)
(c)
(d)
25% after 30 calendar days.
an additional 25% after 60 calendar days;
an additional 25% after 90 calendar days; and
the remaining 25% as from 120 calendar days; and
(v)
Freight and insurance as part of the purchase condition agreed with the seller may be paid in full as from the first date on which the importer has access by virtue of the goods covered.
Entities may also grant access to the foreign exchange market without the prior approval of the BCRA to make deferred payments for new imports of goods with customs entry registration as from December 13, 2023 before the
terms set forth in item (a) above when, in addition to the other applicable regulatory requirements, the payment falls within the situations set forth in item 3 of the Communication “A” 7,917.
Access to the foreign exchange market to make payments with pending customs registration shall require the prior approval of the BCRA except when, in addition to the other applicable requirements, the payment falls within
the situations foreseen in item 3 of the Communication “A” 7,917.
(b)
(c)
(d)
Access to the foreign exchange market to make payments with pending customs entry registration or deferred payments before the terms set forth in item (a) above, when the remaining applicable requirements are
met, only in the case of financing, new pre-financing or advance payments or under specific benefits.
Access to the foreign exchange market to make import payments for goods whose customs entry registration occurred up to December 12, 2023, in addition to the remaining applicable requirements, shall require the
prior conformity of the BCRA except when they are transactions financed by financial entities or official credit agencies or international organizations; among other situations.
Access to financial entities to cancel obligations derived from letters of credit or guaranteed letters issued or granted as from December 13, 2023, within the framework of an import in which it is required to have a
SIRA declaration, will be conditioned to the entity having documentation that proves, at the date of issuance or granting, that the guaranteed transaction was compatible with the terms and conditions set forth in item
(b) above.
Payment of foreign debts for the importation of goods and/or for services effectively rendered and/or accrued
On December 22, 2023, the BCRA issued Communication “A” 7,925 establishing the requirements for importers who have outstanding debts with foreign countries for the import of goods with customs entry registration until
December 12, 2023 and/or for services effectively rendered and/or accrued until that date (the “Import Debt Stock”), to subscribe Bonds for the Reconstruction of a Free Argentina (“BOPREAL”).
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Importers of goods may subscribe the BOPREAL for up to the amount of the outstanding debt for their imports of goods with customs entry registration up to and including December 12, 2023. The amount of the BOPREAL that
importers may subscribe will be adjusted to the outstanding amount registered in the BCRA’s SEPAIMPO system. Importers of services accrued up to December 12, 2023, may also subscribe the BOPREAL for up to the amount of the
outstanding debt for such transactions. Importers of goods and services that, prior to January 31, 2024, subscribe the series offered (maturity in 2027), and for an amount equal to or greater than 50% of the outstanding amount of the
Import Debt Stock, will be able to access the foreign exchange market as from February 1, 2024 to pay the Import Debt Stock for the equivalent of 5% of the amount subscribed of such series.
Likewise, access to the foreign exchange market is authorized for the payment of the Import Debt Stock by means of an exchange and/or arbitrage with the funds deposited in a local bank account and originated in collections of
principal and interest in foreign currency of the BOPREAL.
Importers subscribing to BOPREAL may sell them with settlement in foreign currency in the country or abroad or transfer them to depositories abroad, for up to the amount acquired in the primary subscription without limiting their
ability to access the foreign exchange market. Likewise, Communication “A” 7,935 established that those who have subscribed BOPREAL in the primary bidding may, as from April 1, 2024, carry out sales transactions of securities
against foreign currency for the difference between the nominal value bid and the sale price in the secondary market obtained from the sale of the BOPREAL, without violating the sworn statements set forth in Articles 3.16.3.1. and
3.16.3.2. of the Exchange Regime.
Payment for services rendered by non-residents
Pursuant to Article 3.2 of the Exchange Regime, entities may access the foreign exchange market to make payments for services rendered by non-residents as long as they have documentation to support the existence of the service.
In the case of commercial debts for services, access is granted as from the expiration date, provided that it is verified that the operation is declared, if applicable, in the last due presentation of the “External Assets and Liabilities
Survey”.
Communication “A” 7,953 issued on January 26, 2024, substantially modified the regime of access to the foreign exchange market for the payment of imports of goods and services. Said Communication established the following
regarding access to the foreign exchange market for the payment of imports of services, effective as of December 13, 2023:
Access to the foreign exchange market for the payment of services.
Entities may be given access to the foreign exchange market to make payments for non-residents services that were or will be rendered as of December 31, 2023, when, in addition to the other applicable regulatory requirements, the
transaction falls within one of the situations detailed below:
(i) The payment corresponds to a transaction that falls under the following concept codes:
S03. Passenger Transportation Services.
S06. Travel (excluding transactions associated with withdrawals and/or consumption with resident cards with non-resident suppliers or non-resident cards with Argentine suppliers).
S23. Audiovisual services.
S25. Government services.
S26. Health services by travel assistance companies.
S27. Other health services.
S29. Transactions associated with withdrawals and/or consumptions with resident cards with non-resident suppliers or non-resident cards with Argentine suppliers.
(ii) Expenses paid to foreign financial entities for their usual operations.
(iii) The payment corresponds to an operation that falls under the concept “S30. Freight services for goods import operations” and is made after a period of time equivalent to that in which payment for the goods transported
could begin to be made as per item 10.10.1 has elapsed since the date the service was rendered.
(iv) The payment corresponds to an operation that falls under item “S24. Other personal, cultural and recreational services” and is made after a period of 90 calendar days from the date of rendering or accrual of the service.
(v) The payment corresponds to a service not included in Articles 13.23.1 to 13.2.4 of the Exchange Regime by a counterparty not related to the resident and the payment is made after a period of 30 calendar days from the date
of rendering or accrual of the service.
(vi) The payment corresponds to a service not included in Articles 13.23.1 to 13.2.4 of the Exchange Regime by a counterparty related to the resident and the payment is made after 180 calendar days from the date of rendering
or accrual of the service.
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Stock of debt of Imports of Services
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Access to the foreign exchange market for payments for non-resident services rendered and/or accrued up to December 12, 2023, in advance of the deadlines foreseen in Articles 13.2.3 to 13.2.6 of the Exchange Regime shall
be admissible when, in addition to the other applicable requirements, the following situations are verified:
(i)
If
(ii)
The
(iii)
The
(iv)
(v)
The customer accesses the foreign exchange market with funds originated in a financing of imports of services granted by a local financial institution from a foreign line of credit to the extent that the
maturity dates and the amounts of principal to be paid of the financing granted are compatible with those provided for in Article 13.2 of the Exchange Regime.
the granting of the financing is prior to the date of rendering or accrual of the service, the terms set forth in Article 13.2 of the Exchange Regime shall be computed as from the estimated date of rendering or
accrual plus 15 calendar days.
The customer has access to the foreign exchange market simultaneously with the settlement of funds for advances or pre-financing of exports from abroad or pre-financing of exports granted by local
financial entities with funding in foreign credit lines, to the extent that the stipulations of Article 13.3.1 of the Exchange Regime regarding maturity dates and the amounts of principal to be paid for the
financing are complied with.
entity must also have an affidavit from the importer stating that the prior approval of the BCRA will be required for the application of foreign currency from export collections prior to the maturity date
arising from the term conditions stipulated for situations associated with a financing.
The customer accesses the foreign exchange market simultaneously with the settlement of funds originated in a financial indebtedness abroad, to the extent that the provisions of Article 13.3.1 of the
Exchange Regime regarding maturity dates and principal amounts payable on the financing are complied with.
portion of the financial indebtedness abroad that is used by virtue of the provisions of this item may not be computed for the purposes of other specific mechanisms that enable access to the foreign exchange
market as from the entry and/or settlement of this type of transactions.
The transaction involves the payment for imports of services is performed within the framework of the mechanism provided for in Article 7.11 of the Exchange Regime.
The customer has a “Certification for the regime of access to foreign currency for the incremental production of oil and/or natural gas (Decree No. 277/22)” issued within the framework of the provisions of
Article 3.17 of the Exchange Regime.
(vi)
The payment corresponds to transactions financed or guaranteed prior to December 12, 2023, by local or foreign financial entities.
(vii)
The payment corresponds to operations financed or guaranteed prior to December 12, 2023, by international organizations and/or official credit agencies.
Payments of services abroad up to December 12, 2023.
The BCRA’s prior approval shall be required for access to the foreign exchange market to make payments for non-resident services rendered or accrued up to December 12, 2023, except when, in addition to the other applicable
requirements, the entity fulfills the requirements of Articles 13.4.1 to 13.4.8 of the Exchange Regime.
External financial indebtedness
In order for resident debtors to be able to access the foreign exchange market to cancel foreign financial indebtedness disbursed as of September 1, 2019, it is necessary that the loan proceeds have been settled through the foreign
exchange market and that the transaction has been declared in the External Assets and Liabilities Survey and that the access to the foreign exchange market occurs no more than three (3) business days prior to the due date of the
principal or interest service to be paid.
Access to the foreign exchange market further in advance shall require the prior approval of the BCRA unless the debtor is in one of the following situations and all the conditions stipulated in each case are met:
1)
2)
3)
the pre-cancellation of principal and interest occurs simultaneously with the settlement of new external financial indebtedness;
the pre-cancellation of interest is part of a debt exchange process;
The pre-cancellation of principal and interest occurs simultaneously with the settlement of a new financial indebtedness granted by a local financial institution on the basis of a foreign credit line.
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Repayment of foreign currency debt among residents
179
Access to the foreign exchange market for the repayment of debts and other obligations in foreign currency between residents, contracted as of September 1, 2019, is prohibited.
However, the Exchange Regime establishes as exceptions the cancellation as from its maturity of principal and interest of:
-
-
-
-
-
-
Financing in foreign currency granted by local financial entities (including payments for consumption in foreign currency through credit cards).
Foreign currency liabilities between residents instrumented through public registries or deeds on or before August 30, 2019.
Issuances of debt securities made on or after September 1, 2019, with the purpose of refinancing foreign currency obligations between residents instrumented through public registries or public deeds before August
30, 2019, and involving an increase in the average life of the obligations.
The payment, at maturity, of the principal and interest services of new issues of debt securities made on or after November 29, 2019, with public registration in the country, denominated and payable in foreign
currency in the country, to the extent that: (i) they are denominated and subscribed in foreign currency; (ii) the respective principal and interest services are payable in the country in foreign currency; and (iii) the
totality of the funds obtained with the issue are settled through the foreign exchange market.
Issues made between October 9, 2020 and December 31, 2023, of debt securities with public registration in the country, with an average life not inferior to two years, denominated in foreign currency and whose
services are payable in a foreign country or foreign currency in the country, that were delivered to creditors of financial indebtedness and/or debt securities with public registry in the country denominated in foreign
currency with maturities between October 15, 2020 and December 31, 2023, that were delivered to creditors as a part of the refinancing parameters timely required in Article 3.17 of the Exchange Regime, following
the requirements of Article 3.6.1.4 of the Exchange Regime.
Issues made as from January 7, 2021 of debt securities with public registration in the country denominated in foreign currency and whose services are payable in foreign currency in the country, to the extent that they
have been delivered to creditors to refinance pre-existing debts with extension of the average life, when it corresponds to the amount of the refinanced capital, interest accrued up to the refinancing date and, to the
extent that the new debt securities do not mature before 2023, the amount equivalent to the interest that would accrue until December 31, 2022 on the indebtedness that is refinanced early and/or on the deferral of the
refinanced principal and/or on the interest that would accrue on the amounts so refinanced.
-
The issuance of debt securities with public registry in the country that were included in Article 7.11.1.5, to the extent that the record of customs entry of goods for a value equivalent to the financing received is
demonstrated.
Principal payments under related counterparty debt until December 31, 2024
BCRA’s prior approval is required to access the foreign exchange market to make payments abroad of principal and interest of financial debts when the creditor is a counterparty related to the debtor. This requirement is applicable until
December 31, 2024, in accordance with Article 3.5.6 of the Exchange Regime. Likewise, these debts will continue to be subject to prior approval even if there is a change in the creditor or the debtor which means that there is no longer
a link between the creditor and the resident debtor.
The BCRA’s prior approval shall not be required: (i) in the case of local financial institutions’ own transactions; (ii) in the case of a financial indebtedness abroad with an average life of not less than two years, when the funds have been
deposited and settled through the foreign exchange market as from October 2, 2020; (iii) in the case of a financial indebtedness abroad that meets all of the following conditions: (a) the funds have been used to finance projects within
the framework of the Plan for the Promotion of Argentine Natural Gas Production - Supply and Demand Scheme 2020-2024 established in Article 2 of Decree No. 892/2020 (“Plan GasAr 2020-2024”); (b) the funds have been deposited
and settled through the foreign exchange market as from November 16, 2020; and (c) the indebtedness has an average life of not less than two years. Likewise, the aforementioned conformity shall not be applicable when: (1) the client
has a “Certification of Increase of Exports of Goods” for the years 2021 to 2023, issued within the framework of the provisions of Article 3.18 of the Exchange Regime for the equivalent of the amount of capital to be paid; (2) in the
case of a financial indebtedness abroad with an average life of not less than two years, settled between August 21, 2021 and December 12, 2023, and which was originally used to pay commercial debts for the import of goods and
services that originated the issuance of a Certificate of Entry of New Financial Indebtedness Abroad within the framework of Article 3.19 of the Exchange Regime; (3) in the case of a financial indebtedness abroad with an average life
of not less than two years originated between August 27, 2021 and December 12, 2023, as a result of a refinancing with the creditor of commercial debts for the importation of goods and services within the framework of the provisions
of Article 3.20 of the Exchange Regime; the entity must have a certification for access to the foreign exchange market issued within the five previous business days, by the entity registered with the BCRA within the concept code “P17.
Registration of refinancing of commercial debt under item 20 of Communication “A” 7,626”; (4) the customer must have a Certification for the regimes of access to foreign currency for the incremental production of oil and/or natural
gas, issued within the framework of the provisions of Article 3.21 of the Exchange Regime, for the equivalent of the amount of capital to be paid; and (5) it is a financial indebtedness abroad included in the mechanism of Article 7.11 of
the Exchange Regime and the access date is consistent with the conditions required to be included in such mechanism.
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Article 3.5.4 of the Exchange Regime establishes that, as long as the requirement to obtain prior approval to access the foreign exchange market to pay, at maturity, the principal and interests of external financial indebtedness is in place,
such requirement will not be applicable when the use of the funds has been the financing of projects within the framework of the Plan GasAr 2020-2024; when the funds have been deposited and settled through the foreign exchange
market as from November 16, 2020 and the average life of the indebtedness is not less than two years.
Access to the foreign exchange market for the payment of new issues of debt securities
Entities may access the foreign exchange market for the payment of principal and services of debt securities denominated and publicly registered abroad when the debtor has settled through the foreign exchange market an amount
equivalent to the face value of the external indebtedness.
The aforementioned requirement will be deemed to be met for the portion of debt securities publicly registered abroad issued as from January 7, 2021, intended to refinance pre-existing debt by extending their average life, for an
amount equivalent to the refinanced principal, and provided that the new securities do not have a principal maturity schedule within two years, for interest accrued through the date of refinancing and interest that would accrue during
the first two years on the refinanced indebtedness and/or on the deferral of the refinanced principal and/or interest that would accrue on the refinanced amounts.
Duly registered securities that are denominated and payable in foreign currency in Argentina
Pursuant to Article 2.5 of the Exchange Regime, resident debt issuers will have access to the foreign exchange market for the payment at maturity of principal and interest of duly registered debt security issues that are denominated and
payable in foreign currency in Argentina, to the extent that (i) they are fully subscribed in foreign currency, and (ii) provided that the proceeds of the issue are previously settled through the foreign exchange market.
Non-resident access to the foreign exchange market
Pursuant to Article 3.13 of the Exchange Regime, the prior approval of the BCRA will be required for access to the foreign exchange market by non-residents for the purchase of foreign currency, with the exception of the following
situations: (a) international organizations and institutions that perform the functions of official export credit agencies; (b) diplomatic representations and consular and diplomatic personnel accredited in the country for transfers made in
the exercise of their functions; (c) representatives of courts, authorities or offices, special missions, commissions or bilateral organizations established by treaties or international agreements, to which the Argentine Republic is a party, to
the extent that the transfers are made in the exercise of their functions; (d) transfers abroad on behalf of persons who are beneficiaries of retirement and/or pensions paid by the National Administration of Social Security (“ANSES”), for
up to the amount paid by such agency in the calendar month and to the extent that the transfer is made to a bank account owned by the beneficiary in his/her registered country of residence; (e) purchase of foreign currency in cash by
non-residents for tourism and travel expenses, up to a maximum amount of US$100, to the extent that the financial institution can verify in the online system implemented by the BCRA that the customer has settled an amount equal to
or greater than the amount to be purchased within the 90 days prior to the transaction; (f) transfers to offshore bank accounts of persons who are beneficiaries of pensions granted by the National State in accordance with Laws Nos.
24,043, 24,411, 25,914 and complementary laws; and (g) repatriations of direct investments of non-residents in companies that are not controlling companies of local financial entities, to the extent that the capital contribution has been
entered and settled through the foreign exchange market as from October 2, 2020 and the repatriation takes place at least two years after its entry.
Access to the foreign exchange market for savings or investment purposes by individuals
Pursuant to Article 3.8 of the Exchange Regime, Argentine residents may access the foreign exchange market for purposes of asset formation abroad, family assistance and derivative transactions (with some expressly stated exceptions)
for up to US$200 (through debits to local bank accounts) or US$100 (in cash) per person per month through all authorized exchange entities. If the access involves a transfer of funds abroad, the destination account must be an account
owned by the same person.
In all cases, the general requirements detailed under “—Specific Provisions on Access to the Foreign Exchange Market - General Requirements” apply.
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Purchases in Argentine pesos made abroad with debit cards and amounts in foreign currency acquired by human persons in the foreign exchange market as from September 1, 2020, for the payment of obligations between residents
within the framework of Article 3.6 of the Exchange Regime, including payments for purchases with credit cards in foreign currency, will be deducted, as from the following calendar month, from the monthly quota of US$200. If the
amount of such purchases exceeds the quota available for the following month or such quota has already been absorbed by other purchases made since September 1, 2020, such deduction shall be made from the quotas of the following
months until the amount of such purchases is completed.
The corresponding entity will verify in the online system implemented by the BCRA whether the person has not reached the limits set for the corresponding calendar month or has not exceeded them in the previous calendar month and,
therefore, is entitled to perform the exchange transaction, and will request the customer to submit a sworn statement stating that such person is not a beneficiary of any “Zero Rate Credits” referred to in Article 9 of Decree No.
332/2020, as amended, “Subsidized Rate Credits for Companies” and/or “Zero Rate Credits for Culture”.
In addition, by means of Communication “A” 7,606, the BCRA established that users of public utilities that requested and obtained the subsidy in the tariffs derived from the supply of natural gas and/or electric energy, as well as those
that had obtained it automatically, and those that maintain the subsidy in the potable water tariffs, may not, while maintaining the mentioned benefit: (i) access the foreign exchange market to make purchases of foreign currency by
human persons for the formation of foreign assets of residents, remission of family aid and for operations with derivatives, under the terms of Article 3.8. of the rules on exterior and foreign exchange; nor (ii) carry out the transactions
set forth in Article 4.3.2. of the rules on exterior and foreign exchange.
Finally, through Communication “A” 7,609 the BCRA established, effective as from September 20, 2022, that customers who are legal persons residing in the country engaged in agricultural activities who sell goods within the
framework of Decree No. 576/2022 to those who export them directly or as a result of a productive process carried out in the country may not: (i) access the foreign exchange market to make purchases of foreign currency by human
persons for the formation of foreign assets of residents, remission of family assistance and for transactions with derivatives, under the terms of Article 3.8. of the regulations on exterior and foreign exchange; nor (ii) to carry out the
transactions set forth in Article 4.3.2. of the regulations on exterior and foreign exchange. These last provisions are not applicable to human persons.
Access to the foreign exchange market by other residents - excluding entities- for the formation of foreign assets and for derivative transactions
Pursuant to Article 3.10 of the Exchange Regime, access to the foreign exchange market for the constitution of foreign assets and for derivative transactions by local governments, investment funds, and other entities established in
Argentina, requires the prior authorization of the BCRA.
Access to the foreign exchange market by guarantee trusts for the payment of principal and interest
Pursuant to Article 3.7 of the Exchange Regime, Argentine guarantee trusts created to guarantee principal and interest payments of resident debtors may access the foreign exchange market to make such payments at their scheduled
maturity, to the extent that, in accordance with the applicable regulations in force, the debtor would have had access to the foreign exchange market to make such payments directly. Also, under certain conditions, a trustee may access
the foreign exchange market to guarantee certain principal and interest payments on foreign financial debt and anticipate access to the foreign exchange market.
Derivative transactions
Article 3.12 of the Exchange Regime requires that, as from September 11, 2019, the settlement of future transactions in regulated markets, “forwards”, options and any other type of derivatives entered into in the country, be made in
Argentine pesos.
Likewise, access to the foreign exchange market will be allowed for the payment of premiums, the constitution of guarantees and cancellations corresponding to interest rate hedging contract transactions for the obligations of residents
abroad declared and validated, as applicable, in the Relevance of Foreign Assets and Liabilities, provided that such guarantees do not cover risks higher than the foreign liabilities incurred by the debtor at the interest rate of the risk
being hedged through such transaction. The client that accesses the local market through this mechanism must designate an authorized institution to operate in the foreign exchange market that will oversee the operation and will submit
a sworn statement committing to repatriate and settle the funds corresponding to it as a consequence of such operation or as a consequence of the release of the money from the guarantee, within 5 business days following the date on
which such payment or release occurs.
Profit and dividend payment
Pursuant to Article 3.4 of the Exchange Regime, access to the foreign exchange market for the transfer of foreign currency abroad for the payment of dividends and profits to non-resident shareholders is subject to the prior approval of
the BCRA, unless the following requirements are met:
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(i)
(ii)
(iii)
(iv)
Dividends must correspond to closed and audited balance sheets.
The total amount paid to non-resident shareholders shall not exceed the amount in Argentine pesos that correspond according to the distribution determined by the shareholders’ meeting.
If applicable, the External Assets and Liabilities Survey must have been complied with for the transactions involved.
The company falls within one of the following situations and fulfills all the conditions stipulated in each case:
(a)
(b)
(c)
(d)
The company records direct investment contributions settled as of January 17, 2020. In which case, (i) the total amount of transfers made in the foreign exchange market for the payment of
dividends to non-resident shareholders may not exceed 30% of the total value of the capital contributions made in the relevant local company that have entered and been settled through the foreign
exchange market as of January 17, 2020, (ii) access will only be granted after the expiration of a term of not less than 30 calendar days as from the settlement date of the last capital contribution
taken into account to determine the aforementioned 30% capital cap, and (iii) the definitive capitalization of the capital contributions must be accredited or, failing that, the filing of the registration
procedure of the capital contribution with the Public Registry must be evidenced. In this case, the accreditation of the definitive capitalization must be made within 365 calendar days following the
date of the initial filing with the Public Registry.
Profits generated in projects under the Plan GasAr 2020-2024. In this case: (i) the profits must be generated by the foreign direct investment contributions entered and settled through the foreign
exchange market as from November 16, 2020, destined to the financing of projects framed within the Plan GasAr 2020-2024. If the client is a direct beneficiary of Decree No. 277/2022, the value of
the benefits of the client, directly or indirectly, shall be deducted from the amount allowed in the preceding paragraph; (ii) the access to the foreign exchange market must occur no earlier than two
years from the date of settlement in the foreign exchange market of the contribution that allows the framing in this section; and (iii) the client must submit the documentation supporting the
definitive capitalization of the contribution.
The client must have a Certification of Increased Exports of Goods.
It has certification under the foreign exchange access regimes for incremental production of oil and/or natural gas.
Cases that do not comply with the above conditions will require the prior approval of the BCRA to access the foreign exchange market for the purchase of foreign currency for the distribution of profits and dividends.
Other specific provisions
Swaps, arbitrage and securities transactions
Financial institutions may carry out foreign exchange operations and arbitrage operations with their clients in the following cases:
(i)
(ii)
(iii)
(iv)
(v)
(vi)
(vii)
(viii)
An individual transfers funds from his local accounts (which are already in foreign currency) to his own bank accounts outside of Argentina.
The transfer of foreign currency abroad by local common depositaries of marketable securities in connection with income received in foreign currency on account of principal and interest services on
Argentine treasury bonds when such transaction is part of the payment procedure at the request of foreign common depositaries.
Foreign currency transfers abroad made by individuals from their local accounts denominated in foreign currency to offshore collection accounts up to an amount of US$500 in any month, provided that the
individual submits a sworn statement stating that the transfer is made to assist in the support of Argentine residents who were forced to remain abroad in compliance with the measures adopted in response to
the COVID-19 pandemic.
Arbitrage transactions not originating in transfers from abroad may be carried out without any restriction, to the extent that the funds are debited from a foreign currency account held by the customer with a
local financial institution. To the extent that the funds are not debited from a foreign currency account held by the customer, these transactions may be carried out by individuals, without the prior approval of
the BCRA, up to the amount allowed for the use of cash under Articles 3.8. and 3.13 of the Exchange Regime.
Exchange and arbitrage transactions by non-resident individuals may be carried out without restrictions to the extent that the funds are credited to a tourist savings bank account in accordance with the
regulations on savings deposits, salary and special accounts.
Payments of debts originated in the importation of goods with customs entry registration up to December 12, 2023 or in services rendered or accrued by non-residents up to the aforementioned date to the
extent that the remaining regulatory requirements are met and they are made with funds deposited in a local account and originated in collections of capital and interest in foreign currency of the Bonds for
the Reconstruction of a Free Argentina (BOPREAL).
Transfer of foreign currency abroad of customers from their special account for the Regime of Promotion of the Knowledge Economy to the extent that the regulatory requirements established for such
purposes for each type of operation are complied with.
All other exchange and arbitrage operations may be carried out by customers without the prior approval of the BCRA to the extent that they would be permitted without such approval under other exchange
regulations. This also applies to local common securities depositories with respect to income received in foreign currency as payments of principal and interest on foreign currency securities paid in
Argentina.
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If the transfer is made in the same currency in which the account is denominated, the financial institution will credit or debit the same amount as that received or sent from abroad. When the financial institution charges a commission or
fee for these transactions, it will be instrumented in a specifically designated item.
Securities transactions
According to CNV General Resolution No. 988/2023, sales of marketable securities with settlement in a foreign currency, in any jurisdiction and regardless of the law under which they are issued, require a minimum holding period of
one business day counted as of their accreditation at the Central Depository Agent of Negotiable Securities, to the extent that purchases of the marketable securities in question have been made against Argentine pesos.
Likewise, transfers to foreign depository institutions of marketable securities purchased with Argentine pesos, regardless of the law under which they are issued, must comply with a minimum holding period of one business day as from
the date of deposit of such marketable securities, unless such accreditation (i) results from a primary placement of marketable securities issued by the National Treasury or by the Central Bank of the Argentine Republic, in the
framework of Communication “A” 7.918, as amended, or (ii) refers to Argentine shares and/or certificates of deposit (CEDEAR) traded in markets regulated by the CNV. Intermediaries and trading agents must verify compliance with
the aforementioned minimum holding period of marketable securities.
In addition, (i) the beneficiaries of refinancings provided for in Article 1.1.1. of the rules on “Financial Services within the Framework of the Sanitary Emergency provided for by Decree No. 260/2020 Coronavirus (COVID-19)”, until
their total cancellation, (ii) the beneficiaries of “Zero Rate Credits”, “Zero Rate Credits 2021”, “Zero Rate Credits Culture” or “Subsidized Rate Credits for Companies”, provided for in Articles 1. 1.2. and 1.1.3. of the rules on
“Financial Services within the Framework of the Sanitary Emergency provided by Decree No. 260/2020 Coronavirus (COVID-19)”, until their total cancellation, (iii) the beneficiaries of financing in Argentine pesos under section 2 of
Communication “A” 6,937, Articles 2 and 3 of Communication “A” 7. 006, as supplemented until its total cancellation, (iv) the beneficiaries of Article 2 of Decree No. 319/2020 and complementary and regulatory rules, for the
duration of the benefit with respect to the update of the value of the installment, and (v) the persons included in the Joint Resolution of the President of the Honorable Senate of the Nation and of the President of the Honorable Chamber
of Deputies of the Nation No. 12/2020, will be prevented from selling marketable securities issued by residents to be settled in a foreign currency in Argentina or transferring such marketable securities to foreign depositories or
exchanging marketable securities issued by residents for foreign assets or the acquisition in the country with settlement in Argentine pesos of marketable securities issued by non-residents. Customers included in the BCRA
Communications “A” 7,606 and “A” 7,609 may not carry out these transactions either.
Special provisions for financing under the Plan GasAr
Article 3.5.5 of the Exchange Regime states that to the extent that the BCRA’s prior conformity requirement is in effect for access to the foreign exchange market for the cancellation at maturity of principal and interest on foreign
financial debt, this requirement shall not apply to the extent that all of the following conditions are met:
(i)
(ii)
(iii)
The funds were used to finance projects within the framework of the Plan GasAr.
The funds have been deposited and settled by the foreign exchange market as of November 16, 2020; and
The indebtedness has an average life of not less than two years.
Special provisions for the Export Investment Promotion Regime established by Decree No. 234/2021
Decree No. 234/2021 established a new Export Investment Promotion Regime (the “Promotion Regime”), with the objective, among others, of increasing exports of goods and promoting sustainable economic development. The
Ministry of Economy and the Ministry of Productive Development will be the authorities for the application of the Promotion Regime.
The Promotion Regime covers investments for new productive projects in, among others, forestry, mining, hydrocarbon, manufacturing and agro-industrial activities, as well as the expansion of existing business units that require
investments to increase their production. The benefits of the Promotion Regime do not apply to commodities such as wheat, corn, soybeans and biodiesel, among others. Although the regulatory entities may include and/or exclude
activities from the Promotion Regime, the decree establishes that vested rights will not be affected.
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The requirements are as follows:
184
(i)
(ii)
(iii)
(iv)
Both legal entities and individuals, resident or non-resident, may apply.
Presentation of an “Export Investment Project” consisting of a minimum direct investment of US$100,000,000.
Comply with the terms and conditions of the projects submitted and approved by the regulators.
The following are not eligible to apply for the Promotion Regime: (a) individuals and legal entities whose representatives or directors have been convicted of certain crimes with prison sentences and/or
disqualification for a specific period of time; (b) individuals and legal entities with overdue and unpaid tax or social security debts; (c) individuals and legal entities with tax or social security debts; (d)
individuals and legal entities that have unpaid taxes, fees, fines or surcharges imposed on them by a final judicial or administrative decision in customs, exchange, tax or social security matters; and (e)
individuals that have unjustifiably failed to comply with their obligations in connection with other promotion schemes.
Once the relevant requirements have been verified, the application authority will approve the project and will issue an “Export Investment Certificate” for the purpose of accessing the benefits established by the Promotion Regime,
which will have a term of 15 years.
Beneficiaries participating in the Export Promotion Regime may apply up to 20% of the foreign currency income obtained from exports related to the project to (i) the payment of principal and interest of financial or commercial debts
with foreign countries, (ii) the payment of dividends, and (iii) the repatriation of direct investments of non-residents. However, this benefit may not exceed an annual maximum of 25% of the gross amount of foreign currency liquidated
by such beneficiary through the foreign exchange market to finance the development of the project. In estimating the gross amount of foreign currency settled by the beneficiary in the foreign exchange market to finance the project,
foreign currency flows from exports will not be taken into account.
In the case of projects involving investments in excess of US$500,000,000, the beneficiaries may opt to access an extended benefit for each year in which the benefit previously provided for has not been used.
In the case of projects involving investments between US$500,000,000 and US$1,000,000,000, for each year in which the benefit has not been used, they may enjoy, for two consecutive years, an amount of free application equivalent
to double the percentage previously foreseen.
The calculation of the benefit will be made on the foreign exchange earned from exports related to the project during the year in which the extended benefit is used.
The amount of the free application benefit may not exceed an annual maximum of 40% of the gross amount of the foreign currency effectively entered by the beneficiary in the foreign exchange market to finance the development of the
project, at the time of making use of the same.
The benefits of the Promotion Regime will cease (i) upon expiration of the term of use, (ii) in certain cases, when the beneficiary ceases to have the capacity to carry out the activity that is the reason for the investment project, as
established in the applicable regime, or (iii) if the beneficiary fails to comply with its obligations under the Promotion Regime without justification.
Regime for Access to Foreign Currency for Incremental Petroleum Production (“RADPIP”)
Decree No. 277/2022 approved the Foreign Exchange Access Regime for the Incremental Production of Hydrocarbons with the purpose of promoting production in the hydrocarbons sector, generating incentives through the granting of
foreign exchange access channels without prior authorization from the BCRA.
In this way, two regimes of access to the foreign exchange market were created to increase investments related to the production of crude oil and natural gas, which will be subordinated to a third regime for the promotion of
employment, work and the development of suppliers in the regional and national hydrocarbons industry:
Beneficiaries: Those subjects registered in the Registry of Oil Companies of the National State that are holders of hydrocarbon exploitation concessions granted by the National State, the provinces or Autonomous City of Buenos Aires
and that:
(i)
(ii)
(iii)
(iv)
Adhere to the RADPIP (they may present themselves or associate with duly registered third parties).
Obtain incremental crude oil production.
Comply with the Regime for the Promotion of Employment, Labor, and the Development of Regional and National Suppliers of the Hydrocarbons Industry; and
In case of being beneficiaries thereof, comply with the obligations set forth in the Plan GasAr.
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Baseline calculation: The baseline will be the total crude oil accumulated by the beneficiary (including its subsidiaries or producing companies of the same economic group within the country), during 2021, in all the areas over which it
holds a concession, according to the official data submitted to the Ministry of Energy as of May 28, 2022.
Incremental production calculation: Once the baseline is obtained, the Annual Incremental Production and Quarterly Incremental Production data will be obtained:
(i)
(ii)
Annual Incremental Production: Difference between the effective production of the last 12 months and the baseline.
Quarterly Incremental Production: 1/4 of the Annual Incremental Production.
Incentives: The beneficiary will enjoy the benefits of the RADPIGN on a percentage of its Incremental Injection on a quarterly basis. The base Incremental Injection Volume Benefit (“VIIB”) will be 30% of the Incremental Injection
multiplied by the number of days in the quarter, which may be increased for different circumstances:
(i)
(ii)
(iii)
(iv)
(v)
In the amount of percentage sections equivalent to 1/5 of the percentage of Internal Natural Gas Market Coverage.
By up to 5% if the beneficiary is able to offset the technical decline related to conventional exploitation.
By up to 2% if the incremental oil production is obtained from low productivity or previously inactive or closed wells, together with third-party recovery companies.
By up to 2% when the Annual Incremental Production is obtained by contracting at least 10% of the fracking services from regional or national companies.
Up to 2% when the beneficiary increases its investment, or initiates a new investment process, in exploration and exploitation of oil in marginal areas or in areas with exclusive conventional production with
productive decline. The investment must be of US$5,000,000 in a maximum term of two years once adhered to the RADPIP.
Access to the foreign exchange market: There will be access to the foreign exchange market for an amount equivalent to its VIIB (valued at the weighted average export price of the last 12 months) of the system as a whole), for the
following purposes:
(i)
(ii)
(iii)
Payment of principal and interest on commercial or financial liabilities abroad, including liabilities with nonresident related companies.
Payment of profits and dividends corresponding to closed and audited balances; and/or
Repatriation of direct investments of non-residents.
In all cases, net of export duties, incorporating premiums or discounts on the quality of crude oil, as regulated.
In addition, Communication “A” 7,914 establishes that a client that has a “Certification for the Regimes of Access to Foreign Currency for the Incremental Production of Oil and/or Natural Gas” (Decree No. 277/2022) may access the
foreign exchange market for up to the amount of the certification to carry out:
iI)
(ii)
(iii)
(iv)
(v)
(vi)
Payments of principal of commercial debts for the importation of goods and services.
Payments of interest on commercial debts for the importation of goods and services whose creditor is a counterparty related to the debtor without the prior conformity required in Article 3.3.3 of the
Exchange Regime.
Payment of profits and dividends to non-resident shareholders to the extent that the requirements set forth in Articles 3.4.1. to 3.4.3. of the Exchange Regime are met.
Payments of principal and interest on financial indebtedness with foreign countries whose creditor is a counterparty related to the debtor.
Payments of principal of financial debts in a foreign currency covered by the provisions of Article 3.17 of the Exchange Regime, in excess of the amount resulting from the established parameters.
Repatriations of direct investments of non-residents in companies that are not controlling companies of local financial institutions.
In all cases, compliance with the remaining general and specific requirements applicable to the transaction, by virtue of the exchange regulations in force, must be evidenced.
Also, pursuant to Communication “A” 7,914, the beneficiaries must nominate a single local financial institution that will be responsible for issuing the “Certification for the Regimes of Access to Foreign Currency for the Incremental
Production of Oil and/or Natural Gas” and send them to the financial institution through which the client wishes to access the foreign exchange market.
Benefit transfer: Benefits may be transferred to direct suppliers of the beneficiary (subject to regulation).
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Beneficiaries: Those subjects registered in the Registry of Oil Companies of the National State who are holders of hydrocarbon exploitation concessions granted by the National State, the provinces or the Autonomous City of Buenos
Aires and who:
(i)
(ii)
(iii)
(iv)
Adhere to the RADPIGN (they may apply or associate with duly registered third parties).
Are awarded in compliance with base natural gas injection volumes over 365 days a year, in the auctions or price contests of the Plan GasAr 2020-2024.
Obtain incremental injection levels with respect to the injection baseline; and
Comply with the regime for the Promotion of Employment, Labor and the Development of Regional and National Suppliers of the Hydrocarbons Industry.
Injection baseline calculation: The injection baseline will be the annual average daily injection volume of natural gas for the year 2021, with measurement approved by the application authority and the ENARGAS, and effectively
injected, including off system production, all from its own areas, including that of its subsidiaries or producing companies of the same economic group within the country.
Incremental injection calculation: Once the injection baseline is obtained, the incremental injection data will be obtained, being the daily average excess, with respect to the injection baseline, of the volume of natural gas effectively
injected by the beneficiary. The volume effectively injected will be the average daily injection of the last 12 preceding months.
Incentives: The beneficiary will enjoy the benefits of the RADPIGN on a percentage of its incremental injection on a quarterly basis. The base VIIB will be 30% of the incremental injection multiplied by the number of days in the
quarter, which may be increased due to different circumstances:
(i)
(ii)
In the amount of percentage sections equivalent to 1/5 of the percentage of Internal Natural Gas Market Coverage.
Up to 5% if the beneficiary is able to offset the technical decline related to conventional exploitation.
Access to the foreign exchange market: Access to the foreign exchange market will be granted for an amount equivalent to its VIIB (valued at the weighted average export price of the last 12 months) of the system as a whole), for the
following purposes:
(i)
(ii)
(iii)
Payment of principal and interest on commercial or financial liabilities with foreign countries, including liabilities with non-resident related companies.
Payment of profits and dividends corresponding to closed and audited balance sheets; and/or
Repatriation of direct investments of non-residents.
In addition, Communication “A” 7,626 (supplementary to Decree No. 277/2022) regulates the requirements applicable for access to the foreign exchange market for those clients who have a “Certification for the Regimes of Access to
Foreign Currency for the Incremental Production of Oil and/or Natural Gas”. See “—Regime for Access to Foreign Currency for Incremental Petroleum Production (“RADPIP)—Access to the foreign exchange market”.
Benefit transfer: Benefits may be transferred to direct suppliers of the beneficiary (subject to regulation).
Criminal Exchange Regime
The Exchange Regime establishes that transactions that do not comply with the exchange regulations established by the Exchange Regime will be subject to the Criminal Exchange Regime (Law No. 19,359 and amendments).
For further information on the exchange control restrictions and regulations in force, you should consult your legal advisors and read the applicable rules mentioned in this document, as well as their amendments and complementary
regulations, which are available on the website: http://www.infoleg.gob.ar or on the BCRA’s website www.bcra.gob.ar, as applicable. The information contained in these websites is not part of this annual report and is not deemed to be
incorporated herein.
Item 10.E Taxation
Certain United States Federal Income Tax Considerations
The following is a summary of certain U.S. federal income tax considerations that may be relevant to the purchase, ownership and disposition of common shares or ADSs by a U.S. Holder (as defined below).
This summary is based on provisions of the Internal Revenue Code of 1986, as amended (the “Code”), and regulations, rulings and judicial interpretations thereof, in force as of the date hereof. Those authorities may be changed at any
time, perhaps retroactively, so as to result in U.S. federal income tax consequences different from those summarized below. In addition, this summary assumes that the deposit agreement, and all other related agreements, will be
performed in accordance with their terms.
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This summary is not a comprehensive discussion of all of the tax considerations that may be relevant to a particular investor’s decision to purchase, hold, or dispose of common shares or ADSs. In particular, this summary is directed
only to U.S. Holders that hold common shares or ADSs as capital assets and does not address tax consequences to U.S. Holders who may be subject to special tax rules, such as banks, brokers or dealers in securities or currencies,
traders in securities electing to mark to market, financial institutions, insurance companies, tax exempt entities, entities and arrangements treated as partnerships and the partners therein, holders that own or are treated as owning 10.00%
or more of our shares by vote or value, persons holding common shares or ADSs as part of a hedging or conversion transaction or a straddle, nonresident alien individuals present in the United States for more than 182 days in a taxable
year, or persons whose functional currency is not the U.S. dollar. Moreover, this summary does not address state, local or foreign taxes, the U.S. federal estate and gift taxes, or the Medicare contribution tax applicable to net investment
income of certain non-corporate U.S. Holders, or alternative minimum tax consequences of acquiring, holding or disposing of common shares or ADSs.
For purposes of this summary, a “U.S. Holder” is a beneficial owner of common shares or ADSs that is an individual citizen or resident of the United States or a U.S. domestic corporation or that otherwise is subject to U.S. federal
income taxation on a net income basis in respect of such common shares or ADSs.
You should consult your own tax advisors about the consequences of the acquisition, ownership, and disposition of the common shares or ADSs, including the relevance to your particular situation of the considerations
discussed below and any consequences arising under foreign, state, local or other tax laws.
ADSs
In general, if you are a U.S. Holder of ADSs, you will be treated, for U.S. federal income tax purposes, as the beneficial owner of the underlying common shares that are represented by those ADSs. Accordingly, deposits or withdrawals
of common shares for ADSs will not be subject to U.S. federal income tax.
Taxation of Dividends
Subject to the discussion below under “—Passive Foreign Investment Company,” the gross amount of any distribution of cash or property with respect to common shares or ADSs (including any amount withheld in respect of Argentine
withholding taxes) that is paid out of our current or accumulated earnings and profits (as determined for U.S. federal income tax purposes) will generally be includible in a U.S Holder’s taxable income as ordinary dividend income on
the day on which the holder receives the dividend, in the case of common shares, or the date the ADS Depositary receives the dividends, in the case of ADSs, and will not be eligible for the dividends-received deduction allowed to
corporations under the Code. To the extent that the amount of any distribution exceeds our current and accumulated earnings and profits for a taxable year, the distribution will first be treated as a tax-free return of capital, causing a
reduction in the tax basis of the common shares or ADSs, and to the extent the amount of the distribution exceeds your tax basis, the excess will generally be taxed as capital gain recognized on a sale or exchange.
We do not expect to maintain calculations of our earnings and profits in accordance with U.S. federal income tax principles. U.S. Holders therefore should expect that distributions generally will be treated as dividends for U.S. federal
income tax purposes.
Dividends paid in a currency other than U.S. dollars (a “foreign currency”) generally will be includible in a U.S. Holder’s income in a U.S. dollar amount calculated by reference to the exchange rate in effect on the day the holder
receives the dividends, in the case of common shares, or the date the ADS Depositary receives the dividends, in the case of ADSs. Any gain or loss on a subsequent sale, conversion or other disposition of such non-U.S. currency (or on
behalf of) by such U.S. Holder generally will be treated as ordinary income or loss and generally will be income or loss from sources within the United States. As indicated in “Item 3.D. Risk Factors—Risks Relating to our Shares and
ADSs—Restrictions on transfers of foreign exchange and the repatriation of capital from Argentina may impair your ability to receive dividends and distributions on, and the proceeds of any sale of, shares underlying the ADSs”, in
light of the current restrictions on the conversion of the Argentine currency into a non-Argentine currency, the Depositary for the ADSs may hold the Argentine pesos it cannot convert for the account of the ADS holders for a significant
period of time. The subsequent conversion of such Argentine pesos into U.S. dollars may therefore result in foreign currency exchange gain or loss that is treated as ordinary income or loss as described above. U.S. Holders should
consult their own tax advisors regarding the treatment of foreign currency gain or loss, if any, on any foreign currency received that is converted into U.S. dollars after it is received.
The U.S. dollar amount of dividends received by a non-corporate U.S. Holder with respect to the common shares or ADSs will be subject to taxation at a preferential rate if the dividends are “qualified dividends” and certain other
requirements are met. Subject to certain exceptions for short-term and hedged positions, dividends paid on the common shares or ADSs will be treated as qualified dividends if:
·
·
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the common shares or ADSs are readily tradable on an established securities market in the United States and
we were not, for the year prior to the year in which the dividend was paid, and are not, for the year in which the dividend is paid, a passive foreign investment company (a “PFIC”).
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Our ADSs are listed on the NYSE, and our ADSs will qualify as readily tradable on an established securities market in the United States so long as they are so listed and remain so listed. Based on our audited financial statements and
relevant market and shareholder data, we believe that we were not treated as a PFIC for U.S. federal income tax purposes with respect to our 2022 or 2023 taxable years. In addition, based on our audited financial statements and our
current expectations regarding the value and nature of our assets, the sources and nature of our income, and relevant market and shareholder data, we do not anticipate becoming a PFIC for our current taxable year or in the foreseeable
future. U.S. Holders should consult their own tax advisors regarding the availability of the reduced dividend tax rate in light of their own particular circumstances.
Because the common shares are not themselves listed on a U.S. exchange, it is possible that dividends received with respect to common shares that are not represented by ADSs may not be treated as qualified dividends. U.S. Holders
should consult their own tax advisors regarding the potential availability of the reduced dividend tax rate in respect of common shares.
U.S. Holders that receive distributions of additional common shares or ADSs or rights to subscribe for common shares or ADSs as part of a pro rata distribution to all of our shareholders generally will not be subject to U.S. federal
income tax in respect of the distributions.
Taxation of Dispositions of Common Shares or ADSs
Subject to the discussion below under “—Passive Foreign Investment Company,” if a U.S. Holder realizes gain or loss on the sale, exchange or other disposition of common shares or ADSs, that gain or loss will be capital gain or loss
and generally will be long-term capital gain or loss if the common shares or ADSs have been held for more than one year. Long-term capital gain realized by a non-corporate U.S. Holder generally is subject to taxation at a preferential
rate. The deductibility of capital losses is subject to limitations.
Foreign Tax Credit Considerations
Subject to generally applicable limitations and conditions, Argentine withholding tax on dividends paid at the appropriate rate applicable to the U.S. Holder may be eligible for a credit against such U.S. Holder’s U.S. federal income tax
liability. The rules governing foreign tax credits are complex and recently issued final U.S. Treasury Regulations (“Final FTC Regulations”) have imposed additional requirements that must be met for a foreign tax to be creditable, and
we do not intend to determine whether such requirements will be met in case Argentine taxes are withheld from dividends. However, recent notices (the “Notices”) from the IRS indicate that the U.S. Treasury and the IRS are
considering proposing amendments to the Final FTC Regulations and allowing taxpayers, subject to certain conditions, to defer the application of many aspects of the Final FTC Regulations until the date when a notice or other
guidance withdrawing or modifying this temporary relief is issued (or any later date specified in such notice or other guidance). If the Argentine tax on dividends is not a creditable tax or the U.S. Holder does not elect to claim a foreign
tax credit for any foreign income taxes paid or accrued in the same taxable year, the U.S. Holder may be able to deduct the Argentine tax in computing such U.S. Holder’s taxable income for U.S. federal income tax purposes. Dividend
distributions will constitute income from sources without the United States and, for U.S. Holders that elect to claim foreign tax credits, generally will constitute “passive category income” for foreign tax credit purposes.
Capital gain or loss recognized by a U.S. Holder on the sale or other disposition of common shares or ADSs generally will be U.S. source gain or loss for U.S. foreign tax credit purposes. Subject to the Notices described above, under
the Final FTC Regulations, Argentine taxes on disposition gains of U.S. Holders are likely not creditable for U.S. federal income tax purposes. If the Argentine tax is not a creditable tax, the tax would reduce the amount realized on the
sale or other disposition of the shares even if the U.S. Holder has elected to claim a foreign tax credit for other taxes in the same year. U.S. Holders should consult their own tax advisors regarding the application of the foreign tax credit
rules to a sale or other disposition of the shares and any Argentine tax imposed on such sale or disposition.
The availability and calculation of foreign tax credits and deductions for foreign taxes depend on a U.S. Holder’s particular circumstances and involve the application of complex rules to those circumstances. U.S. Holders should
consult their own tax advisors regarding the application of these rules to their particular situations.
Passive Foreign Investment Company
Special tax rules apply to U.S. Holders if we are a PFIC. In general, we will be a PFIC in a particular taxable year if, after applying certain look-through rules, either 75 percent or more of our gross income for the taxable year is passive
income, or 50 percent or more of the value of our assets (determined on the basis of a quarterly average) is attributable to assets that produce or are held for the production of passive income. Based on our audited financial statements
and relevant market and shareholder data, we believe that we were not treated as a PFIC for U.S. federal income tax purposes with respect to our 2022 or 2023 taxable years. In addition, based on our audited financial statements and our
current expectations regarding the value and nature of our assets, the sources and nature of our income, and relevant market and shareholder data, we do not anticipate becoming a PFIC for our current taxable year or in the foreseeable
future. The determination of whether we are a PFIC for any taxable year depends on the classification of our income and assets, our cash position and the nature of the activities performed by our officers and employees. Because this
determination is made annually, it is possible that we may become a PFIC for the current taxable year or for any future taxable year due to changes in the composition of our income or assets.
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If we are a PFIC for the current taxable year or for a future taxable year during which a U.S. Holder owns common shares or ADSs, the U.S. Holder will be subject to a special tax at ordinary income rates on certain “excess
distributions” and on gain recognized on the sale or other disposition of such holder’s common shares or ADSs. For these purposes, distributions received in a taxable year will be treated as excess distributions to the extent that they are
greater than 125.00% of the average annual distributions received during the shorter of the three preceding taxable years or the U.S. Holder’s holding period for the common shares or ADSs. In addition, the amount of income tax on any
excess distributions or gains will be increased by an interest charge to compensate for tax deferral, calculated as if the excess distributions or gains were earned ratably over the period the U.S. Holder held the common shares or ADSs.
Classification as a PFIC may also have other adverse tax consequences, including with respect to any lower-tier companies within our group treated as PFICs, and will subject a U.S. Holder to certain annual reporting requirements with
respect to their interest in common shares or ADSs on IRS Form 8621. If we are a PFIC for our current taxable year or in future taxable years, U.S. Holders may be able to make certain elections that would mitigate the consequences of
our status as a PFIC, including by electing to mark common shares or ADSs to market annually. We do not intend to make information available to U.S. Holders in order for them to make a “qualified electing fund” election with respect
to our common shares or ADSs if we are a PFIC. U.S. Holders should consult their own tax advisor regarding the U.S. federal income tax considerations discussed above.
Specified Foreign Financial Assets
Certain individual U.S. Holders that own “specified foreign financial assets” with an aggregate value in excess of US$50,000 on the last day of the taxable year or US$75,000 at any time during the taxable year are generally required to
file an information statement along with their tax returns, currently on IRS Form 8938, with respect to such assets. “Specified foreign financial assets” include any financial accounts held at a non-U.S. financial institution, as well as
securities issued by a non-U.S. issuer (which would include the common shares or ADSs) that are not held in accounts maintained by financial institutions. Higher reporting thresholds apply to certain individuals living abroad and to
certain married individuals. Regulations extend this reporting requirement to certain entities that are treated as formed or availed of to hold direct or indirect interests in specified foreign financial assets based on certain objective
criteria. U.S. Holders who fail to report the required information could be subject to substantial penalties. In addition, the statute of limitations for assessment of tax would be suspended, in whole or part. Prospective investors should
consult their own tax advisors concerning the application of these rules to their investment in the common shares or ADSs, including the application of the rules to their particular circumstances.
Backup Withholding and Information Reporting
Dividends paid on, and proceeds from the sale, exchange or other disposition of, the common shares or ADSs to a U.S. Holder generally will be subject to the information reporting requirements of the Code and may be subject to
backup withholding unless the U.S. Holder provides an accurate taxpayer identification number and makes any other required certification or otherwise establishes an exemption. Backup withholding is not an additional tax. The amount
of any backup withholding from a payment to a U.S. Holder will be allowed as a refund or credit against the U.S. Holder’s U.S. federal income tax liability, provided the required information is furnished to the U.S. Internal Revenue
Service in a timely manner.
Material Argentine Tax Considerations
The following discussion is a summary of the material Argentine tax considerations relating to the purchase, ownership and disposition of our common shares or ADSs. The following summary is based upon tax laws of Argentina as in
effect on the date of this document and is subject to any change in Argentine law that may come into effect after such date and any change that could apply retroactively and could affect the continued validity of this summary.
This summary considers the most relevant aspects of Argentine tax law as of the date of this document, nevertheless, it does not include all of the tax considerations that may be relevant to you or your situation, particularly if you are
subject to special tax rules.
This summary does not purport to be a comprehensive description of all the Argentine tax considerations that may be relevant to a holder of such securities. No assurance can be given that the courts or tax authorities responsible for the
administration of the laws and regulations described in this report will agree with this interpretation. In this regard, due to recent nature of certain modifications to Argentine tax law, it is not possible to determine how the relatively new
regulations will be applied and/or construed by the tax authorities of Argentina. Holders are encouraged to consult their tax advisors regarding the tax treatment of our ADSs or common shares as it relates to their situation.
Income tax (“IT”)
Taxation on dividends
According to the amendments introduced to the Income Tax Law (“ITL”), taxation applicable on the distribution of dividends from Argentine companies would be as follows:
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·
·
No Argentine income tax withholding would be levied on dividends paid on our Class D shares or ADSs derived from profits earned during tax periods beginning up to December 31, 2017, whether disbursed in cash,
property or other equity securities, except for the application of the equalization tax (the “Equalization Tax”). The Equalization Tax applies to dividends exceeding the “net accumulated taxable income” from the
immediate prior fiscal period at the time of distribution. To determine the “net accumulated taxable income” under Argentine Income Tax Law (“Income Tax Law”), the income tax paid in the same fiscal period
should be subtracted and the local dividends received in the previous fiscal period should be added to such income. The Equalization Tax would be imposed at a 35% rate on the excess amount. It is considered a final
tax and it is not applicable if dividends are paid in shares (“acciones liberadas”) instead of cash. If applicable, we are responsible for withholding this tax.
Dividends originated in profits obtained during fiscal years initiated on or after January 1, 2018, on Argentine shares paid to Argentine resident individuals and/or non-Argentine residents would be subject to a 7%
income tax withholding as a single and definitive payment on the amount of such dividends (“Dividend Tax”).
However, if dividends are distributed to Argentine entities (in general, entities organized or incorporated under Argentine law, certain traders and intermediaries, local branches of non-Argentine entities, sole proprietorships and
individuals carrying on certain commercial activities in Argentina, among others), no Dividend Tax would apply. In addition, Equalization Tax is not applicable for dividends originated in profits obtained during fiscal years
initiated on or after January 1, 2018.
For Argentine individuals and undivided estates not registered before the Argentine tax authorities as taxpayers for income tax purposes, as well as for non-Argentine residents, the Dividend Tax withholding will be considered a final
payment. Argentine individuals and undivided estates are not allowed to offset income arising from the distribution of dividends on Argentine shares with losses from other types of operations.
The Income Tax Law provides a first in-first out rule pursuant to which distributed dividends correspond to the former accumulated profits of the distributing company.
Holders are encouraged to consult a tax advisor as to the particular Argentine income tax consequences derived from profit distributions made on Class D shares and ADSs.
Taxation on capital gains
As per income tax regulations, gains arising from the transfer of shares, as well as quotas and other equity interests, titles, bonds and other securities, are liable to Argentine income tax (unless exempt), regardless of the type of
beneficiary who realizes the gain.
Argentine entities are subject to income tax on the net income from the sale, exchange or other disposition of shares. A progressive tax rate system, introduced by Law No. 27,630, applies to tax periods beginning on January 1, 2021
and beyond. This system imposes tax rates ranging from 25% to 35% determined based on the taxpayer’s net accumulated taxable income. The applicable scales for fiscal periods commencing on January 1, 2024, are as follows: (i) net
taxable income accumulated up to $34,703,523.08 will be subject to a rate of 25%; (ii) net taxable income accumulated over $34,703,523.08 up to $347,035,230.79 will incur a payment of $8,675,880.77 plus 30% on the excess over
$347,035,230.79; and (iii) net taxable income accumulated from $347,035,230.79 onwards will be subject to a payment of $102,375,393.08 plus 35% on the excess over $347,035,230.79.
Losses arising from the sale of shares and ADSs can only be offset against income derived from the same type and source of operations (understanding by “type” the different concepts of income included under each article of Chapter
II, Title IV of the Income Tax Law), for a five-year carryover period.
Starting in 2018, Argentine resident individuals and undivided estates enjoy an exemption from capital gains tax on income derived from the sale of shares and other securities in specific scenarios. These scenarios encompass: (i) shares
placed through a CNV-authorized public offering; (ii) shares traded on CNV-authorized stock markets with segments ensuring priority of price-time and interference of offers; and/or (iii) the sale, exchange or other disposition of shares
through CNV-authorized tender offer regimes and/or share exchanges.
Additionally, article 34 of the Solidarity Law stipulates that, starting from the 2020 tax period, Argentine resident individuals and undivided estates are exempt from capital gains tax on the sale, exchange, or disposal of securities falling
under the provisions of Article 98 of the Income Tax Law, not included in the first paragraph of article 26 subsection u) of the Income Tax Law. This exemption applies as long as said securities are listed on CNV-authorized stock
exchanges or securities markets, without the application of article 109 of the Income Tax Law. In this sense, Article 109 of the Income Tax Law specifies that total or partial exemptions established or that will be established in the future
by special laws for securities issued by national, provincial, or municipal states or the City of Buenos Aires, do not affect income tax for Argentine resident individuals and undivided estates.
Notably, ADSs would not qualify for the exemption applicable to Argentine resident individuals due to non-compliance with the referred conditions. In the absence of the exemption, income obtained by Argentine resident individuals
and undivided estates located in Argentina from the sale, exchange, or other disposal of ADSs (and shares, if applicable) is subject to a 15% capital gains tax on net income (calculated in Argentine pesos). The acquisition cost may be
adjusted based on the CPI inflationary index rate published by the INDEC, provided that the the equity participation was acquired after January 1, 2018. Losses arising from the sale of non-exempt Argentine shares can only be offset by
Argentine individuals and undivided estates located in Argentina against income derived from operations of the same source and type (understanding by “type” the different concepts of income included under each article of Chapter II,
Title IV of the Income Tax Law), for a five-year carryover period.
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If Argentine resident individuals and undivided estates undertake a conversion process involving securities representing shares that do not fall within the exemption scenarios outlined in points (i), (ii) and/or (iii) above, with the
intention to hold the underlying shares eligible for the exemption, such conversion would be considered a taxable transfer of the securities representing shares. The taxable value is determined based on their fair market value at the time
of conversion. The same tax treatment will apply if the conversion process involves shares not eligible for the exemption being transformed into securities representing shares that qualify for the exemption.
Upon completion of the conversion, the results obtained from any subsequent sale, exchange, swap or any other disposition of the underlying shares or securities representing shares would be exempt from income tax, provided that the
conditions specified in points (i), (ii) and/or (iii) of the paragraph above are satisfied.
In light of amendments introduced by the Solidarity Law, it could also be construed that a capital gains exemption could also apply for Argentine resident individuals and undivided estates if the securities involved in the conversion
process are listed on stock exchanges or securities markets authorized by the CNV (although the matter is not free from doubt and further clarifications should be issued).
Due to the amendments introduced to the Income Tax Law, as from 2018, non-Argentine resident individuals or legal entities (“foreign beneficiaries”) are also exempt from income tax derived from the sale of Argentine shares in the
following situations: (i) when the shares are placed through a CNV-authorized public offering; (ii) when shares are traded on CNV-authorized stock markets, with segments that ensure priority of price-time and interference of offers;
and/or (iii) when the sale, exchange or other disposition of shares is made through CNV-authorized tender offer regimes and/or share exchanges. The exemption applies to the extent the foreign beneficiaries reside in a “cooperative
jurisdiction” (as defined in “—Incoming funds arising from non-cooperative or low or nil tax jurisdictions”) and, in accordance with article 90 of the Regulatory Decree of the Income Tax Law, if their funds come from “cooperative
jurisdictions”.
In addition, under Law No. 27,430 income arising from the sale of ADSs is categorized as Argentine source income. However, capital gains resulting from the sale, exchange or other disposition of ADSs by foreign beneficiaries
residing in a “cooperative jurisdiction”, and whose funds originate from “cooperative jurisdictions”, as per article 90 of the Regulatory Decree of the Income Tax Law, are exempt from income tax on capital gains. This exemption
applies as long as the underlying shares are authorized for public offering by the CNV.
In the event that foreign beneficiaries undergo a conversion process of shares not eligible for the exemption into securities representing shares that are exempt from income tax, such conversion would be treated as a taxable transfer of
shares. The taxable value is determined based on their fair market value at the time of the conversion.
Nevertheless, it is essential to highlight that if Nonresidents are situated in a “non-cooperating jurisdiction” (as defined below) or if the invested funds are originated in a non-cooperating jurisdiction, the aforementioned exemptions do
not apply. Consequently, any capital gains resulting from the disposal of Class D shares or ADSs will be subject to income tax at an effective rate of 31.5% on the gross sale price.
In cases where the exemption is not applicable, and foreign beneficiaries are resident in a “cooperative jurisdiction”, with their funds channeled through cooperative jurisdictions, the gain derived from the disposition of ADSs would be
subject to income tax at a 15% rate on the net capital gain or at an effective rate of 13.5% on the gross price.
As per AFIP General Resolution No. 4,227/2018, various payment mechanisms are outlined depending on the specific circumstances of each sale transaction. In line with article 252 of the Regulatory Decree of the Income Tax Law, in
situations covered by the final paragraph of article 98 of the Income Tax Law (i.e. when both the acquirer and the seller of the security are non-Argentine residents), the tax shall be paid by the foreign seller directly through the
mechanism established for such purpose by the tax authorities. Alternatively, the payment can be facilitated either (i) through an Argentine individual resident with sufficient mandate or (ii) by the foreign seller’s legal representative
domiciled in Argentina.
Holders are encouraged to consult a tax advisor as to the particular Argentine income tax consequences derived from holding and disposing of Class D shares and ADSs and whether any different treatment under a treaty to avoid double
taxation could apply.
Personal assets tax (“PAT”)
Since tax period 2019, Argentine individuals and undivided estates, foreign individuals and undivided estates and foreign entities are subject to personal assets tax of 0.5% of the value of any shares issued by Argentine entities, held at
December 31 of each year. This tax is imposed on Argentine issuers of such shares, such as us, who assume responsibility for paying this tax on behalf of the relevant shareholders. The tax is calculated based on the proportional net
worth value (“valor patrimonial proporcional”) of the shares, derived from the latest consolidated financial statements at December 31 of each year. According to the Argentine Personal Assets Tax Law (“Personal Assets Tax Law”),
we are entitled and expect to seek reimbursement of such paid tax from the applicable shareholders, including by foreclosing on the shares, or by withholding dividends.
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Under existing regulations, the applicable tax treatment for Argentine resident individuals who hold securities representing Argentine shares (such as the ADSs) is currently unclear. Additionally, there is uncertainty about how the
personal assets tax should be estimated in those cases.
Tax on debits and credits in bank accounts (“TDC”)
Tax on debits and credits in bank accounts is levied, with certain exceptions, for debits and credits on checking accounts maintained at financial institutions located in Argentina and other transactions that are used as a substitute for the
use of checking accounts. The general tax rate is 0.6% for each debit and credit, although there are reduced rates of 0.075%, as well as increased rates of 1.2%.
Decree No. 409/2018 established that the account holder may use up to 33% of the amounts paid for TDC for taxable events subject to the general rate of 0.6%, as well as those taxed at the rate of 1.2%, as a credit against other specific
federal taxes. The remaining amount is deductible for income tax purposes. If lower rates were applied, the available credit would be reduced to 20%. Additionally, Law No. 27,264 establishes that 100% of the tax paid may be
considered as a credit against income tax by entities that are characterized as “micro” and “small” and 60% of the tax paid by those entities related to the manufacturing industry that are characterized as “medium - stage 1-” by means of
Article 1 of Law No. 25,300 and its complementary ones.
TDC has certain exemptions. Debits and credits in special checking accounts (created under Communication “A” 3,250 of the BCRA) are exempted from this tax if the accounts are held by foreign legal entities and if they are
exclusively used for financial investments in Argentina. For certain exemptions and/or tax rate reductions to apply, bank accounts must be registered with the tax authority (AFIP and/or DGI) in accordance with AFIP General
Resolution No. 3,900/2016.
According to Decree No. 796/2021, the TDC exemptions foreseen in Decree No. 380/2001 and other regulations of the same nature shall not be applicable in those cases where cash payments are related to the purchase, sale, exchange,
intermediation and/or any other type of operation on crypto assets, cryptocurrencies, digital currencies or similar instruments, in the terms defined by the applicable rules.
Whenever financial institutions governed by Law No. 21,526 make payments acting in their own name and behalf, the application of this tax is restricted to certain specific transactions. Such specific transactions include, among others,
dividends or profits distributions.
Value added tax
The sale, exchange or other disposition of our Class D shares or ADSs and the distribution of dividends are exempt from the value added tax.
Tax for an Inclusive and Caring Argentina (“Impuesto Para una Argentina Inclusiva y Solidaria” “PAIS”)
On an emergency basis and for the term of five fiscal periods since the entry into force of the Solidarity Law, the Argentine government imposed a federal tax applicable to the purchase of foreign currency and other foreign exchange
operations carried out by Argentine residents (individuals or entities). The applicable rate is up to 30%. Holders should consider the provisions that apply to them according to their specific case.
Additionally, through General Resolution AFIP No. 4,815/2020, as amended, a perception regime was established to be applied to certain operations subject to the PAÍS tax. According to the latest modifications to the regime, the
applicable perception is 30% and applies to amounts in pesos specified for each type of transaction. The amounts perceived will be considered as advance payments for PAT or IT, depending on the taxpayer’s situation. If a surplus is
generated in the corresponding tax, it will be considered direct income and can be used to offset other tax obligations.
Stamp tax
This tax is an Argentine provincial tax, which is also levied in the City of Buenos Aires, applicable to the execution of onerous transactions within a provincial jurisdiction or the City of Buenos Aires, or also outside an Argentine
provincial jurisdiction or the City of Buenos Aires but with effects in such jurisdiction. Each of the provinces and the City of Buenos Aires apply different tax rates depending on the type of activity. In the City of Buenos Aires, acts or
instruments related to the negotiation of shares and other securities duly authorized for its public offering by the CNV are exempt from stamp tax to the extent their placement is made within a 180-days term counting as from when such
authorization is granted.
Stamp tax may apply in certain Argentine provinces if transfer of our Class D shares or ADSs is performed or executed in such jurisdictions by means of written agreements.
Gross turnover tax
This tax is an Argentine provincial tax, which is also levied in the City of Buenos Aires, applicable to gross revenues resulting from the regular and onerous exercise of commerce, industry, profession, business, services or any other
onerous activity conducted on a regular basis within the respective Argentine jurisdiction. Each of the provinces and the City of Buenos Aires apply different tax rates depending on the type of activity.
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In addition, gross turnover tax could be applicable on the transfer of Class D shares or ADSs and on the perception of dividends to the extent such activity is conducted on a regular basis within an Argentine province or within the City
of Buenos Aires. However, under the Tax Code of the City of Buenos Aires, any transaction with shares as well as the perception of dividends are exempt from gross turnover tax.
Regimes for the collection of provincial tax revenues on the amounts credited to bank accounts
Different Argentine tax authorities have established collection regimes for gross turnover tax purposes applicable to those credits verified in accounts opened at financial entities, of any type and/or nature and including all branch
offices, irrespective of territorial location. These regimes apply to those taxpayers included in the lists provided monthly by the tax authorities of each jurisdiction. The applicable rates may vary depending on the jurisdiction involved.
Collections made under these regimes shall be considered as a payment on account of the gross turnover tax. Note that certain jurisdictions have excluded the application of these regimes on certain financial transactions. Holders of
Class D shares and ADSs shall corroborate the existence of any exclusions to these regimes in accordance with the jurisdiction involved.
Estate and gift tax
The Buenos Aires Province has imposed a tax on free transmission of assets, including inheritance, legacies, donations, etc., effective January 1, 2011.
Regarding the fiscal year 2024, gratuitous transfers of assets are exempt from this tax when their total amount, without including deductions, exemptions, and exclusions, is equal to or less than Ps.2,038,752.00, or Ps.8,488,486 in the
case of parents, children, and spouses. The amount to be taxed, which includes a fixed component and a variable component that is based on differential rates (which range from 1.6026% to 9.5131% in tax period 2024), varies
according to the property value to be transferred and the degree of kinship of the parties involved. The transfer of Class D shares or ADSs among residents of the Buenos Aires Province shall be subject to this tax if other applicable
conditions are met.
Regarding the existence of taxes on the free transmission of assets in the remaining provincial jurisdictions, the analysis must be carried out taking into consideration the legislation of each province in particular.
Court tax
In the event that it becomes necessary to institute enforcement proceedings in relation to our Class D shares and ADSs in the Argentine federal courts or the courts sitting in the City of Buenos Aires, a court tax (in general at a rate of
3.0%) will be imposed on the amount of any claim brought before such courts. Certain court and other taxes could be imposed on the amount of any claim brought before provincial courts.
Other tax considerations
Subject to the discussion above regarding state and gift taxes, there are no federal inheritance or succession taxes applicable to the ownership, transfer or disposition of our Class D shares or ADSs.
Incoming funds arising from non-cooperative or low or nil tax jurisdictions.
According to Article 82 of Law No. 27,430, for fiscal purposes, any reference to “low tax or no tax countries” or “non-cooperative countries” should be understood to be “non-cooperative jurisdictions or low or nil tax jurisdictions,” as
defined in Article 19 and Article 20 of the Income Tax Law.
As defined under Article 19 of the Argentine Income Tax Law, non-cooperative jurisdictions are those countries or jurisdictions that do not have an agreement in force with the Argentine government for the exchange of information on
tax matters or a treaty to avoid international double taxation with a broad clause for the exchange of information. Likewise, those countries that, having an agreement of this type in force, do not effectively comply with the exchange of
information will also be considered as non-cooperative. The aforementioned treaties and agreements must comply with international standards of transparency and exchange of information on fiscal matters to which the Argentine
government has committed. The Executive Branch published a list of the non-cooperative jurisdictions based on the criteria above, currently included in art 24 of the Regulatory Decree of the Income Tax Law.
In turn, low or nil tax jurisdictions are defined as those countries, domains, jurisdictions, territories, associated states or special tax regimes in which the maximum corporate income tax rate is lower than 60% of the minimum corporate
income tax rate established in the first paragraph of Article 73 of the Income Tax Law.
Pursuant to Article 25 of the regulatory decree of the Income Tax Law, for purposes of determining the taxation level referred to in Article 20 of the Income Tax Law, the aggregate corporate tax rate in each jurisdiction, regardless of the
governmental level in which the taxes were levied must be considered. In turn, “special tax regime” is understood as any regulation or specific scheme that departs from the general corporate tax regime applicable in said country and
results in an effective rate below that stated under the general regime.
According to the legal presumption under Article 18.2 of Law No. 11,683, as amended, incoming funds from low or nil jurisdictions could be deemed unjustified net worth increases for the Argentine party, no matter the nature of the
operation involved.
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The unjustified increases in net worth mentioned in the preceding paragraph, plus an additional 10% attributed as income used or consumed in non-deductible expenses, constitute net gains for the fiscal year in which they occur, for the
purpose of determining the Income Tax. Furthermore, they may serve as a basis for estimating the omitted taxable transactions during the corresponding commercial fiscal year for Value Added Tax and internal taxes, if applicable.
The Argentine party may rebut such legal presumption by duly evidencing before the Argentine tax authority that the funds arise from activities effectively performed by the Argentine party or by a third -party in such jurisdiction, or
that such funds have been previously declared.
Tax treaties
Argentina has tax treaties for the avoidance of double taxation currently in force with Australia, Belgium, Bolivia, Brazil, Canada, Chile, Denmark, Finland, France, Germany, Italy, Mexico, the Netherlands, Norway, Qatar, Russia,
Spain, Sweden, Switzerland, the United Arab Emirates, the United Kingdom and Uruguay (through an information exchange treaty that contains clauses for avoidance of double taxation). Tax treaties between Argentina and Austria,
China, Japan, Luxemburg and Turkey have been signed, but the treaties have not yet been ratified by their respective governments. There is currently no tax treaty or convention in effect between Argentina and the United States.
However, since January 2021 an international administrative agreement for the exchange of information between the Argentine tax administration (“AFIP”) and the United States tax administration (Internal Revenue Service, “IRS”) has
been in force.
Additionally, it should be noted that a legislative bill has undergone parliamentary consideration, approving the “Multilateral Convention to Implement Tax Treaty Related Measures to Prevent Base Erosion and Profit Shifting,” signed
within the framework of the OECD. The approval of this bill will result in modifications to the agreements signed with 17 jurisdictions.
It is not clear when, if ever, a treaty will be ratified or entered into effect. As a result, the Argentine tax consequences described in this section will apply, without modification, to a holder of our Class D shares or ADSs that is a U.S.
resident. Foreign shareholders located in certain jurisdictions with a tax treaty in force with Argentina may be (i) exempted from the payment of the personal assets tax and (ii) entitled to apply for reduced withholding tax rates on
payments to be made by Argentine parties if certain conditions are met.
THE ABOVE SUMMARY IS NOT INTENDED TO BE A COMPLETE ANALYSIS OF ALL ARGENINE TAX CONSEQUENCES RELATING TO THE OWNERSHIP OR DISPOSITION OF ADSs OR COMMON SHARES.
HOLDERS ARE ENCOURAGED TO CONSULT THEIR TAX ADVISORS CONCERNING THE TAX CONSEQUENCES ARISING IN EACH PARTICULAR CASE.
Item 10.F Dividends and paying agents
Not applicable.
Item 10.G Statement by experts
Not applicable.
Item 10.H Documents on display
We are subject to the information requirements of the Securities Exchange Act of 1934, as amended, or the Exchange Act. In accordance with these requirements, we file reports and other information with the SEC. These materials,
including this annual report and the accompanying exhibits, may be inspected and copied at the SEC’s Public Reference Room at 100 F Street, N.E., Room 1580, Washington, D,C, 20549. Copies of the materials may be obtained from
the SEC’s Public Reference Room at prescribed rates. The public may obtain information on the operation of the SEC’s Public Reference Room by calling the SEC in the United States at 1-800-SEC-0330. In addition, the SEC
maintains an internet website that contains filings, reports and other information regarding issuers who, like us, file electronically with the SEC. The address of that website is http://www.sec.gov.
We remind investors that we are required to file consolidated financial statements and other periodic reports with the CNV because we are a public company in Argentina. Investors can access our historical consolidated financial
statements published in Spanish on the CNV’s website at www.cnv.gob.ar. The information found on the CNV’s website is not a part of this annual report. Investors are cautioned not to place undue reliance on our consolidated financial
statements or other information not included in this annual report.
Item 10.I. Subsidiary Information
Not applicable.
Item 10.J Annual Report to Security Holders
Not Applicable.
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Item 11. Quantitative and Qualitative Disclosures about Market Risk
Financial Risk Management Goals and Policies
195
Our principal financial liabilities comprise of bank loans and trade and other payables. The main purpose of these financial liabilities is to finance our operations. We have trade and other receivables, and cash and cash equivalents that
result directly from our operations. We also have financial assets at fair value through profit and loss.
Due to our business activity, we are exposed to the following financial risks: market risk, credit risk and liquidity risk. We continuously monitor these risks to minimize the potential negative impact they could have on our finances.
Market Risk
Market risk is the risk of changes in the fair value or the future cash flows of financial instruments due to fluctuations in market prices. The market risks affecting our business include interest rate risk, foreign currency risk and price
risk.
Interest Rate Risk
See Note 19 to our audited and consolidated Financial Statements for the period ended December 31, 2023.
Interest rate sensitivity
See Note 19 to our audited and consolidated Financial Statements for the period ended December 31, 2023.
Foreign Currency Risk
See Note 19 to our audited and consolidated Financial Statements for the period ended December 31, 2023.
Foreign currency sensitivity
See Note 19 to our audited and consolidated Financial Statements for the period ended December 31, 2023.
Price Risk
See Note 19 to our audited and consolidated Financial Statements for the period ended December 31, 2023.
Credit Risk
See Note 19 to our audited and consolidated Financial Statements for the period ended December 31, 2023.
See “Item 3.D.—Risk Factors—Risks Relating to Our Business—Our results depend largely on the compensation established by the Secretariat of Electric Energy and received from CAMMESA” and “Item 3.D.—Risk Factors—Risks
Relating to the Electric Power Sector in Argentina—We have, in the recent past, been unable to collect payments, or to collect them in a timely manner, from CAMMESA and other customers in the electric power sector”.
We are entitled to receive payments from CAMMESA under the Spot Sales within 42 days after the date of billing. In recent years, due to regulatory conditions in Argentina’s electric power sector that affected the profitability and
economic viability of power utilities, certain WEM agents defaulted on their payments to CAMMESA, which adversely affected CAMMESA’s ability to meet its payment obligations to electric power generators, including us. As a
consequence, in the past, we have seen CAMMESA pay more than 90 days after month-end, rather than the required 42 days after the date of billing. Such payment delays would result in higher working capital requirements than we
would typically have to finance with our own financing sources.
For these delays, we are entitled to receive interests from CAMMESA. Payments related to PPAs under the Renovar Regulatory Framework have not suffered delays. CAMMESA may once again be unable to make payments to
generators both in respect of energy dispatched and generation capacity availability on a timely basis or in full, which may substantially and adversely affect our financial position and the results of our operations.
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As of the date of issuance of this report, CAMMESA is in arrears with the transactions corresponding to the months of December 2023, January and February 2024, as well as the payments corresponding to the FONINVEMEM
program for the months of March and April 2024, for total estimated of Ps 89.04 billion. The Company carries out multiple financial transactions on a daily basis for the efficient management of its liquidity and investments, which is
normal and customary in its financial management, thus the payment capacity of our obligations in general has not been affected to date.
The chart below shows the payment cycle of CAMMESA (for sales under the Spot Sales) in terms of number of days after the due date that CAMMESA took to pay the balances each month from January 2020 to November 2023.
Source: Central Puerto
Under our contracts with YPF and Terminal 6 Industrial S.A., we typically issue monthly invoices, and YPF/Terminal 6 Industrial S.A. pay them within 35 to 45 days after they are issued. Our invoices are issued in U.S. dollars) and
payments are made in pesos at the exchange rate as of the date of the payment.
Under our PPAs pursuant to Energía Plus, we typically issue monthly invoices and the off-taker pays them within 20 to 30 days after they are issued. The tariff for the energy sold is set in U.S. dollars. Our invoices can be issued in U.S.
dollars or pesos converted into U.S. dollars, and are payable in pesos at the exchange rate as of the date of the payment, with the off-taker in this second case typically covering any exchange rate fluctuations as a result of any payment
delay through credit or debit payments.
With respect to the FONINVEMEM program, after commercial authorization was granted to the Manuel Belgrano power plant (on January 7, 2010) and the San Martín power plant (on February 2, 2010), we started to collect monthly
partial payments of our outstanding receivables from electric power sales from January 2004 through December 2007. These receivables were denominated in U.S. dollars bearing interest at LIBOR plus 1.00% (for receivables paid
from the proceeds of the Manuel Belgrano plant) and 2% (for receivables paid from the proceeds of the “San Martín” power plant), and payments were made in pesos at the exchange rate as of the date of the payment.
During January and February 2020, we collected the last installments from the total 120 installments that were established by TMB and TSM agreements, respectively.
Regarding the CVO Agreement, effective as of March 20, 2018, CAMMESA granted the CVO Commercial Approval in the WEM, as a combined cycle, of the thermal plant Central Vuelta de Obligado, which entitled us to receive the
collection of the trade receivables under the CVO Agreement. A PPA between the CVO Trust and CAMMESA, through which the CVO Trust makes energy sales and, consequently, receives the cash flow to pay the trade receivables,
had to be signed in order to start the collections. The PPA agreement was signed on February 7, 2019, with retroactive effect to March 20, 2018.
As a result, the original amortization schedule from the CVO Agreement is in full force and effect.
During 2022, we collected Ps. 38.64 billion in CVO receivables, measured in current amounts as of December 31, 2023.
During 2023, we collected Ps. 36.94 billion in CVO receivables, measured in current amounts as of December 31, 2023.
Liquidity Risk
See Note 19 to our audited and consolidated Financial Statements for the period ended December 31, 2023.
Item 12. Description of Securities Other Than Equity Securities
Item 12.A Debt Securities
Not applicable.
Item 12.B Warrants and Rights
Not applicable.
Item 12.C Other Securities
Not applicable.
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Item 12.D American Depositary Shares
Fees and Charges
On September 5, 2023, we terminated our deposit agreement with Citibank, N.A., filed with the Commission on January 17, 2018. On October 16, 2023 we entered into a deposit agreement with JPMorgan Chase Bank, N.A. under
which JPMorgan Chase Bank, N.A. was engaged to act as depositary of our ADSs.
As an ADS holder, you will be required to pay the following fees under the terms of the deposit agreement:
Service
Issuance of ADSs (e.g., an issuance of ADS upon a deposit of common shares, upon a change in the ADS(s)-to-common share(s) ratio, or
for any other reason), excluding ADS issuances as a result of distributions of common shares)
Cancellation of ADSs (e.g., a cancellation of ADSs for delivery of deposited property, upon a change in the ADS(s)-to-common share(s)
ratio, or for any other reason)
Service
Distribution of cash dividends or other cash distributions (e.g., upon a sale of rights and other entitlements)
Distribution of ADSs pursuant to (i) stock dividends or other free stock distributions, or (ii) exercise of rights to purchase additional ADSs
Distribution of securities other than ADSs or rights to purchase additional ADSs (e.g., upon a spin-off)
ADS Services
As an ADS holder you will also be responsible to pay certain charges such as:
Fees
Up to U.S. 3¢ per ADS issued
Up to U.S. 5¢ per ADS cancelled
Fees
Up to U.S. 2¢ per ADS held
Up to U.S. 2¢ per ADS held
Up to U.S. 2¢ per ADS held
Up to U.S. 2¢ per ADS held on the applicable record date(s) established by the depositary
bank
·
·
·
·
·
·
taxes (including applicable interest and penalties) and other governmental charges;
the registration fees as may from time to time be in effect for the registration of common shares on the share register and applicable to transfers of common shares to or from the name of the custodian, the depositary
bank or any nominees upon the making of deposits and withdrawals, respectively;
certain cable, telex and facsimile transmission and delivery expenses;
the expenses and charges incurred by the depositary bank in the conversion of foreign currency;
the fees and expenses incurred by the depositary bank in connection with compliance with exchange control regulations and other regulatory requirements applicable to common shares, ADSs and ADRs; and
the fees and expenses incurred by the depositary bank, the custodian, or any nominee in connection with the servicing or delivery of deposited property.
ADS fees and charges for (i) the issuance of ADSs, and (ii) the cancellation of ADSs are charged to the person for whom the ADSs are issued (in the case of ADS issuances) and to the person for whom ADSs are cancelled (in the case
of ADS cancellations). In the case of ADSs issued by the depositary bank into DTC, the ADS issuance and cancellation fees and charges may be deducted from distributions made through DTC, and may be charged to the DTC
participant(s) receiving the ADSs being issued or the DTC participant(s) holding the ADSs being cancelled, as the case may be, on behalf of the beneficial owner(s) and will be charged by the DTC participant(s) to the account of the
applicable beneficial owner(s) in accordance with the procedures and practices of the DTC participants as in effect at the time. ADS fees and charges in respect of distributions and the ADS service fee are charged to the holders as of
the applicable ADS record date. In the case of distributions of cash, the amount of the applicable ADS fees and charges is deducted from the funds being distributed. In the case of (i) distributions other than cash and (ii) the ADS service
fee, holders as of the ADS record date will be invoiced for the amount of the ADS fees and charges and such ADS fees and charges may be deducted from distributions made to holders of ADSs. For ADSs held through DTC, the ADS
fees and charges for distributions other than cash and the ADS service fee may be deducted from distributions made through DTC and may be charged to the DTC participants in accordance with the procedures and practices prescribed
by DTC and the DTC participants in turn charge the amount of such ADS fees and charges to the beneficial owners for whom they hold ADSs.
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In the event of refusal to pay the depositary bank fees, the depositary bank may, under the terms of the deposit agreement, refuse the requested service until payment is received or may set off the amount of the depositary bank fees from
any distribution to be made to the ADS holder. Certain of the depositary fees and charges (such as the ADS services fee) may become payable shortly after the closing of the ADS offering. Note that the fees and charges you may be
required to pay may vary over time and may be changed by us and by the depositary bank. You will receive prior notice of such changes. The depositary bank may reimburse us for certain expenses incurred by us in respect of the ADR
program, by making available a portion of the ADS fees charged in respect of the ADR program or otherwise, upon such terms and conditions as we and the depositary bank agree from time to time. Accordingly, we have received the
following amounts from the depositary bank on the dates indicated below:
(i)
(ii)
February 5, 2021: US$137,442.96;
February 5, 2022: US$128,375.40; and
(iii)
October 19, 2023: US$186,992.90.
Item 13. Defaults, Dividend Arrearages and Delinquencies
None.
Item 14. Material Modifications to the Rights of Security Holders and Use of Proceeds
None.
Item 15. Controls and Procedures
Evaluation of Disclosure Controls and Procedures
(a) Evaluation of Disclosure Controls and Procedures
Our company, under the supervision and with the participation of our chief executive officer and chief financial officer, has evaluated the effectiveness of the design and operation of our disclosure controls and procedures
pursuant to 13a-15(e) of the Exchange Act, as of December 31, 2023.
There are inherent limitations to the effectiveness of any system of disclosure controls and procedures, including the possibility of human error and the circumvention or overriding of the controls and procedures. Accordingly,
even effective disclosure controls and procedures can only provide reasonable assurance of achieving their control objectives. Based upon their evaluation, our company’s Chief Executive Officer and Chief Financial Officer
concluded that as of December 31, 2023, our disclosure controls and procedures were effective to provide reasonable assurance of achieving their control objectives.
(b) Management’s Report on Internal Control over Financial Reporting
Our management is responsible for establishing and maintaining adequate internal control over financial reporting as defined in Rules 13a-15(f) and 15d-15(f) under the Securities Exchange Act of 1934. Our internal control
over financial reporting was designed to provide reasonable assurance regarding the reliability of financial reporting and the preparation of consolidated financial statements for external purposes in accordance with
International Financial Reporting Standards (“IFRS”) as issued by the International Accounting Standards Board. Our internal control over financial reporting includes those policies and procedures that:
(i) pertain to the maintenance of records that, in reasonable detail, accurately and fairly reflect the transactions and dispositions of our assets;
(ii) provide reasonable assurance that transactions are recorded as necessary to permit preparation of consolidated financial statements in accordance with IFRS, and that our receipts and expenditures are being made
only in accordance with authorizations of our management and directors; and
(iii) provide reasonable assurance regarding the prevention or timely detection of unauthorized acquisition, use or disposition of our assets that could have a material effect on the consolidated financial statements.
Because of its inherent limitations, internal control over financial reporting may not prevent or detect misstatements. Also, projections of any evaluation of effectiveness to future periods are subject to the risk that controls may
become inadequate because of changes in conditions, or that the degree of compliance with the policies or procedures may deteriorate.
Central Costanera S.A., Empresas Verdes Argentina S.A., Las Misiones S.A, Estancia Celina S.A, Cordillera Solar VIII S.A. and Scatec Equinor Solutions Argentina S.A. (currently, CP Servicios Renovables S.A.) became part
of our consolidated subsidiaries during 2023, because of the performed acquisitions. As permitted by the SEC Staff interpretive guidance for newly acquired businesses, our management excluded Central Costanera S.A.,
Empresas Verdes Argentina S.A., Las Misiones S.A, Estancia Celina S.A, Cordillera Solar VIII S.A. and Scatec Equinor Solutions Argentina S.A. (currently, CP Servicios Renovables S.A.) from the evaluation of internal
control over financial reporting as of December 31, 2023. Central Costanera S.A., Empresas Verdes Argentina S.A., Las Misiones S.A, Estancia Celina S.A, Cordillera Solar VIII S.A. and Scatec Equinor Solutions Argentina
S.A. (currently, CP Servicios Renovables S.A.), represent 17% of our total consolidated assets ,22% of our consolidated liabilities, 13% of our consolidated revenues as reported in our Consolidated Financial Statements for the
year ended December 31, 2023.
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Central Costanera S.A., Empresas Verdes Argentina S.A., Las Misiones S.A, Estancia Celina S.A, Cordillera Solar VIII S.A. and Scatec Equinor Solutions Argentina S.A. (currently CP Servicios Renovables S.A.) will be
included in the scope of the internal control model for financial reporting in 2024 and their processes and controls will be included and certified in 2024.
Management assessed the effectiveness of our internal control over financial reporting as of December 31, 2023. In making this assessment, management used the criteria set forth by the Committee of Sponsoring Organizations
of the Treadway Commission (COSO) in Internal Control-Integrated Framework (2013). Based on our assessment and those criteria, management believes that we maintained effective internal control over financial reporting as
of December 31, 2023.
(c) Attestation report of the registered public accounting firm
Reference is made to the report of Pistrelli, Henry Martin y Asociados S.R.L. (a member firm of Ernst & Young Global Limited) on page F-1 of this annual report.
(d) Changes in internal controls over financial reporting
There was no change in our internal control over financial reporting that occurred during the period covered by this annual report that has materially affected, or is reasonably likely to materially affect, our internal control over
financial reporting.
Item 16.A Audit committee financial expert
Mr. Tomás José White is our audit committee’s financial expert. He is an independent member of the audit committee under Rule 10A-3 and applicable NYSE standards.
Item 16.B Code of Ethics
We have adopted a “Code of Business Conduct” (the “code”) designed to establish guidelines with respect to professional conduct, morals and employee performance. This code applies to all our directors, managers, heads and
employees. The code is posted on our website at https://investors.centralpuerto.com/governance-documents. In 2018, the code was amended to comply with the requirements set forth in Argentine Law No. 27.401 (the “Corporate
Criminal Liability Law”), which include that our employees shall act with due care while dealing with public sector officers or agencies on our behalf and shall avoid, at all times, circumstances that may be considered contrary to the
public duties of such public sector officers, illicit enrichment of such public sector officers, bribery and influence-peddling, extortion and preparation of false balance sheets and reports. On March 9, 2018, our Audit Committee
approved the amendment. In addition, we did not grant any waivers to the code during the year ended December 31, 2023.
Item 16.C Principal Accountant Fees and Services
Pistrelli, Henry Martin y Asociados S.R.L. (a member firm of Ernst & Young Global Limited) acted as our independent registered public accounting firm for the fiscal years ended December 31, 2023, and 2022. The following tables
sets forth the total amount billed to us and our subsidiaries for the indicated fiscal years (stated in the current measurement unit as of December 31, 2023):
Audit Fees
Tax Fees
Total
2023
2022
(in thousands of Ps.)
693,976
71,202
698,067
344,464
67,087
411,551
Audit fees are fees billed for professional services rendered by the principal accountant for the audit of the registrant’s annual consolidated financial statements or services that are normally provided by the accountant in connection with
statutory and regulatory filings or engagements for those fiscal years. It includes the audit of our annual consolidated financial statements, the reviews of our quarterly consolidated financial statements submitted to CNV and other
services that generally only the independent accountant reasonably can provide, such as comfort letters, statutory audits, attestation services, consents and assistance with and review of documents filed with the SEC.
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Tax fees are billed for professional services related to tax compliance and tax advice for fiscal years 2022 and 2021, respectively.
Audit Committee Pre-Approval Policies and Procedures
200
Consistent with SEC requirements regarding auditor independence, the Audit Committee pre-approves services prior to commencement of the specified service. Before any accountant is engaged to render audit or non-audit services,
the engagement must be approved by the Audit Committee and the Audit Committee must pre-approve the provision of services by our principal auditor prior to commencement of the specified service. The Audit Committee has
delegated the authority to grant pre-approvals to auditors’ services to its president. The decision of the president to pre-approve a service is presented to the full Audit Committee at each of its scheduled meetings.
All audit fees, audit-related fees, tax fees and other fees, if any, are submitted to our Audit Committee for prior approval. The Audit Committee evaluates the scope of the work to be performed by our accountants and the fees for such
work prior to their engagement.
Consequently, 100% of the services and fees rendered by our principal accountants in 2023 were approved by the Audit Committee prior to their engagement to perform such work.
Item 16.D Exemptions from the Listing Standards for Audit Committees
Not applicable.
Item 16.E Purchases of Equity Securities by the Issuer and Affiliated Purchasers
On October 13, 2022, our Board of Directors sanctioned a treasury stock acquisition program. The program followed existing regulations and capped the acquisition at either US$10,000,000 or 10% of our share capital, whichever was
lower. The program lasted for 180 days starting from the first business day after the announcement of the purchase was made public in the market media. Said program expired on April 11, 2023. Under the framework of the program,
CP Renovables repurchased 125,782 of our shares for a total value of Ps.0.88 billion.
On August 24, 2023, our Board of Directors sanctioned a new treasury stock acquisition program. The program will follow existing regulations and will also cap the acquisition at either US$10,000,000 or 10% of our share capital,
whichever is lower. The program is set to last for 180 days starting from the first business day after the announcement of the purchase is made public in the market media. This period is subject to potential renewal or extension.
The buyback can be conducted by us or our subsidiaries, with a daily transaction ceiling of 25% of the average daily trading volume of our stock, based on market data from the preceding 90 trading days. The shares' purchase price is
capped at US$8 per ADS on the NYSE and initially up to Ps. 605 per share on BYMA. This last cap was later raised to Ps. 800 per share, as authorized by our Board of Directors on October 17, 2023.
As of December 31, 2023, we had repurchased 2,299,993 shares for a total value of Ps. 1.66 billion under the program. The operations carried out through both programs have been recorded as acquisitions of treasury shares in
accordance with the provisions of IAS 32. The consideration paid for these shares was directly recognized as equity under the heading “Other equity accounts.”
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On the table below, it is described the share and bond repurchases made during 2023:
201
Period
August
August
August
August
August
August
September
September
September
September
September
September
September
September
September
September
September
September
September
September
September
September
Exchange
Type
(a) Total Number of
Shares (or Units)
Purchased
(b) Average Price
Paid per Share (or
Units)
(c) Total Number of
Shares (or Units)
Purchased as Part of
Publicly Announced
Plans or Programs
BYMA
BYMA
BYMA
BYMA
BYMA
BYMA
BYMA
BYMA
BYMA
BYMA
BYMA
BYMA
BYMA
BYMA
BYMA
BYMA
BYMA
BYMA
BYMA
BYMA
BYMA
BYMA
Bonds
Bonds
Bonds
Bonds
Bonds
Bonds
Stocks
Stocks
Stocks
Stocks
Stocks
Stocks
Stocks
Stocks
Stocks
Stocks
Stocks
Stocks
Stocks
Stocks
Stocks
Stocks
1,220,000
882,029
113,611
4,245,981
67,273
4,390,000
41,000
41,000
13,410
85,000
80,000
50,000
57,941
86,000
86,000
86,000
87,300
87,500
129,000
110,000
129,935
130,000
Ps. 290.90
Ps. 345.27
Ps. 345.27
Ps. 350.03
Ps. 350.03
Ps. 350.23
Ps. 462.90
Ps. 439.43
Ps. 439.51
Ps. 461.81
Ps. 471.21
Ps. 466.94
Ps. 468.56
Ps. 472.45
Ps. 462.94
Ps. 459.36
Ps. 458.48
Ps. 449.04
Ps. 444.73
Ps. 454.02
Ps. 485.82
Ps. 484.76
(d) Maximum
Number (or
Approximate Value)
of Shares (or Units)
that May Yet Be
Purchased Under the
Plans or Programs
Ps. 613,380,204
Ps. 526,341,862
Ps. 67,796,212
Ps. 2,568,677,123
Ps. 40,697,925
Ps. 2,657,321,295
Ps. 29,092,842
Ps. 27,617,296
Ps. 9,034,606
Ps. 60,171,355
Ps. 57,785,385
Ps. 35,788,243
Ps. 41,615,910
Ps. 62,282,959
Ps. 61,029,237
Ps. 60,557,021
Ps. 61,353,975
Ps. 60,228,692
Ps. 87,941,785
Ps. 76,555,910
Ps. 96,763,619
Ps. 96,600,391
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
BYMA
BYMA
BYMA
BYMA
BYMA
BYMA
BYMA
BYMA
BYMA
BYMA
Stocks
Stocks
Stocks
Stocks
Stocks
Stocks
Stocks
Stocks
Stocks
Stocks
130,600
130,600
131,317
131,600
526
42,474
61,126
131,792
132,822
107,050
Ps. 477.42
Ps. 463.85
Ps. 489.50
Ps. 499.07
Ps. 515.12
Ps. 520.01
Ps. 519.91
Ps. 535.09
Ps. 589.90
Ps. 590.33
-
-
-
-
-
-
-
-
-
-
Ps. 88,250,447
Ps. 85,928,753
Ps. 90,981,035
Ps. 92,958,364
Ps. 383,503
Ps. 31,261,342
Ps. 44,981,373
Ps. 99,814,180
Ps. 110,897,503
Ps. 89,444,933
October
October
October
October
October
October
October
October
October
October
* Weighted average price.
Item 16.F Change in Registrant’s Certifying Accountant
Not applicable.
Item 16.G Corporate Governance
NYSE Corporate Governance Rules
Under NYSE rules, foreign private issuers are subject to more limited corporate governance requirements than U.S. domestic issuers. As a foreign private issuer, we must comply with Sections 303A.06, 303A.11 and 303A.12(b) and (c)
of the NYSE Listed Company Manual which set forth the following corporate governance rules: (i) we must satisfy the requirements of Rule 10A-3 of the Exchange Act relating to audit committees; (ii) our CEO must promptly notify
the NYSE in writing after any executive officer becomes aware of any non-compliance with the applicable NYSE corporate governance rules; (iii) we must provide a brief description of any significant differences between our corporate
governance practices and those followed by U.S. companies under NYSE listing standards; and (iv) we must provide the NYSE with annual and interim written affirmations as required under the NYSE corporate governance rules.
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The table below briefly describes the significant differences between our Argentine corporate governance rules and the NYSE corporate governance rules:
202
Section
303A.01
303A. 02
NYSE corporate governance rule for U.S. domestic issuers
A listed company must have a majority of independent directors. “Controlled
companies” are not required to comply with this requirement.
Argentine corporate governance rules
A listed company must have at least two independent directors who form a
majority of the Audit Committee.
No director qualifies as “independent” unless the board of directors
affirmatively determines that the director has no material relationship with
the listed company (whether directly or as a partner, shareholder, or officer of
an organization that has a relationship with the company) and emphasizes
that the concern is independence from management. The board is also
required, on a case-by-case basis, to express an opinion with regard to the
independence or lack of independence, of each individual director.
Pursuant to CNV Rules, a director is not independent if such director is:
(a) a member of management or an employee of shareholders who hold
material holdings in the listed company or of other entities in which these
shareholders have material holdings or over which these shareholders
exercise a material influence;
(b) is currently an employee or has, in the last three years, been an employee
of the listed company;
(c) a person who has a professional relationship or is part of a company or
professional association that maintains professional relations with, or that
receives remunerations or fees (other than directors’ fees) from, the listed
company or from shareholders that have material holdings in the listed
company, or with a company in which such shareholders have material
holdings or exercise a material influence;
(d) a person who has material holdings in the listed company or in an entity
that has material holdings in, or exercises a material influence over, the listed
company;
(e) a person who directly or indirectly provides goods or services to the listed
company or to shareholders that have material holdings in or exercise a
material influence over the listed company and receives compensation for
such services that is substantially higher than that received as director of the
listed company;
(f) the member is married or is a family member to an individual who would
not qualify as independent.
(g) the member is the director, CEO, administrator or principal executive
from a non-profit organization which had received funds for amounts
exceeding those established by Resolution No. 30/2011 of the UIF (currently
equivalent to Ps. 150 Minimum Living and Mobile Wages), coming from the
company, or a parent company;
(h) a person who receive any payments from the company or group
companies other than fees as a director or dividends as shareholder; or
(i) a member of the administrative or supervisory committee and/or hold a
significant participation (directly or indirectly) with respect to one or more
companies that are registered as Agente de Negociación, Agente de
Liquidación y Compensación y/o Agente de Corretaje de Valores
Negociables.
It is necessary to comply with the conditions of independence for at least
three years before the designation as a director.
The independent directors will cease to be independent after 10 years of
holding its position of directors and will be restored with its status of
independent three years after leaving office.
“Material holdings” are shareholdings, either directly or indirectly, that
represent at least 5% of the capital stock of the relevant entity, or a smaller
percentage when the person has the right to elect one or more directors per
class of shares or by having entered into agreements with other shareholders
relating to the governance and the management of the relevant entity or of its
controlling shareholders.
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303A.03
303A.04
303A.05
203
The non-management directors of a listed company must meet at regularly
scheduled executive sessions without management.
Neither Argentine law nor our bylaws require the holding of such meetings
and we do not hold non-management directors meetings.
The Argentine Corporate Law provides, however, that the board shall meet at
least once every three months, and according to our bylaws, whenever the
chairman considers necessary to convene for a meeting.
A listed company must have a nominating/corporate governance committee
composed entirely of independent directors, with a written charter that covers
certain minimum specified duties. “Controlled companies” are not required
to comply with this requirement.
Neither Argentine law nor our bylaws require the establishment of a
nominating/corporate governance committee. We do not have a
nominating/corporate governance committee.
Directors are nominated and appointed by the shareholders.
A listed company must have a compensation committee composed entirely of Neither Argentine law nor our bylaws require the establishment of a
independent directors, with a written charter that covers certain minimum
specified duties. “Controlled companies” are not required to comply with this
requirement.
303A.06*
A listed company must have an audit committee with a minimum of three
independent directors who satisfy the independence requirements of Rule
10A-3, with a written charter that covers certain minimum specified duties.
compensation committee. We do not have a compensation committee.
The compensation of our directors is determined at the annual ordinary
shareholders’ meeting. Additionally, the audit committee must issue an
opinion regarding the reasonableness and adequacy of such compensation.
Argentine law requires the audit committee be composed of three or more
members from the board of directors (with a majority of independent
directors), all of whom must be well-versed in business, financial or
accounting matters. In addition, we are required to satisfy the audit
committee requirements of Rule 10A-3.
The responsibilities of an audit committee, as provided in Law No. 26,831
and the CNV standards, are essentially the same as those provided for under
Rule 10A-3, including, but not limited to, the following:
(a) advise on the board of directors’ proposal for the designation of external
independent accountants and to ensure their independence;
(b) oversee our internal control mechanisms and administrative and
accounting procedures and assess the reliability of all financial and other
relevant information filed with the CNV and other entities to which we
report;
(c) oversee our information policies concerning risk management;
(d) provide the market with complete information on transactions in which
there may be a conflict of interest with members of our various corporate
bodies or controlling shareholders;
(e) advise on the reasonableness of fees or stock option plans for our
directors and managers proposed by the board of directors;
(f) advise on our fulfillment of legal requirements and the reasonableness of
the terms of the issuance of shares or other instruments that are convertible
into shares in cases of capital increase in which pre-emptive rights are
excluded or limited;
(g) verify the fulfillment of any applicable rules of conduct; and
(h) issue grounded opinions on related-party transactions under certain
circumstances and file such opinions with regulatory agencies as required by
the CNV in the case of possible conflicts of interest.
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303A.08
303A.09
303A.10
303A.12
204
Shareholders must be given the opportunity to vote on all equity-
compensation plans and material revisions thereto, with limited exemptions
set forth in the NYSE rules.
A listed company must adopt and disclose corporate governance guidelines
that cover certain minimum specified subjects.
The basic terms for any equity-based compensation plan should be
considered by the general shareholders’ meeting, notwithstanding its power
to delegate any decision to the board of directors. We do not currently offer
equity-based compensation to our directors, executive officers or employees,
and have no policy on this matter.
Neither Argentine law nor our bylaws require the adoption or disclosure of
corporate governance guidelines. The CNV Rules contain a recommended
Code of Corporate Governance for listed companies and the board of
directors must include on its annual report, the degree of compliance of such
code. We have adopted, as of May 26, 2011, a corporate governance manual.
A listed company must adopt and disclose a code of business conduct and
ethics for directors, officers and employees, and promptly disclose any
waivers of the code for directors or executive officers.
Neither Argentine law nor our bylaws require the adoption or disclosure of a
code of business conduct. We, however, have adopted a code of business
conduct and ethics that applies to all of our employees.
(a) Each listed company CEO must certify to the NYSE each year that he or
she is not aware of any violation by the company of NYSE corporate
governance listing standards.
(b)* Each listed company CEO must promptly notify the NYSE in writing
after any executive officer of the listed company becomes aware of any non-
compliance with any applicable provisions of this Section 303A.
(c)* Each listed company must submit an executed Written Affirmation
annually to the NYSE. In addition, each listed company must submit an
interim Written Affirmation as and when required by the interim Written
Affirmation form specified by the NYSE.
The CNV Rules provide that each year the board of directors shall include in
the annual report included in the financial statement, a report on the degree
of compliance with the code of corporate governance for listed companies
included in the CNV Rules. In such report, which shall be submitted to the
CNV and published for the general public, the board of directors must: (i)
inform if it fully complies with the guidelines and recommendations of the
aforementioned code of corporate governance; or (ii) explain the reasons for
which it complies only partially or it does not comply with such principles
and recommendations, and indicate if the company intends to incorporate the
principles and guidelines it failed to adopt. To such end, the company must
(a) adopt the principles as general corporate governance guidelines and the
recommendations as a framework to adopt the principles within the
company; (b) notify compliance with each of the recommendations included
in the Corporate Governance Manual; (c) in case of compliance include the
required information in accordance with CNV Rules; and (d) in case of
partial or non-compliance, justify such event and indicate the action plan for
future years, or an indication of the reasons for which the board of directors
does not consider appropriate or applicable to follow the recommendations
and guidelines provided in the CNV Rules.
*
*
We are required to comply with these rules under the NYSE Listed Company Manual
We are required to conform the structure of the Board of Directors to the independence criteria established in article 11, Chapter III, Title II of the CNV Rules by the first shareholders meeting held after December 31, 2018.
Item 16.H. Mine Safety Disclosure
Not applicable.
Item 16.I. Disclosure Regarding Foreign Jurisdictions that Prevent Inspections
Not applicable.
Item 16J Insider Trading Policies
Pursuant to the applicable SEC transition guidance, the disclosure required by Item 16J will be applicable to the Company from the fiscal year ending December 31, 2024.
205
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Item 16 K Cybersecurity
Risk Management and Strategy
We uphold a thorough procedure for evaluating, recognizing, and addressing cybersecurity risks, encompassing threats such as business operations disruption, reporting system vulnerabilities, data breaches, and reputational concerns.
The Department of Cybersecurity holds the mandate to implement a range of proactive and responsive measures that influence data processing and facilitate information protection. Moreover, it carries out risk analysis and assessment
concerning cybersecurity threats that could affect the Company, working closely with the Cybersecurity Manager and other cybersecurity experts. The functions of our Department of Cybersecurity have been integrated into our general
risk systems and processes.
Key responsibilities of the Department of Cybersecurity encompass:
·
·
·
·
·
·
Restricting unauthorized access or alterations to information by individuals, entities, or processes.
Guaranteeing the availability of critical information as required by authorized users, entities, or processes.
Identifying risks and suggesting security solutions for their monitoring and mitigation.
Supervising, communicating, and implementing technical security solutions aligned with business objectives.
Proactively detecting threats to enable early identification and containment, thus minimizing impacts on Company assets, products, and operations.
Formulating and enhancing cybersecurity policies and controls to ensure compliance with relevant standards and regulations.
The Cybersecurity Department’s procedures undergo annual reviews, testing, updates, and approval by the Approval Committee. Any necessary updates resulting from these reviews are implemented accordingly.
Incident Response Plan
We have a Cybersecurity Risk Assessment Procedure to identify, assess and manage risks in order to protect the confidentiality, integrity and availability of our networks, systems and associated information. This procedure is part of the
Cybersecurity Risk Management Program, which requires periodic updates and its corresponding assessment.
We rely on and use recognized international frameworks, including the NIST SP 800-30, NIST SP 800-37, NIST CSF and MAGERIT frameworks for the identification, assessment, and management of cybersecurity risks relevant to
our business.
Our Cybersecurity Risk Management Program includes the following key elements:
·
·
·
·
·
A cybersecurity risk identification and assessment procedure that allows us to identify risks, especially those that are critical to our business.
A team with a defined leader and members; with the main function of identifying, assessing, and managing cybersecurity risks.
A process for implementing strategies and measures to address cybersecurity risks.
A cyber incident response plan that allows restoring systems and resuming operations, also, minimizing the consequences and acquiring incident information to conduct investigations and activate other internal processes.
A cyber incident management plan that allows us to carry out a process for determining the materiality of potential cyber incidents, their documentation and corresponding communication to the competent bodies (SEC,
entities at the national level, stakeholders, etc.).
Governance
We and our Board of Directors consider that cybersecurity risks and their management are of vital importance; we are aware that cybersecurity requires the active participation of the Board of Directors and Senior Management to
exercise corporate governance, therefore we have adopted the Cybersecurity Governance Procedure with the goal of establishing a comprehensive cybersecurity governance and management framework adapted to our specific needs.
We recognize the critical importance of ensuring operational continuity, information protection and preservation of trust in a vital sector such as energy generation.
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Management
206
Our Cybersecurity Manager at Management leads and oversees our cybersecurity strategy to ensure the comprehensive protection of digital assets, effective cyber risk management, regulatory compliance, and the promotion of a robust
security culture, in order to achieve the integrity, confidentiality and availability of our networks, systems and information. Our cybersecurity manager has obtained professional security certifications and advanced training in the field
of cybersecurity, training and experience related to the position and cybersecurity.
In the event that the preliminary assessment Cybersecurity Manager suggests that the incident could be significant, our policy stipulates the formation of an Approval Committee consisting of the CEO, CFO, and Cybersecurity
Manager. The role of the Approval Committee is to oversee the materiality determination made by the Cybersecurity team. If deemed necessary, the Approval Committee forwards pertinent information to the Audit Committee for
review. Should the Audit Committee validate the incident’s materiality, it is then communicated to the Board of Directors, and subsequently, publicly disclosed in accordance with relevant laws and regulations.
The Cybersecurity Manager maintains regular meetings with both the Board of Directors and the Audit Committee to discuss cybersecurity processes, risks, initiatives, and mitigation efforts.
Board of Directors
Our Audit Committee has an agenda on cybersecurity issues, it is the body in charge of supervising our cybersecurity strategy, especially the identification, evaluation and management of cybersecurity risks.
The Audit Committee reports to the Board of Directors annually and whenever necessary, in order to update and inform about the cybersecurity strategy, cybersecurity risks, their management for the treatment and effectiveness of
cybersecurity controls and potential cyber incidents. In addition, it has
set biannual meetings and whenever necessary, with the person responsible for cybersecurity in Management, through which it is informed, exercises oversight and decision making.
To fulfill this duty, the Audit Committee convenes regular meetings and ad-hoc sessions as necessary, during which the Cybersecurity Manager provides reports on cybersecurity events and updates on prevailing risks. Additionally, the
Audit Committee engages with the Cybersecurity Manager if a material event arises.
The Cybersecurity Manager communicates significant activities related to cybersecurity incidents in accordance with the Cybersecurity Risk Assessment Procedure to both the Board of Directors and the Audit Committee.
Third-Party Service Provider
Our cybersecurity risk management protocols also encompass monitoring and identifying threats related to our utilization of third-party service providers, as per the terms outlined in our contracts with them. We stipulate in our
contracts that third-party services must adhere to our security policies. The Department of Cybersecurity supervises this process, and if any risks are identified, they instruct the providers to comply with our cybersecurity policies.
Training
The Department of Cybersecurity organizes awareness campaigns and training sessions for employees, emphasizing various topics such as creating secure passwords, recognizing phishing attempts, understanding social engineering
tactics, data leakage, ensuring security on WhatsApp and social networks, understanding data protection principles, and promoting secure development practices, among other relevant subjects.
Risks from Cybersecurity Threats
As of the date of this annual report, the Company has not suffered any material cybersecurity incidents.
For further details regarding our cybersecurity-related risks, please refer to "Item 3—Key Information—Risk Factors— A cyberattack could adversely affect our business, balance sheet, results of operations and cash flow.
Item 17. Financial Statements
We have responded to Item 18 in lieu of responding to this Item 17.
Item 18. Financial Statements
Our Audited Consolidated Financial Statements are included in this annual report beginning at Page F-1.
207
Table of Contents
Item 19. Exhibits
EXHIBIT INDEX
Exhibit Number
1.1.
Description
English translation of bylaws of Central Puerto S.A.
2.1.
2.(d).
4.2.
Amended and Restated Deposit Agreement among Central Puerto S.A., JPMorgan Chase Bank, N.A., as depositary and holders and beneficial owners of American Depositary Receipts.
Description of rights of the securities registered under Section 12 of the Securities Exchange Act of 1934 (incorporated by reference to Exhibit 2.(d) of our annual report on Form 20-F/A (File No. 001-
38376), filed with the Commission on April 29, 2020).
Guarantee and Sponsor Support Agreement, dated as of December 22, 2017, among CP La Castellana S.A.U., as Borrower, CP Renovables S.A., as Sponsor and Shareholder, Central Puerto S.A., as
Sponsor Guarantor and Shareholder, the Inter-American Investment Corporation, the Inter-American Investment Corporation, acting as agent for the Inter-American Development Bank, the Inter-American
Investment Corporation, in its capacity as administrator of the Canadian Climate Fund for the Private Sector of the Americas, the International Finance Corporation, as Senior Lenders, The Eligible Hedge
Providers Listed Therein, and Citibank, N.A., as Offshore Collateral Agent (incorporated by reference to Exhibit 10.2 of our registration statement on Form F-1 (File No. 333-222402), as amended, filed
with the Commission on January 3, 2018).
4.3.
Common Terms Agreement (the “Common Terms Agreement”), dated as of October 20, 2017, among CP La Castellana S.A.U., the Inter-American Investment Corporation, the Inter-American Investment
Corporation, acting as agent for the Inter-American Development Bank, the Inter-American Investment Corporation, as agent of the Inter-American Development Bank, in its capacity as administrator of
the Canadian Climate Fund for the Private Sector of the Americas, and the International Finance Corporation (incorporated by reference to Exhibit 10.3 of our registration statement on Form F-1 (File No.
333-222402), as amended, filed with the Commission on January 3, 2018).
Amendment and Waiver to the Common Terms Agreement, dated as of December 22, 2017 (incorporated by reference to Exhibit 10.4 of our registration statement on Form F-1 (File No. 333-222402), as
amended, filed with the Commission on January 3, 2018).
Loan Agreement, dated as of October 20, 2017, among CP La Castellana S.A.U., the Inter-American Investment Corporation, the Inter-American Investment Corporation, acting as agent for the Inter-
American Development Bank, and the Inter-American Investment Corporation, as agent of the Inter-American Development Bank, in its capacity as administrator of the Canadian Climate Fund for the
Private Sector of the Americas (incorporated by reference to Exhibit 10.5 of our registration statement on Form F-1 (File No. 333-222402), as amended, filed with the Commission on January 3, 2018).
Loan Agreement, dated as of October 20, 2017, among CP La Castellana S.A.U. and the International Finance Corporation (incorporated by reference to Exhibit 10.6 of our registration statement on Form
F-1 (File No. 333-222402), as amended, filed with the Commission on January 3, 2018).
English translation of Agreement for Project Management and Operation, Increase of Thermal Generation Availability and Adaptation of Remuneration for Generation 2008-2011, dated as of November
25, 2010, among the Secretariat of Energy of the Ministry of Federal Planification, Public Investment and Services, and the generators named therein (the “FONINVEMEM Arrangement for CVOSA”)
(incorporated by reference to Exhibit 10.7 of our registration statement on Form F-1 (File No. 333-222402), as amended, filed with the Commission on January 3, 2018).
208
English translation of Addendum No. 1 to the Agreement for Project Management and Operation, Increase of Thermal Generation Availability and Adaptation of Remuneration for Generation 2008-2011,
dated as of April 12, 2011, among the Secretariat of Energy of the Ministry of Federal Planification, Public Investment and Services, and the generators named therein (incorporated by reference to Exhibit
10.8 of our registration statement on Form F-1 (File No. 333-222402), as amended, filed with the Commission on January 3, 2018).
English translation of Addendum No. 2 to the Agreement for Project Management and Operation, Increase of Thermal Generation Availability and Adaptation of Remuneration for Generation 2008-2011,
dated as of June 25, 2012, among the Secretariat of Energy of the Ministry of Federal Planification, Public Investment and Services, and the generators named therein (incorporated by reference to Exhibit
10.9 of our registration statement on Form F-1 (File No. 333-222402), as amended, filed with the Commission on January 3, 2018).
English translation of Final Agreement for the Management and Operation of Projects for the Reconversion of the MEM Under the Scope of Resolution No. 1427/2004 Issued by the Secretariat of Energy,
as dated October 17, 2005, among the Argentine Secretariat of Energy and the generators named therein (the “FONINVEMEM Arrangement for TJSM and TMB”) (incorporated by reference to Exhibit
10.10 of our registration statement on Form F-1 (File No. 333-222402), as amended, filed with the Commission on January 3, 2018).
English translation of the Offer to Transfer the La Plata Steam and Electric Power Cogeneration Plant, dated as of December 15, 2017, from Central Puerto S.A. to YPF Energía Eléctrica S.A.
(incorporated by reference to Exhibit 10.11 of our registration statement on Form F-1 (File No. 333-222402), as amended, filed with the Commission on January 3, 2018).
Common Terms Agreement, dated as of January 17, 2018, among CP Achiras S.A.U., the Inter-American Investment Corporation, the Inter-American Investment Corporation, acting as agent for the Inter-
American Development Bank, the Inter-American Investment Corporation, as agent of the Inter-American Development Bank, in its capacity as administrator of the Canadian Climate Fund for the Private
Sector of the Americas, and the International Finance Corporation (incorporated by reference to Exhibit 10.12 of our registration statement on Form F-1 (File No. 333-222402), as amended, filed with the
Commission on January 3, 2018).
Loan Agreement, dated as of January 17, 2018, among CP Achiras S.A.U., the Inter-American Investment Corporation, the Inter-American Investment Corporation, acting as agent for the Inter-American
Development Bank, and the Inter-American Investment Corporation, as agent of the Inter-American Development Bank, in its capacity as administrator of the Canadian Climate Fund for the Private Sector
of the Americas (incorporated by reference to Exhibit 10.13 of our registration statement on Form F-1 (File No. 333-222402), as amended, filed with the Commission on January 3, 2018).
Loan Agreement, dated as of January 17, 2018, among CP Achiras S.A.U. and the International Finance Corporation (incorporated by reference to Exhibit 10.14 of our registration statement on Form F-1
(File No. 333-222402), as amended, filed with the Commission on January 3, 2018).
Guarantee and Sponsor Support Agreement, dated as of February 22, 2018, among CP Achiras S.A.U., as Borrower, CP Renovables S.A., as Sponsor and Shareholder, Central Puerto S.A., as Sponsor
Guarantor and Shareholder, the Inter-American Investment Corporation, the Inter-American Investment Corporation, acting as agent for the Inter-American Development Bank, the Inter-American
Investment Corporation, in its capacity as administrator of the Canadian Climate Fund for the Private Sector of the Americas, the International Finance Corporation, as Senior Lenders, and Citibank, N.A.,
as Offshore Collateral Agent (incorporated by reference to Exhibit 4.15 of our annual report on Form 20-F (File No. 001-38376), filed with the Commission on April 27, 2018).
Wind Farm Omnibus Amendment and Agreement, dated March 16, 2018, among CP Achiras S.A.U., the Inter-American Investment Corporation, the Inter-American Investment Corporation, acting as
agent for the Inter-American Development Bank, the Inter-American Investment Corporation, as agent of the Inter-American Development Bank, in its capacity as administrator of the Canadian Climate
Fund for the Private Sector of the Americas, and the International Finance Corporation (incorporated by reference to Exhibit 4.16 of our annual report on Form 20-F (File No. 001-38376), filed with the
Commission on April 27, 2018).
Brigadier López Power Plant transfer contract (incorporated by reference to Exhibit 4.18 of our annual report on Form 20-F/A (File No. 001-38376), filed with the Commission on April 29, 2020).
List of subsidiaries of Central Puerto S.A. as of the date of this annual report.
Code of Ethics of Central Puerto S.A., as amended (incorporated by reference to Exhibit 11.1 of our annual report on Form 20-F (File No. 001-38376), filed with the Commission on April 27, 2018).
Certification of Chief Executive Officer pursuant to Section 302 of the Sarbanes-Oxley Act of 2002.
Certification of Chief Financial Officer pursuant to Section 302 of the Sarbanes-Oxley Act of 2002.
Certification of Chief Executive Officer and Chief Financial Officer pursuant to Section 906 of the Sarbanes-Oxley Act of 2002.
Consent of Vaisala, Inc. (incorporated by reference to Exhibit 23.5 of our registration statement on Form F-1 (File No. 333-222402), as amended, filed with the Commission on January 3, 2018).
Clawback Policy
XBRL Instance Document and related items.
4.4.
4.5.
4.6.
4.7.
Table of Contents
4.8.
4.9.
4.10.
4.11.
4.12.
4.13.
4.14.
4.15.
4.16.
4.18
8.1.
11.1.
12.1.
12.2.
13.1
15.2.
97.1*
101
Table of Contents
209
SIGNATURES
The registrant hereby certifies that it meets all of the requirements for filing on Form 20-F and that it has duly caused and authorized the undersigned to sign this annual report on its behalf.
Date: April 29, 2024.
Table of Contents
CENTRAL PUERTO S.A.
By:
/S/ ENRIQUE TERRANEO
Chief Financial Officer
210
INDEX TO THE FINANCIAL STATEMENTS
Audited Consolidated Financial Statements of Central Puerto S.A.
Report of the Independent Registered Public Accounting Firm (PCAOB ID 1449)
Consolidated Statement of Income for the years ended December 31, 2023, 2022, and 2021
Consolidated Statement of Comprehensive Income for the years ended December 31, 2023, 2022, and 2021
Consolidated Statement of Financial Position as of December 31, 2023, and 2022
Consolidated Statement of Changes in Equity for the years ended December 31, 2023, 2022, and 2021
Consolidated Statement of Cash Flows for the years ended December 31, 2023, 2022, and 2021
Notes to the Consolidated Financial Statements
211
Page
F-1
F-4
F-5
F-6
F-7
F-8
F-9
Table of Contents
REPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM
To the Shareholders and Board of Directors of Central Puerto S.A.:
Opinion on the Financial Statements
We have audited the accompanying consolidated statements of financial position of Central Puerto S.A. (the Company) as of December 31, 2023 and 2022, the related consolidated statements of income, comprehensive income, changes
in equity and cash flows for each of the three years in the period ended December 31, 2023, and the related notes (collectively referred to as the “consolidated financial statements”). In our opinion, the consolidated financial statements
present fairly, in all material respects, the financial position of the Company at December 31, 2023 and 2022, and the results of its operations and its cash flows for each of the three years in the period ended December 31, 2023, in
conformity with International Financial Reporting Standards as issued by the International Accounting Standards Board.
We also have audited, in accordance with the standards of the Public Company Accounting Oversight Board (United States) (PCAOB), the Company's internal control over financial reporting as of December 31, 2023, based on criteria
established in Internal Control-Integrated Framework issued by the Committee of Sponsoring Organizations of the Treadway Commission (2013 framework), and our report dated April 29, 2024 expressed an unqualified opinion
thereon.
Basis for Opinion
These financial statements are the responsibility of the Company's management. Our responsibility is to express an opinion on the Company’s financial statements based on our audits. We are a public accounting firm registered with the
PCAOB and are required to be independent with respect to the Company in accordance with the U.S. federal securities laws and the applicable rules and regulations of the Securities and Exchange Commission and the PCAOB.
We conducted our audits in accordance with the standards of the PCAOB. Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the financial statements are free of material
misstatement, whether due to error or fraud. Our audits included performing procedures to assess the risks of material misstatement of the financial statements, whether due to error or fraud, and performing procedures that respond to
those risks. Such procedures included examining, on a test basis, evidence regarding the amounts and disclosures in the financial statements. Our audits also included evaluating the accounting principles used and significant estimates
made by management, as well as evaluating the overall presentation of the financial statements. We believe that our audits provide a reasonable basis for our opinion.
Critical Audit Matters
The critical audit matters communicated below are matters arising from the current period audit of the consolidated financial statements that were communicated or required to be communicated to the audit committee and that: (1)
relate to accounts or disclosures that are material to the financial statements and (2) involved our especially challenging, subjective, or complex judgments. The communication of critical audit matters does not alter in any way our
opinion on the consolidated financial statements, taken as a whole, and we are not, by communicating the critical audit matters below, providing separate opinions on the critical audit matters or on the accounts or disclosures to which
they relate.
Description of the matter
Impairment of property, plant and equipment and intangible assets
As reflected in the Company´s consolidated financial statements, at December 31, 2023, the Company´s property, plant and equipment (“PP&E”) and intangible assets were Argentine pesos
(“Ps.”) 758,934 million and Ps. 15,956 million, respectively. As further described in Note 2.2.8 to the consolidated financial statements, PP&E and intangible assets are tested for impairment or
impairment reversal, when an existing event or one that took place after year end, and provides additional evidence of conditions that existed at the end of the reporting period, indicates that the
recoverable amount of the PP&E and/or intangible assets amounts may be affected. For each individual asset or cash generating unit (“CGU”) for which impairment or impairment reversal
indicators are identified, management estimates the recoverable amount for the asset or CGU, which is the higher of the fair value less costs to sell and its value in use, and compares it to the
respective carrying amount. The value in use for the Company´s CGUs related to the Electric Power Generation from conventional and renewable sources operating segments, was estimated
based on discounted future cash flows, considering a significant assumption related to electricity prices as well as assumptions related to operational costs, discount rates and macroeconomic
variables such as inflation and exchange rates. The recoverable amount for a gas turbine and land was estimated based on fair value less cost to sell. During 2023, the Company recorded a Ps.
16,633 million and Ps. 2,209 million impairment loss on PP&E and intangible assets, respectively, related to the Brigadier Lopez thermoelectric plant. Also, the Company recorded a gain on the
reversal of PP&E impairment of Ps. 62,739 million related to the Luján de Cuyo combined cycle, the Terminal 6 San Lorenzo cogeneration unit, the Manque and La Genoveva wind farms, a
gas turbine and land, and a gain of Ps. 98 million on the reversal of intangible assets impairment related to the Manque and La Genoveva wind farms.
Auditing the impairment of property, plant and equipment and intangible assets is especially challenging because it involves a high degree of auditor judgment in performing procedures to
evaluate the significant and other assumptions described above used to determine the value in use, including projected financial information, and the fair value less cost to sell.
Table of Contents
F-1
How We Addressed the Matter in our
Audit
We obtained an understanding, evaluated the design, and tested the operating effectiveness of controls over the Company’s impairment assessment process, including controls over
management’s review of the significant and other assumptions described above, the completeness and accuracy of the underlying data and the consistency of the discounted cash flow model
used by the Company.
To test management´s impairment or reversal of impairment evaluation, our audit procedures included, among others, assessing the methodologies used by management, testing the significant
and other assumptions described above and testing the completeness and accuracy of underlying data. For example, we compared the electricity prices used by management with historical data
and performed sensitivity analysis to evaluate the changes in the value in use that would result from changes in the underlying significant assumption. Additionally, we compared the other
assumptions used by management, such as inflation and exchange rates, to current available economic trends data. We also assessed the historical accuracy of management’s estimates and
tested the arithmetical accuracy of the discounted cash flows model. We involved our internal valuation specialists in the evaluation of the methodologies and assumptions related to inflation,
exchange rates and discount rates used in the future cash flows prepared by management and in the evaluation of the assumptions used by management for the determination of the fair value
less costs to sell. We also assessed the related disclosures in the consolidated financial statements.
Accounting for business combinations
Description of the Matter
As indicated in Note 2.2.20, 20.5 and 20.6 to the consolidated financial statements, during the year ended December 31, 2023 the Company, through its fully controlled company Proener
S.A.U., completed the acquisition of 75.68% of the shares of Central Costanera S.A. for consideration paid of USD 48 million, and 100% of the shares of Empresas Verdes Argentina S.A., Las
Misiones S.A. and Estancia Celina S.A, for consideration paid of USD 29.9 million. These transactions were accounted for as business combinations using the acquisition method in accordance
with the requirements of IFRS 3 Business Combinations, resulting in identifiable assets and liabilities recorded of Ps 177,483 million and Ps 44,356 million, respectively, and recognition of a
gain from bargain purchase of Ps 72,645 million.
Auditing the Company´s accounting for these business combinations was complex due to the significant judgments and estimates in the determination of the fair value of the property, plant and
equipment in the Central Costanera S.A. acquisition and the biological assets in the Empresas Verdes Argentina S.A., Las Misiones S.A. and Estancia Celina S.A. acquisition. The Company’s
management developed these estimates, with the assistance of independent specialists, using the valuation methodologies identified in Note 2.2.20 to the consolidated financial statements.
How We Addressed the Matter in our
Audit
We obtained an understanding, evaluated the design and tested the operating effectiveness of the Company’s controls over accounting for business combinations, including controls over the
recognition and measurement of identifiable assets and liabilities. For example, we tested controls over management's evaluation of the methodologies and significant assumptions used to
determine the fair value of the identifiable assets and liabilities.
To test the estimated fair value of the property, plant and equipment in the Central Costanera S.A. acquisition, our audit procedures included, among others, assessing the methodology used by
management, testing the significant assumption related to electricity prices as well as assumptions related to the discount rate and macroeconomic variables such as inflation and exchange rates,
and testing the completeness and accuracy of underlying data. For example, we compared the assumptions used by management to current available economic trends data. We involved our
valuation specialists in the evaluation of the methodology and assumptions related to inflation, exchange rates and the discount rate used by management .
To test the fair value of the biological assets in the Empresas Verdes Argentina S.A., Las Misiones S.A. and Estancia Celina S.A. acquisition, our audit procedures included, among others,
assessing the methodology used by management, testing the significant assumption related to future forest growth as well as assumptions related to the discount rate and macroeconomic
variables such as inflation and exchange rates, and testing the completeness and accuracy of the underlying data. We involved our specialists in the evaluation of the methodologies and
significant assumptions used by management.
We tested the arithmetical accuracy of the valuation models and the determination of the gain for bargain purchase resulting from the acquisitions. We also assessed the related disclosures in the
consolidated financial statements.
/s/ PISTRELLI, HENRY MARTIN Y ASOCIADOS S.R.L.
Member of Ernst & Young Global Limited
We have served as the Company’s auditor since 2002.
City of Buenos Aires, Argentina
April 29, 2024
Table of Contents
REPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM
To the Shareholders and the Board of Directors of Central Puerto S.A.
Opinion on Internal Control Over Financial Reporting
F-2
We have audited Central Puerto S.A.’ internal control over financial reporting as of December 31, 2023, based on criteria established in Internal Control - Integrated Framework issued by the Committee of Sponsoring
Organizations of the Treadway Commission (2013 framework), (the COSO criteria). In our opinion, Central Puerto S.A. (the Company) maintained, in all material respects, effective internal control over financial reporting as of
December 31, 2023, based on the COSO criteria.
As indicated in the accompanying Management’s Annual Report on Internal Control over Financial Reporting, management’s assessment of and conclusion on the effectiveness of internal control over financial reporting did not
include the internal controls of Central Costanera S.A., Empresas Verdes Argentina S.A., Las Misiones S.A., Estancia Celina S.A, Cordillera Solar VIII S.A. and CP Servicios Renovables S.A., which are included in the 2023
consolidated financial statements of the Company and constituted 17% of total consolidated assets and 22% of total consolidated liabilities as of December 31, 2023, and 13% of revenues, as the acquisition of Central Costanera S.A.
was effective on February 17, 2023, the acquisition of Empresas Verdes Argentina S.A., Las Misiones S.A. and Estancia Celina S.A. was effective on May 3, 2023 and the acquisition of Cordillera Solar VIII S.A. and CP Servicios
Renovables S.A. was effective on October 18, 2023. Our audit of internal control over financial reporting of the Company also did not include an evaluation of the internal control over financial reporting of Central Costanera S.A.,
Empresas Verdes Argentina S.A., Las Misiones S.A., Estancia Celina S.A, Cordillera Solar VIII S.A. and CP Servicios Renovables S.A.
We also have audited, in accordance with the standards of the Public Company Accounting Oversight Board (United States) (PCAOB), the consolidated statements of financial position of Central Puerto S.A. as of December
31, 2023 and 2022, the related consolidated statements of income, comprehensive income, changes in equity and cash flows for each of the three years in the period ended December 31, 2023, and the related notes, and our report dated
April 29, 2024 expressed an unqualified opinion thereon.
Basis for Opinion
The Company’s management is responsible for maintaining effective internal control over financial reporting and for its assessment of the effectiveness of internal control over financial reporting included in the accompanying
Management’s Report on Internal Control over Financial Reporting. Our responsibility is to express an opinion on the Company’s internal control over financial reporting based on our audit. We are a public accounting firm registered
with the PCAOB and are required to be independent with respect to the Company in accordance with the U.S. federal securities laws and the applicable rules and regulations of the Securities and Exchange Commission and the PCAOB.
We conducted our audit in accordance with the standards of the PCAOB. Those standards require that we plan and perform the audit to obtain reasonable assurance about whether effective internal control over financial
reporting was maintained in all material respects.
Our audit included obtaining an understanding of internal control over financial reporting, assessing the risk that a material weakness exists, testing and evaluating the design and operating effectiveness of internal control based
on the assessed risk, and performing such other procedures as we considered necessary in the circumstances. We believe that our audit provides a reasonable basis for our opinion.
Definition and Limitations of Internal Control Over Financial Reporting
A company’s internal control over financial reporting is a process designed to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in
accordance with generally accepted accounting principles. A company’s internal control over financial reporting includes those policies and procedures that (1) pertain to the maintenance of records that, in reasonable detail, accurately
and fairly reflect the transactions and dispositions of the assets of the company; (2) provide reasonable assurance that transactions are recorded as necessary to permit preparation of financial statements in accordance with generally
accepted accounting principles, and that receipts and expenditures of the company are being made only in accordance with authorizations of management and directors of the company; and (3) provide reasonable assurance regarding
prevention or timely detection of unauthorized acquisition, use, or disposition of the company’s assets that could have a material effect on the financial statements.
Because of its inherent limitations, internal control over financial reporting may not prevent or detect misstatements. Also, projections of any evaluation of effectiveness to future periods are subject to the risk that controls may
become inadequate because of changes in conditions, or that the degree of compliance with the policies or procedures may deteriorate.
/s/ PISTRELLI, HENRY MARTIN Y ASOCIADOS S.R.L.
Member of Ernst & Young Global Limited
City of Buenos Aires, Argentina April 29, 2024
Table of Contents
CONSOLIDATED STATEMENT OF INCOME
F-3
CENTRAL PUERTO S.A.
Revenues
Cost of sales
Gross income
Administrative and selling expenses
Other operating income
Other operating expenses
Reversal of impairment / (impairment) of property, plant and equipment and intangible assets net
Operating income
Loss on net monetary position
Finance income
Finance expenses
Share of the profit (loss) of associates
Gain from bargain purchase
Income before income tax
Income tax for the year
Net gain (loss) for the year
Attributable to:
– Equity holders of the parent
– Non-controlling interests
Basic and diluted earnings per share (ARS)
Table of Contents
CONSOLIDATED STATEMENT OF COMPREHENSIVE INCOME
Net income (loss) for the year
Other comprehensive (loss) income for the year
Other comprehensive (loss) income not to be reclassified to income in subsequent periods
Remeasurement of losses from long-term employee benefits
Income tax related to remeasurement of losses from long-term employee benefits
Total other comprehensive (loss) income not to be reclassified to income in subsequent periods
Total other comprehensive (loss) income for the year
Total comprehensive income (loss) for the year
Attributable to:
– Equity holders of the parent
– Non-controlling interests
F-4
CENTRAL PUERTO S.A.
Notes
5
6.1
6.2
7.1
7.2
2.1.2
7.3
7.4
3
2.2.20
8
9
Notes
14.3
8
2023
ARS 000
For the years ended December 31,
2022
ARS 000
2021
ARS 000
313,568,164
(210,166,444)
103,401,720
(31,753,694)
237,706,231
(15,128,790)
43,994,536
338,220,003
(126,511,590)
230,203,826
(356,774,380)
6,115,780
72,645,358
163,898,997
(17,938,127)
145,960,870
315,744,637
(166,051,558)
149,693,079
(23,253,248)
111,837,412
(1,875,144)
(43,670,460)
192,731,639
(94,864,437)
79,527,910
(135,316,228)
347,325
37,911,293
80,337,502
(20,927,229)
59,410,273
148,043,845
(2,082,975)
145,960,870
59,293,545
116,728
59,410,273
346,243,761
(179,326,913)
166,916,848
(25,183,782)
66,235,117
(4,899,121)
(47,102,661)
155,966,401
(10,033,044)
11,784,114
(108,067,187)
(3,424,273)
-
46,226,011
(50,155,953)
(3,929,942)
(4,501,444)
571,498
(3,929,946)
98.41
39.40
(2.99)
2023
ARS 000
For the years ended December 31,
2022
ARS 000
2021
ARS 000
145,960,870
59,410,273
(3,929,946)
(1,155,337)
404,368
(750,969)
(750,969)
145,209,901
(731,366)
255,977
(475,389)
(475,389)
58,934,884
147,292,876
(2,082,975)
58,818,156
116,728
2,351
(819)
1,532
1,532
(3,928,414)
(4,499,912)
571,498
Table of Contents
CONSOLIDATED STATEMENT OF FINANCIAL POSITION
F-5
CENTRAL PUERTO S.A.
Assets
Non-current assets
Property, plant and equipment
Intangible assets
Biological assets
Investment in associates
Inventories
Other non-financial assets
Trade and other receivables
Other financial assets
Deferred tax asset
Current assets
Biological assets
Inventories
Other non-financial assets
Trade and other receivables
Other financial assets
Cash and cash equivalents
Total assets
Equity and liabilities
Equity
Capital stock
Adjustment to capital stock
Legal reserve
Voluntary reserve
Other equity accounts
Voluntary reserve for future dividends distribution
Retained earnings
Equity attributable to holders of the parent
Non-controlling interests
Total equity
Non-current liabilities
Other non-financial liabilities
Loans and borrowings
Compensation and employee benefits liabilities
Provisions
Deferred income tax liabilities
Current liabilities
Trade and other payables
Other non-financial liabilities
Loans and borrowings
Compensation and employee benefits liabilities
Income tax payable
Provisions
Total liabilities
Total equity and liabilities
Table of Contents
F-6
CENTRAL PUERTO S.A.
145,209,901
58,934,884
(3,928,414)
Notes
12-31-2023
ARS 000
12-31-2022
ARS 000
11
12
3
10
14.1
13.1
13.6
8
10
14.1
13.1
13.6
15
14.2
13.3
14.3
8
13.2
14.2
13.3
14.3
758,933,621
15,956,070
89,242,177
34,360,068
5,981,574
304,343
154,597,455
38,740,617
12,663,514
1,110,779,439
6,758,707
8,939,956
12,220,611
161,280,356
89,838,080
13,470,493
292,508,203
1,403,287,642
1,514,022
246,927,434
41,261,481
346,305,972
(22,528,983)
73,320,698
148,019,840
834,820,464
21,751,086
856,571,550
28,078,227
286,373,907
3,309,290
1,934,005
79,164,462
398,859,891
49,803,473
25,617,934
48,810,618
15,726,816
6,273,203
1,624,157
147,856,201
546,716,092
1,403,287,642
616,321,669
24,212,452
38,299,254
37,860,820
6,813,989
765,683
131,784,373
3,632,284
2,602,356
862,292,880
9,181,119
19,681,975
2,777,364
136,683,090
129,998,893
28,785,809
327,108,250
1,189,401,130
1,514,022
246,927,434
38,296,802
485,798,841
(18,091,155)
-
58,818,155
813,264,099
616,612
813,880,711
23,580,634
140,883,742
2,321,472
184,892
76,196,163
243,166,903
23,376,350
27,316,831
56,632,669
10,034,781
14,849,276
143,609
132,353,516
375,520,419
1,189,401,130
CONSOLIDATED STATEMENT OF CHANGES IN EQUITY
Capital stock
Retained earnings
Face
value
ARS 000
Adjustment
to capital
stock
ARS 000
Legal
reserve
ARS 000
Voluntary
reserve
ARS 000
Other equity
accounts
ARS 000
Voluntary
reserve for
future
dividends
distribution
ARS 000
Attributable to holders of the parent
Unappropriated
retained
earnings
ARS 000
Total
ARS 000
Non-
controlling
interests
ARS 000
Total
ARS 000
As of January 1, 2023
1,514,022
246,927,434
38,296,802
485,798,841
(18,091,155)
Net income for the year
Other comprehensive loss for the year
Total comprehensive income (loss) for
the year
Increase in legal reserve
Increase in voluntary reserve for future
dividends distribution
Dividends in cash
Business combination (Note 2.2.20)
Transaction between related parties
(Note 18)
Dividends in cash distributed by a
subsidiary (2)
Dividends in cash collected by a
subsidiary (3)
Acquisition of treasury shares (Note
13.3.10)
As of December 31, 2023 (1)
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
2,964,679
-
-
-
-
-
-
-
-
-
-
(139,492,869)
-
-
-
-
-
-
-
-
-
(2,778,048)
-
-
-
-
-
-
-
-
-
195,346,345
(122,025,647)
-
-
-
-
58,818,155
813,264,099
616,612
813,880,711
148,043,845
148,043,845
(2,082,975)
(750,969)
(750,969)
-
145,960,870
(750,969)
147,292,876
147,292,876
(2,082,975)
145,209,901
(2,964,679)
(55,853,476)
-
-
-
-
(122,025,647)
-
-
-
-
-
19,146,135
-
(122,025,647)
19,146,135
-
-
(2,778,048)
8,929,639
6,151,591
-
(4,858,325)
(4,858,325)
726,964
726,964
-
726,964
-
1,514,022
-
246,927,434
-
41,261,481
-
346,305,972
(1,659,780)
(22,528,983)
-
73,320,698
-
148,019,840
(1,659,780)
834,820,464
-
21,751,086
(1,659,780)
856,571,550
As of January 1, 2022
1,514,022
246,927,434
38,296,802
503,835,858
(18,002,310)
Net income for the year
Other comprehensive (loss) income for
the year
Total comprehensive income for the
year
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
(4,449,524)
768,122,282
1,031,915
769,154,197
59,293,545
59,293,545
116,728
59,410,273
(475,389)
(475,389)
-
(475,389)
58,818,156
58,818,156
116,728
58,934,884
Decrease in voluntary reserve due to
loss absorption
Dividends in cash
Dividends in cash distributed by a
subsidiary (4)
Acquisition of treasury shares (Notes
13.3.10)
As of December 31, 2022 (5)
-
-
-
-
-
-
-
-
-
(4,449,523)
(13,587,494)
-
-
-
-
-
1,514,022
-
246,927,434
-
38,296,802
-
485,798,841
(88,845)
(18,091,155)
As of January 1, 2021
1,514,022
246,927,434
35,141,636
443,887,685
(18,002,310)
Net (loss) income for the year
Other comprehensive income for the
year
Total comprehensive (loss) income for
the year
Increase in legal reserve
Increase in voluntary reserve
Dividends in cash distributed by a
subsidiary (6)
As of December 31, 2021 (5)
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
3,155,166
-
-
59,948,173
-
1,514,022
-
246,927,434
-
38,296,802
-
503,835,858
-
-
-
-
-
-
(18,002,310)
-
-
-
-
-
-
-
-
-
-
-
-
-
4,449,523
-
-
(13,587,494)
-
-
-
(13,587,494)
-
-
(532,031)
(532,031)
-
58,818,155
(88,845)
813,264,099
-
616,612
(88,845)
813,880,711
63,153,727
772,622,194
1,174,908
773,797,102
(4,501,444)
(4,501,444)
571,498
(3,929,946)
1,532
1,532
-
1,532
(4,499,912)
(4,499,912)
571,498
(3,928,414)
(3,155,166)
(59,948,173)
-
-
-
-
-
-
-
(4,449,524)
-
768,122,282
(714,491)
1,031,915
(714,491)
769,154,197
(1)
(2)
(3)
(4)
(5)
(6)
Includes 11,277,623 treasury shares
Distribution of dividends in cash approved by the Shareholders’ Meeting of the subsidiary Central Vuelta de Obligado S.A. held on May 24, 2023.
Dividend collection by the subsidiary Proener S.A.U. in relation to the dividends distribution of the Company.
Distribution of dividends in cash approved by the Shareholders’ Meeting of the subsidiary Central Vuelta de Obligado S.A. held on May 4, 2022.
8,977,630 common shares are held by subsidiaries.
Distribution of dividends in cash approved by the Shareholders’ Meeting of the subsidiary Central Vuelta de Obligado S.A. held on April 28, 2021.
Table of Contents
CONSOLIDATED STATEMENT OF CASH FLOWS
F-7
CENTRAL PUERTO S.A.
Operating activities
Income for the year before income tax
Adjustments to reconcile income for the year before income tax to net cash flows:
Depreciation of property, plant and equipment
Amortization of intangible assets
Reversal of impairment / (impairment) of property, plant and equipment and intangible assets
Loss from disposal (Income from sale) of property, plant and equipment
Recovery (Charge) discount of tax credits
Interest earned from customers
Finance income
Finance expenses
Insurance recovery
Share of the profit of associates
Gain from bargain purchase
Material and spare parts impairments
Movements in provisions, and long-term employee benefit plan expense
Biological assets revaluation
Foreign exchange difference for trade receivables
Net monetary results effect
Trade and tax interests lost
Working capital adjustments:
Decrease in trade and other receivables
(Increase) Decrease in other non-financial assets, biological assets and inventories
Decrease in trade and other payables, other non-financial liabilities and liabilities from employee benefits
Interest received from customers
Trade and tax interests paid
Income tax paid
Insurance recovery collected
Net cash flows provided by operating activities
Investing activities
Purchase of property, plant and equipment and materials
Dividends received
Sale of property, plant and equipment
Acquisition of financial assets, net
Acquisition of subsidiaries and associates, net of cash acquired
Acquisition of treasury shares
Net cash flows used in investing activities
Financing activities
Bank and investment accounts overdrafts (paid) received, net
Loans received
Loans paid
Corporate bonds repurchase payment
Direct financing and loans refinancing costs
Interest paid
Dividends paid
Net cash flows used in financing activities
(Decrease) Increase in cash and cash equivalents
Exchange difference and other financial results
Monetary results effect on cash and cash equivalents
Cash and cash equivalents as of January 1
Cash and cash equivalents as of December 31
Table of Contents
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
1. Corporate information and main business
F-8
CENTRAL PUERTO S.A.
2023
ARS 000
For the years ended December 31,
2022
ARS 000
2021
ARS 000
163,898,997
80,337,502
46,226,011
64,072,513
6,145,364
(43,994,536)
8,461,885
763,531
(33,388,985)
(230,203,826)
356,774,380
-
(6,115,780)
(72,645,358)
716,167
3,692,018
(12,658,919)
(190,654,483)
123,284,321
1,792,410
42,974,477
(32,310,543)
(19,130,210)
29,320,380
(952,955)
(34,344,072)
118,000
125,614,776
(9,834,940)
6,728,299
-
(22,793,255)
(36,017,836)
(1,659,780)
(63,577,512)
(4,814,307)
71,906,462
(93,096,630)
(6,474,215)
(1,711,546)
(23,648,968)
(21,914,775)
(79,753,979)
(17,716,715)
20,416,299
(18,014,900)
28,785,809
13,470,493
48,238,614
12,334,158
43,670,460
(61,955)
(818,538)
(20,714,927)
(79,527,910)
135,316,228
(4,174,622)
(347,325)
(37,911,293)
1,594,977
1,070,834
-
(85,079,807)
52,082,034
-
31,262,737
10,559,232
(11,473,497)
18,030,017
-
(25,046,766)
3,921,416
173,261,569
(10,434,395)
875,311
146,707
(55,592,318)
(32,252,001)
(88,845)
(97,345,541)
6,558,899
-
(26,333,200)
-
(888,343)
(18,946,446)
(11,171,400)
(50,780,490)
25,135,538
4,059,896
(2,118,590)
1,708,965
28,785,809
46,330,005
18,645,411
47,102,661
(637,987)
(1,436,000)
(21,902,168)
(11,784,114)
108,067,187
-
3,424,273
-
250,861
1,857,254
-
(41,734,061)
(5,446,892)
3,787,816
22,139,735
(6,002,547)
(41,805,221)
21,369,929
(3,787,816)
(26,730,242)
-
157,934,095
(32,586,599)
850,261
22,110,475
-
(32,376,289)
-
(42,002,152)
(9,766,394)
-
(78,207,660)
-
(2,112,876)
(25,465,098)
(714,491)
(116,266,519)
(334,576)
487,562
(995,813)
2,551,793
1,708,965
Central Puerto S.A. (hereinafter the “Company”, ”we”, “us” or “CEPU”) and the companies that make up the business group (hereinafter the “Group”) form an integrated group of companies pertaining to the energy sector. The Group
is mainly engaged in electric power generation.
CEPU was incorporated pursuant to Executive Order No. 122/92. We were formed in connection with privatization process involving Servicios Eléctricos del Gran Buenos Aires S.A. (“SEGBA”) in which SEGBA’s electricity
generation, transportation, distribution and sales activities were privatized.
On April 1, 1992, Central Puerto S.A., the consortium-awardee, took possession over SEGBA’s Nuevo Puerto and Puerto Nuevo plants, and we began operations.
Our shares are listed on the BCBA (“Buenos Aires Stock Exchange”), and, since February 2, 2018, they are listed on the NYSE (“New York Stock Exchange”), both under the symbol “CEPU”.
In order to carry out its electric energy generation activity the Group owns the following assets:
–
–
–
–
–
–
–
–
Our Puerto complex is composed of two facilities, Central Nuevo Puerto (“Nuevo Puerto”) and Central Puerto Nuevo (“Puerto Nuevo”), located in the port of the City of Buenos Aires. Our Puerto complex’s facilities include
steam turbines plants and a Combined Cycle plant and has a current installed capacity of 1,747 MW.
Our Luján de Cuyo plants are located in Luján de Cuyo, Province of Mendoza and have an installed capacity of 576 MW and a steam generating capacity of 125 tons per hour.
The Group also owns the concession right of the Piedra del Águila hydroelectric power plant located at the edge of Limay river in Neuquén province. Piedra del Águila has four 360 MW generating units.
Equity investees in Termoeléctrica José de San Martín S.A. (“TJSM”) and Termoeléctrica General Belgrano S.A. (“TMB”). Those entities operate the two thermal generation plants with an installed capacity of 865 MW and
873 MW, respectively. Additionally, through its subsidiary Central Vuelta de Obligado S.A. (“CVO”) the Group is engaged in the operation of the thermal plant Central Vuelta de Obligado, with an installed capacity of 816
MW.
The thermal station Brigadier López located in Sauce Viejo, Province of Santa Fe, with an installed power of 280.5 MW (open-cycle operation).
The thermal cogeneration plant Terminal 6 - San Lorenzo located in Puerto General San Martín, Santa Fe Province, with an installed power of 391 MW and 340 tn/h of steam production.
The thermal station Costanera located in the City of Buenos Aires, that operates a thermal generation plant which is made by six turbo-steam units with an installed power capacity of 1,131 MW and two combined cycle plants
with an installed power capacity of 1,128 MW (see Note 20.5).
Generation plants using renewable energy sources with a total installed capacity of 473.8 MW of commercially available installed capacity from renewable energy sources, distributed as follows: (i) wind farm La Castellana
100.8 MW; (ii) wind farm La Castellana II 15.2 MW; (iii) wind farm La Genoveva 88.2 MW; (iv) wind farm La Genoveva II 41.8 MW; (v) wind farm Achiras 48 MW; (iv) wind farm Los Olivos 22.8 MW, (vii) wind farm
Manque 57 MW and (viii) solar farm Guañizuil II A 100 MW (See Note 20.7).
The Group is also engaged in the natural gas distribution public sector service in the Cuyo and Centro regions in Argentina, through its equity investees belonging to ECOGAS Group. On July 19, 2018, the National Gas
Regulation Entity (Enargas) filed the Company with the Registry of Traders and Trade Agreements of Enargas.
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F-9
CENTRAL PUERTO S.A.
During 2022, within the framework of MEyM Resolution No. 281/2017, the Company was awarded the project “Parque Solar San Carlos” (solar power station) for a 10 MW power. This project will be built in San Carlos, Salta
province.
Finally, through Proener S.A.U., a company fully controlled by CPSA, the Group is engaged in the forest activity since Proener S.A.U. is the parent company of: a) Forestal Argentina S.A. and Loma Alta Forestal S.A.; such companies
own forestry assets which consist of 72,000 hectares approximately in Entre Ríos and Corrientes provinces, in which 43,000 hectares approximately are planted with eucalyptus and pine tree, and b) Empresas Verdes Argentina S.A.,
Las Misiones S.A. and Estancia Celina S.A.; such companies own forest assets that are made of approximately 88,063 hectares in Corrientes province, from which 26,000 are planted with pine tree (over a total 36,000 hectares plantable
area). See Note 20.6.
1.1. Overview of Argentine Electricity Market
Transactions among different participants in the electricity industry take place through the wholesale electricity market (“WEM”) which is a market in which generators, distributors and certain large users of electricity buy and sell
electricity at prices determined by supply and demand (“Term market”) and also, where prices are established on an hourly basis based on the economic production cost, represented by the short term marginal cost measured at the
system’s load center (“Spot market”). CAMMESA (Compañía Administradora del Mercado Mayorista Eléctrico Sociedad Anónima) is a quasi-government organization that was established to administer the WEM and functions as a
clearing house for the different market participants operating in the WEM. Its main functions include the operation of the WEM and dispatch of generation and price calculation in the Spot market, the real-time operation of the
electricity system and the administration of the commercial transactions in the electricity market.
After the Argentine economic crisis in 2001 and 2002 and the end of the Convertibility Law, the costs of generators increased as a result of the Argentine peso devaluation. In addition, the price of fuel for their generation increased as
well. The increasing generation costs combined with the freezing of rates for the final user decided at the time by National Government led to a permanent deficit in CAMMESA accounts, which faced difficulties to pay the energy
purchases to generators. Due to this structural deficit, the Secretariat of Energy issued a series of regulations to keep the electricity market working despite the deficit.
1.2. Amendments to WEM regulations
a) Resolution SE No. 406/03 and other regulations related to WEM generators’ receivables
Resolution 406/03 issued in September 2003 enforced priority payments of generator’s balances. Under the priority payment plan, generators only collected the variable generation costs declared and the payments for power capacity
and the remaining payments on these plants were delayed as there were not sufficient funds as a result of the structural deficit. Resolution 406/03 established that the resulting monthly obligations to generators for the unpaid balance
were to be considered payments without a fixed due date, or “LVFVD receivables” using the Spanish acronym. Although these obligations did not have a specified due date, the Resolution provided that they would earn interest at an
equivalent rate to the one received by CAMMESA on its own cash investments, hereafter “the CAMMESA rate”.
As a result of this regulation, a portion of the invoices issued by Company’s plants were not paid in full beginning in 2004.
Between 2004 and 2007, the Argentine government issued a series of resolutions aimed at increasing thermal generation capacity while at the same time providing a mechanism for generators to collect their LVFVD receivables. These
resolutions created funds called the “FONINVEMEM” which were administered by trusts (“the FONINVEMEM trust”) and made investments in two thermal generation plants within Argentina. All WEM creditor agents with LVFVD
(including the Company) were invited to state formally their decision to participate in forming the FONINVEMEM. The Company, as most LVFVD generators, stated its decision to participate in the creation of the FONINVEMEM
with the abovementioned receivables.
Within this framework, generators created the companies Termoeléctrica José de San Martín S.A. (“TSM”) and Termoeléctrica Manuel Belgrano S.A. (“TMB”), which were engaged in managing the purchase of equipment, and
building, operating and maintaining each new power plant.
Table of Contents
F-10
CENTRAL PUERTO S.A.
Under these Resolutions, the trusts Central Termoeléctrica Timbúes ("FCTT") and Central Termoeléctrica Manuel Belgrano ("FCTMB") are the owner of the Central Termoeléctrica San Martin and Central Termoeléctrica Belgrano
plants during the first ten years of operations. Trusts are aimed at administrating, each of them, 50% of the resources accrued under FONINVEMEM and other funds for the purpose of financing the power stations. Under these
agreements, CAMMESA acts as a Trustor, Banco de Inversión y Comercio Exterior (“BICE”) as Trustee, the Secretariat of Energy as regulatory authority and TSM and TMB as Trust Beneficiaries and the Company, with the remaining
shareholders of TSM and TMB, as guarantors of the obligations of the latter.
The trust agreements had to remain in force until the termination date of the supply agreement that the Trustee - in representation of the Trust - entered into with CAMMESA - as the purchasing party - that had to remain valid for 10
years as from the date of the commercial authorization of the power stations. Upon the termination of that term, the trust assets must be transferred to TSM and TMB provided that, prior to such transference, TSM and TMB and their
shareholders perform all the corporate acts necessary to allow private contributors and/or the Argentine Government to receive their correspondent shares in the capital of the power stations pursuant to the terms of the agreement.
Failure to comply with this condition, holders of interest certificates (Argentine Government) and the generators who are the current shareholders of TSM and TMB shall be deemed as trust beneficiaries.
The FONINVEMEM agreements established that the receivables mentioned above will be paid by CAMMESA in 120 equal, consecutive monthly installments commencing on the commercial operation date of the plants. Also, the
agreements established that the LVFVD receivables would be collected converted to US dollar and began earning interest at LIBOR plus a spread of 1% and 2%.
Once Manuel Belgrano and San Martin plants were commissioned (on January 7, 2010 and February 2, 2010, respectively), CAMMESA began paying the LVFVD receivables. On May 2010, CAMMESA informed the Company of the
payment plan, including the amount of accrued interest at the CAMMESA rate which was added to the principal to be repaid in monthly installments over a ten-year period. Upon receipt of the payment schedule, the Company
recognized accrued interest (related to the CAMMESA rate). The Company also began recognizing LIBOR interest income based on the contractual rate provided in the Resolution and the conversion of the receivables into US dollar.
Since achieving commercial operations in 2010, CAMMESA have made all scheduled contractual principal and interest payments in accordance with the installment plan.
On January 7, 2020, the supply agreement with TMB was terminated and on February 2, 2020, the supply agreement with TSM was terminated, therefore payments of the final installment of the 120 established in the agreement for
each power stations ceased. As a result, the reimbursement for the LVFVD receivables is deemed completed. In Note 3.1, the events that occurred after the termination of the supply agreements with TMB and TSM are included.
Additionally, in 2010 the Company approved a new agreement with the former Secretariat of Energy (Central Vuelta Obligado, the “CVO agreement”). This agreement established, among other agreements, a framework to determine a
mechanism to settle unpaid trade receivables as per Resolution No. 406/03 accrued over the 2008 - 2011 period by the generators (“CVO receivables”) and for that purpose, enabling the construction of a thermal combined cycle plant
named Central Vuelta de Obligado. The CVO agreement established that the CVO receivables will be paid by CAMMESA in 120 equal and consecutive monthly installments. For the determination of the novation of CVO credits, the
following mechanism was applied: the cumulative LVFVD (sale settlements with due date to be defined) were converted to USD at the exchange rate established in the agreement (ARS 3.97 per USD for the cumulative LVFVD until
the execution date of the CVO Agreement and the closing exchange rate corresponding to each month for the LVFVD subsequently accumulated), the LIBOR rate was applied plus a 5% margin.
As from March 20, 2018, CAMMESA granted the commercial operations as a combined cycle of Central Vuelta de Obligado thermal power plant (the “Commercial Approval”). The financial impact of the Commercial Approval is
described in Note 13.1.
Under the agreement mentioned above, generators created the company Central Vuelta de Obligado S.A., which was in charge of managing the purchase of equipment and construction of the Central Vuelta de Obligado thermal power
plant and currently it is in charge of managing its operation and maintenance.
Table of Contents
TSM and TMB
F-11
CENTRAL PUERTO S.A.
After termination of the supply agreements with TSM and TMB dated February 2, 2020 and January 7, 2020, respectively, trust agreements also terminated. As from those dates, a 90-day period commenced in which TSM and TMB
and their shareholders had to perform all the company acts necessary to allow the Argentine Government to receive the corresponding shares in the capital of TSM and TMB that their contributions give them rights to.
On January 3, 2020, i.e. before the aforementioned 90-day period commenced, the Argentine Government (through the Ministry of Productive Development) served notice to the Company (together with TSM, TMB and their other
shareholders and BICE, among others) stating that, according to the Final Agreement for the Re-adaptation of WEM, TSM and TMB shall perform the necessary acts to incorporate the Argentine Government as shareholder of both
companies, acknowledging equity interest rights: 65.006% in TMB and 68.826% in TSM.
On January 9, 2020, the Company, together with the other generation shareholders of TSM and TMB, rejected such act understanding that the equity interest the Government claims does not correspond with the contributions made for
the construction of power stations and that gave it right to claim such equity interest.
On March 4, 2020, the Company was notified on two notes sent by the Minister of Productive Development whereby he answered the one sent by the Company on January 9, 2020 - mentioned above -, ratifying the terms of the note
notified to the Company on January 3, 2020. In March 2020, the Company raised a reconsideration motion, with higher supplementary appeal, against the Argentine Government’s order for the acts mentioned above.
On May 4 and 8, 2020, the Company attended the Special Shareholder’s Meetings of TMB and TSM, respectively, in which the admission of the Argentine Government as shareholder of TSM and TMB was allowed, in accordance with
the shareholding interest claimed by the Argentine Government. This with the sole purpose of complying with the precedent condition established in the respective Trust Agreements, which stated that for the trusted equity -comprised,
among others, by the power plants- to be transferred to the companies TSM and TMB in a 90-day period counted as from the end of the supply agreements, such companies and their shareholders (among which the Company is
included) had to allow the entrance of the Argentine Government in TSM and TMB, receiving the same amount of shares representing the contributions made by the Argentine Government for the construction of the plants and giving it
the right to claim such interest.
In both cases, when the mentioned Shareholders’ Meetings were held, through which the Argentine Government was allowed as shareholder of TMB and TSM due to its interest claim, the Company made the corresponding reservation
of rights so as to continue the abovementioned claims already commenced.
On November 19, 2020, BICE (in its capacity as trustee of both trust agreements) had the condition precedent established in the Trust Agreements fulfilled since the necessary corporate acts for the Argentine Government to be allowed
as shareholder of TSM and TMB were performed. Finally, on March 11, 2021, the Argentine Government has subscribed its shares in TSM and TMB. This way, the Group´s equity interest in TSM and TMB was changed from
30.8752% to 9.6269% and from 30.9464% to 10.8312%, respectively. As of the date of these financial statements, the transference of power stations has not been made to TSM and TMB.
On the other hand, the Company, together with the other shareholders of TSM and TMB (as guarantor within the framework and the limits stated by the Final Agreement for the Re-adaptation of WEM, Note SE no. 1368/05 and trust
agreements), BICE, TSM, TMB and SE signed: a) on January 7, 2020 an amendment addenda of the Operation and Maintenance (“OMA”) of Thermal Plant Manuel Belgrano and b) on January 9, 2020 an amendment addenda of the
Operation and Maintenance Agreement (“OMA”) of Thermal Plant San Martín, to extend the operating period until the effective transference of the trust’s liquidation equity.
As result of the business combination described in Note 2.2.20, the Group´s equity interest in TSM and TMB was increased from 9.6269% to 11.3069% and from 10.8312% to 12.7212%, respectively.
Table of Contents
F-12
CENTRAL PUERTO S.A.
The values recorded in these financial statements for the investments in TMB and TSM are included in non- current assets under other financial assets.
b) Resolution No. 95/2013, Resolution No. 529/2014, Resolution No. 482/2015 and Resolution No. 22/2016
On March 26, 2013, the former Secretariat of Energy released Resolution No. 95/2013 (“Resolution 95”), which affects the remuneration of generators whose sales prices had been frozen since 2003. This new regulation, which
modified the regulatory framework for the electricity industry, was applicable to generators with certain exceptions. It defined a new compensation system based on compensating for fixed costs, non-fuel variable costs and an additional
remuneration. Resolution 95 converted the Argentine electric market towards an “average cost” compensation scheme. Resolution 95 applied to all Company’s plants, excluding La Plata plant, which sold energy in excess of YPF’s
demand on the Spot market pursuant to the framework in place prior to Resolution 95.
In addition, Resolution 95 established that those Sales Settlements with Maturity Dates to be Defined (“LVFVD”) issued by CAMMESA through the application of Resolution 406 which are not committed to the execution of
investment and/or maintenance works of existing equipment, should be destined to the integration of trust estate in the aforementioned trust.
Thermal units had to achieve an availability target which varied by technology in order to receive full fixed cost revenues. The availability of all Company’s plants exceeds this market average. As a result of Resolution 95, revenues to
Company’s thermal units increased, but the impact on hydroelectric plant Piedra del Águila was dependent on hydrology. The new Resolution also established that all fuels, except coal, would be provided by CAMMESA.
This resolution also established that part of the additional remuneration would not be collected in cash rather it would be implemented through LVFDV and would be directed to a “New Infrastructure Projects in the Energy Sector”
which needed to be approved by the former Secretariat of the Energy.
Finally, Resolution 95 temporarily suspended the inclusion of new contracts in the Term market as well as their extension or renewal. Notwithstanding the foregoing, contracts in force as at the effective date of Resolution 95 were
continue being managed by CAMMESA upon their termination. As from such termination, large users should acquire their supplies directly from CAMMESA. Also, Resolution 95 temporarily suspended the acquisition of fuel by the
generation agents. All fuel purchases for the generation of electric power are centralized through CAMMESA.
On May 23, 2014, Resolution SE No. 529/2014 was published in the Argentine Official Gazette (“Resolution 529”) to be applied as from February 2014 transactions. Resolution 529 modified Resolution 95 by increasing the amounts
that remunerate fix costs, variable costs and additional remuneration of the Comprised Generators in MEM (Wholesale Electricity Market) of the conventional thermal type or national hydro type. Resolution 529 included a new
“Remuneration of Non-Recurrent Maintenance” scheme for the Comprised Generators. This new remuneration was determined monthly and its calculation was made based on the total generated energy. Regarding this aspect,
CAMMESA was instructed to issue LVFVD for the financing of major maintenances subject to the approval of the former SE.
On July 17, 2015, the Secretariat of Electric Energy set forth Resolution No. 482/2015 (“Resolution 482”) which retroactively updated the prices of Resolution 529 to February 1, 2015, and created a new trust called “Recursos para las
inversiones del FONINVEMEM 2015-2018” in order to invest in new generation plants. Company’s plants would receive compensation under this program.
Finally, on March 30, 2016, through Resolution No. 22/2016 (“Resolution 22”), the values set by Resolution 482 were updated to become effective as from the transactions of February 2016.
c) Resolution No. 19/2017
On February 2, 2017, the Secretariat of Electric Energy (“SEE”) issued Resolution SEE No. 19/17 (Resolution 19), which replaced Resolution 95, as amended. This resolution changed electric energy
Table of Contents
F-13
CENTRAL PUERTO S.A.
generators remuneration methodology for transactions operated since February 1, 2017, which were previously covered by Resolution 95 as amended (see section b in this note).
Resolution 19 substantially amended the tariff scheme applicable, which was previously governed by Resolution 22. Among its most significant provisions, such resolution established: (a) that generation companies would receive a
remuneration of electric power generated and available capacity, (b) gradual increases in tariffs effective as of February, May and November 2017, (c) that the new tariffs would be denominated in U.S. dollars, instead of Argentine
pesos, thus protecting generation companies from potential fluctuations in the value of the Argentine peso and (d) 100% of the energy sales would be collected in cash by generators, eliminating the creation of additional LVFVD
receivables.
Pursuant to this resolution, the Secretariat of Electric Energy established that electricity generators, co- generators and self-generators acting as agents in the WEM and which operate conventional thermal power plants, may make
guaranteed availability offers (ofertas de disponibilidad garantizada) in the WEM. Pursuant to these offers, these generation companies may commit specific capacity and power output of the generation, provided that such capacity and
energy had not been committed under other power purchase agreements. The offers must be accepted by CAMMESA (acting on behalf of the electricity demanding agents of the WEM), who will be the purchaser of the power under the
guaranteed availability agreements (compromisos de disponibilidad garantizada). The term of the guaranteed availability agreements is 3 years, and their general terms and conditions are established in Resolution 19.
Resolution 19 also established that WEM agents that operate hydroelectric power plants would be remunerated for the energy and capacity of their generation units in accordance with the values set forth in such resolution.
d) SGE (Secretaría de Gobierno de Energía) Resolution No. 70/2018 and Ministry of Productive Development Resolution No. 12/2019
On November 6, 2018, Resolution No. 70/2018 of the SGE was published, which resolution replaced Article 8 of Resolution issued by former SE no. 95/2013. The new article allowed MEM Generators, Autogenerators and
Cogenerators to obtain their own fuel. This did not alter the commitments assumed by Generation Agents within the context of MEM supply agreements with CAMMESA. It was established that generation costs with their own fuel
would be valued according to the recognition mechanism of Average Variable Costs (“CVP”) recognized by CAMMESA. The Resolution also established that regarding those Generators not purchasing their own fuel, CAMMESA
would continue the commercial management and the fuel supply.
Regarding this matter, under Resolution No. 12/2019 by the Ministry of Productive Development (published in the Official Gazette on December 30, 2019) fuel purchase for the generation of electric power was once again centralized
through CAMMESA, therefore repealing the effect of Resolution No. 70/2018 of the former Secretariat of Energy, and Section 8 of Resolution No. 95/2013 of the former Secretariat of Energy and Section 4 of Resolution No. 529/2014
of the former Secretariat of Energy were back in force.
e) Resolution of the Secretariat of Renewable Resources and Electricity Market no. 1/2019
On March 1, 2019 Resolution No. 1/2019 (“Resolution 1”) of the Secretariat of Renewable Resources and Electricity Market was published in the Official Gazette by virtue of which Resolution 19 was abolished. It established the new
remuneration values of energy, power and associated services for the affected generators, as well as their application methodology. Its validity commenced on the date of its publication in the Official Gazette.
According to Resolution 1, the approved remuneration system would be of transitional application and until the following would be defined and gradually implemented: regulatory mechanisms aimed at reaching an autonomous,
competitive and sustainable operation that allows for freedom of contract between supply and demand; and a technical, economical and operative functioning for the integration of different generation technologies so as to guarantee a
reliable and cost effective system..
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The following were the main changes introduced by Resolution 1 in connection with Resolution 19:
Energy Sale:
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The price of energy generated by thermal power stations was reduced. Therefore, the price for energy generated with natural gas was of 4 USD/MWh and 7 USD/MWh for energy generated with liquid fuel.
The price of energy operated by thermal power stations was reduced. Therefore, the price for energy operated with any fuel was of 1.4 USD/MW.
The price for energy generated from non-conventional energy sources (renewable energies) was fixed at 28 USD/MWh.
Power Sale:
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DIGO price (established by Resolution 19) went from 7,000 USD/MW-month during the twelve months of the year to 7,000 USD/MW-month the six months of higher seasonal demand for electrical energy (December,
January, February, June, July and August) and to 5,500 USD/MW-month the remaining months of the year (March, April, May, September, October and November).
Some minimum values of offered availability are reduced. Its compliance was subject to the foregoing prices.
A weighting factor was fixed for the foregoing prices, between 1 and 0.7, depending on the use factor of the twelve months previous to each month of the transaction.
f) Resolution No. 31/2020 of the Secretariat of Energy
On February 27, 2020, the Secretariat of Energy published in the Official Gazette Resolution No. 31 (“Resolution 31”) which sets forth the criteria to calculate the economic transactions of energy and power that the generating parties
commercialize in the spot market, which was in force as from February 1, 2020.
This new regulation, contrary to Resolution 1, establishes all prices for the remuneration of energy and power in Argentine pesos, and it sets forth that the prices would be adjusted on a monthly basis with a formula based on the
evolution of Consumer Price Index (IPC) and the Domestic Wholesale Price Index (IPIM). New power prices were generally reduced in relation to the current prices as at January 2020, and the energy prices remained equivalent,
expressed in Argentine pesos instead of US dollars. Finally, this regulation introduced a new remuneration component which applied to the energy generated during the first 50 hours of maximum thermal requirement of the month
(MTR, which is determined by the sum of the hours of all the thermal generation of the system), it determines different remuneration prices based on the season of the year and the energy delivered during the first and second 25 hours
of MTR.
On April 8, 2020, the Company learned that the Secretariat of Energy instructed CAMMESA to postpone until further notice the application of the price update mechanism described in the second paragraph of this note. Accordingly,
CAMMESA did not apply the price update mechanism to the energy and power sold since March 2020.
g) Secretariat of Energy Resolution No. 440/2021
Through Resolution No. 440 (“Resolution 440”), published in the Official Gazette on May 21, 2021, the Secretariat of Energy established a new remuneration scheme for MEM generation agents. In this regard,
Exhibits II, III, IV and V of Resolution 31 were replaced. Moreover, section 2 of Resolution 31, which established a system for the automatic updating of remuneration values, was repealed. In general terms, Resolution 440 increased
the remuneration values of generation agents by 29% compared to Resolution 31.
It was established that for what Resolution 440 set forth (collection of the new values as from February 2021 transactions, among others), MEM generation agents must submit before CAMMESA a note -to CAMMESA’s satisfaction-
stating full and unconditional withdrawal of any administrative complaint or ongoing judicial
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procedure against the National Government, the Secretariat of Energy and/or CAMMESA, related to section 2 of Resolution 31. Dated June 17, 2021, the Company submitted the requested withdrawal note.
In addition, on November 9, 2021, the Secretariat of Energy established that in order to determine the Power Availability Remuneration of thermal generators under Resolution 440, a constant Utilization Factor equal to 70% must be
considered.
h) Secretariat of Energy Resolution No. 354/2020
This resolution established, among other things, that as from the effectiveness of Plan “GasAr” (Plan Gas 4), Generators of WEM may adhere to centralized dispatch, assigning CAMMESA such contracts entered into with producers or
transporters of natural gas, so that such contracts are used by the Dispatch Entity (OED for its acronym in Spanish), based on dispatch criteria.
In addition, this resolution established that generation agents who, pursuant to Resolution No. 287/2017, have the obligation of self-procuring fuel are able to deem such obligations null and therefore, have their associated costs
recognized, and they must keep maintenance of the transport capacity for its management in centralized dispatch, as long as CAMMESA determines the convenience of having such.
i) Secretariat of Energy Resolution No. 1037/2021
On November 2, 2021, Resolution No.1037/2021 was published in the Official Gazette, whereby the Secretariat of Energy, upon verifying a status of high energy demand in Brazil due droughts in the area, created an Exports Account
where the revenue margins will be accumulated after such electric power export. Such amounts will be destined to financing energy infrastructure works.
In addition, through such Resolution, the Secretariat informed there will be an additional and temporary recognition in the remuneration of Generation Agents under the scope of Resolution 440, covering economic transactions between
September 1, 2021 and February 28, 2022. Such recognition was established in an exported 1000 $/MWh additional amount during the month, which will be assigned in a proportional manner to the power generated on a monthly basis
to each generating agent.
j) Secretariat of Energy Resolution No. 238/2022
On April 21, 2022, Resolution No. 238/2022 ("Resolution 238") issued by the Secretariat of Energy was published in the Official Gazette. This resolution updates remuneration prices for energy and capacity of generation units not
committed on a Purchase Power Agreement, it replaces Annex I to V of the former Resolution No. 440/2021 and it abolishes section 4 of Resolution No. 1037/2021, which granted an additional and temporary increase to generators
remuneration. It also removes the Use Factor from the capacity payment calculation, improving revenue performance.
Resolution 238 increased by 30% the remuneration values starting February 2022, and it provided an additional 10% above the new values starting on June 2022.
k) Secretariat of Energy Resolution No. 826/2022
On December 14, 2022, Resolution No. 826/2022 (“Resolution 826”) issued by the Secretariat of Energy was published in the Official Gazette, through which the power and energy remuneration values of the generation not committed
under contracts were updated. Exhibits I to V of Resolution No. 238 were replaced therein, and a 20% retroactive increase was ordered as of September 1, 2022, as well as the following consecutive increases: 10% as from December 1,
2022, 25% as from February 1, 2023 and 28% as from August 1, 2023.
i) Secretariat of Energy Resolution No. 59/2023
On February 7, 2023, Resolution No. 59/2023 (“Resolution 59”) was published in the Official Gazette whereby generators with combined cycle units are authorized to adhere to the Power Availability and Efficiency Improvement
Agreement (the "Agreement") so as to foster the necessary investments for major and minor maintenance of the equipment.
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Through this agreement, adhering generators commit to reach, at least, 85% of monthly average power availability in exchange of a new power and energy price formed, in part, by amounts denominated in US dollars. In the case of
power, a 2,000 USD/MW-month, plus the amount in ARS corresponding to the 85% and 65% of the power value established by Resolution 826 is set for the spring/autumn and summer/winter periods, respectively. Additionally, the
price for generated energy is set at 3.5 USD/MWh in case of using gas, and at 6.1 USD/MWh in case of alternative fuel (gasoil) use.
On April 25, 2023, CAMMESA accepted the subscription to the Agreement of all the Group's combined cycle units, except for the unit so-called Buenos Aires that belongs to Central Costanera S.A. Hence, an increase in the
remuneration of these units for their sales to the spot market occurred from the transactions since March 2023, as described in the preceding paragraph.
Regarding Buenos Aires combined cycle, on July 28, 2023 CAMMESA agreed to the Agreement subscription by Central Costanera S.A. (valid as from July transactions), once the Secretariat of Energy successfully ordered
CAMMESA the following regarding the mentioned thermal unit: a) conversion to mono-fuel, i.e. operation just with natural gas, eliminating the possibility of operation with gas oil; and b) the adequation of the installed capacity to the
real technical possibility of energy generation by the combined cycle. During the month of October 2023, the corrective maintenance tasks of this unit were concluded, therefore, the increases in the remuneration of this unit were
applied as from the transactions of October 2023.
m) Secretariat of Energy Resolutions No. 574/2023, 2/2024 and 33/2024
On July 11, 2023, Resolution No. 574/2023 was published, which extended for 60 days (with the possibility of being extended for 60 days more) the termination date for the Concession Agreement of the Hydroelectric Power Station
Piedra del Águila, among other Argentine Hydroelectric Power Stations, whose concession term ends during 2023. This way, the Company extended the useful life of generators and auxiliary equipment of Piedra del Águila
hydroelectric power station so that they depreciate up to the new termination date of the concession agreement of Piedra del Águila hydroelectric power station.
In addition, after the closing of the fiscal year, through Resolution No. 2/2024, published in the Official Gazette on January 17, 2024, the termination term of the concession agreement was extended for 60 days as from February 28,
2024. Then, through Resolution No. 33/2024, published in the Official Gazette on March 18, 2024, the termination term of the concession agreement was extended again for 60 days as from April 28, 2024.
n) Secretariat of Energy Resolution No. 750/2023
On September 6, 2023, the Energy Secretariat Resolution No. 750/2023 (“Resolution 750”) was published in the Official Gazette. Resolution 750 updated the amounts of remuneration for power and energy for the generation which is
not committed in contracts. Thus, Annexes I to IV of Resolution 826 were replaced and a 23% increase as from September 1, 2023 was established.
ñ) Secretariat of Energy Resolution No. 869/2023
On October 30, 2023, the Energy Secretariat Resolution No. 869/2023 (“Resolution 869”) was published in the Official Gazette. Resolution 869 updated the amounts of remuneration for power and energy of the generation
which is not committed in contracts. Thus, Annexes I to IV of Resolution 750 were replaced and a 28% increase as from November 1, 2023 was established.
o) Secretariat of Energy Resolution No. 9/2024
On February 8, 2024, Resolution No. 9/2024 (“Resolution 9”) of the Secretariat of Energy was published in the Official Gazette. This Resolution updated the power and energy remuneration values of the generation not committed
under contracts. In addition, Exhibits I to IV of Resolution 869 were replaced and a 74% increase as from February 1, 2024 was established.
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2. Basis of preparation of the consolidated financial statements
2.1. Basis of preparation
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The consolidated financial statements of the Group have been prepared in accordance with International Financial Reporting Standards (IFRS) as issued by the International Accounting Standards Board (IASB).
The attached financial statements have been prepared in order to be included in a Securities and Exchange Commission (“SEC”) filing and have been approved by the Company’s management on April 29, 2024.
These consolidated financial statements provide comparative information in respect of the previous years.
In preparing these consolidated financial statements, the Group applied the material accounting policies, estimates and assumptions described in Notes 2.2 and 2.3, respectively. Moreover, the Group has adopted the changes in
accounting policies described in Note 2.4.
The Group’s consolidated financial statements are presented in Argentine pesos, which is the Group’s functional currency, and all values have been rounded to the nearest thousand (ARS 000), except when otherwise indicated.
2.1.1. Basis of consolidation
The consolidated financial statements as of December 31, 2023 and 2022 and for each of the years ended December 31, 2023, 2022 and 2021, include the financial statements of the Group formed by the parent company and its
subsidiaries: Central Vuelta de Obligado S.A., Vientos La Genoveva S.A.U., Vientos La Genoveva II S.A.U., Proener S.A.U. and its subsidiaries and CP Renovables S.A. and its subsidiaries.
Control is achieved when the investor is exposed or entitled to variable returns arising from its ownership interest in the investee, and has the ability to affect such returns through its power over the investee. Specifically, the investor
controls an investee, if and only if it has:
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Power over the investee (i.e. the investor has rights that entitle it to direct the relevant activities of the investee).
Exposure or right to variable returns arising from its ownership interest in the investee.
Ability to exercise its power over the investee to significantly affect its returns.
Consolidation of a subsidiary begins when the parent company obtains control over the subsidiary and ends when the parent company loses control over the subsidiary. The assets, liabilities, income and expenses of a subsidiary
acquired or sold during the fiscal year are included in the consolidated financial statements from the date on which the parent company acquired control of the subsidiary to the date on which the parent company ceased to control the
subsidiary.
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The result for the fiscal year and each component of the other comprehensive income (loss) are assigned to the owners of the parent company and non-controlling interests, even if the results of the non-controlling interests give rise to a
debit balance. If necessary, appropriate adjustments are made to the subsidiaries’ financial statements so that their accounting policies are in accordance with the Group’s accounting policies. All assets and liabilities, equity, income,
expenses and cash flows within the Group that relate to transactions among the members of the Group are completely eliminated in the consolidation process.
A change in ownership interest in a subsidiary, without loss of control, is accounted for as an equity transaction. If the Group loses control of a subsidiary, it cancels the carrying amount of the assets (including goodwill) and related
liabilities, non-controlling interests and other equity components, while recognizing the profit or loss resulting from the transaction in the relevant income statement.
2.1.2. Measuring unit
The financial statements as at December 31, 2023, including the figures for the previous periods (this fact not affecting the decisions taken on the financial information for such periods) were restated to consider the changes in the
general purchasing power of the functional currency of the Company (Argentine peso) pursuant to IAS 29. Consequently, the financial statements are stated in the current measurement unit at the end of the reported period.
In accordance with IAS 29, the restatement of the financial statements is necessary when the functional currency of an entity is the currency of a hyperinflationary economy. To define a hyperinflationary state, the IAS 29 provides a
series of non-exclusive guidelines that consist on (i) analyzing the behavior of the population, prices, interest rates and wages before the evolution of price indexes and the loss of the currency’s purchasing power, and (ii) as a
quantitative characteristic, which is the most considered condition in practice, verifying if the three-year cumulative inflation rate approaches or exceeds 100%.
Due to different macroeconomic factors, the triennial inflation in 2023 was higher than such figure, as the goals of the Argentine government, and other available projections, indicate that this trend will not revert in the short term.
So as to evaluate the mentioned quantitative condition and to restate the financial statements, the Argentine Securities Commission established that the series of indexes to be used in the IAS 29 application is the one established by the
Argentine Federation of Professional Councils in Economic Sciences.
Considering the before mentioned index, the inflation was of 211.41%, 94.79% and 50.94% in the years ended December 31, 2023, 2022 and 2021, respectively.
The following is a summary of the effects of the IAS 29 application:
Restatement of the Balance Sheet
(i)
(ii)
(iii)
The monetary items (those with a fixed face value in local currency) are not restated since they are stated in the current measurement unit at the closing date of the reported period. In an inflationary period, keeping monetary
assets causes the loss of purchasing power, and keeping monetary liabilities causes gain in purchasing power as long as those items are not tied to an adjustment mechanism compensating those effects. The monetary loss or
gain is included in the income (loss) for the reported period.
The assets and liabilities subject to changes established in specific agreements are adjusted in accordance with those agreements.
Non-monetary items measured at their fair values at the end of the reported period are not restated to be included in the balance sheet; however, the adjustment process must be completed to determine the income (loss)
produced for having those non-monetary items in the terms of a uniform measurement unit.
As at December 31, 2023 and 2022, the Company counted with the following items measured with the current value method: biological assets and the share kept in foreign currency of the items Trade and other receivables,
Cash and cash equivalents, Loans and borrowings and Trade and other payables.
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(iv)
Non-monetary items at historical cost or at fair value of a date previous to the end of the reported period are restated at rates reflecting the variation occurred at the general level of prices from the acquisition or revaluation date
until the end of the reported period; then the amounts restated for those assets are compared with the corresponding recoverable values. Charges to the income (loss) for the period due to property, plant and equipment
depreciation and intangible assets amortization, as well as other non- monetary assets consumption are determined in accordance with the new restated amounts.
As at December 31, 2023 and 2022, the items subject to this restatement process were the following:
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Non-monetary items measured at fair value of a date previous to the end of the reported period: certain machines, equipment, turbogroups and auxiliary equipment of the Property, Plant and Equipment item, which were
measured at their fair value as at January 1, 2011 (transition date to IFRS) and Property, Plant and Equipment items acquired in business combinations which were measured at fair value at acquisition date.
Non-monetary items at historical cost: the remaining items of Property, Plant and Equipment, Intangible assets, Investment in associates, Inventories and Deferred income tax liabilities and assets.
(v)
When borrowing costs in non-monetary assets are capitalized in accordance with IAS 23, the share of those cost compensating the creditor for the effects of inflation is not capitalized.
The Company proceeded to the capitalization of borrowing costs as stated in Note 2.2.6.
(vi)
The restatement of the non-monetary assets in the terms of a current measurement unit at the end of the reported period without an equivalent adjustment for tax purposes leads to a temporary taxable difference and to the
recognition of a deferred-tax liability whose balancing entry is recognized in the income (loss) for the period. For the next reporting period, the deferred-tax items are restated for inflation to determine the item on income (loss)
for such period. In Note 8 the effects of this process are detailed.
Restatement of the statement of income (loss) and other comprehensive income
(i)
(ii)
(iii)
The expenses and income are restated as from the date of accountable entry, including interest and currency exchange differences, except for those items not reflecting or including in their determination the consumption of
assets measured in currency of purchasing power previous to the consumption entry, which are restated taking into account the origin date of the asset related to the item (for example, depreciation, devaluation and other
consumptions of assets valued at historical cost); and except for income (loss) emerging from comparing two measurements expressed in currency of purchasing power of different dates. For such purpose, it is necessary to
identify the compared amounts, separately restate them and compare them again, but with amounts already restated.
The income (loss) for exposure to change in purchasing power of currency (income (loss) on net monetary position), originated by the keeping of monetary assets and liabilities, is shown in a separate item of the income (loss)
for the period.
Gains and losses on non-monetary items measured at fair value are typically calculated as the difference between the restated opening balance, or if acquired during the year, the restated acquisition date value, and the fair
value on the reporting date.
Restatement of the Statement of Changes in Equity
All the components of equity are restated by applying the general prices index as from the beginning of the period, and each variation of such components is re-expressed as from the contribution date or as from the moment in which
such contribution was made through any other form, with the exception of the account “Capital stock -face value” which has been maintained for its nominal value and the effects of their restatement can be found in the account
“Adjustment to capital stock”.
Restatement of the Statement of Cash Flows
IAS 29 sets forth that all the items of this section shall be restated in terms of the current measurement unit at the closing date of the reported period.
The monetary result generated by cash and equivalents to cash are stated in the Statement of Cash Flows separately from the cash flows resulting from operation, investment and financing activities as a specific item of the conciliation
between the existence of cash and cash equivalents at the beginning and at the end of the period.
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2.2. Summary of material accounting policies
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The following are the material accounting policies applied by the Group in preparing its consolidated financial statements.
2.2.1. Classification of items as current and non-current
The Group classifies assets and liabilities in the consolidated statement of financial position as current and non-current. An entity shall classify an asset as current when:
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it expects to realize the asset, or intends to sell or consume it, in its normal operating cycle;
it holds the asset primarily for the purpose of trading;
it expects to realize the asset within twelve months after the reporting period; or
the asset is cash or a cash equivalent unless the asset is restricted from being exchanged or used to settle a liability for at least twelve months after the reporting period.
All other assets are classified as non-current. An entity shall classify a liability as current when:
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it is expected to be settled in normal operating cycle;
It is held primarily for the purpose of trading;
it is due to be settled within twelve months after the reporting period; or
there is no unconditional right to defer the settlement of the liability for at least twelve months after the reporting period.
All other liabilities are classified as non-current.
Deferred tax assets and liabilities are classified as non-current assets and liabilities, in all cases.
2.2.2. Fair value measurement
The Group measures certain financial instruments at their fair value at each reporting date. In addition, the fair value of financial instruments measured at amortized cost is disclosed in Note 13.5.
Fair value is the price that would be received to sell an asset or paid to transfer a liability in an orderly transaction between market participants at the measurement date. The fair value measurement is based on the presumption that the
transaction to sell the asset or transfer the liability takes place either:
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in the principal market for the asset or liability, or
in the absence of a principal market, in the most advantageous market for the asset or liability.
The principal or the most advantageous market must be accessible to the Group. The fair value of an asset or a liability is measured using the assumptions that market participants would use when pricing the asset or liability, assuming
that market participants act in their economic best interest.
A fair value measurement of a non-financial asset takes into account a market participant’s ability to generate economic benefits by using the asset in its highest and best use or by selling it to another market participant that would use
the asset in its highest and best use.
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The Group uses valuation techniques that are appropriate in the circumstances and for which sufficient data are available to measure fair value, maximizing the use of relevant observable inputs and minimizing the use of unobservable
inputs.
All assets and liabilities for which fair value is measured or disclosed in the consolidated financial statements are categorized within the fair value hierarchy, described as follows, based on the lowest level input that is significant to the
fair value measurement as a whole:
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Level 1 input data: quoted (unadjusted) prices in active markets for identical assets or liabilities.
Level 2 input data: valuation techniques with input data other than the quoted prices included in Level 1, but which are observable for assets or liabilities, either directly or indirectly.
Level 3 input data: valuation techniques for which input data are not observable for assets or liabilities.
2.2.3. Transactions and balances in foreign currency
Transactions in foreign currencies are recorded by the Group at the related functional currency rates prevailing at the date of the transaction.
Monetary assets and liabilities denominated in foreign currencies are translated at the functional currency spot rate of exchange ruling at the reporting period-end.
All differences are taken to consolidated statement of income under other operating income or expenses, or under finance income or expenses, depending on the nature of assets or liabilities generating those differences.
Non-monetary items that are measured in terms of historical cost in a foreign currency are translated using the exchange rates as at the dates of the initial transactions. Non-monetary items measured by their fair value in foreign
currency are converted using exchange rates at the date in which such fair value is determined.
2.2.4. Revenue recognition
2.2.4.1. Revenue from ordinary activities
IFRS 15 presents a five-step detailed model to explain revenue from contracts with customers. Its fundamental principal lies on the fact that an entity has to recognize revenue to represent the transference of goods or services promised
to the customers, in an amount reflecting the consideration the entity expects to receive in exchange for those goods or services at the moment of executing the performance obligation. An asset is transferred when (or while) the client
gets control over such asset, defined as the ability to direct the use and substantially obtain all the remaining benefits of the asset. IFRS 15 requires the analysis of the following:
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If the contract (or the combination of contracts) contains more than one promised good or service, when and how such goods or services should be granted.
If the price of the transaction distributed to each performance obligation should be recognized as revenue throughout time or at a specific moment. According to IFRS 15, an entity recognizes revenue when the performance
obligation is satisfied, i.e. every time control over those goods and services is transferred to the customer. The new model does not include separate guidelines for the “sale of goods” and the “rendering of services”; instead, it
requires that entities should evaluate whether revenue should be recognized throughout time or at a specific moment, regardless of the fact that it includes “the sale of goods” or “the rendering of services”.
When the price includes an estimation element of variable payments, how that will affect the amount and the time to recognize such revenue. The concept of variable payment estimation is broad. A transaction price is
considered as variable due to discounts, reimbursement, credits, price concessions, incentives, performance bonus, penalties and contingency agreements. The new model introduces a big condition for a variable consideration
to be considered as revenue: only as long as it is very unlikely for a significant change to occur in the cumulative revenue amount, when the uncertainties inherent to the variable payment estimation are solved.
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When the incurred cost to close an agreement and the costs to comply with it can be recognized as an asset.
The most relevant revenue source of the Group is the commercialization of energy produced in the spot market and under the energy supply agreements, CAMMESA being its main customer.
The Company recognizes its sales revenue in accordance with the availability of its machines’ effective power, the energy and steam supplied; and as balancing entry, a sales receivable is recognized, which represents the Company’s
unconditional right to consideration owed by the customer. Billing for the service is monthly made by CAMMESA in accordance with the guidelines established by SEE; and compensation is usually received in a maximum term of 90
days. Therefore, no implicit financing components are recognized. The satisfaction of the performance obligation is done throughout time since the customer simultaneously receives and consumes the benefits given by the performance
of the entity as the entity does it. Payments by CAMMESA related to the sale of energy and power under the spot market during each month are due 42 days following the end of such month. When payments are made after such
deadline interests are collected from CAMMESA.
Revenues from energy, power and steam sales are calculated at the prices established in the respective contracts or at the prices prevailing in the electricity market, according to the regulations in force. These include revenues from the
sale of steam, energy and power supplied and not billed until the closing date of the reported period, valued at the prices defined in the contracts or in the respective regulations.
Additionally, the Group recognizes the sales from contracts regarding the supplied energy and the prices established in such contracts, and as balancing entry it recognizes an account receivable. Such credit represents the unconditional
right the Company has to receive the consideration owed by the customer. Billing for the service is monthly made by CAMMESA in the case of the contracts of the wind farms La Castellana, La Genoveva and Achiras and the contracts
of the solar farm Guañizuil II A and for the Energía plus contracts in accordance with the guidelines established by SEE; and compensation is received in a maximum term of 90 days. Therefore, no implicit financing components are
recognized. For the rest of the clients, billing is also monthly and done by the Company; and compensation is received in a maximum term of 90 days. Therefore, no implicit financing components are recognized. The satisfaction of the
performance obligation is done throughout time since the customer simultaneously receives and consumes the benefits given by the performance of the entity as the entity does it.
The Group recognizes revenues from resale and distribution of gas and revenues for the monthly management of the thermal power plant CVO in accordance with the monthly fees established in the respective contracts and as balancing
entry, it recognizes a sale credit. Such credit represents the unconditional right the Company has to receive the consideration owed by the customer. Billing for the service is also monthly made by the Company and compensation is
generally received in a maximum term of 90 days. Therefore, no implicit financing components are recognized.
Finally, the Group recognizes sales revenues from its forestry activities based on the wood delivered and at the current prices, and it recognizes a sales credit as an offsetting entry. This credit represents the Company’s unconditional
right to receive the consideration owed by the client. The performance obligation is satisfied when the wood is delivered to the respective clients. Billing for the service is made every two weeks and compensation is usually received in
a maximum term of 21 days. Therefore, no implicit financing components are recognized.
The detail of revenues from ordinary activities of the Group is included in Note 5 to these consolidated financial statements.
2.2.4.2. Other income and expenses - Interest
For all financial assets and liabilities measured at amortized cost and interest bearing financial assets classified as available for sale, interest income or expense is recorded using the effective interest rate method, which is the rate that
exactly discounts the estimated future cash payments or receipts through the expected life of the financial instrument or a shorter period, where appropriate, to the net carrying amount of the financial asset or liability. In general, interest
income and expense are included in finance income and expenses in the consolidated statement of income, respectively, unless they derive from operating items (such as trade and other receivables or trade and other payables); in that
case, they are booked under other operating income and expenses, as the case may be.
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2.2.5. Taxes
Current income tax
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Current income tax assets and liabilities for the year are measured at the amount expected to be recovered from or paid to the taxation authorities. The tax rates and tax laws used to compute those amounts are those that are enacted or
substantively enacted, at the end of the reporting period. The statutory tax rate for the Group for the fiscal year 2023 is described in Note 22.
Current income tax relating to items recognized directly in equity is recognized in equity and not in the consolidated statement of income.
Management periodically assesses the positions taken in each tax report regarding the situations in which the applicable tax regulations are subject to interpretation, and it determines whether they must be treated as uncertain tax
treatment, and in such case, whether it must be treated independently or collectively with one or more tax treatments, pursuant to IFRIC 23. For these cases, we use the approach which better predicts uncertainty and applies criteria to
identify and quantify uncertainties.
Deferred income tax
Deferred income tax is provided using the liability method on temporary differences at the end of the reporting period between the tax bases of assets and liabilities and their related carrying amounts.
Deferred income tax liabilities are recognized for all taxable temporary differences, except:
–
–
where the deferred income tax liability arises from the initial recognition of goodwill or of an asset or liability in a transaction that is not a business combination and, at the time of the transaction, affects neither the accounting
profit nor taxable profit or loss;
in respect of taxable temporary differences associated with investments in subsidiaries and associates, where the timing of the reversal of the temporary differences can be controlled and it is probable that the temporary
differences will not reverse in the foreseeable future.
Deferred income tax assets are recognized for all deductible temporary differences and tax carry forwards losses, to the extent that it is probable that taxable profit will be available against which the deductible temporary differences,
and/or the tax losses carry forward can be utilized, except:
–
–
where the deferred income tax asset arises from the initial recognition of an asset or liability in a transaction that is not a business combination and, at the time of the transaction, affects neither the accounting profit nor taxable
profit or loss;
in respect of deductible temporary differences associated with investments in subsidiaries, associates and interests in joint ventures, deferred income tax assets are recognized only to the extent that it is probable that the
deductible temporary differences will reverse in the foreseeable future and taxable profit will be available against which those differences can be utilized.
The carrying amount of deferred income tax assets is reviewed at each reporting period date and reduced against income or loss for the period or other comprehensive income, as the case may be, to the extent that it is no longer
probable that sufficient taxable profit will be available to allow all or part of the deferred income tax asset to be utilized (recovered). Unrecognized deferred income tax assets are reassessed at each reporting period date and are
recognized with a charge to income or other comprehensive income for the period, as the case may be, to the extent that it has become probable that future taxable profits will allow the deferred income tax asset not previously
recognized to be recovered.
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Deferred income tax assets and liabilities are measured at undiscounted nominal value at the tax rates that are expected to apply in the year when the asset is realized or the liability is settled, based on tax rates and tax laws that have
been enacted or substantively enacted at the reporting period date.
Deferred income tax relating to items recognized outside profit or loss is recognized outside profit or loss. Deferred income tax items are recognized in correlation to the underlying transactions either in other comprehensive income or
directly in equity.
Deferred income tax assets and deferred income tax liabilities are offset if a legally enforceable right exists to set off current income tax assets and liabilities and the deferred income taxes relate to the same taxable entity and the same
taxation authority.
Uncertainties over income tax treatments
The Group determines whether each tax treatment should be considered independently or whether some tax treatments should be considered together and uses an approach that provides better predictions of the resolution of the
uncertainty.
The Group applies significant judgment when identifying uncertainties on the income tax treatment. The Group evaluated whether the Interpretation had an impact on its consolidated financial statements, especially within the
framework of tax inflation adjustment in determining the tax income of mentioned periods:
a) Income tax return for fiscal year 2014
In February 2015 CPSA filed income tax returns for the nine-month period ended September 30, 2014, applying the adjustment for inflation mechanism established by the Argentine Income Tax Law. In addition, the Company filed its
income tax return for the three-month period ended December 31, 2014, applying the same adjustment for inflation mechanism.
Later on, on July 27, 2021, the Argentine Tax Authorities issued a resolution through which it implemented an infringement investigation in relation to the income tax for the irregular fiscal periods ended September 2014 and December
31, 2014, for the alleged omission included in Section 45, Law No. 11683. On September 8, 2021, CPSA submitted the corresponding deposition and the corresponding evidence. Based on the Tax Determination issued by AFIP on
April 28, 2022, CPSA appealed before the Argentine Fiscal Court (TFN) on May 23, 2022. By virtue of this appeal, the TFN declared the admittance of evidence through the resolution dated March 29, 2023; and to that effect, on
October 26, 2023, the accounting expert’s report was furnished as evidence.
b) Action for recovery - Income tax refund for fiscal period 2010
In December 2014, the Company, as merging company and continuing company of HPDA, raised a recourse action before fiscal authorities regarding the income tax for the fiscal period 2010. This recourse action seeks to recover the
income tax entered by HPDA in accordance with the lack of application of the inflation- adjustment mechanism established by the Law on Income Tax. In December 2015, since the term stated by Law no. 11,683 elapsed, the Company
brought a contentious- administrative claim before the National Court to ask for its right to obtain the income tax recovery.
In October 2018, the Company was served notice of the judgment issued by the Federal Contentious- Administrative Court No. 5, which granted the right to recourse. The judgment ordered tax authorities to return the amount of 67,612
(at historical values) to the Company plus the interest stated in the BCRA Communication 14290 and ordered that legal cost must be borne by the defendant. Such judgment was appealed by the National Tax Administration, and on
September 9, 2019, Division I of the National Court of Appeals of the Federal Contentious- Administrative Court (“CNACAF”) confirmed the appealed judgment. On September 24, 2019, the National Tax Administration raised
Federal Extraordinary Appeal (“REF”) against CNACAF judgment, which was replied by the Company. On October 29, 2019, CNACAF granted the REF and sent the file to the Argentine Supreme Court. On October 25, 2022, the
Argentine Supreme Court (CSJN) confirmed the appealed decision. On March 21, 2024, CPSA collected the amount claimed plus the corresponding interest.
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c) Action for recovery - income tax refund for fiscal years 2009, 2011 and 2012
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In December 2015, the Company filed a petition with the Argentine Tax Authorities for the recovery of income tax for the fiscal year 2009, in the amount of 20,395 at historical values which had been incorrectly paid by the Company
in excess of our income tax liability. By filling such action, the Company seeks to recover the excess income tax paid by CPSA due to the failure to apply the adjustment for inflation set forth in the Argentine Income Tax Law. On April
22, 2016, after the term required by Law No. 11,683 expired, the Company filed an action for recovery for the amount claimed with the Argentinean Court. On September 27, 2019, the judge entered judgment rejecting the complaint
filed by the Company. Such judgment was appealed by the Company last October 4, 2019. Room I of CNACAF (Argentine Appeal Court for Federal Contentious Administrative Matters) granted the appeal presented by the Company
on March 11, 2020. Against this resolution, the Argentine Tax Authorities raised an Extraordinary Appeal. On October 25, 2022, the Argentine Supreme Court confirmed the decision made by the CNACAF and on November 27, 2023,
CPSA collected the amount claimed plus the corresponding interest.
In December 2017, the Company, as merging company and continuing company of HPDA, filed a petition with the Argentine Tax Authorities for the recovery of 52,783 at historical values paid in excess by HPDA for payment of
Income Tax for 2011 fiscal period. The purpose of such action is to recover the income tax paid by HPDA due to the failure to apply the adjustment for inflation mechanism aforementioned. On April 1, 2019 such claim was rejected by
national fiscal authorities. Therefore, the Company filed an administrative and legal action on April 25, 2019. On September 13, 2022, the Company obtained a favorable first-instance judgment. This judgment was appealed by AFIP
and it is still pending resolution.
In December 2018, the Company brought two administrative complaints of recovery before the Argentine Tax Authorities: the first one was filed by the Company, as merging company and continuing company of HPDA, regarding the
income tax for the fiscal period 2012 that amounted to 62,331 at historical values, which was entered in excess by HPDA. The second complaint was filed by the Company regarding the income tax for the same fiscal period that
amounted to 33,265 at historical values, which was entered in excess by the Company. These recourse actions seek to recover the income tax entered by HPDA and the Company in accordance with the lack of application of the
inflation-adjustment mechanism aforementioned. On September 12, 2019, the Company filed both recourse actions before the Federal Contentious- Administrative Court against the Argentine Tax Authorities in accordance with Section
82, paragraph “c” of Law no. 11,683 (restated text 1998 as amended), as the term established in the second paragraph of Section 81 of such law had elapsed.
d) Action for recovery - Income tax for the fiscal year 2015
On December 23, 2020, the Company submitted before the fiscal authorities an action for recovery of the income tax for the fiscal year 2015 for the amount of 129,231 (at historical values) unduly paid by CPSA. The purpose of the
action for recovery is to obtain reimbursement of the income tax paid by CPSA based on the lack of application of the inflation adjustment mechanism set forth in the Argentine Income Tax Act. On April 22, 2021, the Company filed a
recovery lawsuit before the Court for Contentious Administrative Matters against the Argentine Tax Authorities pursuant to the provisions of Section 82, subsection c of Law No. 11683 (restated and amended 1998), on the grounds that
the term established in the second paragraph of Section 81 of that body of rules had elapsed.
e) Action of recovery - Income tax for the fiscal year 2016
On January 24, 2022, the Company filed before the tax authorities a recovery action of the income tax for the fiscal year 2016, for the amount of 189,376 (at historical values) unduly paid by CPSA. Such recovery action is aimed at
obtaining the reimbursement of the income tax paid by CPSA based on the lack of application of the inflation adjustment mechanism set for by the Argentine Income Tax Act.
The Group considered, based on the opinion of its legal advisors and on the IFRIC 23 accounting guidelines: 1) regarding the income tax 2014 determination stated in a), that it is probable that authorities will accept the Company's
position and, therefore, it is not required to register a liability under such item, and 2) regarding recourse actions for income tax, except for the case of recourse action by HPDA for the fiscal period 2011, that it is also probable that the
positions adopted by the Company will be accepted in court; therefore, an asset has been recognized for such recourse actions.
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The corresponding asset is included in the item “Other non-financial assets” of Non-Current Assets under “Income Tax Credits” and it amounts to 156,882 and 750,327 as of December 31, 2023 and 2022, respectively.
Other taxes related to sales and to bank account transactions
Revenues from recurring activities, expenses incurred and assets are recognized excluding the amount of sales tax, as in the case of value-added tax or turnover tax, or the tax on bank account transactions, except:
–
–
where the tax incurred on a sale or on a purchase of assets or services is not recoverable from the taxation authority, in which case the sales tax is recognized as part of the cost of acquisition of the asset or as part of the expense
item as the case may be;
receivables and payables are stated including value-added tax.
The charge for the tax on bank account transactions is presented in the administrative and selling expenses line within the consolidated statement of income.
The net amount of the tax related to sales and to bank account transactions recoverable from, or payable to, the taxation authority is included as a non-financial asset or liability, as the case may be.
2.2.6. Property, plant and equipment
Property, plant and equipment are measured at the acquisition cost restated according to Note 2.1.2, net of the cumulative depreciation and/or the cumulative losses due to impairment, if any. This cost includes the cost of replacing
components of property, plant and equipment and the cost for borrowings related to long-term construction projects, as long as the requirements for their recognition as assets are fulfilled. The Property, Plant and equipment acquired in
a business combination was valued at fair value at acquisition date restated as explained in Note 2.1.2.
When significant parts of property, plant and equipment are required to be replaced at intervals, the Group derecognizes the replaced part and recognizes the new part with its own associated useful life and depreciation. Likewise, when
a major maintenance is performed, its cost is recognized as a replacement according to the conditions stated in the IFRS. All other regular repair and maintenance costs are recognized in the consolidated statement of income as incurred.
Electric power facilities and materials and spare parts related to the Nuevo Puerto Combined Cycle plant were depreciated on a unit-of-production basis.
Electric power facilities related to the Luján de Cuyo combined cycle plant and cogeneration unit, the Terminal 6 - San Lorenzo cogeneration unit, the Central Costanera combined cycle power plants and the Brigadier Lopez thermal
station are depreciated on a straight-line basis over the total useful lives estimated.
Electric power facilities and auxiliary equipment of Piedra del Águila hydroelectric power plant are depreciated on a straight-line basis over the remaining life of the concession agreement of the mentioned power plant.
The depreciation of the remaining property, plant and equipment is calculated on a straight-line basis over the total estimated useful lives of the assets as follows:
–
–
–
–
–
–
Buildings: 5 to 50 years.
Wind turbines and solar farm equipment: 20 years.
Lands are not depreciated.
Material and spare parts: based on the useful life of related machinery and equipment to be replaced.
Furniture, fixtures and equipment: 5 to 10 years.
Others: 3 to 5 years.
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–
Gas turbines and Construction in progress: they are not depreciated until they are in conditions of being used.
An item of property, plant and equipment and any significant part initially recognized is derecognized upon disposal or when no future economic benefits are expected from its use or disposal. Any gain or loss arising on derecognition
of the asset (calculated as the difference between the net disposal proceeds and the carrying amount of the asset) is included in the consolidated statement of income when the asset is derecognized.
The residual values, useful lives and methods of depreciation are reviewed at each reporting period end and adjusted prospectively, if appropriate.
During the years ended December 31, 2023 and 2022 the Group has not capitalized interests.
2.2.7. Intangible assets
Intangible assets acquired separately are measured on initial recognition at acquisition cost restated according to Note 2.1.2. The cost of the intangible assets acquired in a business combination is their fair value at the date of the
acquisition. Following initial recognition, intangible assets are carried at cost less accumulated amortization (if they are considered as having finite useful lives) and accumulated impairment losses, if any.
The useful lives of intangible assets are assessed as either finite or indefinite. The useful lives of the intangible assets recognized by the Group are finite.
Intangible assets with finite useful lives are amortized over their useful economic lives. The amortization period and the amortization method for an intangible asset with a finite useful life are reviewed at least at the end of each
reporting period. Changes in the expected useful life or the expected pattern of consumption of the asset is accounted for by changing the amortization period or method, as appropriate, and are treated prospectively as changes in
accounting estimates. The amortization expense on intangible assets with finite lives is recognized in the consolidated statement of income in the expense category consistent with the function of the intangible assets.
The Group’s intangible assets are described in Note 12.
2.2.8. Impairment of property, plant and equipment and intangible assets
The Group assesses at each reporting period-end whether an existing event or one that took place after year end and provides additional evidence of conditions that existed at the end of the reporting period, indicates that an individual
component or a group of property, plant and equipment and/or intangible assets with limited useful lives may be impaired. If any indication exists, the Group estimates the asset’s recoverable amount. An asset’s recoverable amount is
the higher of the fair value less costs to sell, and the value-in-use. That amount is determined for an individual asset, unless the asset does not generate cash inflows that are largely independent of those from other assets or groups of
assets; in which case, the cash flows considered are the ones from the a cash-generating unit (“CGU”) where such asset belongs.
Where the carrying amount of an individual asset or CGU exceeds its recoverable amount, the individual asset or CGU, as the case may be, is considered impaired and is written down to its recoverable amount.
In assessing value in use of an individual asset or CGU, the estimated future cash flows are discounted to their present value using a discount rate that reflects current market assessments of the time value of money and the risks specific
to the individual asset or CGU, as the case may be.
In determining fair value less costs to sell, recent market transactions are taken into account, if available. If no such transactions can be identified, an appropriate valuation model is used. These calculations are verified by valuation
multiples, quoted values for similar assets on active markets and other available fair value indicators, if any.
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The Group bases its impairment calculation on detailed budgets and forecast calculations which are prepared separately for each of the Group’s CGU to which the individual assets are allocated.
Impairment losses of continuing operations are recognized in a specific line of the consolidated statement of income.
In addition, for the assets for which an impairment loss had been booked, as of each reporting period-end, an assessment is made whether there is any indication that previously recognized impairment losses may no longer exist or may
have decreased.
Should there be such triggering event, the Group makes an estimate of the recoverable amount of the individual asset or of the cash generating unit, as the case may be.
A previously recognized impairment loss is reversed only if there has been a change in the assumptions used to determine the individual assets or CGU’s recoverable amount since the last impairment loss was recognized. The reversal
is limited so that the carrying amount of the asset or CGU does not exceed its recoverable amount, nor exceed the carrying amount that would have been determined, net of the related depreciation or amortization, had no impairment
loss been recognized for the asset or CGU in prior periods. Such reversal is recognized in the statement of income in the same line in which the related impairment charge was previously recognized, unless the asset is carried at a
revalued amount, in which case, the reversal is treated as a revaluation increase.
The Group has identified a triggering of potential impairment of its property, plant and equipment and/or intangible assets with finite useful lives due to the uncertainty over the evolution of the rates denominated in Argentine pesos for
the spot market sales in relation to the evolution of the increase of costs due to inflation. On the other side, the Group has also identified a triggering of potential impairment reversal related to the evolution of the exchange rate in
comparison with the evolution of the inflation.
As a result of the recoverability analysis, the Group determined that the net book value of the assets, did not exceed their recoverable, except for the assets comprising the cash generating unit corresponding to the Brigadier Lopez
thermoelectric power plant. On the other hand, the Group has reversed losses due to impairment in the following cash- generating units: combined cycle Luján de Cuyo, cogeneration unit Terminal 6 San Lorenzo, wind farms Manque
and La Genoveva, land of the thermoelectric power plants Puerto Nuevo and Nuevo Puerto, and a gas turbine.
CGUs Brigadier López thermoelectric plant, Luján de Cuyo Combined Cycle, Terminal 6 San Lorenzo cogeneration unit and Manque and La Genoveva wind farms
The Group estimated that the book value of the assets related to the Brigadier Lopez thermoelectric plant exceeded its recoverable value by 18,842,526. Therefore, an impairment loss was determined in property, plant and equipment
for 16,633,114 under "Electric power facilities and other equipment", "Land and buildings", "Construction in progress" and "Others" and in intangible assets for 2,209,412, which was charged to "Impairment of property, plant and
equipment and intangible assets" in the consolidated statement of income for the year ended December 31, 2023. After recognizing such impairment, the net book value of property, plant and equipment and intangible assets of
Brigadier Lopez thermoelectric plant is 46,845,920 and 6,222,645, respectively.
The Group estimated that the book value of the assets that form the cash-generating unit corresponding to the Terminal 6 San Lorenzo cogeneration unit is lower than its recoverable value, therefore an impairment reversal of property,
plant and equipment was determined for 25,521,596 in the items “Electric power facilities and other equipment”, “Lands and buildings” and “Others”, and was recorded under the item “Reversal of impairment of property, plant and
equipment and intangible assets” in the consolidated income statement for the fiscal year ended December 31, 2023. After the recognition of the impairment reversal, the book value of the property, plant and equipment corresponding to
the cogeneration unit Terminal 6 San Lorenzo amounts to 212,756,093.
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The Group estimated that the book value of the assets that form the cash-generating unit corresponding to the Lujan de Cuyo combined cycle is lower than its recoverable value, therefore an impairment reversal of property, plant and
equipment was determined for 4,211,126 in the items “Electric power facilities and other equipment”, “Lands and buildings” and “Others”, and was recorded under the item “Reversal of impairment of property, plant and equipment and
intangible assets” in the consolidated income statement for the fiscal year ended December 31, 2023. After the recognition of the mentioned impairment reversal, the book value of the property, plant and equipment corresponding to the
Lujan de Cuyo combined cycle amounts to 19,819,524.
Also, the Group estimated that the book value of the assets that form the cash-generating unit corresponding to the wind farm Manque is lower than its recoverable value. Therefore an impairment reversal of property, plant and
equipment was determined for 7,391,011 in the items “Lands and buildings”, “Wind turbines”, "Electric power facilities and other equipment" and "Others" and an impairment reversal of intangible assets was determined for 3,182, both
of which were recorded under the item “Reversal of impairment of property, plant and equipment and intangible assets” in the consolidated statement of income for the fiscal year ended December 31, 2023. After the recognition of the
mentioned impairment reversals, the book value of the property, plant and equipment and intangible assets corresponding to the Manque wind farm amounts to 38,573,686 and 16,540, respectively.
Finally, the Group estimated that the book value of the assets that form the cash-generating unit corresponding to the wind farm La Genoveva is lower than its recoverable value. Therefore an impairment reversal of property, plant and
equipment was determined for 16,144,362 in the items “Lands and buildings”, “Wind turbines”, "Electric power facilities and other equipment" and "Others", and an impairment reversal of intangible assets was determined for 95,212,
both of which were recorded under the item “Reversal of impairment of property, plant and equipment and intangible assets” in the consolidated statement of income for the fiscal year ended December 31, 2023. After the recognition of
the mentioned impairment reversals, the book value of the property, plant and equipment and intangible assets corresponding to the La Genoveva wind farm amounts to 62,827,443 and 368,757, respectively.
In order to assess the recoverability of Brigadier Lopez thermoelectric plant, the Luján de Cuyo combined cycle, the Terminal 6 San Lorenzo cogeneration unit and the Manque and La Genoveva wind farms, the value in use was
applied.
Key assumptions to estimate the value in use are the following:
–
Revenues: the revenues have been determined for the budgeted period based on the energy prices arising from the resolutions in force issued by the SE adjusted for projections of price increases and considering the energy
supply signed agreements, as applicable. In this sense, the Group considered different weighted alternatives in relation to the evolution of energy and power prices that remunerate the conventional energy generation units,
which implied the preparation of different scenarios with different estimates of expected cash flows and assigning probabilities of occurrence based on the Group's experience and expectations on the outcome of the
uncertainties involved.
Other relevant assumptions are described below:
–
Discount rate: it represents the current market assessment of the specific risks of the Company, taking into consideration the time-value of money. Discount rate calculation is based on the circumstances of the market
participants and it is derived from the weighted average cost of capital (WACC). The WACC rate takes into consideration both debt and equity. The cost of equity is derived from the expected return on investment by market
participant investors, whereas the cost of debt is based on the conditions of the debt which market participants could access to. The specific risks of the operational segment are incorporated by applying individual beta factors,
which are annually assessed from the available public information of the market.
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Discount rates used to determine the value in use as of December 31, 2023 were 15.2% and 14.9%, depending on the term of the future cash flows.
Any increase in the discount rate would entail an additional impairment loss for the cash-generation unit Brigadier López thermoelectric plant.
–
–
Operational costs: Costs were estimated based on operation costs incurred in the past, being the most relevant cost the plants maintenance, which was estimated based on the provisions from the agreements in force with the
suppliers Siemens Energy and Vestas Argentina.
Macroeconomic variables: estimated inflation and devaluation rates, as well as exchange rates, were obtained from external sources, which are well known consulting firms dedicated to the local and global economic analysis,
widely experienced in the market.
Brigadier López thermoelectric plant, Luján de Cuyo Combined Cycle and Terminal 6 San Lorenzo cogeneration unit belong to the electric power generation from conventional sources operating segment while wind farms Manque and
La Genoveva belong to the electric power generation from renewable sources operating segment.
Land
The Group estimated that the book value of the land where the thermoelectrical plants Puerto Nuevo and Nuevo Puerto are located is lower than its recoverable value. Therefore, impairment reversal of property, plant and equipment
was determined for 3,334,703 under the item “Lands and buildings” and recorded under the item “Reversal of impairment of property, plant and equipment and intangible assets” of the consolidated statement of income for the fiscal
year ended December 31, 2023. After the recognition of the impairment reversal, the book value of the mentioned assets amounts to 16,584,386.
To determine the recoverable value the Group has used the fair value less costs to sell.
Gas turbines
The Group revised during the fiscal year 2023 the recoverability of the turbines as individual assets and estimated that the book value of the gas turbine General Electric, which is stored in the facilities of Nuevo Puerto thermoelectrical
power plant, is lower than its recoverable value. Therefore, a charge due to partial reversal of impairment was recognized in under property, plant and equipment for 6,135,870 within the item “Turbines”, and was recorded under the
item “Reversal of impairment of property, plant and equipment and intangible assets” of the consolidated statement of income for the fiscal year ended December 31, 2023.
To determine the recoverable value the Group has used the fair value less costs to sell.
After the recognition of the impairment reversal, the book value of the gas turbine amounts to 15,897,682.
2.2.9. Financial instruments. Presentation, recognition and measurement
A financial instrument is any contract that gives rise to a financial asset of one entity and a financial liability or equity instrument of another entity.
2.2.9.1. Financial assets
Classification
According to IFRS 9 “Financial instruments”, the Group classifies its financial assets in three categories:
–
Financial assets at amortized cost
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A financial asset is measured at amortized cost if both of the following conditions are met: (i) the asset is held within a business model whose objective is to hold assets in order to collect contractual cash flows; and (ii) the contractual
terms of the financial asset give rise on specified dates to solely payments of principal and interest.
Additionally, and for those assets complying with the above-mentioned conditions, IFRS 9 provides for the option of determining, at initial recognition, an asset measured at fair value if doing so would eliminate or significantly reduce
a measurement or recognition inconsistency, which would appear if the assets or liabilities valuation or the recognition of their profits or losses are made on different grounds. The Group has not classified a financial asset at fair value
using this option.
At the closing of these consolidated financial statements, the financial assets at amortized cost of the Group include certain cash elements and cash equivalents, trade and other receivables and other non-current financial assets.
–
Financial assets at fair value through other comprehensive income
Financial assets are measured at fair value through other comprehensive income if they are held in a business model whose objective is achieved by both collecting contractual cash flows and selling financial assets.
At the closing of these consolidated financial statements, the Group has not financial assets at fair value through other comprehensive income.
–
Financial assets at fair value through profit or loss
Any financial assets at fair value through profit or loss belong to a residual category that includes the financial assets that are not held in one of the two business models mentioned, including those kept to negotiate and those classified
at fair value at initial recognition.
At the closing of these consolidated financial statements, the financial assets of the Group at fair value through profit or loss include mutual funds, public debt securities, stocks and corporate bonds and interest rate swaps accounted
under other financial assets.
Recognition and measurement
The purchase and sale of financial assets are recognized at the date on which the Group commits to purchase or sale the asset.
Financial assets valued at amortized cost are initially recognized at their fair value plus cost of transaction. These assets accrue interest according to the effective interest rate method.
Financial assets valued at fair value through profit or loss and other comprehensive income are initially recognized at fair value, and transaction costs are recognized as expenses in the comprehensive income statement. Subsequently,
they are valued at fair value. Changes in fair value and income from the sale of financial assets at fair value through profit or loss and other comprehensive income are recorded in Finance Income or Finance Expenses and Other
comprehensive income, respectively, in the consolidated statement of income and comprehensive income, respectively.
In general, the Group uses the transaction price to determine the fair value of a financial instrument at the initial recognition. In the rest of the cases, the Group only records revenue or loss at initial recognition if the fair value of the
instrument is evidenced with other comparable and visible transactions of the market for the same instrument or if it is based on a valuation technique that only includes visible market data. Revenue or loss not recognized at the initial
recognition of a financial asset is later recognized as long as they derive from a change in factors (including time) in which the market participants consider establishing the price.
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The profit or loss of debt instruments which are measured at amortized cost and are not designated as hedge instruments are recognized in profit or loss when the financial assets are removed or when impairment is recognized and
during the amortization process by using the effective interest rate method. The Group only reclassifies all investments in debt instruments when it changes the business model used to manage those assets.
Derecognition of financial assets
A financial asset (or, where applicable, a part of a financial asset or part of a group of similar financial assets) is derecognized; that is to say, it is deleted from the statement of financial position, when:
–
–
the contractual rights to receive cash flows from the asset have expired;
the contractual rights to receive cash flows from the asset have been transferred or an obligation has been assumed to pay the received cash flows in full without material delay to a third party under a ‘pass-through’
arrangement; and either (a) all the risks and rewards of the asset have been transferred substantially, or (b) all the risks and rewards of the asset have neither been transferred nor retained substantially, but control of the asset
has been transferred.
When the contractual rights to receive cash flows from an asset have been transferred or a pass-through arrangement has been entered into, but all of the risks and rewards of the asset have neither transferred nor retained substantially
and no control of it has been transferred, such asset shall continue to be recognized to the extent of the Group’s continuing involvement in it. In this case, the Group shall also recognize the associated liability. The transferred asset and
the associated liability are measured on a basis that reflects the rights and obligations that the Group has retained.
Impairment of financial assets
IFRS 9 establishes an “expected credit loss” model (“ECL”). This requires the application of considerable judgment with regard to how changes in economic factors affect ECL, which is determined over a weighted average base. ECL
results from the difference between contractual cash flows and cash flows at current value that the Group expects to receive.
The impairment model set forth by IFRS 9 is applicable to the financial assets measured at amortized value or at fair value through changes in other comprehensive income, except for the investment in equity securities and assets from
the contracts recognized under IFRS 15.
Pursuant to IFRS 9, loss allowances are measured using one of the following bases:
–
–
The 12-month ECL: these are expected credit losses that result from those default events on the financial instrument that are possible within 12 months after the reporting date; and
Full lifetime expected credit losses: these are expected credit losses that result from all possible default events over the life of the financial instrument.
Given the nature of the clients with which the Group operates and on the base of the foregoing criteria, the Group did not identify expected credit losses.
With regard to financial placements and according to the placement policies in force, the Group monitors the credit rate and the credit risk of these instruments. Pursuant to the analysis, the Group did not identify the need to record
impairment of these types of instruments.
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2.2.9.2. Financial liabilities
Initial recognition and subsequent measurement
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Financial liabilities are classified, at initial recognition, as financial liabilities at fair value through profit or loss, loans and borrowings, accounts payables or as derivatives designated as hedging instruments in an effective hedge ratio,
as appropriate.
Financial liabilities are initially recognized at their fair value, net of the incurred transaction costs. Since the Group has no financial assets whose characteristics require the fair value accounting, according to IFRS, after the initial
recognition, the financial assets are valued at amortized cost. Any difference between the amount received as financing (net of transaction costs) and the reimbursement value is recognized in comprehensive income throughout the life
of the debt financial instrument using the method of effective interest rate.
At the closing date of these consolidated financial statements, the financial liabilities classified as loans and borrowings and accounts payables of the Group include Trade and other payables, and Loans and borrowings.
Derecognition of financial liabilities
A financial liability is derecognized when the obligation under the liability is discharged or cancelled or expires.
When an existing financial liability is replaced by another from the same lender on substantially different terms, or the terms of an existing liability are substantially modified, such an exchange or modification is treated as a
derecognition of the original liability and the recognition of a new liability, and the difference in the respective carrying amounts is recognized as finance income or costs in the statement of income, as the case may be.
2.2.9.3. Offsetting financial assets and financial liabilities
Financial assets and financial liabilities are offset, and the net amount presented in the statement of financial position if, and only if, there is a currently enforceable legal right to offset the recognized amounts and there is an intention to
settle on a net basis, or to realize the assets and settle the liabilities simultaneously.
2.2.9.4. Financial assets and liabilities with related parties
Assets and liabilities with related parties are recognized initially at fair value plus directly attributable transaction costs. As long as credits and debts with related parties do not derive from arms-length transactions, any difference arising
at the initial recognition between such fair value and the consideration given or received in return shall be considered as an equity transaction (capital contribution or payment of dividends, which will depend on whether it is positive or
negative).
Following initial recognition, these receivables and payables are measured at their amortized cost through the effective interest rate (EIR) method. The EIR amortization is included in finance income or costs or other operating income
or expenses in the statement of income, depending on the nature of the liability giving rise to it.
2.2.9.5. Derivative financial instruments and hedge accounting
Initial recognition and subsequent measurement
The derivative financial instruments used by the Group are initially recognized through their fair values at the date on which the contract is entered into, and they are subsequently measured again at their fair value. The derivative
financial instruments are accounted as financial assets when their fair value is positive and as financial liabilities when their fair value is negative.
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The method to recognize the loss or income from the change in fair value depends on whether the derivative was determined as a hedge instrument; in such case, on the nature of the item it is covering. The Company can determine
certain derivative as:
–
–
Fair value hedge;
Cash flow hedge;
At the beginning of the transaction, the Group records the relationship between the hedge instruments and items covered, as well as its objectives for risk management and the strategy to make different hedge operations. It also records
its assessment, both at the beginning and on a continuous base, on whether the derivatives used in the hedge transactions are highly effective to compensate changes in fair value or in the cash flows of the items covered.
Fair value hedge
Changes in fair value of derivatives determined and classified as fair value hedge are recorded in the statement of comprehensive income together with any change in the fair value of the covered asset or liability attributable to the
covered risk.
Cash flow hedge
The effective part of changes in fair value of the derivatives determined and classified as cash flow hedge are recognized in Other comprehensive income. The loss or income related to the non-effective part is immediately recognizedin
the consolidated statement of income within the Finance Expenses or Finance Income, respectively.
The cumulative amounts in Other comprehensive income are recorded in the consolidated statement of income in the periods in which the item covered affects the consolidated statement of income. In the case of interest rates hedge,
this means the amounts recognized in equity are reclassified as net finance income (loss) as interest is accrued on associated debts.
As at December 31, 2023, the Group has no hedging derivative instruments. Hence, swap contracts of interest rate are measured at their current value at the closing of each period or fiscal year and are stated as assets or liabilities
depending on the rights and obligations emerging from the respective contracts. In this way, changes in the accounting measure of such contracts are recognized in the consolidated statement of income under finance income or finance
cost, as applicable.
2.2.10. Inventories
Inventories are valued at the lower of restated acquisition cost and net realizable value. In the estimation of recoverable values, the purpose of the asset to be measured and the movements of items of slow or scarce rotation are taken
into account. Inventories balance is not higher than its net realizable value at the corresponding dates.
2.2.11. Cash and cash equivalents
Cash is deemed to include both cash fund and freely-available bank deposits on demand. Short-term deposits are deemed to include short-term investments with significant liquidity and free availability that, subject to no previous notice
or material cost, may be easily converted into a specific cash amount that is known with a high degree of certainty upon the acquisition, are subject to an insignificant risk of changes in value, maturing up to three months after the date
of the related acquisitions, and whose main purpose is not investment or any other similar purpose, but settling short-term commitments.
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For the purpose of the consolidated statement of financial position and the consolidated statement of cash flows, cash and cash equivalents comprise cash at banks and on hand and short-term investments meeting the abovementioned
conditions.
2.2.12. Provisions
Provisions are recognized when the Group has a present obligation (legal or constructive) as a result of a past event, it is probable that an outflow of resources embodying economic benefits will be required to settle the obligation and a
reliable estimate can be made of the amount of the obligation. Where the Group expects some or all of a provision to be reimbursed, for example under an insurance contract, the reimbursement is recognized as a separate asset but only
when the reimbursement is virtually certain. The expense relating to any provision is presented in the statement of income under the item that better reflects the nature of the provision net of any reimbursement to the extent that the
latter is virtually certain.
If the effect of the time value of money is material, provisions are discounted using a current pre-tax market rate that reflects, where appropriate, the risks specific to the liability. Where discounting is used, the increase in the provision
due to the passage of time is recognized as a finance cost in the consolidated statement of income.
–
Provision for lawsuits and claims
In the ordinary course of business, the Group is exposed to claims of different natures (e.g., commercial, labor, tax, social security, foreign exchange or customs claims) and other contingent situations derived from the interpretation of
current legislation, which result in a loss, the materialization of which depends on whether one more events occur or not. In assessing these situations, Management uses its own judgment and advice of its legal counsel, both internal
and external, as well as the evidence available as of the related dates. If the assessment of the contingency reveals the likelihood of the materialization of a loss and the amount can be reliably estimated, a provision for lawsuits and
claims is recorded as of the end of the reporting period.
2.2.13. Contingent liabilities
A contingent liability is: (i) a possible obligation that arises from past events and whose existence will be confirmed only by the occurrence or non-occurrence of one or more uncertain future events not wholly within the control of the
entity; or (ii) a present obligation that arises from past events but is not recognized because: (a) it is not probable that an outflow of resources embodying economic benefits will be required to settle the obligation; or (2) the amount of
the obligation cannot be measured with sufficient reliability.
A contingent liability is not recognized in financial statements; it is reported in notes, unless the possibility of an outflow of resources to settle such liability is remote. For each type of contingent liability as of the relevant reporting
period-end dates, the Group shall disclose (i) a brief description of the nature of the obligation and, if possible, (ii) an estimate of its financial impact; (iii) an indication of the uncertainties about the amount or timing of those outflows;
and (iv) the possibility of obtaining potential reimbursements.
2.2.14. Contingent assets
A contingent asset is a possible asset that arises from past events and whose existence will be confirmed only by the occurrence or non-occurrence of one or more uncertain future events not wholly within the control of the Group.
A contingent asset is not recognized in financial statements; it is reported in notes only where an inflow of economic benefits is probable. For each type of contingent asset as of the relevant reporting period-end dates, the Group shall
disclose (i) a brief description of the nature thereof and, if possible, (ii) an estimate of its financial impact.
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2.2.15. Employee benefits
Employee short-term benefits:
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The Group recognizes short-term benefits to employees, such as salary, vacation pay, bonuses, among others, on an accrued basis and includes the benefits arising from collective bargaining agreements.
Post-employment employee long-term benefits:
The Group grants benefits to all trade-union employees when obtaining the ordinary retirement benefit under the Argentine Integrated Pension Fund System, based on multiples of the relevant employees’ salaries.
The amount recognized as a liability for such benefits includes the present value of the liability at the end of the reporting period, and it is determined through actuarial valuations using the projected unit credit method.
Actuarial gains and losses are fully recognized in other comprehensive income in the period when they occur and immediately allocated to unappropriated retained earnings (accumulated losses), and not reclassified to income in
subsequent periods.
The Group recognizes the net amount of the following amounts as expense or income in the statement of income for the reporting year: (a) the cost of service for the current period; (b) the cost of interest; (c) the past service cost, and
(d) the effect of any curtailment or settlement.
Other long-term employee benefits:
The Group grants seniority-based benefits to all trade-union employees when reaching a specific seniority, based on their normal salaries.
The amount recognized as liabilities for other long-term benefits to employees is the present value of the liability at the end of the reporting period. The Group recognizes the net amount of the following amounts as expense or income:
(a) the cost of service for the current period; (b) the cost of interest; (c) actuarial income and loss, which shall be recognized immediately and in full; (d) the past service cost, which shall be recognized immediately and in full; and (e)
the effect of any curtailment or settlement.
2.2.16. Share-based payments
The cost of share-based payments transactions that are settled with equity instruments is determined by the fair value at the date when the grant is made using an appropriate valuation model.
This cost is recognized in the consolidated financial statements under employee benefits expense.
On January 18, 2017, the subsidiary CP Renovables S.A. (“CPR”) entered into a stock option agreement with its minority shareholder at that time that was also its chairman and general manager and a shareholder of the Company (the
“minority shareholder”). Under such agreement the minority shareholder has the right to purchase class B shares of CPR that represents 10% of the fully diluted capital stock of CPR. The option was exercisable in whole or in part, at
any time prior to the seventh anniversary of the date of the stock option agreement. On November 15, 2023, the minority shareholder exercised the option and acquired the shares representing 10% of the capital stock of CPR. See
Consolidated Statement of Changes in Equity. As of December 31, 2023 all assumed obligations under the stock option agreement were met.
2.2.17. Investment in associates
The Group’s investments in associates are accounted for using the equity method. An associate is an entity over which the Group has significant influence. Significant influence is the power to participate in the financial and operating
policy decisions of the investee, but is neither control nor joint control.
According to the equity method, investments in associates are originally booked in the statement of financial position at cost, plus (less) the changes in the Group’s ownership interests in the associates’ net assets subsequent to the
acquisition date. If any, goodwill relating to the associate is included in the carrying amount of the investment and is neither amortized nor individually tested for impairment.
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CENTRAL PUERTO S.A.
If the cost of the investments is lower than the proportional share as of the date of acquisition on the fair value of the associate’s assets and liabilities, a gain is recognized in the period in which the investment was acquired.
The statement of income reflects the share of the results of operations of the associates adjusted on the basis of the fair values estimated as of the date on which the investment was incorporated. When there has been a change
recognized directly in the equity of the associates, the Group recognizes its share of any changes and includes them, when applicable, in the statement of changes in equity.
The Group’s share of profit of an associate is shown in a single line on the main body of the consolidated statement of income. This share of profit includes income or loss after taxes of the associates.
The financial information of the associates is prepared for the same reporting period as the Group. When necessary, adjustments are made to bring the accounting policies of the associates in line with those of the Group.
After application of the equity method, the Group determines whether it is necessary to recognize impairment losses on its investment in its associates. At each reporting date, the Group determines whether there is objective evidence
that the value of investment in the associates has been impaired. If such was the case, the Group calculates the amount of impairment as the difference between the recoverable amount of the investment in the associates and its carrying
value, and recognizes the loss as “Share of losses of an associate” in the consolidated statement of income.
The information related to associates is included in Note 3.
2.2.18. Information on operating segments
For management purposes, the Group is organized in four different business units to carry out its activities, as follows:
–
–
–
–
Electric power generation from conventional sources: the Group is engaged in the production of electric power from conventional sources and its sale.
Electric power generation from renewable sources: the Group also is engaged in the production of electric power from renewable sources and its sale.
Natural gas transport and distribution: through its equity investees companies belonging to ECOGAS Group, the Group is engaged in the natural gas distribution public sector service in the Cuyo and Centro regions of
Argentina and it is also engaged in the natural gas transport sector service through its equity investee Company Transportadora de Gas del Mercosur S.A. Also, the Company resells certain gas transport and distribution
capacity that was previously contracted by the Company.
Forestry activity: the Group is engaged in the forestation, reforestation, woods plantation and commercialization of its products.
The Board of Directors is the Chief Operating Decision Maker (CODM) and monitors the operating results of its business units separately for the purpose of making decisions about resource allocation and performance assessment.
The financial performance of segments is evaluated based on profit or loss and measured consistently with profit or loss in the consolidated financial statements (Note 4).
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2.2.19. Biological assets
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Forestry plantations are measured, both on initial recognition and at the end of the reporting period, at its fair value, less costs of sale at harvest or collection point. Fair value of the plantations with no available market prices under their
current condition is determined through discounted cash flows, using market discount rates.
Forestry plantations included in the harvest plan for the twelve months following the closing of the period are classified as current biological assets.
2.2.20. Business combinations
Business combinations are accounted using the acquisition method when the Group takes effective control of the acquired company.
The Group will recognize in its financial statements the acquired identifiable assets, the assumed liabilities, any non-controlling interest and, if any, goodwill according to IFRS 3.
The acquisition cost is measured as the aggregate of the transferred consideration, measured at fair value on that date, and the amount of any non-controlling interest in the acquiree. The Group will measure the non- controlling interest
in the acquiree at fair value or at the proportional interest in the identifiable net assets of the acquiree.
If the business combination is made in stages, the Group will measure again its previous holding at fair value at the acquisition date and will recognize income or loss in the consolidated statement of comprehensive income.
Goodwill is measured at cost, as excess of the transferred consideration regarding the acquired identifiable assets and the net assumed liabilities of the Group. If this consideration is lower than the fair value of the identifiable assets and
of the assumed liabilities, the difference is recognized in the consolidated statement of income. If the fair value of the net assets acquired is higher than the consideration paid, the Group reassesses whether it has properly identified all
the assets acquired and all the liabilities assumed and reviews the procedures used to measure the amounts to be recognized at the acquisition date. If the reassessment still results in an excess of the fair value of the net assets acquired in
comparison to the consideration paid, then the gain is recognized in the consolidated statement of income.
As described in Note 20.5, on February 17, 2023, the Company acquired the company Central Costanera S.A. The fair value of the identifiable assets and liabilities transferred at the date of the acquisition, which was determined in
accordance with IFRS 3, is as follows:
Assets
Property, plant and equipment
Other non-financial assets
Trade and other receivables
Other financial assets
Cash and cash equivalents
Liabilities
Trade and other payables
Other loans and borrowings
Other non-financial liabilities
Compensation and employee benefits liabilities
Provisions
Deferred income tax liabilities
Total identifiable net assets measured at fair value
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CENTRAL PUERTO S.A.
ARS 000
80,546,470
2,156,269
25,171,582
1,173,060
6,736,561
(5,359,654)
(22,077,936)
(3,779,158)
(3,743,777)
(1,288,155)
(809,380)
78,725,882
On the other hand, the Group decided to measure the non-controlling interest in the acquired company based on its proportional interest of the identifiable net assets of the acquired company.
The business combination was accounted for using the “acquisition method” set forth in IFRS 3. As a result of the application of such method, the Company considers that the consideration transferred amounting to 25,494,995 plus the
value of the non-controlling interest in the acquired company of 19,146,135 is lower than the fair value of the assets acquired and liabilities assumed at the acquisition date. The Company reassessed whether it has properly identified all
the assets acquired and all the liabilities assumed and reviewed the procedures used to measure the amounts to be recognized at the acquisition date. After the reassessment there was still an excess of the fair value of the net assets
acquired in comparison to the sum of consideration paid and the value of the non-controlling interest. Therefore, the Company recognized a gain from bargain purchase amounting to 34,084,752 in the statement of income for the year
ended December 31, 2023.
The Company performed the allocation of the price and the valuation at fair value of the identifiable assets and the liabilities assumed with the assistance of an independent specialist.
Revenues and loss before income tax accrued after the acquisition date amounted to 37,039,172 and (16,507,910), respectively, and were included in the consolidated statement of income for the fiscal year ended December 31, 2023.
If the business combination had been made at the beginning of the fiscal year, revenues and loss before income tax for the period starting January 1, 2023 and ending December 31, 2023 would have amounted to 46,647,880 and
(1,315,513), respectively.
As described in Note 20.6, on May 3, 2023, the Company acquired the companies Empresas Verdes Argentina S.A., Las Misiones S.A. y Estancia Celina S.A. The fair value of the identifiable assets and liabilities transferred at the date
of the acquisition, which was determined in accordance with IFRS 3, is as follows:
Assets
Property, plant and equipment
Biological assets
Other non-financial assets
Trade and other receivables
Other financial assets
Cash and cash equivalents
Liabilities
Trade and other payables
Other non-financial liabilities
Compensation and employee benefits liabilities
Deferred income tax liabilities
Total identifiable net assets measured at fair value
ARS 000
21,083,378
39,820,532
340,028
81,516
314,165
60,310
(56,897)
(190,277)
(149,632)
(6,901,257)
54,401,866
The business combination was accounted for using the “acquisition method” set forth in IFRS 3. As a result of the application of such method, the Company considers that the consideration transferred amounting to 15,841,258 is lower
than the fair value of the assets acquired and liabilities assumed at the acquisition date. The Company reassessed whether it has properly identified all the assets acquired and all the liabilities assumed and reviewed the procedures used
to measure the amounts to be recognized at the acquisition date. After the reassessment there was still an excess of the fair value of the net assets acquired in comparison to the consideration paid. Therefore, the Company recognized a
gain from bargain purchase amounting to 38,560,607 in the consolidated statement of income for the year ended December 31, 2023.
The Company has made the purchase price allocation and the valuation at fair value of the identifiable assets and the liabilities assumed with the assistance of an independent specialist. The fair value of the biological assets
corresponding to mature plantations has been determined based on the price existing in the active market in which they operate, whereas the fair value of the biological assets corresponding to young plantations has been determined
based on the discounted cash flow.
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CENTRAL PUERTO S.A.
Revenues and the Income before income tax after the acquisition date amounted to 2,541,991 and 9,646,670 respectively and were included in the consolidated statement of income for the fiscal year ended December 31, 2023.
The Company does not have the necessary information to disclose the foregoing figures as if the acquisition took place at the beginning of this fiscal year.
As described in Note 20.6, on December 27, 2022, the Company acquired the companies Forestal Argentina S.A. and Loma Alta Forestal S.A. The business combination was accounted for using the “acquisition method” set forth in
IFRS 3. As a result of the application of such method, the Company considered that the consideration transferred was lower than the fair value of the assets acquired and liabilities assumed at the acquisition date. Therefore, the
Company recognized a gain from bargain purchase amounting to 37,911,293 in the consolidated statement of income for the year ended December 31, 2022. During 2023, the Company reviewed the preliminary allocation of the price
and the valuation at fair value of identifiable assets and assumed liabilities in 2022, and no modifications were identified.
2.3. Significant accounting estimates and assumptions
The preparation of the Group’s financial statements requires management to make significant estimates and assumptions that affect the recorded amounts of revenues, expenses, assets and liabilities, and the disclosure of contingent
liabilities, at the end of the reporting period. In this sense, the uncertainties related to the estimates and assumptions adopted could give rise in the future to final results that could differ from those estimates and require significant
adjustments to the amounts of the assets and liabilities affected.
The key assumptions concerning the future and other key sources of estimation uncertainty at the end of the reporting period, that have a significant risk of causing a material adjustment to the carrying amounts of assets and liabilities
within the next financial year, are described below. The Group based its accounting assumptions and significant estimates on parameters available when the financial statements were prepared. Existing circumstances and assumptions
about future developments, however, may change due to market changes or circumstances arising beyond the control of the Group. Such changes are reflected in the assumptions when they occur.
Recoverability of property, plant and equipment and intangible assets:
At each closing date of the reported period, the Group evaluates if there is any sign that the property, plant and equipment and/or intangible assets with finite useful lives may have their value impaired. Impairment exists when the book
value of assets related to the Cash Generating Unit (CGU) exceeds its recoverable value, which is the higher between its fair value less costs of sale of such asset and value in use. The value in use is calculated through the estimation of
future cash flows discounted at their present value through a discount rate that reflects the current assessments of the market over the temporal value of money and the specific risks of each CGU. The recoverable value is sensitive to the
used discount rate, as well as the estimated inflows.
Biological assets:
The process of estimating the value of biological assets is determined using fair values. This estimation includes judgment and assumptions related to estimated forest growth, margins, and discount rates.
Business combinations:
See Note 2.2.20.
2.4. Changes in accounting policies
New standards and interpretations adopted
As from the fiscal year beginning January 1, 2023, the Group has applied for the first time certain new and/or amended standards and interpretations as issued by the IASB.
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Below is a brief description of the new and/or amended standards and interpretations adopted by the Group and their impact on these consolidated financial statements.
Definition of Accounting Estimates - Amendments to IAS 8
In February 2021, the IASB issued amendments to IAS 8, in which it introduces a definition of “accounting estimates”. The amendments clarify the distinction between changes in accounting estimates and changes in accounting
policies and the correction of errors. Also, they clarify how entities use measurement techniques and inputs to develop accounting estimates.
The amendments are effective for annual reporting periods beginning on or after 1 January 2023 and apply to changes in accounting policies and changes in accounting estimates that occur on or after the start of that period.
The amendments did not have a significant impact on the Group´s consolidated financial statements.
Disclosure of Accounting Policies - Amendments to IAS 1 and IFRS Practice Statement 2
In February 2021, the IASB issued amendments to IAS 1 and IFRS Practice Statement 2 Making Materiality Judgements, in which it provides guidance and examples to help entities apply materiality judgements to accounting policy
disclosures. The amendments aim to help entities provide accounting policy disclosures that are more useful by replacing the requirement for entities to disclose their ‘significant’ accounting policies with a requirement to disclose their
‘material’ accounting policies and adding guidance on how entities apply the concept of materiality in making decisions about accounting policy disclosures.
The amendments to IAS 1 are applicable for annual periods beginning on or after 1 January 2023 with earlier application permitted. Since the amendments to the Practice Statement 2 provide non-mandatory guidance on the application
of the definition of material to accounting policy information, an effective date for these amendments is not necessary. The Group has revisited their accounting policy information disclosures to ensure consistency with the amended
requirements. These amendments did not have a significant impact on the Group´s consolidated financial statements.
Deferred Tax related to Assets and Liabilities arising from a Single Transaction - Amendments to IAS 12
The amendments to IAS 12 Income Tax narrow the scope of the initial recognition exception, so that it no longer applies to transactions that give rise to equal taxable and deductible temporary differences such as leases and
decommissioning liabilities. The amendments had no impact on the Group’s consolidated financial statements.
International Tax Reform - Pillar Two Model Rules - Amendments to IAS 12
The amendments to IAS 12 have been introduced in response to the OECD’s BEPS Pillar Two rules and include:
A mandatory temporary exception to the recognition and disclosure of deferred taxes arising from the jurisdictional implementation of the Pillar Two model rules; and Disclosure requirements for affected entities to help users of the
financial statements better understand an entity’s exposure to Pillar Two income taxes arising from that legislation, particularly before its effective date.
The mandatory temporary exception - the use of which is required to be disclosed - applies immediately. The remaining disclosure requirements apply for annual reporting periods beginning on or after 1 January 2023, but not for any
interim periods ending on or before 31 December 2023.
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As of the date of these financial statements, the adoption of the above-mentioned amendments has not taken any effects as there is no tax regulatory framework in the jurisdictions in which the Company operates related to said Reform
and additionally the Group does not exceed sales revenues in euros 750 million.
2.5. IFRS issued but not yet effective
The following new and/or amended standards and interpretations have been issued but were not effective as of the date of issuance of these consolidated financial statements of the Group. In this sense, only the new and/or amended
standards and interpretations that the Group expects to be applicable in the future are indicated. In general, the Group intends to adopt these standards, as applicable when they become effective.
On August 15, 2023, General Resolution CNV No. 972/2023 was published in the Official Gazette which indicates that the early application of IFRS and/or their amendments will not be allowed, unless specifically admitted by the
CNV.
Amendments to IAS 1: Classification of Liabilities as Current or Non-current
In January 2020 and October 2022, the IASB issued amendments to paragraphs 69 to 76 of IAS 1 to specify the requirements for classifying liabilities as current or non-current. The amendments clarify: (i) What is meant by a right to
defer settlement; (ii) that a right to defer must exist at the end of the reporting period; (iii) that classification is unaffected by the likelihood that an entity will exercise its deferral right and (iv) that only if an embedded derivative in a
convertible liability is itself an equity instrument would the terms of a liability not impact its classification. In addition, a requirement has been introduced to require disclosure when a liability arising from a loan agreement is classified
as non-current and the entity’s right to defer settlement is contingent on compliance with future covenants within twelve months.
The amendments are effective for annual reporting periods beginning on or after 1 January 2024 and must be applied retrospectively. The Group is currently assessing the impact the amendments will have on current practice.
Supplier Finance Arrangements - Amendments to IAS 7 and IFRS 7
In May 2023, the IASB issued amendments to IAS 7 Statement of Cash Flows and IFRS 7 Financial Instruments: Disclosures to clarify the characteristics of supplier finance arrangements and require additional disclosure of such
arrangements. The disclosure requirements in the amendments are intended to assist users of financial statements in understanding the effects of supplier finance arrangements on an entity’s liabilities, cash flows and exposure to
liquidity risk.
A supplier finance arrangement is an arrangement where (i) a financial supplier pay the amount that a company owe to its commercial supplier and (ii) the mentioned company pays to the financial supplier in accordance with the
agreement terms.
The amendments will be effective for annual reporting periods beginning on or after 1 January 2024. Early adoption is permitted, but will need to be disclosed.
The amendments are not expected to have a material impact on the Group’s financial statements.
IAS 21 "Effects of Changes in Foreign Currency Exchange Rates" - Absence of Convertibility
In August 2023, the IASB issued Lack of Exchangeability (Amendments to IAS 21). The amendment to IAS 21 specifies how an entity should assess whether a currency is exchangeable and how it should determine a spot exchange
rate when exchangeability is lacking.
If a currency is not exchangeable into another currency, an entity is required to estimate the spot exchange rate at the measurement date. An entity’s objective in estimating the spot exchange rate is to reflect the rate at which an orderly
exchange transaction would take place at the measurement date between market participants under prevailing economic conditions.
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The amendments note that an entity can use an observable exchange rate without adjustment or another estimation technique.
CENTRAL PUERTO S.A.
When an entity estimates a spot exchange rate because a currency is not exchangeable into another currency, it discloses information that enables users of its financial statements to understand how the currency not being exchangeable
into the other currency affects, or is expected to affect, the entity’s financial performance, financial position and cash flows.
The amendments will be effective for annual reporting periods beginning on or after 1 January 2025. Early adoption is permitted, but will need to be disclosed. When applying the amendments, an entity cannot restate comparative
information.
The Enhancement and Standardization of Climate-Related Disclosures for Investors
On March 06, 2024, the Securities and Exchange Commission (SEC) issued the final rule on The Enhancement and Standardization of Climate-Related Disclosures for Investors. This rule mandates the disclosure of information
regarding a registrant’s climate-related risks that have materially impacted, or are reasonably likely to have a material impact on, its business strategy, results of operations, or financial condition.
In April, 2024. the SEC voluntarily stayed its climate-related disclosure rules pending judicial review by the US Court of Appeals for the Eighth Circuit of the consolidated challenges to the rules. The SEC said in its order the stay will
facilitate the judicial resolution of the challenges and that it will continue to vigorously defend the rules’ validity in court.
IASB issues IFRS 18 Presentation and Disclosure in Financial Statements
IFRS 18 was issued on 9 April 2024 and becomes effective for reporting periods beginning on or after 1 January 2027. IFRS 18 introduces new requirements on presentation within the statement of profit or loss, including specified
totals and subtotals. It also requires disclosure of management-defined performance measures and includes new requirements for aggregation and disaggregation of financial information based on the identified ‘roles’ of the primary
financial statements and the notes. In addition, there are consequential amendments to other accounting standards.
3. Investment in associates
The book value of investment in associates as of December 31, 2023 and 2022 amounts to:
ECOGAS Group (Note 3.1)
Transportadora de Gas del Mercosur S.A.
The share of the profit of associates for the years ended December 31, 2023, 2022 and 2021 amounts to:
ECOGAS Group (Note 3.1)
Transportadora de Gas del Mercosur S.A.
Termoeléctrica José de San Martin S.A. (Note 1.2.a)
Termoeléctrica Manuel Belgrano S.A. (Note 1.2.a)
3.1. Investments in gas distribution
12-31-2023
ARS 000
12-31-2022
ARS 000
33,451,095
908,973
34,360,068
37,238,428
622,392
37,860,820
2023
ARS 000
2022
ARS 000
2021
ARS 000
5,829,197
286,583
-
-
6,115,780
497,022
(149,697)
-
-
347,325
(3,147,522)
124,055
(228,962)
(171,844)
(3,424,273)
The Group holds ownership interests of 42.31% in Inversora de Gas del Centro S.A. (“IGCE”, the controlling company of Distribuidora de Gas del Centro S.A. “DGCE” and Distribuidora de Gas Cuyana S.A. “DGCU”) and 17.20% in
DGCE (from now on, “ECOGAS Group”). Consequently, the Group holds, both directly and indirectly, a 40.59% of the capital stock of DGCE, and, indirectly, a 21.58% interest in DGCU. The Company does not control such
companies.
IGCE is a private, unlisted company which holds a 55.29% equity interest in DGCE, a company engaged in the distribution of natural gas in the provinces of Cordoba, La Rioja and Catamarca, Argentine, and a 51% equity interest in
DGCU, a company engaged in the distribution of natural gas in the provinces of Mendoza, San Juan and San Luis.
During April and December 2023 and during April 2022 and 2021, the Group received dividends of 9,596,021, 305,659 and 850,261, respectively, from ECOGAS Group.
On March 24, 2022 CPSA acquired an 8.599% equity interest in the related company GESER S.A.U., an entity controlled by IGCE. The purchase price was 5,125. GESER S.A.U. is a private unlisted company which is engaged in the
rendering of professional services related to administrative and/or commercial activities.
3.2. Transportadora de Gas del Mercosur S.A.
The Group has a 20% interest in Transportadora de Gas del Mercosur S.A. (“TGM”). This Company has a gas pipeline that covers the area from Aldea Brasilera (in the Province of Entre Ríos) to Paso de los Libres (in the Province of
Corrientes). TGM is a private unlisted company.
Table of Contents
4. Operating segments
F-44
CENTRAL PUERTO S.A.
The following provides summarized information of the operating segments for the years ended December 31, 2023, 2022 and 2021:
2023
Electric Power
Generation
from
conventional
sources
ARS 000
Electric Power
Generation
from
renewable
sources
ARS 000
Natural Gas
Transport and
Distribution
(1) (2)
ARS 000
Forest activity
ARS 000
Others (1) (5)
ARS 000
Adjustments
and
eliminations
(3)
ARS 000
Revenues
Cost of sales
Administrative and selling expenses
Other operating income
Other operating expenses
Reversal of impairment of property, plant and equipment and intangible assets, net
Operating income
246,099,601
(179,457,000)
(28,222,382)
211,721,234
(10,959,900)
20,360,769
259,542,322
55,226,719
(19,409,265)
(1,921,495)
10,829,622
(222,386)
23,633,767
68,136,962
148,154,740
(120,530,232)
(31,126,116)
6,283,765
(1,775,586)
-
1,006,571
5,815,213
(5,395,181)
(1,609,817)
15,021,037
(3,928,976)
-
9,902,276
4,568,538
(4,952,119)
-
134,338
(17,528)
-
(266,771)
(146,296,647)
119,577,353
31,126,116
(6,283,765)
1,775,586
-
(101,357)
Total
ARS 000
313,568,164
(210,166,444)
(31,753,694)
237,706,231
(15,128,790)
43,994,536
338,220,003
Other (expenses) income (4)
(213,344,071)
(54,477,772)
13,599,809
(3,278,475)
73,033,788
(7,792,412)
(192,259,133)
Net income for the segment
Share in the net income for the segment
46,198,251
46,198,251
13,659,190
13,659,190
14,606,380
6,683,668
6,623,801
6,623,801
72,767,017
72,795,960
(7,893,769)
-
145,960,870
145,960,870
2022
Revenues
Cost of sales
Administrative and selling expenses
Other operating income
Other operating expenses
Impairment of property, plant and equipment and intangible assets
Operating income
Electric Power
Generation
from
conventional
sources
ARS 000
Electric Power
Generation
from
renewable
sources
ARS 000
Natural Gas
Transport and
Distribution
(1) (2)
ARS 000
251,232,057
(139,936,949)
(21,064,610)
106,181,448
(1,850,316)
(18,592,606)
175,969,024
56,866,766
(20,199,641)
(2,188,638)
5,518,119
(24,330)
(25,077,854)
14,894,422
165,127,506
(134,093,751)
(28,993,257)
4,255,737
(1,467,013)
-
4,829,222
Other (expenses) income (4)
(169,621,403)
(921,919)
(12,567,593)
Forest activity
ARS 000
Others (1) (5)
ARS 000
Adjustments
and
elimination
(3)
ARS 000
5,457,369
(4,597,277)
-
137,845
(498)
-
997,439
(162,939,061)
132,776,060
28,993,257
(4,255,737)
1,467,013
-
(3,958,468)
Total
ARS 000
315,744,637
(166,051,558)
(23,253,248)
111,837,412
(1,875,144)
(43,670,460)
192,731,639
37,179,395
12,610,154
(133,321,366)
-
-
-
-
-
-
-
-
Net income (loss) for the segment
Share in the net income for the segment
6,347,621
6,347,621
13,972,503
13,972,503
(7,738,371)
903,303
2021
Electric Power
Generation
from
conventional
sources
ARS 000
Electric Power
Generation
from
renewable
sources
ARS 000
Natural Gas
Transport and
Distribution
(1) (2)
ARS 000
Forest
activity
ARS 000
Revenues
Cost of sales
Administrative and selling expenses
Other operating income
Other operating expenses
Impairment of property, plant and equipment and intangible assets
Operating income
268,729,908
(152,779,050)
(21,910,620)
63,549,989
(4,963,256)
(47,102,661)
105,524,310
68,826,723
(20,495,496)
(3,273,162)
2,564,834
64,134
-
47,687,033
186,722,670
(143,806,932)
(37,701,469)
6,101,706
(1,411,710)
-
9,904,265
Other (expenses) income (4)
(141,877,419)
(13,296,431)
(27,318,781)
Net (loss) income for the segment
Share in the net (loss) income for the segment
(36,353,109)
(36,353,109)
34,390,602
34,390,602
(17,414,516)
(2,924,339)
-
-
-
-
-
-
-
-
-
-
-
-
38,176,834
38,186,846
8,651,686
-
59,410,273
59,410,273
Adjustments
and
eliminations
(3)
ARS 000
Others (1)
ARS 000
10,621,840
(9,064,087)
-
120,297
-
-
1,678,050
(188,657,380)
146,818,652
37,701,469
(6,101,709)
1,411,711
-
(8,827,257)
Total
ARS 000
346,243,761
(179,326,913)
(25,183,782)
66,235,117
(4,899,121)
(47,102,661)
155,966,401
(1,073,788)
23,670,076
(159,896,343)
604,262
956,904
14,842,819
-
(3,929,942)
(3,929,942)
(1)
(2)
(3)
(4)
(5)
Includes information from associates.
Includes income (expenses) related to resale of gas transport and distribution capacity.
Includes adjustments and eliminations related to equity method investees.
Includes loss on net monetary position, share of the profit of associates, gain from bargain purchase, finance income and expenses, net allocated to each segment.
Includes gain from bargain purchase related to the business combination described in Note 2.2.20.
Table of Contents
Major customers
F-45
CENTRAL PUERTO S.A.
During the years ended December 31, 2023, 2022 and 2021 revenues from CAMMESA amounted to 84%, 86% and 87%, respectively, from total Group revenues.
5. Revenues
Spot market revenues
Sales under contracts
Steam sales
Forest activity revenues
Resale of gas transport and distribution capacity
Revenues from CVO thermal plant management
6. Operating expenses
6.1. Cost of sales
Inventories and biological assets at beginning of each year
Acquisition of biological assets (1)
Purchases and operating and forest production expenses for each year:
– Inventory variation
– Purchases
– Operating expenses (Note 6.2)
– Transfers to property, plant and equipment, net
– Forest production expenses (Note 6.2)
– Forest growth and revaluation of biological assets (Note 7.1)
Inventories and biological assets at the end of each year
2023
ARS 000
2022
ARS 000
2021
ARS 000
155,523,697
131,012,781
14,789,842
5,815,213
1,858,093
4,568,538
313,568,164
125,095,966
167,719,171
15,283,685
-
2,188,445
5,457,370
315,744,637
144,468,508
182,679,073
10,409,047
-
1,868,300
6,818,833
346,243,761
2023
ARS 000
2022
ARS 000
2021
ARS 000
73,976,337
11,094,075
13,389,501
39,820,532
48,101,462
-
(419,994)
31,399,079
174,401,555
(13,217,277)
2,469,707
12,658,919
207,291,989
14,780,802
34,188,222
131,863,334
-
-
-
180,832,358
(110,922,414)
210,166,444
(73,976,337)
166,051,558
-
37,456,133
142,023,647
(2,448,293)
-
-
177,031,487
(11,094,075)
179,326,913
(1)
Corresponds to the biological assets that were added to the Company's equity through the business combinations described in Note 2.2.20.
Table of Contents
6.2. Operating, forest production, administrative and selling expenses
F-46
CENTRAL PUERTO S.A.
Accounts
Compensation to employees
Other long-term employee benefits
Depreciation of property, plant and equipment
Amortization of intangible assets
Purchase of energy and power
Fees and compensation for services
Maintenance expenses
Consumption of materials and spare parts
Insurance
Levies and royalties
Taxes and assessments
Tax on bank account transactions
Forest production services
Others
Total
7. Other income and expenses
7.1. Other operating income
Operating
expenses
ARS 000
41,700,159
2,894,147
63,605,059
6,145,363
1,466,205
9,273,477
21,606,026
13,173,185
9,232,370
4,036,400
432,537
45,643
-
790,984
174,401,555
2023
Forest
production
expenses
2022
2021
Administrative
and selling
expenses
ARS 000
Operating
expenses
ARS 000
Administrative
and selling
expenses
ARS 000
Operating
expenses
ARS 000
Administrative
and selling
expenses
ARS 000
167,208
-
17,398
-
-
327,121
-
-
2,432
-
1,521
-
1,919,065
34,962
2,469,707
13,838,284
332,620
450,056
-
45
9,980,007
144,348
-
52,461
-
1,714,134
4,644,198
2,322
595,219
31,753,694
26,389,627
1,072,843
48,238,614
12,334,159
948,672
9,486,361
17,216,231
7,603,566
5,625,912
2,303,666
395,394
57,922
-
190,367
131,863,334
9,932,020
190,198
-
-
-
7,228,242
79,652
-
261,019
-
1,623,511
3,410,957
-
527,649
23,253,248
26,288,224
1,248,486
46,330,005
18,645,411
1,170,600
8,499,454
22,053,818
6,988,271
7,788,489
2,334,782
540,507
55,686
-
79,914
142,023,647
9,742,852
266,515
-
-
-
9,175,464
560,051
-
216,185
-
2,068,952
2,587,340
-
566,423
25,183,782
Interest earned from customers
Foreign exchange difference, net
Income from growth and revaluation of biological assets
Insurance recovery
Recovery related to discount of tax credits
Income from sale of property, plant and equipment
Net recovery related to the provision for lawsuits and claims
Net recovery related to the allowance for doubtful accounts and other receivables
Others
(1)
(2)
Includes 12,040,419, 10,377,093 and 11,078,159 related to CVO receivables for the years ended December 31, 2023, 2022 and 2021, respectively.
Includes 179,453,393, 77,990,353 and 42,838,631 related to CVO receivables for the years ended December 31, 2023, 2022 and 2021.
7.2. Other operating expenses
Property, plant and equipment disposal
Forestry expenses
Impairment of material and spare parts
Net charge related to the provision for lawsuits and claims
Net charge related to the allowance for doubtful accounts and other receivables
Trade and tax interests
Others
Table of Contents
7.3. Finance income
Interest earned
Net income on financial assets at fair value through profit or loss (1)
Interest rate swap income
F-47
CENTRAL PUERTO S.A.
(1)
Net of 1,326,994, 350,583 and 140,787 corresponding to turnover tax for the years ended December 31, 2023, 2022 and 2021, respectively.
7.4. Finance expenses
Interest on loans
Foreign exchange differences
Bank commissions for loans and others
Others
8. Income tax
The major components of income tax during the years ended December 31, 2023, 2022 and 2021, are the following:
Consolidated statements of income and comprehensive income
Consolidated statement of income
Current income tax
Income tax charge for the year
Variation between provision and tax return
Deferred income tax
Related to the net variation in temporary differences
Income tax
Consolidated statement of comprehensive income
Income tax for the year related to items charged or credited directly to equity
Deferred income tax income (expense)
Income tax credited charged to other comprehensive income
Table of Contents
F-48
CENTRAL PUERTO S.A.
2023
ARS 000
2022
ARS 000
2021
ARS 000
33,388,985(1)
190,654,483(2)
12,658,919
-
-
-
-
-
1,003,844
237,706,231
20,714,927(1)
85,079,807(2)
-
4,174,622
818,538
61,955
192,207
1,731
793,625
111,837,412
21,902,168(1)
41,734,061(2)
-
-
1,436,000
637,987
-
-
524,901
66,235,117
2023
ARS 000
2022
ARS 000
2021
ARS 000
(7,514,354)
(3,810,192)
(716,167)
(465,251)
(773,244)
(1,792,410)
(57,172)
(15,128,790)
-
-
(1,594,977)
-
-
-
(280,167)
(1,875,144)
-
-
(250,861)
(342,253)
(4,307)
(3,787,816)
(513,884)
(4,899,121)
2023
ARS 000
2022
ARS 000
2021
ARS 000
5,797,141
219,494,795
4,911,890
230,203,826
1,718,494
69,967,225
7,842,191
79,527,910
235,739
8,426,317
3,122,058
11,784,114
2023
ARS 000
2022
ARS 000
2021
ARS 000
25,504,640
(328,248,363)
(2,808,234)
(213,143)
(356,774,380)
(19,648,546)
(113,168,225)
(2,498,682)
(775)
(135,316,228)
(28,577,690)
(74,994,391)
(4,491,538)
(3,568)
(108,067,187)
2023
ARS 000
2022
ARS 000
2021
ARS 000
(31,830,367)
(653,803)
(51,318,496)
949,401
(41,328,005)
919,406
14,546,043
(17,938,127)
29,441,866
(20,927,229)
(9,747,354)
(50,155,953)
2023
ARS 000
2022
ARS 000
2021
ARS 000
404,368
404,368
255,977
255,977
(819)
(819)
The reconciliation between income tax in the consolidated statement of income and the accounting income multiplied by the statutory income tax rate for the years ended December 31, 2023, 2022 and 2021, is as follows:
Income before income tax
At statutory income tax rate 35%
Share of the profit of associates
Effect related to the discount of income tax payable
Variation between provision and tax return
Loss on net monetary position
2023
ARS 000
2022
ARS 000
2021
ARS 000
163,898,997
80,337,502
46,226,011
(57,364,649)
3,358,607
(2,068,000)
(653,803)
(16,276,274)
(28,118,126)
(172,953)
4,960,011
949,401
(10,634,281)
(16,179,106)
99,859
(26,195,938)
919,412
(4,070,845)
Unrecognized tax-loss carryforwards
Non- taxable financial earnings
Income from growth and revaluation of biological assets
Business combination tax effects
Others
Income tax for the year
Deferred income tax
Deferred income tax relates to the following:
Trade receivables
Other financial assets
Provisions and others
Employee benefit liability
Investments in associates
Property, plant and equipment - Material & spare parts - Intangible assets
Deferred tax income
Tax loss carry-forward
Tax inflation adjustment - Asset
Tax inflation adjustment - Liability
Deferred income tax income (expense)
Deferred income tax liabilities, net
Deferred income tax liability, net, disclosed in the consolidated statement of financial position
Consolidated statement
of financial position
12-31-2023
ARS 000
12-31-2022
ARS 000
241,294
(45,015)
(6,222,395)
1,369,568
(11,712,773)
(58,580,403)
(19,756,067)
29,503,216
58,315
(1,356,688)
25,037
(317,474)
(2,647,351)
1,095,043
(12,858,246)
(37,932,341)
(16,760,797)
491,124
377,856
(5,066,658)
(66,500,948)
(73,593,807)
Deferred income tax asset
Deferred income tax liability
Deferred income tax liability, net
1,608,917
19,381,439
4,047,796
25,425,875
4,601,965
(17,938,127)
(8,748,331)
-
-
13,268,952
7,568,098
(20,927,229)
(7,301,074)
-
-
-
2,571,739
(50,155,953)
Consolidated statement of income from continuing operations and
statement
of other comprehensive income
2022
ARS 000
2021
ARS 000
2023
ARS 000
10,963
284,647
310,753
(385,575)
1,209,707
2,644,085
(2,995,269)
10,135,653
(319,541)
4,054,989
14,950,412
(17,837)
(109,018)
300,530
(254,211)
(225,250)
17,074,671
5,920,762
(813,742)
(713,637)
8,535,575
29,697,843
13,219
(204,872)
(264,905)
342,031
(2,730,942)
6,311,190
1,435,041
(20,686,962)
(620,358)
6,658,385
(9,748,173)
2023
ARS 000
Consolidated statement
of financial position
2022
ARS 000
2021
ARS 000
12,663,514
(79,164,462)
(66,500,948)
2,602,356
(76,196,163)
(73,593,807)
798,019
(92,049,689)
(91,251,670)
As of December 31, 2023, the Group holds tax loss carry-forward in its subsidiaries for 96,440,440 that could be utilized against future taxable profit from such entities. Nevertheless, the Group considered there is no certainty regarding
the existence of future taxable income against which tax loss carry-forward for an amount of 12,145,537 can be applied. Therefore, the corresponding deferred tax asset has not been recognized.
Table of Contents
9. Earnings per share
F-49
CENTRAL PUERTO S.A.
Earnings per share amounts are calculated by dividing net income for the year attributable to equity holders of the parent by the weighted average number of ordinary shares during the year, net of the number of treasury shares.
There are no transactions or items generating an effect of dilution.
The following reflects information on income and the number of shares used in the earnings per share computations:
2023
ARS 000
2022
ARS 000
2021
ARS 000
Income (loss) attributable to equity holders of the parent
148,043,845
59,293,545
(4,501,444)
Weighted average number of ordinary shares
1,504,361,287
1,505,044,626
1,505,170,408
There have been no transactions involving ordinary shares or potential ordinary shares between the reporting date and the date of issuance of these consolidated financial statements that may produce a dilution effect.
10. Inventories
Non-current:
Materials and spare parts
Provision for obsolete inventory
Current:
Materials and spare parts
Forest inventories
Fuel oil
Diesel oil
10.1. Provision for obsolete inventory
Inventories
Total 12-31-2023
Total 12-31-2022
Table of Contents
11. Property, plant and equipment
Cost
01-01-2022
2023
ARS 000
2022
ARS 000
10,068,796
(4,087,222)
5,981,574
8,468,323
456,696
7,461
7,476
8,939,956
10,185,044
(3,371,055)
6,813,989
18,997,554
621,090
23,234
40,097
19,681,975
Item
At beginning
12-31-2023
Increases
3,371,055
3,371,055
1,776,078
716,167
716,167
1,594,977
At end
4,087,222
4,087,222
12-31-2022
At end
3,371,055
3,371,055
F-50
CENTRAL PUERTO S.A.
Lands and
buildings
ARS 000
Electric power
facilities and
other
equipment
ARS 000
Wind turbines
ARS 000
Gas
turbines
ARS 000
Construction
in progress
ARS 000
Other
ARS 000
Total
ARS 000
90,327,213
790,491,955
212,494,986
23,384,259
69,767,590
36,549,894
1,223,015,897
Additions
Transfers
Disposals
12-31-2022
Additions
Transfers
Disposals
12-31-2023
36,254,648
128,820
-
126,710,681
67,571,064
(440)
-
194,281,305
11,282
3,182,178
(3,012,371)
790,673,044
70,465,725
10,745,301
(10,687,336)
861,196,734
-
-
-
212,494,986
201,382
(2,214)
-
212,694,154
-
-
-
23,384,259
-
-
-
23,384,259
3,155,466
(3,348,632)
-
69,574,424
15,447,919
2,450,732
(8,247)
747,715
22,911
(166,208)
37,154,312
40,169,111(2)
(14,723)(1)
(3,178,579)
1,259,991,706
2,137,433
23,898
(47,580)
155,823,523(3)
13,217,277(4)
(10,743,163)
1,418,289,343
87,464,828
39,268,063
Depreciation and impairment
01-01-2022
Depreciation for the year
Disposals and impairment
12-31-2022
Depreciation for the year
Disposals and (impairment reversal) / impairment, net
12-31-2023
Net book value:
12-31-2023
12-31-2022
Lands and
buildings
ARS 000
Electric power
facilities and
other
equipment
ARS 000
Wind turbines
ARS 000
Gas
turbines
ARS 000
Construction
in progress
ARS 000
Other
ARS 000
Total
ARS 000
19,999,599
2,938,589
3,694,475
26,632,663
431,400,614
33,632,001
19,657,269
484,689,884
24,585,660
10,703,959
19,669,727
54,959,346
13,622,448
-
-
13,622,448
5,198,104
(6,433,114)
25,397,653
47,759,020
(27,623,796)
504,825,108
9,623,914
(18,540,652)
46,042,608
-
(6,135,872)
7,486,576
33,891,012
-
-
33,891,012
-
9,849,420
43,740,432
28,474,524
964,065
436,095
29,874,684
1,491,475
497,186
31,863,345
551,973,857
48,238,614
43,457,566
643,670,037
64,072,513
(48,386,828)
659,355,722
168,883,652
100,078,018
356,371,626
305,983,160
166,651,546
157,535,640
15,897,683
9,761,811
43,724,396
35,683,412
7,404,718
7,279,628
758,933,621
616,321,669
(1)
(2)
(3)
(4)
Transferred to intangible assets related to transmission lines and electrical substation that were transferred to electric energy transport companies.
Includes 36,457,318, that were added to the Company’s equity as a result of the business combination that occurred on December 27, 2022 (see Note 2.2.20).
Includes 101,629,848 that were added to the Company’s equity through the business combinations occurred during 2023 that are described in Note 2.2.20.
Transferred from inventories.
Table of Contents
12. Intangible assets
Cost
01-01-2022
Transfers
12-31-2022
Transfers
12-31-2023
Amortization and impairment
01-01-2022
Amortization for the year
Impairment
12-31-2022
Amortization for the year
(Impairment reversal) / Impairment
12-31-2023
Net book value
12-31-2022
12-31-2023
F-51
CENTRAL PUERTO S.A.
Transmission
lines and electrical
substations
for wind farms
ARS 000
Turbogas and
turbosteam supply
agreements for
thermal station
Brigadier López
ARS 000
Concession
right
ARS 000
Total
ARS 000
151,577,773
-
151,577,773
-
151,577,773
138,938,117
6,319,828
-
145,257,945
5,529,849
-
150,787,794
12,369,145
14,723
12,383,868
-
12,383,868
2,199,490
619,504
104,307
2,923,301
615,515
(98,394)
3,440,422
75,967,699
-
75,967,699
-
75,967,699
62,140,816
5,394,826
-
67,535,642
-
2,209,412
69,745,054
239,914,617
14,723(1)
239,929,340
-
239,929,340
203,278,423
12,334,158
104,307
215,716,888
6,145,364
2,111,018
223,973,270
6,319,828
789,979
9,460,567
8,943,446
8,432,057
6,222,645
24,212,452
15,956,070
(1)
Transferred from property, plant and equipment. See below.
Concession right of Piedra del Águila hydroelectric power plant
Includes the amounts paid as consideration for rights relating to the concession of Piedra del Águila hydroelectric power plant awarded by the Argentine government for a 30-year term, from the date of taking possession of such
hydroelectric complex. The concession term terminated on December 29, 2023 and it was extended until June 28, 2024 (see Note 1.2.m).
For a concession arrangement to fall within the scope of IFRIC 12, usage of the infrastructure must be controlled by the concession grantor. This requirement is met when the following two conditions are met:
–
–
the grantor controls or regulates what services the operator must provide with the infrastructure, to whom it must provide them, and at what price; and
the grantor controls the infrastructure, i.e., retains the right to take back the infrastructure at the end of the concession.
Upon Resolution 95 passed by Argentine government the Company´s concession right of Piedra del Águila hydroelectric power plant met both conditions above.
The main features of the concession contract are as follows:
Control and regulation of prices by concession grantor: Pricing schedule approved by grantor;
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CENTRAL PUERTO S.A.
Table of Contents
Remuneration paid by: CAMMESA;
Grant or guarantee from concession grantor: None;
Residual value: Infrastructure returned to grantor for no consideration at end of concession;
Concession end date: June 28, 2024 (see Note 1.2.m);
IFRIC 12 accounting model: Intangible asset.
Fees and royalties: the Intergovernmental Basin Authority is entitled to a fee of 2.5% of the plant’s revenues, and the provinces of Rio Negro and Neuquén are entitled to royalties of 12% of such revenues. For the years ended
December 31, 2023, 2022 and 2021, the fees and royalties amounted 4,036,400, 2,303,666 and 2,334,782, respectively and they were shown in operating expenses in the consolidated statement of income.
Contractual capital investment obligations and obligations relating to maintenance expenditure on infrastructure under concession are not significant.
Transmission lines of wind farms Achiras, La Castellana, La Genoveva, La Genoveva II and Manque
The Group finished the construction of wind farms La Castellana, Achiras, La Genoveva, La Genoveva II and Manque, whereby the Group agreed to build high and medium tension lines and the electrical substation to connect the wind
farms to Sistema Argentino de Interconexión ("SADI"), a part of which were given to the companies transporting the energy; therefore, such companies are in charge of the maintenance of such transferred installations. Consequently,
the Group recognized intangible assets for the works related to the construction of the described equipments.
Turbogas and turbosteam supply agreements for Brigadier Lopez thermoelectric power plant
During fiscal year 2019, as a result of the business combination related to the acquisition of Brigadier Lopez thermoelectric power plant, the Group recognized an intangible asset related to turbogas and turbosteam supply agreements
entered into with CAMMESA regarding Brigadier Lopez thermoelectric power plant.
13. Financial assets and liabilities
13.1. Trade and other receivables
Non-current:
Trade receivables - CAMMESA
Receivables from shareholders
Guarantee deposits
Current:
Trade receivables - CAMMESA
Trade receivables - YPF S.A. and YPF Energía Eléctrica S.A.
Trade receivables - Large users
Trade receivables - Forest clients
Receivables from associates and other related parties
Other receivables
Allowance for doubtful accounts - Note 13.1.1.
12-31-2023
ARS 000
12-31-2022
ARS 000
154,578,344
19,068
43
154,597,455
137,369,492
2,741,707
9,180,837
1,991,075
-
10,036,693
161,319,804
(39,448)
161,280,356
131,048,305
735,934
134
131,784,373
98,866,203
2,298,244
6,679,940
1,869,533
181
27,022,762
136,736,863
(53,773)
136,683,090
Table of Contents
For the terms and conditions of receivables from related parties, refer to Note 18.
Trade receivables from CAMMESA accrue interest, once they become due.
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CENTRAL PUERTO S.A.
The Company accrues interests on CVO receivables since the Commercial Approval date and according to the rate agreed in the CVO agreement, as described in Note 1.2.a).
Trade receivables related to large users accrue interest as stipulated in each individual agreement. The average collection term is generally from 30 to 90 days.
CVO receivables
As described in Note 1.2.a), in 2010 the Company approved the “CVO agreement” and as from March 20, 2018, CAMMESA granted the “Commercial Approval”.
Receivables under CVO agreement are disclosed under “Trade receivables - CAMMESA”.
As a consequence of the Commercial Approval and in accordance with the CVO agreement, the Company collects the CVO receivables converted in US dollars in 120 equal and consecutive installments.
Due to the fact that as from June 30, 2023, the calculation and publication of the LIBO rate were suspended, as at the issuance date of these financial statements, the Company and the enforcement authorities are still in the process of
defining the new applicable interest rate, in accordance with the recommendations of the local and international regulatory entities, the market good practices and the characteristics and particulars of such credit.
CVO receivables are expressed in USD and they accrue LIBOR interest at a 5% rate.
During the years ended December 31, 2023, 2022 and 2021, collections of CVO receivables belonging to CPSA amounted to 36,935,566, 38,635,456 and 49,715,112, respectively. Also, collections of CVO receivables belonging to
Central Costanera S.A. amounted to 1,535,228 during the period between the acquisition date of such company and December 31, 2023.
The information on the Group’s objectives and credit risk management policies is included in Note 19.
The breakdown by due date of trade and other receivables due as of the related dates is as follows:
12-31-2023
315,877,811
300,568,207
15,204,643
72,175
18,047
10,534
4,205
13.1.1. Allowance for doubtful accounts
Total
ARS 000
To due
ARS 000
<90
days
ARS 000
90-180
days
ARS 000
Past due
180-270
days
ARS 000
270-360
days
ARS 000
>360
days
ARS 000
Item
At beginning
Increases
12-31-2023
Decreases
Recoveries
At end
53,773
53,773
89,753
32,131(2)
32,131
6,250
(21,043)(1)
(21,043)
(34,249)(1)
(25,413)
(25,413)
(7,981)
39,448
39,448
12-31-2022
At end
53,773
53,773
Allowance for doubtful accounts - Trade and other receivables
Total 12-31-2023
Total 12-31-2022
(1)
Loss on net monetary position.
13.2. Trade and other payables
Current:
Trade and other payables
Payables to associates and other related parties
Table of Contents
Trade payables are non-interest bearing and are normally settled on 60-day terms.
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CENTRAL PUERTO S.A.
12-31-2023
ARS 000
12-31-2022
ARS 000
49,519,925
283,548
49,803,473
22,989,124
387,226
23,376,350
The information on the Group’s objectives and financial risk management policies is included in Note 19.
For the terms and conditions of payables to related parties, refer to Note 18.
13.3. Loans and borrowings
Non-current
Long-term loans for project financing (Notes 13.3.1, 13.3.2, 13.3.3, 13.3.4, 13.3.5, 13.3.6, 13.3.11, 13.3.12 and 13.3.13)
Corporate bonds - CPSA Program (Note 13.3.9)
Current
Long-term loans for project financing (Notes 13.3.1,13.3.2, 13.3.3, 13.3.4, 13.3.5, 13.3.6, 13.3.11, 13.3.12 and 13.3.13)
Corporate bonds - CPSA Program (Note 13.3.9)
Corporate bonds - Manque and Los Olivos Program (Note 13.3.8)
Bank and investment accounts overdrafts
(1)
Net of debt issuance costs.
13.3.1. Loans from the IIC-IFC Facility
12-31-2023
ARS 000
12-31-2022
ARS 000
208,087,574(1)
78,286,333(1)
286,373,907
140,883,742(1)
-
140,883,742
45,835,886(1)
1,231,627(1)
-
1,743,105
48,810,618
34,239,411(1)
-
15,833,048(1)
6,560,210
56,632,669
On October 20, 2017 and January 17, 2018, CP La Castellana S.A.U. and CP Achiras S.A.U. (both of which are subsidiaries of CPR), respectively, agreed on the structuring of a series of loan agreements in favor of CP La Castellana
S.A.U. and CP Achiras S.A.U., for a total amount of USD 100,050,000 and USD 50,700,000, respectively, with: (i) International Finance Corporation (IFC) on its own behalf, as Eligible Hedge Provider and as an implementation entity
of the Intercreditor Agreement Managed Program; (ii) Inter-American Investment Corporation (“IIC”), as lender on its behalf, acting as agent for the Inter-American Development Bank (“IDB”) and on behalf of IDB as administrator of
the Canadian Climate Fund for the Private Sector in the Americas (“C2F”, and together with IIC and IDB, “Group IDB”, and together with IFC, “Senior Creditors”).
As of the date of these financial statements, the loans disbursements have been fully received by the Group.
In accordance with the terms of the agreement subscribed by CP La Castellana S.A.U., USD 5 million accrue an interest rate equal to LIBOR plus 3.5%, and the rest at LIBOR plus 5.25%. As a consequence of the suspension of LIBO
rate, occurred on June 30, 2023, CP La Castellana S.A.U., together with IDB Group and IFC amended loan agreements on June 29, 2023, replacing LIBO rate with the Secured Overnight Financing Rate (SOFR) plus a fixed Credit
Adjustment Spread (CAS) of 0.26161% applicable as from August 15, 2023. The loan is amortizable quarterly in 52 equal and consecutive installments as from February 15, 2019.
In accordance with the terms of the agreement subscribed by CP Achiras, USD 40.7 million accrue a fixed interest rate equal to 8.05%, and the rest accrue a 6.77% fixed interest rate. The loan is amortizable quarterly in 52 equal and
consecutive installments as from May 15, 2019.
Other related agreements and documents, such as the Guarantee and Sponsor Support Agreement (the “Guarantee Agreement” by which CPSA completely, unconditionally and irrevocably guarantees, as the main debtor, all payment
obligations undertaken by CP La Castellana and CP Achiras until the projects reach the commercial operations date) hedging agreements, guarantee trusts, a mortgage, guarantee agreements on shares, guarantee agreements on wind
turbines, direct agreements and promissory notes have been signed.
Pursuant to the Guarantee and Sponsor Support Agreement, among other customary covenants for this type of facilities, we committed, until each project completion date, to maintain (i) a leverage ratio of (a) until (and including)
December 31, 2018, not more than 4.00:1.00; and (b) thereafter, not more than 3.5:1.00; and (ii) an interest coverage ratio of not less than 2.00:1.00. In addition, our subsidiary, CPR, and we, upon certain conditions, agreed to make
certain equity contributions to CP La Castellana and CP Achiras.
Table of Contents
As of December 31, 2023, the Group has met the requirements described in (i) and (ii) above.
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CENTRAL PUERTO S.A.
As of February 16, 2023, CP La Castellana and CP Achiras has fulfilled all the requirements and conditions to prove the occurrence of the project’s compliance date. As a result, the Guarantee Agreement posted by CPSA was released.
We also agreed to maintain, unless otherwise consented to in writing by each senior lender, ownership and control of the CP La Castellana and CP Achiras as follows: (i) until each project completion date, (a) we shall maintain (x)
directly or indirectly, at least seventy percent (70%) beneficial ownership of CP La Castellana and CP Achiras; and (y) control of the CP La Castellana and CP Achiras; and (b) CP Renovables shall maintain (x) directly, ninety-five
percent (95%) beneficial ownership of CP La Castellana and CP Achiras; and (y) control of CP La Castellana and CP Achiras. In addition, (ii) after each project completion date, (a) we shall maintain (x) directly or indirectly, at least
fifty and one tenth percent (50.1%) beneficial ownership of each of CP La Castellana, CP Achiras and CP Renovables; and (y) control of each of CP La Castellana, CP Achiras and CP Renovables; and (b) CP Renovables shall maintain
control of CP La Castellana and CP Achiras. As of December 31, 2023, the Group has met such obligations.
Under the subscribed trust guarantee agreement, as at December 31, 2023 and 2022, there are trade receivables with specific assignment for the amount of 2,079,147 and 20,505,785, respectively. Finally, there are certain requirements
to be fulfilled in order to distribute dividends from CP La Castellana and CP Achiras.
As of December 31, 2023 and 2022, the balance of these loans amounts to 74,881,903 and 56,835,395, respectively.
13.3.2. Borrowing from Kreditanstalt für Wiederaufbau (“KfW”)
On March 26, 2019 the Company entered into a loan agreement with KfW for an amount of USD 56 million in relation to the acquisition of two gas turbines, equipment and related services relating to the Luján de Cuyo cogeneration
unit project.
In accordance with the terms of the agreement, the loan accrues an interest equal to LIBOR plus 1.15%. As a consequence of the suspension of LIBO rate, occurred on June 30, 2023, the Company and KfW amended the loan agreement
on June 30, 2023, replacing LIBO rate with the Secured Overnight Financing Rate (SOFR) plus a fixed Credit Adjustment Spread (CAS) of 0.26161%. The loan is amortizable quarterly in 47 equal and consecutive installments as from
the day falling six months after the commissioning of the gas turbines and equipment.
Pursuant to the loan agreement, among other obligations, CPSA has agreed to maintain a debt ratio of (a) as at December 31, 2019 of no more than 4.00:1.00 and (b) as from that date, no more than 3.5:1.00. As at December 31, 2023,
the Company has complied with that requirement.
During 2019 the disbursements for this loan were fully received for a total amount of USD 55.2 million.
As at December 31, 2023 and 2022, the balance of this loan amounts to 24,531,506 and 17,184,651, respectively.
13.3.3. Loan from Citibank N.A., JP Morgan Chase Bank N.A. and Morgan Stanley Senior Funding INC.
On September 12, 2019, the Company entered into a loan agreement with Citibank N.A., JP Morgan Chase Bank N.A. and Morgan Stanley Senior Funding INC. for USD 180 million to fund the acquisition of the Thermal Station
Brigadier López.
According to the terms of the agreement, this loan accrues at a variable interest rate based on the LIBO rate plus a margin. Due to the suspension of the LIBO rate on June 30, 2023, the Company and Citibank N.A., JP Morgan Chase
Bank N.A. and Morgan Stanley Senior Funding INC amended the loan agreement on August 16, 2023, replacing the LIBO rate with the Secured Overnight Financing Rate (SOFR) plus a Credit Adjustment Spread (CAS) of 0.26161%
applicable as from September 12, 2023.
Table of Contents
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CENTRAL PUERTO S.A.
Pursuant to the loan agreement, among other obligations, CPSA has agreed to maintain (i) a debt ratio of no more than 2.25:1.00; (ii) an interest coverage ratio of no more than 3.50:1.00 and (iii) and a minimum equity of USD 500
million.
On June 14, 2019 the loan funds were fully disbursed.
As mentioned in Note 22, on September 15, 2020, BCRA issued Communication “A” 7106, which established certain access restrictions to the foreign exchange market for the repayment of the financial debt in which it allows payment
of up to 40% of installments higher than USD 1 million becoming due between October 15, 2020 and March 31, 2021, establishing that a refinancing plan should be submitted for the outstanding amounts, which shall fulfill certain
conditions established in the regulation, such as that repayment must have an average life higher than 2 years. This way, the loan installments becoming due between December 2020 and March 2021 were under the scope of the
provisions of such regulation.
On December 22, 2020, the Company signed an amendment to the loan, modifying, among others, the amortization schedule so as to comply with the requirements established by Communication “A” 7106, partially postponing
installments becoming due in December 2020 and March 2021, extending the final payment term to June 2023, including monthly amortizations as from January 2021 until January 2022, and keeping the amortizations in the initial
schedule for June, September and December 2021, each of them equal to 20% of capital. In December 2020, 40% of the installment for such month was paid, complying with the regulations in force and the abovementioned
amendment. Amongst others, the amendment involves a two basic points increase in the interest rates as from December 12, 2020.
Other changes derived from the amendment include: a limitation to make dividends payment during 2021, and a USD 25 million maximum allowed for 2022. Moreover, a collateral agreement was signed, which includes the pledge on
turbines of Brigadier López Thermal Station, a mortgage on the land in which such power station is located and a LVFDV passive collection collateral assignment.
On June 15, 2021, the Company signed a new amendment, in accordance with Communication “A” 7230 issued by BCRA, as described in Note 22, which changed the amortization schedule, rescheduling 60% of installments, whose
original maturity date operated in June, September and December 2021, and extending the loan’s final term up to January 2024. The schedule in force, which includes this amendment and the one dated December 22, 2020, foresees
monthly amortizations until January 2022, one amortization in June 2023 for the amount of USD 34.128 million and the last amortization in January 2024 for the amount of USD 55.1 million. Moreover, the financial commitments and
obligations undertaken in the first amendment are kept.
This new amendment also implied a 125 basic-point increase in the applicable interest rate as from June 12, 2021 and the dividend payment restriction was maintained until 2021, as well as the USD 25 million limitation for 2022. As
described in Note 21, as of October 19, 2023, this limitation is no longer in effect.
On December 23, 2022 and May 3, 2023 the Company subscribed two limited consents, by means of which the creditor financial entities agreed to the acquisition by Proener S.A.U. of the companies Forestal Argentina S.A., Loma Alta
Forestal S.A., Empresas Verdes Argentina S.A., Las Misiones S.A. and Estancia Celina S.A. In addition, it was established that CPSA and Proener S.A.U should keep a minimum amount of “Cash and short-term investments”
corresponding to the established payment in the next maturity of principal and interest.
Also, on October 19, 2023, the Company paid in advance the principal for an amount of USD 49,043,078, under the terms and conditions of the loan agreement, thus after such payment, the principal owed amounts to USD 6,056,922
due on January 2024.
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F-57
CENTRAL PUERTO S.A.
As at December 31, 2023 and 2022, the balance of the loan amounts to 4,917,399 and 49,347,508, respectively. At the issuance date of these financial statements, the loan balance was totally paid
at due date.
13.3.4. Loan from the IFC to the subsidiary Vientos La Genoveva S.A.U.
On June 21, 2019, Vientos La Genoveva S.A.U., a CPSA subsidiary, entered into a loan agreement with IFC on its own behalf, as Eligible Hedge Provider and as an implementation entity of the Managed Co-Lending Portfolio Program
(MCPP) administered by IFC, for an amount of USD 76.1 million.
Pursuant to the terms of the agreement subscribed with Vientos La Genoveva S.A.U., this loan accrues an interest rate equal to LIBOR plus 6.50% As a consequence of the suspension of LIBO rate, occurred on June 30, 2023, Vientos
La Genoveva S.A.U. together with IFC amended this agreement on June 14, 2023, replacing LIBO rate with the Secured Overnight Financing Rate (SOFR) plus a fixed Credit Adjustment Spread (CAS) of 0.26161% applicable as from
August 15, 2023. The loan is amortizable quarterly in 55 installments as from November 15, 2020.
Other related agreements and documents, such as the Guarantee and Sponsor Support Agreement (the “Guarantee Agreement” by which CPSA completely, unconditionally and irrevocably guarantees, as the main debtor, all payment
obligations undertaken by Vientos La Genoveva S.A.U until the project reaches the commercial operations date) hedging agreements, guarantee trusts, guarantee agreements on shares, guarantee agreements on wind turbines, direct
agreements and promissory notes have been signed.
Pursuant to the Guarantee Agreement, among other customary covenants for this type of facilities, CPSA has committed, until the project completion date, to maintain (i) a leverage ratio of not more than 3.5:1.00; and (ii) an interest
coverage ratio of not less than 2.00:1.00. In addition, CPSA, upon certain conditions, agreed to make certain equity contributions to Vientos La Genoveva S.A.U. As of December 31, 2023, the Group has met the mentioned
requirements.
Under the subscribed trust guarantee agreement, as at December 31, 2023 and 2022, there are trade receivables with specific assignment for the amounts of 5,522,634 and 3,359,145, respectively. Finally, there are certain requirements
to be fulfilled in order to distribute dividends from Vientos La Genoveva S.A.U.
On November 22, 2019 the loan funds were fully disbursed. As at December 31, 2023 and 2022, the balance of the loan amounts to 50,174,147 and 35,898,597, respectively.
13.3.5. Loan from Banco de Galicia y Buenos Aires S.A. to CPR Energy Solutions S.A.U.
On May 24, 2019, CPR Energy Solutions S.A.U. (subsidiary of CPR) entered into a loan agreement with Banco de Galicia y Buenos Aires S.A. for an amount of USD 12.5 million to fund the construction of the wind farm “La
Castellana II”.
According to the executed agreement, this loan accrues a fixed interest rate equal to 8.5% during the first year, which will be increased 0.5% per annum until the sixty-first interest period. The loan is amortizable quarterly in 25
installments as from May 24, 2020.
Other agreements and related documents, like the Collateral (in which CPSA totally, unconditionally and irrevocably guarantees, as main debtor, all the payment obligations assumed by CPR Energy Solutions S.A.U. until total
fulfillment of the guaranteed obligations or until the project reaches the commercial operation date, what it happens first) -, guarantee agreements on shares, guarantee agreements on wind turbines, promissory notes and other
agreements have been executed.
On September 3, 2021, CPR Energy Solutions S.A.U. has fulfilled all the requirements and conditions to prove the occurrence of the project’s compliance date. As a result, the Collateral posted by the Company was released.
On May 24, 2019 the loan funds were fully disbursed. As at December 31, 2023 and 2022, the balance of this loan amounts to 4,502,513 and 4,091,299, respectively.
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CENTRAL PUERTO S.A.
13.3.6. Loan from Banco Galicia y Buenos Aires S.A. to subsidiary Vientos La Genoveva II S.A.U.
On July 23, 2019, subsidiary Vientos La Genoveva II S.A.U. entered into a loan agreement with Banco de Galicia y Buenos Aires S.A. for an amount of USD 37.5 million.
According to the executed agreement, this loan accrues LIBOR plus 5.95% As a consequence of the suspension of LIBO rate, occurred on June 30, 2023, Vientos La Genoveva II S.A.U. and Banco de Galicia y Buenos Aires S.A.
entered into an amendment agreement on July 21, 2023, whereby the interest rate changed to the Secured Overnight Financing Rate (SOFR) plus a fixed Credit Adjustment Spread (CAS) of 0.42826% applicable as of July 24, 2023.
The loan is amortizable quarterly in 26 installments starting on the ninth calendar month counted from the disbursement date.
Other agreements and related documents, like the Collateral (in which CPSA totally, unconditionally and irrevocably guarantees, as main debtor, all the payment obligations assumed by Vientos La Genoveva II S.A.U. until total
fulfillment of the guaranteed obligations or until the project reaches the commercial operation date, what it happens first) -, guarantee agreements on shares, guarantee agreements on wind turbines, direct agreements and promissory
notes have been signed.
As of September 3, 2021, Vientos La Genoveva II S.A.U. has fulfilled all the requirements and conditions to prove the occurrence of the project’s compliance date. As a result, the Collateral posted by the Company was released.
On July 23, 2019, the loan funds were fully disbursed. As of December 31, 2023 and 2022, the balance of this loan amounts to 13,373,610 and 11,765,703, respectively.
13.3.7. Financial trust corresponding to Thermoelectrical Station Brigadier López
Within the framework of the acquisition of Thermoelectrical Station Brigadier López, the Company assumed the capacity of trustor in the financial trust previously entered into by Integración Energética Argentina S.A., which was the
previous owner of the thermal station. The financial debt balance at the transfer date of the thermal station was USD 154,662,725.
According to the provisions of the trust agreement, the financial debt accrued an interest rate equal to the LIBO rate plus 5% or equal to 6.25%, whichever is higher, and it was monthly amortizable. On April 5, 2022, this loan has been
paid in full.
Under the subscribed trust guarantee agreement, as at December 31, 2023 and 2022, there are trade receivables with specific assignment for the amounts of 884,757 and 2,755,201, respectively.
As of the date of these financial statements, procedures needed for the financial trust liquidation are being made.
13.3.8. CP Manque S.AU. and CP Los Olivos S.A.U. Program of Corporate Bonds
On August 26, 2020, under Resolution No. RESFC-2020 - 20767 - APN.DIR#CNVM, the public offering of the Global Program for the Co-Issuance of Simple Corporate Bonds (not convertible into shares) by CP Manque S.A.U. and
CP Los Olivos S.A.U. (both subsidiaries of CPR, and together the “Co-issuers”) for the amount of up to USD 80,000,000 was authorized. By virtue of such program, the Co-Issuers may issue corporate bonds, of different class and/or
series, that may qualify as social, green and sustainable marketable securities under the criteria established by CNV in that regard.
Within the framework of the mentioned program, on September 2, 2020, Corporate Bonds Class I were issued for an amount of USD 35,160,000 at a fix 0% interest rate expiring on September 2, 2023; and Corporate Bonds Class II
were issued for 1,109,925 at a variable interest rate equivalent to BADLAR, plus an applicable margin of 0.97% expiring on September 2, 2021. After such maturity dates, Corporate Bonds Class I and Class II were fully paid.
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13.3.9. CPSA Notes Program
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CENTRAL PUERTO S.A.
On July 31, 2020, the Special Shareholders’ Meeting of the Company approved the creation of a new global issuance program of corporate bonds for a maximum amount of up to USD 500,000,000 (or its equivalent in other currency),
which shall be issued at short, mid or long term, simple, not convertible into shares, under the terms of the Corporate Bonds Act (the “Program”). Moreover, the Board of Directors was granted the powers to determine and establish the
conditions of the Program and of the corporate bonds to be issued under it provided they had not been expressly determined at the Shareholders’ Meeting. On October 29, 2020, CNV approved the creation of such program, which shall
expire on October 29, 2025, in accordance with the regulations in force.
Within this program framework, the Company issued two types of corporate bonds. On the one hand, on September 17, 2023, the paying in and liquidation of the Class A Corporate Bond (CB) took place, denominated, paid-in and
payable in US dollars abroad. The characteristics of this CB are the following: i) face value issued: USD 37,232,818, ii) interest rate, determined by bidding: 7%, iii) periodicity of the interest coupon: six months, iv) amortization:
bullet, v) term: 30 months to be counted as from September 17, 2023 and vi) applicable law and deposit place: Argentina, Caja de Valores S.A. On the other hand, on October 17, 2023, the paying in and liquidation of the international
bond denominated “10% Senior Notes due 2025” (Class B CB) took place. Such bond is denominated, paid-in and payable in US dollars abroad, under the Reg S scheme. The characteristics of this bond are the following: i) face value
issued: USD 50,000,000, ii) interest rate, determined by bidding: 10%, iii) periodicity of the interest coupon: six months, iv) amortization: bullet, v) term: 24 months to be counted as from October 17, 2023 and vi) applicable law and
deposit place: New York, Euroclear.
Finally, on October 20, 2023, the Company decided to reopen the Class A CB. This procedure allows to offer in the market a security which replicates the conditions of the security already offered, incorporating the interest rate
determined in the original offer (7%) and to bid the price. As a result of this process, the Company issued additional USD 10,000,000 for the Class A CB, with an issuance price of 102.9%.
13.3.10. CPSA´s Shares Buyback Program
On October 13, 2022, the Company’s Board of Directors approved the creation of a program for the acquisition of shares issued by the Company as per the regulations in force, for a maximum amount of up to USD 10,000,000 or the
lowest amount from the acquisition until reaching 10% of the share capital and for a 180-calendar-day period counted as from the business day following the publication of the purchase in the market’s media. Such program ended on
April 11, 2023. Under the program framework, the subsidiary CPR acquired 125,782 CPSA shares for a total amount of 88,842.
On August 24, 2023, the Company's Board of Directors approved the creation of a new program for the acquisition of the shares issued by the Company as per the regulations in force, for a maximum amount of up to USD 10,000,000
or the lowest amount from the acquisition until reaching 10% of the share capital and for a 180-calendar-day period counted as from the business day following the publication of the purchase in the market’s media, which shall be
subject to any term renewal or extension. The acquisition procedures may be conducted by the Company and/or its subsidiaries with a daily limit for operations of up to 25% of the average volume of daily transactions for the share in
the markets in which it is listed, considering to such end the previous 90 trading business days. The maximum price to be paid is USD 8 per American Depositary Receipt (“ADR”) in the NYSE and up to a maximum of ARS 605 per
share in BYMA, which was increased to ARS 800 per share as per the decision of the Company's Board of Directors on October 17, 2023. As of December 31, 2023, CPSA acquired 2,299,993 of its own shares under the program for a
total amount of 1,659,780.
The operations conducted through both programs have been recorded as treasury shares acquisitions in accordance with IAS 32. Therefore, the consideration paid for such shares was directly recorded against Equity under the “Other
equity accounts” item.
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13.3.11. Mitsubishi Corporation Loan
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CENTRAL PUERTO S.A.
On November 29, 1996, the Company Central Costanera S.A. entered into an Agreement with Mitsubishi Corporation for the installation of a combined cycle power station. The original agreement includes a USD 192.5 million
financing in 12 years counted as from the provisional reception of the project, with an annual 7.42 % fixed rate and a semester capital and interest amortization.
On October 27, 2014, Central Costanera S.A. and Mitsubishi Corporation agreed on the restructuring of such liabilities. Among the main restructuring conditions, the following stand out: accrued and accumulated interest remission as
of September 30, 2014 for the amount of USD 66,061,897; the rescheduling of capital due date for the amount of USD 120,605,058 for an 18-year term, with a 12-month grace period, which must be totally paid before December 15,
2032; a minimum annual payment of USD 3,000,000 in concept for capital, in quarterly installments; an annual 0.25% fixed rate; and certain dividend payment restrictions were agreed on.
Considering the restrictions imposed by the Argentine Central Bank described on Note 22, several amendments to the loan agreement were entered into as from September 30, 2020.
On May 13, 2022, an amendment was signed to pay the June 2022 capital in two monthly and consecutive installments of USD 2,000,000 in June 2022, and USD 861,116 in July 2022, remaining the other conditions unaltered.
On August 23, 2022, a new amendment was signed to pay the September 2022 capital in two monthly and consecutive installments of USD 2,000,000 in September 2022, and USD 861,116 in October 2022, remaining the other
conditions unaltered.
On November 21, 2022, a new amendment was signed to pay the December 2022 capital in two monthly and consecutive installments of USD 2,000,000 in December 2022, and USD 861,116 in January 2023, remaining the other
conditions unaltered.
The loan considers certain financial restrictions, which as of December 31, 2023 have been completely fulfilled by Central Costanera S.A. Moreover, as guarantee of the obligations undertaken, Central Costanera S.A. has a pledge in
favor of Mitsubishi Corporation with a first degree recording on the financed asset.
As of December 31, 2023, the liabilities balance amounts to 34,131,660.
13.3.12. Loan from Equinor Wind Power AS
As a result of the solar farm acquisition described in Note 20.7, the Group assumed the liabilities corresponding to the loan granted to the subsidiary Cordillera Solar VIII (“CSVIII”) by its previous shareholder Equinor Wind Power AS
for a capital amount of USD 62,199,879 and interest for USD 8,983,951. As a guarantee for such loan, CSVIII gave a first-grade pledge over certain properties, plant, and equipment of such company in favor of Equinor Wind power
AS.
On October 18, 2023, both parties agreed on a refinancing plan for a 24-month term counted as from the refinancing date at a 9% annual rate. In addition, on such dates, CSVIII paid an amount of USD 40 million with funds obtained
through the loan described on Note 13.3.13.
Moreover, as a result of the acquisition, the Group acquired the liabilities for the loan Junior Shareholder Loan Agreement granted to CSVIII for a USD 1,768,897 balance, which on October 18, 2023, was refinanced at a 9% annual rate
to be paid 24 months after the refinancing date.
As of December 31, 2023, the loans balance amounts to 14,634,811.
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13.3.13. Loan from Banco Santander International
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CENTRAL PUERTO S.A.
On October 18, 2023, the subsidiary Cordillera Solar VIII S.A. agreed on financing with Banco Santander International for an amount of USD 40 million with a 6.5% annual rate to be paid on the 24 months after the granting of the
loan.
As of December 31, 2023, the balance of this loan amounts to 32,775,911.
13.4. Changes in liabilities arising from financing activities
Non-current liabilities
Loans and borrowings
01-01-2023
ARS 000
Incorporation
by acquisition
of companies
ARS 000
Payments
ARS 000
Non-cash
transactions
ARS 000
Disbursements
ARS 000
Other
ARS 000
31-12-2023
ARS 000
140,883,742
20,446,246
-
(150,692,749)
69,664,166
206,072,502
286,373,907
Current liabilities
Loans and borrowings
Non-current liabilities
Loans and borrowings
Current liabilities
Loans and borrowings
56,632,669
37,771,408
(108,068,934)
(68,632,440)
3,982,116
127,125,799
48,810,618
01-01-2022
ARS 000
Incorporation
by acquisition
of companies
ARS 000
Payments
ARS 000
Non-cash
transactions
ARS 000
Disbursements
ARS 000
Other
ARS 000
31-12-2022
ARS 000
219,481,798
41,336,226
-
-
-
(98,289,828)
-
19,691,772
140,883,742
(35,784,301)
(45,865,105)
6,554,131
90,391,718
56,632,669
The “Non-cash transactions” column includes the income for exposure to change in purchasing power of currency (income on net monetary position), which amounted to 219,600,752 and 144,154,933 as of December 31, 2023 and
2022, respectively. The “Other” column includes the effect of reclassification of non- current portion to current due to the passage of time, the foreign exchange movement and the effect of accrued but not yet paid interest. The Group
classifies interest paid as cash flows from financing activities.
13.5. Quantitative and qualitative information on fair values
Information on the fair value of financial assets and liabilities by category
The following tables is a comparison by category of the carrying amounts and the relevant fair values of financial assets and liabilities.
Financial assets
Trade and other receivables
Other financial assets
Cash and cash equivalents
Total
Financial liabilities
Loans and borrowings
Total
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Valuation techniques
Carrying amount
Fair value
12-31-2023
ARS 000
12-31-2022
ARS 000
12-31-2023
ARS 000
12-31-2022
ARS 000
315,877,811
128,183,604
13,470,493
457,531,908
268,467,463
133,419,616
28,785,809
430,672,888
315,877,811
128,183,604
13,470,493
457,531,908
268,467,463
133,419,616
28,785,809
430,672,888
335,184,525
335,184,525
197,516,411
197,516,411
335,184,525
335,184,525
197,516,411
197,516,411
F-62
CENTRAL PUERTO S.A.
The fair value reported in connection with the abovementioned financial assets and liabilities is the amount at which the instrument could be exchanged in a current transaction between willing parties, other than in a forced or
liquidation sale. The following methods and assumptions were used to estimate the fair values:
Management assessed that the fair values of current trade receivables approximate their carrying amounts largely due to the short-term maturities of these instruments.
The Group measures long-terms receivables at fixed and variable rates based on discounted cash flows. The valuation requires that the Group adopt certain assumptions such as interest rates, specific risk factors of each transaction and
the creditworthiness of the customer.
Fair value of quoted debt securities, mutual funds, stocks and corporate bonds is based on price quotations at the end of each reporting period.
Fair value of loans and borrowings is similar to their book value, except for the loan granted by Mitsubishi Corporation to the controlled company Central Costanera S.A.
Fair value hierarchy
The following tables provides, by level within the fair value measurement hierarchy, as described in Note 2.2.2, the Company’s financial assets, that were measured at fair value on recurring basis as of December 31, 2023 and 2022:
12-31-2023
12-31-2022
Assets measured at fair value
Financial assets at fair value through profit or loss:
Mutual funds
Public debt securities
Stocks and corporate bonds
Interest rate swap
Total financial assets measured at fair value
Assets measured at fair value
Financial assets at fair value through profit or loss:
Mutual funds
Public debt securities
Stocks and corporate bonds
Interest rate swap
Total financial assets measured at fair value
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Total
ARS 000
Fair value measurement using:
Level 1
ARS 000
Level 2
ARS 000
Level 3
ARS 000
18,003,429
102,677,487
4,959,801
2,542,887
128,183,604
18,003,429
102,677,487
-
2,542,887
123,223,803
-
-
4,959,801
-
4,959,801
Total
ARS 000
Level 1
ARS 000
Level 2
ARS 000
Level 3
ARS 000
Fair value measurement using:
19,123,490
108,417,085
4,238,947
1,640,094
133,419,616
19,123,490
108,417,085
-
1,640,094
129,180,669
-
-
4,238,947
-
4,238,947
-
-
-
-
-
-
-
-
-
-
F-63
CENTRAL PUERTO S.A.
There were no transfers between hierarchies and there were not significant variations in assets values.
The information on the Group’s objectives and financial risk management policies is included in Note 19.
13.6. Other financial assets
CURRENT ASSETS
12-31-2023
Book value
ARS 000
12-31-2022
Book value
ARS 000
Financial assets at fair value through profit or loss
Public debt securities issued by National Government
Public debt securities - T-Bills
Mutual funds
Stocks and corporate bonds
Interest rate swap
NON-CURRENT ASSETS
Financial assets at fair value through profit or loss
Public debt securities - T-Bills
Mutual funds
Interest rate swap
Financial assets at amortized cost
Unquoted shares:
- TSM
- TMB
47,062,484
21,042,199
17,349,564
2,542,886
1,840,947
89,838,080
34,572,805
653,866
3,118,853
38,345,524
178,734
216,359
395,093
38,740,617
108,416,976
109
18,626,907
1,640,094
1,314,807
129,998,893
-
496,583
2,924,140
3,420,723
135,550
76,011
211,561
3,632,284
The information on the objectives and financial risk management policies is included in Note 19.
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13.7. Financial assets and liabilities in foreign currency
F-64
CENTRAL PUERTO S.A.
Account
Currency and amount
(in thousands)
12-31-2023
Effective exchange
rate (1)
Book
value
ARS 000
12-31-2022
Currency and amount
(in thousands)
Book
value
ARS 000
NON-CURRENT ASSETS
Trade and other receivables
Other financial assets
CURRENT ASSETS
Cash and cash equivalents
Other financial assets
Trade and other receivables
NON-CURRENT LIABILITIES
Loans and borrowings
Trade and other payables
CURRENT LIABILITIES
Loans and borrowings
Trade and other payables
USD: US dollar. EUR: Euro.
SEK: Swedish Crown.
USD
USD
USD
EUR
USD
USD
USD
USD
USD
USD
USD
EUR
SEK
191,196
46,796
14,046
2
66,181
105,677
18,607
363,490
2,319
60,002
38,950
1,532
202
808.48(2)
805.45
805.45
889.38
805.45
808.48(2)
805.45
808.45
808.45
808.45
808.45
894.71
81.01
154,578,344
37,691,658
192,270,002
USD
USD
USD
EUR
USD
USD
USD
11,313,351
1,779
53,305,465
85,438,090
14,987,008
165,045,693
357,315,695
293,863,593
1,874,796
295,738,389
USD
-
USD
USD
EUR
-
48,508,515
31,489,128
1,370,698
16,365
81,384,706
377,123,095
237,581
5,306
50,869
2
8,983
92,185
29,201
305,131
-
64,439
9,966
144
-
131,047,555
2,923,797
133,971,352
28,032,225
1,180
4,950,236
50,848,421
16,091,707
99,923,769
233,895,121
168,337,655
-
168,337,655
35,550,337
5,498,142
85,164
-
41,133,643
209,471,298
(1)
(2)
At the exchange rate prevailing as of December 31, 2023 as per Banco de la Nación Argentina.
At the exchange rate according to Communication “A” 3500 (wholesale) prevailing as of December 31, 2023 as per the Argentine Central Bank.
14. Non-financial assets and liabilities
14.1. Other non-financial assets
Non-current:
Tax credits
Income tax credits
Prepayments to vendors
Current:
Upfront payments of inventories purchases
Prepayment insurance
Tax credits
Dividends receivable from associated companies (Note 18)
Other
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14.2. Other non-financial liabilities
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CENTRAL PUERTO S.A.
12-31-2023
ARS 000
12-31-2022
ARS 000
142,950
156,882
4,511
304,343
4,757,055
526,092
3,365,008
2,924,543
647,913
12,220,611
1,308
750,327
14,048
765,683
785,171
1,015,276
737,497
-
239,420
2,777,364
12-31-2023
ARS 000
12-31-2022
ARS 000
Non-current:
VAT payable
Tax on bank account transactions payable
Current:
VAT payable
Turnover tax payable
Income tax withholdings payable
Concession fees and royalties
Tax on bank account transactions payable
Dividends payable
Other
14.3. Compensation and employee benefits liabilities
Non-current:
Employee long-term benefits
Current:
Employee long-term benefits
Vacation and statutory bonus
Contributions payable
Bonus accrual
Other
26,819,699
1,258,528
28,078,227
19,648,153
363,436
3,917,976
301,826
1,113,177
-
273,366
25,617,934
22,764,173
816,461
23,580,634
17,309,557
150,083
5,620,425
167,273
1,086,947
2,948,230
34,316
27,316,831
12-31-2023
ARS 000
12-31-2022
ARS 000
3,309,290
2,321,472
1,433,277
4,762,417
1,546,166
7,770,959
213,997
15,726,816
543,268
3,693,911
1,159,601
4,302,165
335,836
10,034,781
The following tables summarize the components of net benefit expense recognized in the consolidated statement of income as long-term employee benefit plans and the changes in the long-term employee benefit liabilities recognized
in the consolidated statement of financial position.
Benefit plan expenses
Cost of interest
Cost of service for the current year
Past service cost
Expense recognized during the year
Defined benefit obligation at beginning of year
Incorporation from business combination
Cost of interest
Cost of service for the current year
Past service cost
Actuarial losses (gains)
Benefits paid
Decrease due to gain on net monetary position
Defined benefit obligation at end of year
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12-31-2023
ARS 000
12-31-2022
ARS 000
12-31-2021
ARS 000
308,283
2,715,455
203,029
3,226,767
2,864,739
1,857,161
904,961
1,407,163
203,029
1,155,337
(435,198)
(3,214,625)
4,742,567
178,309
886,574
197,283
1,262,166
2,859,681
-
634,446
127,602
197,283
731,366
(294,016)
(1,391,622)
2,864,740
214,999
1,253,814
-
1,468,813
2,880,627
-
1,092,421
187,318
-
(2,351)
(326,150)
(972,184)
2,859,681
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CENTRAL PUERTO S.A.
The main key assumptions used to determine the obligations as of year-end are as follows:
Main key assumptions used
2023
2022
Discount rate
Increase in the real annual salary
Turnover of participants
A one percentage point change in the discount rate applied would have the following effect:
Effect on the benefit obligation as of the 2023 year-end
Effect on the benefit obligation as of the 2022 year-end
A one percentage point change in the annual salary assumed would have the following effect:
Effect on the benefit obligation as of the 2023 year-end
Effect on the benefit obligation as of the 2022 year-end
As of December 31, 2023 and 2022, the Group had no assets in connection with employee benefit plans.
15. Cash and cash equivalents
For the purpose of the consolidated statement of financial position and the consolidated statement of cash flow, cash and short-term deposits comprise the following items:
Cash at banks and on hand
Short-term deposits
5.50%
2.00%
0.73%
5.50%
2.00%
0.73%
Increase
ARS 000
Decrease
ARS 000
(350,370)
(226,723)
410,034
265,892
Increase
ARS 000
Decrease
ARS 000
381,662
247,672
(332,425)
(215,142)
12-31-2023
ARS 000
12-31-2022
ARS 000
13,470,493
-
13,470,493
28,413,826
371,983
28,785,809
Bank balances accrue interest at variable rates based on the bank deposits daily rates. Short-term deposits are made for varying periods of between one day and three months, depending on the immediate cash requirements of the Group,
and earn interest at the respective fixed short-term deposit rates.
16. Equity reserves and dividends
Pursuant to the Argentine Companies Act (Ley General de Sociedades) and the bylaws, 5% of the income for the year must be allocated to the legal reserve until such reserve reaches 20% of the capital stock.
On April 30, 2021, the Shareholders’ Meeting of the Company approved to increase the legal reserve in the amount of 3,155,167 and to allocate the remaining unappropriated earnings as of December 31, 2020 to increase the voluntary
reserve by 59,948,173.
On April 29, 2022, the Shareholders´ Meeting of the Company approved that the unappropriated earnings (loss) as of December 31, 2021 amounting to 4,449,523 were absorbed into the voluntary reserve.
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CENTRAL PUERTO S.A.
On December 23, 2022, the Shareholders´ Meeting of the Company decided to partially deallocate the voluntary reserve by 13,587,494 for distribution of a cash dividend.
On April 28, 2023, the Shareholders’ Meeting of the Company approved to increase the legal reserve in the amount of 2,964,679 and to allocate the remaining unappropriated earnings as of December 31, 2022 to create a voluntary
reserve in order to be applied to future dividends payment based on the evolution of the Company´s financial situation and according to current Company´s dividends distribution policy. On September 15, 2023, such reserve was
increased in 139,492,869 through the partial deallocation of the voluntary reserve as decided by the Company’s Shareholders’ Meeting on such date.
On November 2, 2023, the Company’s Board of Directors decided to partially deallocate the voluntary reserve intended for dividends payment so as to distribute a dividend equivalent to 29.72 ARS per share.
On December 1, 2023, the Company’s Board of Directors decided to partially deallocate the voluntary reserve intended for dividends payment so as to distribute a dividend equivalent to 32.431222 ARS per share.
On December 15, 2023, the Company’s Board of Directors decided to partially deallocate the voluntary reserve intended for dividends payment so as to distribute a dividend equivalent to 11 ARS per share.
On January 2, 2024, the Company’s Board of Directors decided to partially deallocate the voluntary reserve intended for dividends payment so as to distribute a dividend equivalent to 5.75 ARS per share.
Within the framework of the amendment to the loan agreement with Citibank N.A., JP Morgan Chase Bank N.A. and Morgan Stanley Senior Funding INC -described in Note 13.3.3-, there was a restriction for the payment of dividends
until 80% of the loan’s principal and interests were paid. Thus, during 2021 no dividends could be paid, while during 2022 and 2023 dividends could be paid up to USD 25 million and USD 20 million, respectively. Due to the advanced
partial payment of the balance of such loan on October 19, 2023 as described in Note 13.3.3, through which more than 80% of the loan was paid, this limitation was no longer applicable as from that date.
In connection with loans described in Notes 13.3.1. and 13.3.4. there are certain requirements to be fulfilled by the subsidiaries CP Achiras S.A.U., CP La Castellana S.A.U. and Vientos La Genoveva S.A.U. in order for them to
distribute dividends.
Dividends originated in profits obtained during fiscal years initiated on or after January 1, 2018, that are to be paid to Argentine resident individuals and/or non-Argentine residents, are subject to a 7% income tax withholding on the
amount of such dividends.
17. Provisions
Current
Provision for lawsuits and claims
Total 2023
Total 2022
Non-current
Provision for wind and solar farms dismantling
Total 2023
Total 2022
Item
At beginning
ARS 000
Increases
ARS 000
2023
Decreases
ARS 000
Recoveries
ARS 000
At end
ARS 000
2022
At end
ARS 000
143,609
143,609
544,035
184,892
184,892
292,253
1,638,530(2)
1,638,530
35,329
(136,268)(1)
(136,268)
(208,219)(1)
(21,714)
(21,714)
(227,536)
1,624,157
1,624,157
890,079
890,079
34,859
(112,616)(1)
(112,616)
(142,220)(1)
-
-
-
962,355
962,355
143,609
143,609
184,892
184,892
(1)
(2)
Relates to the effect of the inflation for the year.
Includes 467,659 that were added to the Company’s equity through the business combinations described in Note 2.2.20.
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18. Information on related parties
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CENTRAL PUERTO S.A.
The following table provides the transactions performed for the years ended December 31, 2023, 2022 and 2021, and the accounts payable to/receivable from related parties as of December 31, 2023, 2022 and 2021:
Income
ARS 000
Expenses
ARS 000
Receivables
ARS 000
Payables
ARS 000
Associates:
Termoeléctrica José de San Martín S.A.
Distribuidora de Gas Cuyana S.A. (1)
Distribuidora de Gas del Centro S.A.
Inversora de Gas del Centro S.A.
Energía Sudamericana S.A.
Related companies:
RMPE Asociados S.A. (2)
Total
12-31-2023
12-31-2022
12-31-2021
12-31-2023
12-31-2022
12-31-2021
12-31-2023
12-31-2022
12-31-2021
12-31-2023
12-31-2022
12-31-2021
12-31-2023
12-31-2022
12-31-2021
12-31-2023
12-31-2022
12-31-2021
12-31-2023
12-31-2022
12-31-2021
228
2,086
3,500
44,622
54,011
-
44,672
54,011
-
-
-
-
43,524
-
-
712
1,566
1,803
133,758
111,674
5,303
-
-
-
4,556,027
4,075,850
3,386,792
-
-
-
-
-
-
-
-
-
3,282,121
4,295,716
5,144,217
7,838,148
8,371,566
8,531,009
-
156
302
-
-
-
-
-
-
2,924,543
-
-
-
-
-
-
25
-
2,924,543
181
302
-
-
-
283,548
367,047
429,957
-
20,179
-
-
-
-
-
-
3,326
-
-
-
283,548
387,226
433,283
(1)
(2)
Acquisition of natural gas for our thermal station located in Mendoza province. The purchase price is set according to current regulation of the natural gas market.
Administrative, financial, commercial, human resources and general management services rendered under the terms of the management assistance agreement. The management assistance fee is calculated as a percentage of
revenues.
Balances and transactions with shareholders
As at December 31, 2023 and 2022, there is a balance of 19,068 and 735,934 due from shareholders, corresponding to the tax on personal goods paid by the Company as a substitute taxpayer.
As described in Note 2.2.16, on January 18, 2017, the subsidiary CPR entered into a stock option agreement with its minority shareholder at that time.
Key management personnel compensation
During 2023, 2022 and 2021, short‑term employee benefits compensation for key management personnel amounted to approximately Argentine pesos 1,215.4 million, 408 million and 215.3 million, respectively (all figures stated in
nominal values).
Terms and conditions of transactions with related parties
Balances at the related reporting period-ends are unsecured and interest free. There have been no guarantees provided or received for any related party receivables or payables.
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CENTRAL PUERTO S.A.
For the years ended December 31, 2023, 2022 and 2021, the Group has not recorded any impairment of receivables relating to amounts owed by related parties. This assessment is undertaken at the end of each reporting period by
examining the financial position of the related party and the market in which the related party operates.
19. Financial risk management objectives and policies
–
Interest rate risk
Interest rate variations affect the value of assets and liabilities accruing a fixed interest rate, as well as the flow of financial assets and liabilities with floating interest rates.
The Company´s risk administration policy is defined for the purposes of reducing the effect of the purchasing power loss. During most of 2023 and 2022 net monetary positions have been assets; hence, during such period the Company
sought to mitigate the risk by implementing adjustment mechanisms through interest and exchange differences. Consequently, during 2023 and 2022, item Loss on net monetary position” registered a net loss due to inflation-exposure of
monetary items.
Interest rate sensitivity
The following table shows the sensitivity of income before income tax for the year ended December 31, 2023, to a reasonably possible change in interest rates over the portion of loans bearing interest at a variable interest rate, with all
other variables held constant:
Increase in percentage
Effect on income before income tax (Loss)
ARS 000
5%
(16,846,382)
–
Foreign currency risk
Foreign currency risk is the risk that the fair value or future cash flows of a financial instrument will fluctuate because of changes in foreign exchange rates.
The Company is exposed to the foreign currency risk at an ARS/USD ratio, mainly due to its operating activities, the investment projects defined by the Company and the financial debt related to the bank loans mentioned in Note 13.3.
The Company does not use derivative financial instruments to hedge such risk. However, as of December 31, 2023, the Company has receivables, other financial assets and cash and short-term deposits in foreign currency for USD
442,503 and liabilities in foreign currency for USD 464,127. Therefore the net liability position in foreign currency amounts to USD 21,624 thousands as of such date.
Foreign currency sensitivity
The following table shows the sensitivity to a reasonably possible change in the US dollar exchange rate, with all other variables held constant, of income before income tax as of December 31, 2023 (due to changes in the fair value of
monetary assets and liabilities).
Change in USD rate
Effect on income before income tax (Loss)
ARS 000
10%
(1,741,683)
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CENTRAL PUERTO S.A.
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–
Price risk
The Company’s revenues depend on the electric power price in the spot market paid by CAMMESA. The Company has no power to set prices in the market where it operates, except for the income from agreements entered into in the
Term Market, where the price risk is reduced since normally prices are negotiated above the spot market price.
Credit risk
Credit risk is the risk that a counterparty will not meet its obligations under a financial instrument or customer contract, leading to a financial loss. The Company is exposed to credit risk from its operating activities (primarily for trade
receivables) and from its financing activities, including holdings of government securities.
–
Trade and other receivables
The Finance Department is in charge of managing customer credit risk subject to policies, procedures and controls relating to the Group’s credit risk management. Customer receivables are regularly monitored. Although the Group has
received no guarantees, it is entitled to request interruption of electric power flow if customers fail to comply with their credit obligations. In regard to credit concentration, see Note 13.1. The need to book impairment is analyzed at the
end of each reporting period on an individual basis for major clients. The allowance recorded as of December 31, 2023, is deemed sufficient to cover the potential impairment in the value of trade receivables.
–
Cash and cash equivalents
Credit risk from balances with banks and financial institutions is managed by the Group’s treasury department in accordance with corporate policy. Investments of surplus funds are made only with approved counterparties; in this case,
the risk is limited because high-credit-rating banks are involved.
–
Public and corporate securities
This risk is managed by the Company’s finance management according to corporate policies, whereby these types of investments may only be made in first-class companies and in instruments issued by the federal or provincial
governments.
Liquidity risk
The Group manages its liquidity to guarantee the funds required to support its business strategy. Short-term financing needs related to seasonal increases in working capital are covered through short-and medium-term bank credit lines.
The table below summarizes the maturity profile of the Company’s financial liabilities.
As of December 31, 2023
Loans and borrowings
Trade and other payables
As of December 31, 2022
Loans and borrowings
Trade and other payables
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Less than 3 months
ARS 000
3 to 12
months
ARS 000
More than
a year
ARS 000
Total
ARS 000
1,743,105
49,803,473
51,546,578
6,560,210
23,376,350
29,936,560
48,480,786
-
48,480,786
50,072,459
-
50,072,459
284,960,634
-
284,960,634
140,883,742
-
140,883,742
335,184,525
49,803,473
384,987,998
197,516,411
23,376,350
220,892,761
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Granted and received guarantees
The Group has posted a bank guarantee to cover the obligations undertaken under the Concession Agreement of Complejo Hidroeléctrica Piedra del Águila for 83,716.
CENTRAL PUERTO S.A.
On March 19, 2009, the Group entered into a pledge agreement with the former Secretariat of Energy to secure its obligations in favor of FONINVEMEM trusts by virtue of the operation and maintenance agreement of the Timbúes and
Manuel Belgrano power stations, by which it pledged as a collateral 100% of the shares in TSM and TMB.
On the other hand, shares acquired by the Group in Central Costanera S.A. have a pledge for which the Group will follow the procedure to achieve its extinguishment.
Regarding the agreement described in Note 13.3.13., the Group has granted T-BILLs as compliance guarantee for USD 42.1 million, which are included under non-current other financial assets.
Likewise, the Group entered into various guaranteed agreements to provide performance assurance of its obligations arising from the agreements described in Notes 1.2.a), 13.3.1, 13.3.3, 13.3.4, 13.3.7, 13.3.8, 13.3.9, 13.3.11, 13.3.12
and 20.3.
20. Contracts, acquisitions and agreements
20.1. Maintenance and service contracts
The Group entered into long-term service agreements executed with leading global companies in the construction and maintenance of thermoelectrical generation plants, such as (i) General Electric, which is in charge of the
maintenance of the Nuevo Puerto Combined Cycle plant, and part of the Mendoza based units, (ii) Siemens Energy, which is in charge of the maintenance of the combined cycle unit based in Mendoza site, the thermoelectrical power
plant Brigadier López, the Luján de Cuyo and Terminal 6 San Lorenzo cogeneration units, and one of the combined cycle units based in Costanera thermoelectrical power plant, and (iii) Mitsubishi, which is in charge of the
maintenance of the other combined cycle unit located in the Costanera thermoelectrical power plant.
Under long-term service agreements, suppliers provide materials, spare parts, labor and on-site engineering guidance in connection with scheduled maintenance activities, in accordance with the applicable technical recommendations.
20.2. Acquisition of General Electric gas turbine
On March 13th, 2015, the Company acquired a gas turbine from General Electric and hired their specialized technical support services. The unit is a gas turbine with 373 MW output power.
20.3. Renewable Energy generation farms
In 2017 the Group entered into a power purchase agreement with CAMMESA for La Castellana and Achiras wind farms for a 20-year term as from the launch of the commercial operations. Likewise, during 2018 the Group entered into
a power purchase agreement with CAMMESA for La Genoveva wind farm for a 20-year term as from the launch of the commercial operations.
Regarding wind farm La Castellana II, the Group entered into supply agreements with Rayen Cura S.A.I.C. for a 7-year term and approximately 35,000 MWh/year volume, with Metrive S.A. for a 15-year term and 12,000 MWh/year
volume, with N. Ferraris for a 10-year term and 6,500 MWh/year volume and with Banco de Galicia y Buenos Aires S.A. for a 10-year term to supply energy demand for approximately 4,700 MWh/year.
Regarding wind farm La Genoveva II, the Group entered into supply agreements with Aguas y Saneamiento S.A. (AYSA) for a 10-year term from the beginning of operations date of the wind farm and approximately 87.6 GWh/year
volume, with PBB Polisur S.R.L. (Dow Chemical) for a term of 6 years and an estimated volume of 80 GWh/year, with INC S.A. (Carrefour) for a term of 3 years and an estimated volume of 12 GWh/year, with Farm Frites for a 5-year
term and 9.5 GWh/year volume and with BBVA for a 5-year term and 6 GWh/year volume.
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CENTRAL PUERTO S.A.
Regarding wind farm Manque, the Group entered into a power purchase agreement with Cervecería y Maltería Quilmes SAICAyG (“Quilmes”) for the wind farm Manque for a 20-year term as from the launch of the commercial
operations and for an estimated volume of 235 GWh per year.
Regarding the wind farm Los Olivos, the Group entered into power purchase agreements with S.A. San Miguel A.G.I.C.I. y F., Minera Alumbrera Limited and SCANIA Argentina S.A.U. for a 10-year term as from the launch of
commercial operations, to supply them 8.7 GWh/year, 27.4 GWh/year and 20.2 GWh/year, respectively.
Acquisition and operation of wind turbines
The Group has entered into agreements with Nordex Windpower S.A. for the operation and maintenance of Achiras and La Castellana wind farms for a 10-year term.
In addition, the Group has entered into agreements with Vestas Argentina S.A. for the operation and maintenance of wind farms La Genoveva I until August 30, 2040; La Genoveva II until May 31, 2039; La Castellana II until May 31,
2039; and Manque y Los Olivos until December 31, 2039.
20.4. Acquisition of Brigadier López thermoelectric plant
In the context of a local and foreign public tender called by Integración Energética Argentina S.A. (“IEASA”), which has been awarded to the Company, on June 14, 2019 the transfer agreement of the production unit that is part of
Brigadier López thermoelectric plant and of the premises on which the plant is located, was signed, including: a) production unit for the plant, which includes personal property, recordable personal property, facilities, machines, tools,
spare parts, and other assets used for the plant operation and use; b) IEASA’s contractual position in executed contracts (including turbogas and turbosteam supplying contracts with CAMMESA and the financial trust agreement signed
by IEASA as trustor, among others); c) permits and authorizations in effect related to the plant operation; and d) the labor relationship with the transferred employees.
The plant currently has a Siemens gas turbine of 280.5 MW. According to the tender specifications and conditions, it is expected to supplement the gas turbine with a boiler and a steam turbine to reach the closing of the combined cycle,
which will generate 420 MW in total.
The works for closing the cycle are still pending. During February 2024, the agreement with SACDE on the works, services, and necessary works to close the cycle was agreed on, having the “notice to proceed” been granted on
February 26, 2024.
20.5. Shares purchase agreements with Enel Group
On February 17, 2023, Proener S.A.U. acquired 531,273,928 shares from Enel Argentina S.A., which represent 75.68% of the capital stock and votes from Enel Generación Costanera S.A. (currently, Central Costanera S.A.). The total
purchase price amounted to USD 48,000,000. Pursuant to the CNV applicable regulations, on March 17, 2023, a mandatory public acquisition offering ("OPA") at an equitable price with respect to the remaining outstanding shares was
announced. Such was approved by CNV on May 23, 2023. The offering reception period was opened from May 30, 2023 to June 12, 2023, and offerings from a total of 17 shareholders, owners of 65,100 shares, representing
approximately 0.0093% of the issued and outstanding shares of Central Costanera S.A. were accepted, which were acquired at a $94,189 price per share by Proener S.A.U. This acquisition was recorded as a business combination as
described in Note 2.2.20.
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CENTRAL PUERTO S.A.
On the same date, Proener S.A.U. entered into a shares purchase agreement with Enel Argentina S.A. and Enel Américas S.A., by virtue of which, subject to the exercise of the preemptive right of the remaining shareholders, Enel
Américas S.A. agreed to sell to Proener S.A.U. its interest in Inversora Dock Sud S.A. and Enel Argentina S.A. agreed to sell to Proener S.A.U. its interest in Central Dock Sud S.A. The total purchase price for both holdings amounted
to USD 54,000,000. On March 17, 2023, Proener S.A.U. was informed by Enel Argentina S.A. and Enel Américas S.A. that the remaining shareholders have decided to exercise their preemptive right. This way, once the stocks
purchase was accomplished by the remaining shareholders during April 2023, Proener S.A.U. terminated the shares purchase agreement on April 25, 2023.
20.6. Forest companies’ acquisition
On December 27, 2022, Proener S.A.U., entered into a shares purchase agreement with Masisa S.A. and Masisa Overseas S.A. (jointly, “Masisa”), one of the main forestry companies in the region. Through such agreement, Masisa sold
Proener S.A.U. the total shares of its Argentine affiliates Forestal Argentina S.A. and Masisa Forestal S.A. (currently, Loma Alta Forestal S.A.), which hold the forestry assets Masisa had in the country.
On May 3, 2023, Proener S.A.U. acquired 100% of capital stock and votes of companies Empresas Verdes Argentina S.A., Las Misiones S.A. y Estancia Celina S.A. The purchase price amounted to USD 29,881,340. Such companies
own forest assets that are made of approximately 88,063 hectares in Corrientes province, from which 26,000 are planted with pine tree (over a total 36,000 hectares plantable area). This acquisition was recorded as a business
combination as described in Note 2.2.20.
20.7. Acquisition of solar farm
On October 18, 2023, Proener S.A.U. acquired from Equinor Wind Power A.S., Scatec Solar Netherlands B.V. and Scatec Solar Argentina B.V. 100% of the share capital and votes of Cordillera Solar VIII S.A. (CSVIII) and Scatec
Equinor Solutions Argentina S.A., (currently called CP Servicios Renovables S.A.) owner and operating companies, respectively, of a solar farm located in the province of San Juan, with an approximate power of 100 MW. The solar
farm has an agreement with CAMMESA for the purchase of generated energy for a 20-year term counted as from the operations beginning date of such farm. This acquisition has been recorded as an assets acquisition as per IFRS 3.
For further information regarding CSVIII loans see Note 13.3.12.
20.8. Acquisition of two Siemens gas turbines
On May 27th, 2016, the Company acquired from Siemens two gas turbines for electric power generation composed by a turbine and a generator with 298 MW output power, and the proper ancillary equipment and maintenance and
assistance services.
During September 2021, the Company sold such equipment to UNIPER KRAFTWERKE GMBH and UNIPER HUNGARY Kft. for the amount of USD 33,750,000.
20.9. Acquisition of equity interest in AbraSilver Resource Corp.
On April 22, 2024, Proener S.A.U. entered into a shares subscription agreement for a 4% interest in the capital stock of AbraSilver Resource Corp. (a Canadian company listed in the Canadian stock market), which is the owner of the
silver-gold project Diablillos located in the Northwest region of Argentina.
21. Tax integral inflation adjustment
Pursuant to Law no. 27,468, modified by Law no. 27,430, to determine the amount of taxable net profits for fiscal years commencing January 1, 2019, the inflation adjustment calculated on the basis of the provisions set forth in the
income tax law will have to be added to or deducted from the fiscal year’s tax result. This adjustment will only be applicable (a) if the variance percentage of the consumers price index (“IPC”) during the 36 months prior to fiscal year
closing is higher than 100%, and (b) for the first, second, and third fiscal year as from January 1, 2018, if the accumulated IPC variance is higher than 55%, 30% or 15% of such 100%, respectively. The positive or negative tax inflation
adjustment, depending on the case, corresponding to the first, second and third period commenced as from January 1, 2018, which must be calculated in case of verifying the statements on the foregoing paragraphs (a) y (b), shall be
charged in a sixth for that fiscal period and the remaining five sixths, equally, in the immediately following fiscal periods.
At December 31, 2019 and during the following fiscal years, such conditions have been already met. Consequently, the current and deferred income tax booked since the fiscal year ended December 31, 2019 include the effects derived
from the application of the tax inflation adjustment under the terms stablished by the income tax law.
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22. Measures in the Argentine economy
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CENTRAL PUERTO S.A.
On December 10, 2023, new government authorities took office, which authorities issued a series of measures among whose main objectives the following stand out: flexibility of regulations for economic development, reduction of
expenses towards reducing fiscal deficit, reduction of subsidies, among others. Within the context of the new government, there was a significant devaluation of the Argentine peso which was reflected on the official exchange rate.
Foreign exchange market
As from December 2019, the BCRA issued a series of communications whereby it extended indefinitely the regulations on Foreign Market and Foreign Exchange Market issued by BCRA that included regulations on exports, imports
and previous authorization from BCRA to access the foreign exchange market to transfer profits and dividends abroad, as well as other restrictions on the operation in the foreign exchange market.
Particularly, as from September 16, 2020, Communication “A” 7106 established, among other measures referred to human persons, the need for refinancing the international financial indebtedness for those loans from the non-financial
private sector with a creditor not being a related counterparty of the debtor expiring between October 15, 2020 and March 31, 2021. The affected legal entities were to submit before the Central Bank a refinancing plan under certain
criteria: that the net amount for which the foreign exchange market was to be accessed in the original terms did not exceed 40% of the capital amount due for that period and that the remaining capital had been, as a minimum,
refinanced with a new external indebtedness with an average life of 2 years. This point shall not be applicable when indebtedness is taken from international entities and official credit agencies, among others. On February 25, 2021,
through Communication “A” 7230, BCRA broadened the regulation scope to all those debt installments higher than USD 2 million becoming due between April 1 and December 31, 2021. The effects of these regulations for the
Company are described in Note 13.3.3. and 13.3.11. Moreover, on March 3, 2022 and October 13, 2022, through Communications “A” 7466 and "A" 7621, BCRA broadened the regulation scope to all those debt installments higher
than USD 2 million becoming due until December 31, 2022 and December 31, 2023, respectively. The effects of this regulation for the Company are described in Note 13.3.11.
As of the issuance date of these financial statements, after the new authorities took office on December 10, 2023, the restrictions for the payment of imports made after December 13, 2023 were reduced, while other BCRA restrictions
to access to the Unique and Free Exchange Rate Market and to operate in the exchange rate market still apply.
Income Tax
On June 16, 2021, the Argentine Executive Power passed Law No. 27630, which established changes in the corporate income tax rate for the fiscal periods commencing as from January 1, 2021. Such law establishes payment of the tax
based on a structure of staggered rates regarding the level of accumulated taxable net income. The estimated amounts in this scale will be annually adjusted as from January 1, 2022, considering the annual variation of the consumer
price index provided by the INDEC corresponding to October of the year prior to the adjustment compared with the same month of the previous year. For fiscal year 2022 the applicable scale was the following: 25% up to an
accumulated taxable net income of 7.6 million Ps.; 30% for the excess of such amount up to 76 million Ps.; and 35% for the excess of such amount. For fiscal year 2023 the applicable scale is the following: 25% up to an accumulated
taxable net income of 14.3 million Ps.; 30% for the excess of such amount up to 143 million Ps.; and 35% for the excess of such amount.
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23. Environment-related topics
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CENTRAL PUERTO S.A.
The Group’s activities are subject to certain environmental regulations: The Group Management considers its operations comply, in all relevant aspects, with the laws and regulations related to the protection of the environment. On the
other hand, the Group records provisions for the dismantling of wind and solar renewable assets based on the commitments assumed with the owners of the premises in which they are located. The Group monitors potential relevant
changes on environmental regulations related with its activities and no significant future changes were identified for a foreseeable future.
24. Subsequent events
No facts or operations, other than disclosed, occurred between the closing date of the fiscal year and the date of issuance of these financial statements that may significantly affect such financial statements.
F-76
EXHIBIT 1.1
EXHIBIT 2.1
Subsidiary
Central Vuelta de Obligado S.A.
Jurisdiction of incorporation
City of Buenos Aires
Proener S.A.U.
CP Renovables S.A.
CP Achiras S.A.U.
CPR Energy Solutions S.A.U.
Puerto Energía S.A.U.
CP La Castellana S.A.U.
CP Achiras S.A.U.
Vientos La Genoveva S.A.U.
Vientos La Genoveva II S.A.U.
CP Manque S.A.U.
CP Los Olivos S.A.U.
Forestal Argentina S.A.
Loma Alta Forestal S.A.
Central Costanera S.A.
Cordillera Solar VIII S.A.
CP Servicios Renovables S.A.
Empresas Verdes Argentina S.A.
Las Misiones S.A.
Estancia Celina S.A.
City of Buenos Aires
City of Buenos Aires
City of Buenos Aires
City of Buenos Aires
City of Buenos Aires
City of Buenos Aires
City of Buenos Aires
City of Buenos Aires
City of Buenos Aires
City of Buenos Aires
City of Buenos Aires
City of Concordia
City of Corrientes
City of Buenos Aires
City of Mendoza
City of Mendoza
City of Corrientes
City of Corrientes
City of Corrientes
EXHIBIT 8.1.
Name under which the
subsidiary does business
Central Vuelta de Obligado
Proener
CP Renovables
CP Achiras
CPRES
Puerto Energía
CP La Castellana
CP Achiras
Vientos La Genoveva
Vientos La Genoveva II
CP Manque
CP Los Olivos
Forestal Argentina
Loma Alta Forestal
Central Costanera
Cordillera Solar
CP Servicios Renovables
Evasa
Las Misiones
Estancia Celina
EXHIBIT 12.1
I, Fernando Roberto Bonnet, certify that:
CERTIFICATE
1.
2.
3.
4.
I have reviewed this annual report on Form 20-F of Central Puerto S.A.;
Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements
were made, not misleading with respect to the period covered by this report;
Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations and cash flows of the company as of,
and for, the periods presented in this report;
The company’s other certifying officer and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) and internal control over financial
reporting (as defined in Exchange Act Rules 13a-15(f) and 15d-15(f)) for the company and have:
(a)
(b)
(c)
(d)
Designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the company, including its
consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared;
Designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under our supervision, to provide reasonable assurance regarding the reliability of
financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles;
Evaluated the effectiveness of the company’s disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the
period covered by this report based on such evaluation; and
Disclosed in this report any change in the company’s internal control over financial reporting that occurred during the period covered by the annual report that has materially affected, or is reasonably likely to
materially affect, the company’s internal control over financial reporting; and
5.
The company’s other certifying officer and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the company's auditors and the audit committee of the company’s board of
directors (or persons performing the equivalent functions):
(a)
All significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the company’s ability to record, process,
summarize and report financial information; and
(b)
Any fraud, whether or not material, that involves management or other employees who have a significant role in the company’s internal control over financial reporting.
Date: April 29, 2024
By:
Name:
Title:
/s/ FERNANDO BONNET
Fernando Roberto Bonnet
Chief Executive Officer
EXHIBIT 12.2
I, Enrique Terraneo, certify that:
CERTIFICATE
1.
2.
3.
4.
I have reviewed this annual report on Form 20-F of Central Puerto S.A.;
Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements
were made, not misleading with respect to the period covered by this report;
Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations and cash flows of the company as of,
and for, the periods presented in this report;
The company’s other certifying officer and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) and internal control over financial
reporting (as defined in Exchange Act Rules 13a-15(f) and 15d-15(f)) for the company and have:
(a)
(b)
(c)
(d)
Designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the company, including its
consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared;
Designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under our supervision, to provide reasonable assurance regarding the reliability of
financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles;
Evaluated the effectiveness of the company’s disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the
period covered by this report based on such evaluation; and
Disclosed in this report any change in the company’s internal control over financial reporting that occurred during the period covered by the annual report that has materially affected, or is reasonably likely to
materially affect, the company’s internal control over financial reporting;
5.
The company’s other certifying officer and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the company’s auditors and the audit committee of the company’s board of
directors (or persons performing the equivalent functions):
(a)
All significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the company’s ability to record, process,
summarize and report financial information; and
(b)
Any fraud, whether or not material, that involves management or other employees who have a significant role in the company’s internal control over financial reporting.
Date: April 29, 2024
By:
Name:
Title:
/s/ ENRIQUE TERRANEO
Enrique Terraneo
Chief Financial Officer
Certification by CEO and CFO pursuant to
Section 1350, as adapted pursuant to Section 906
of the Sarbanes – Oxley Act of 2002
EXHIBIT 13.1
The certification set forth below is being furnished to the Securities and Exchange Commission, in connection with Central Puerto S.A.’s Annual Report on Form 20-F for the year ended December 31, 2023 (the “Annual
Report”) solely for the purpose of complying with Rule 13a-14(b) or Rule 15d-14(b) of the Securities Exchange Act of 1934, as amended (the “Exchange Act”) and Section 1350 of Chapter 63 of Title 18 of the United States Code as
adapted pursuant to Section 906 of the Sarbanes – Oxley Act of 2002.
Fernando Roberto Bonnet, the Chief Executive Officer and Enrique Terraneo, the Chief Financial Officer of Central Puerto S.A. each certifies that, to the best of their knowledge:
1.
2.
the Annual Report fully complies with the requirements of Section 13(a) or 15(d) of the Securities Exchange Act of 1934; and
the information contained in the Annual Report fairly presents, in all material respects, the financial condition and results of operations of Central Puerto S.A.
Date: April 29, 2024
By:
Name:
Title:
By:
Name:
Title:
/s/ FERNANDO BONNET
Fernando Roberto Bonnet
Chief Executive Officer
/s/ ENRIQUE TERRANEO
Enrique Terraneo
Chief Financial Officer
EXHIBIT 6.1
PURPOSE
NYSE EXECUTIVE REMUNERATION CLAWBACK POLICY
The purpose of this policy (this “NYSE Clawback Policy”) is to set out the basis for the mandatory recovery of erroneously awarded Incentive-Based Compensation (as defined below) from Executives (as defined below) of
Central Puerto S.A. (the “Company”, together with its subsidiaries, the “Group”) in the event of a Restatement (as defined below).
The Board of Directors of the Company (the “Board”) has adopted this NYSE Clawback Policy in accordance with the requirements of Section 303A.14 of the New York Stock Exchange (“NYSE”) Listed Company Manual/,
which was mandated by Rule 10D-1 of the Securities Exchange Act of 1934 (the “Exchange Act”).
This NYSE Clawback Policy may be amended from time to time by the Board pursuant to any laws, regulations or rules of the US Securities and Exchange Commission, the NYSE, any other stock exchange on which the
Company’s securities are listed or other regulatory authority applicable to the Group or the Executive (“Applicable Law”). Applicable Law includes Section 304 of the US Sarbanes-Oxley Act of 2002. Executives will be
notified of any significant amendments to this NYSE Clawback Policy and how such amendments may impact their remuneration.
APPLICABILITY
This NYSE Clawback Policy applies to any current and former “executive officer” as the Company may determine from time to time in accordance with the definition of “executive officer” as defined in Section 303A.14 of
the NYSE Listed Company Manual (each an “Executive”). Executives of the Company’s parent(s) or subsidiaries are deemed to be Executives of the Company if they perform such policy making functions for the Company.
Individuals will be notified as soon as practicable after becoming or being determined to be an Executive.
Remuneration shall be subject to recovery pursuant to this NYSE Clawback Policy where: (i) the Board determines that such remuneration constitutes Incentive-Based Compensation; and (ii) the remuneration was Received
(as defined below) by an Executive:
2.2.1
after beginning their services as an Executive;
2.2.2
who served as an Executive at any time during the performance period for that Incentive-Based Compensation;
2.2.3
while the Company has a class of securities listed on the NYSE, another national securities exchange or a national securities association in the United States; and
2.2.4
during the Recovery Period (as defined below);
provided that this NYSE Clawback Policy shall only apply to Incentive-Based Compensation Received on or after October 2, 2023 (the “Effective Date”).
For the avoidance of doubt, this NYSE Clawback Policy continues to apply to an Executive following any termination of their office or employment.
This NYSE Clawback Policy will be notified to Executives through any means determined by the Board.
RECOVERY OF ERRONEOUSLY AWARDED INCENTIVE-BASED COMPENSATION
In the event that the Company is required to prepare an accounting restatement due to the material noncompliance of the Company with any financial reporting requirement under the securities laws (as used in Section 303A.14
of the NYSE Listed Company Manual) (a “Restatement”), including any required accounting restatement to correct an error in previously issued financial statements that is material to the previously issued financial
statements, or that would result in a material misstatement if the error were corrected in the current period or left uncorrected in the current period, the Board shall reasonably promptly recover the amount of Incentive-Based
Compensation Received by an Executive in the Recovery Period that exceeds the amount of Incentive-Based Compensation that otherwise would have been Received by the Executive had such remuneration been determined
based on the restated amounts, computed without regard to any taxes/duties/contributions/levies (“Taxes”) paid or payable (“Recoverable Amount”). The Recoverable Amount shall not exceed the differential between the
amount of Incentive-Based Compensation paid to such Executive in connection with the Restatement and the amount of Incentive-Based Compensation that would have been paid to such Executive had the Restatement not
occurred (in each case without regard to any Taxes paid or payable). Where Incentive-Based Compensation is based only in part on the achievement of a Financial Reporting Measure performance goal, the Compensation
Committee shall first determine the portion of the original Incentive-Based Compensation based on or derived from the Financial Reporting Measure that was restated. The Board shall then recalculate the affected portion
based on the Financial Reporting Measure as restated and recover the difference between the greater amount based on the original financial statements and the lesser amount that would have been received based on the
restatement. In calculating the Recoverable Amount, the Board may, at its sole and absolute discretion, consult with legal advisers and any experts it retains to assist in such calculations.
Whether a Restatement has occurred for the purposes of this NYSE Clawback Policy shall be confirmed by the Board, which shall rely on any decision in this respect of the Audit Committee.
The Recovery Period shall mean the period of three full financial years of the Company preceding the Restatement Date (as defined below) and any transition period that results from a change in the Company’s financial year
within or immediately following such period.
For Incentive-Based Compensation based on share price or total shareholder return, where the Recoverable Amount is not subject to mathematical recalculation directly from the information in the Restatement, the
Recoverable Amount will be determined by the Board based on the Board’s reasonable estimate of the effect of the Restatement on the share price or total shareholder return upon which the Incentive-Based Compensation was
received. The Company must maintain documentation of the determination of that reasonable estimate and provide such documentation to the NYSE.
1
1.1
1.2
1.3
2
2.1
2.2
2.3
2.4
3
3.1
3.2
3.3
3.4
3.5
In the event that the Company is required to prepare a Restatement, the Board shall:
3.5.1
determine the Recoverable Amount in accordance with Section 3.1 of this NYSE Clawback Policy; and
2
3.5.2
to the extent the Recoverable Amount has been Received by an Executive, instruct the Company to recover reasonably promptly the full Recoverable Amount in accordance with Section 3.6 of this NYSE Clawback
Policy; or
3.5.3
to the extent the Recoverable Amount has not been Received, but is otherwise owed to an Executive, cancel the right of such Executive to receive the Recoverable Amount reasonably promptly.
To the extent permitted by Applicable Law, the Board may seek to recoup Recoverable Amounts by all legal means available, including but not limited to, by requiring any affected Executive to repay such amount to the
Company, by set-off, by reducing future remuneration of such affected Executive, or by such other means or combination of means as the Board, in its sole and absolute discretion, determines to be appropriate.
Recoupment of the Recoverable Amount under this NYSE Clawback Policy will be initiated by the Company as soon as practicable following the written request/resolution of the Board.
All amounts recoverable pursuant to this NYSE Clawback Policy shall be payable by the Executive to the Company (or as the Company directs) and shall be payable immediately on demand.
For purposes of this NYSE Clawback Policy:
3.6
3.7
3.8
3.9
3.9.1
“Incentive-Based Compensation” means any remuneration that is granted, earned, or vested/released based wholly or in part upon the attainment of a Financial Reporting Measure (as defined below). Incentive-
Based Compensation is based in part upon the attainment of a Financial Reporting Measure if such compensation is subject to multiple conditions one or more, but not all, of which are Financial Reporting Measures.
Examples of Incentive-Based Compensation include, but are not limited to: (i) non-equity incentive plan awards that are earned based wholly or in part on satisfying a Financial Reporting Measure performance goal;
(ii) bonuses paid from a “bonus pool”, the size of which is determined based wholly or in part on satisfying a Financial Reporting Measure performance goal; (iii) other cash awards based wholly or in part on
satisfying a Financial Reporting Measure performance goal; (iv) restricted shares, restricted share units, performance share units, stock options and stock appreciation rights that are granted or become vested/released
based wholly or in part on satisfying a Financial Reporting Measure performance goal; and (v) proceeds received upon the sale of shares acquired through an incentive plan that were granted or vested/released based
wholly or in part on satisfying a Financial Reporting Measure performance goal.
3
(i)
(ii)
Incentive-Based Compensation includes any compensation that vests, accrues or is granted based in whole or variable remuneration structures operated by the Group from time to time under which awards
are wholly or in part based upon the attainment of a Financial Reporting Measure.
Examples of compensation that is not Incentive-Based Compensation for this purpose include, but are not limited to: (i) an Executive’s salary; (ii) bonuses paid solely at the discretion of the Board or the
Board that are not paid from a “bonus pool” that is determined by satisfying a Financial Reporting Measure performance goal; (iii) bonuses paid solely upon satisfying one or more subjective standards (e.g.
demonstrated leadership) and/or completion of a specified employment period); (iv) non-equity incentive plan awards earned solely upon satisfying one or more strategic measures (e.g., consummating a
merger or divestiture), or operational measures (e.g., completion of a project, increase in market share); and (v) equity awards for which the grant is not contingent upon achieving any Financial Reporting
Measure performance goal and vesting/release is contingent solely upon completion of a specified employment period and/or attaining one or more nonfinancial reporting measures.
3.9.2
“Financial Reporting Measure” means any measure that is determined and presented in accordance with International Financial Reporting Standards as issued by the International Accounting Standards Board
(“IFRS”) (or any other accounting principles used to prepare the Group’s financial statements from time to time), and any measure derived wholly or in part from such measure, including non-IFRS financial measures
(as well as other measures, metrics and ratios that are non-IFRS measures). The term Financial Reporting Measure includes stock price and total shareholder return. Financial Reporting Measures may be presented
outside the Company’s financial statements.
3.9.3
“Received”: Incentive-Based Compensation is deemed Received in the Company’s financial period during which the Financial Reporting Measure specified in the Incentive-Based Compensation award is attained,
even if the payment or grant occurs after the end of the financial period in which the Financial Reporting Measure is attained. For the avoidance of doubt, an Executive receives the Incentive-Based Compensation
even when the Executive has established only a contingent right to payment at that time. Ministerial acts or other conditions necessary to effect issuance or payment, such as calculating the amount earned or obtaining
Board approval of payment do not affect the determination of the date Received. In the case of awards subject to multiple conditions, not all conditions must be satisfied for the Incentive-Based Compensation to be
deemed Received. The Board shall have the discretion to determine when the Incentive-Based Compensation was Received, and such determination need not be uniform across the type of Incentive-Based
Compensation or for all Executives.
3.9.4
“Restatement Date” means the date on which the Company is required to prepare a Restatement, which is the earlier to occur of: (i) the date on which the Board, or the Audit Committee concludes, or reasonably
should have concluded, that the Company is required to prepare a Restatement; or (ii) the date a court, regulator or other legal authorised body directs the Company to prepare a Restatement.
4
4
4.1
Impracticability Exception to Recovery Obligation
The Company must recover the Recoverable Amount in compliance with this NYSE/ Clawback Policy except to the extent that the conditions set out in 4.2.1, 4.2.2 or 4.2.3 of this NYSE Clawback Policy are met and the
Board determines, in its sole and absolute discretion, that recovery would be impracticable.
4.2
The Board may determine that a recovery is impracticable only if:
4.2.1
4.2.2
4.2.3
following a reasonable attempt to recover the Recoverable Amount, the Board determines, in its sole discretion, that the direct expense that would need to be paid to a third party to assist in enforcing this NYSE
Clawback Policy would exceed the Recoverable Amount. The Company must document such reasonable attempt(s) to recover and provide that documentation to the NYSE;
recovery would violate an Argentinean law, where such law was adopted prior to November 28, 2022. Before concluding that it would be impracticable to recover any Recoverable Amount based on a violation of any
Argentinean law, the Company must obtain an opinion of an external counsel from Argentina, acceptable to the NYSE that recovery would result in such a violation and provide such opinion to the NYSE; or
if applicable, the Board determines that recovery would likely cause an otherwise tax-qualified retirement plan, under which benefits are broadly available to employees of the Company, to fail to meet the
requirements of 26 U.S.C. 401(a)(13) or 26 U.S.C. 411(a) and regulations thereunder.
In determining whether a recovery would be impracticable due to costs in accordance with 4.2.1 above, the only criteria that the Board may consider is whether the direct costs, such as reasonable legal expense and consulting
fees, amongst others, paid to a third party to assist in enforcing recovery would exceed the Recoverable Amount. Indirect costs, such as reputational concerns or the effect on hiring of new Executives, amongst others, may not
be considered when determining whether recovery is impracticable.
INDEMNIFICATION AND INSURANCE
The Group is prohibited from insuring or indemnifying any Executive against the loss of erroneously awarded remuneration as set forth in this NYSE Clawback Policy. If an Executive purchases a third-party insurance policy
to fund potential recovery obligations, the Company is prohibited from paying or reimbursing the Executive for premiums for such an insurance policy.
5
OTHER RECOVERY RIGHTS
Any right of recovery under this NYSE Clawback Policy applies in addition to (and without limiting) any other remedies and/or rights to reduce, cancel or recover any elements of remuneration (or similar) that may be
available to any member of the Group pursuant to any remuneration policy (including any further malus and clawback policies) operated by any member of the Group, the terms of any incentive plans or awards operated by
any member of the Group, any employment agreement, any other terms and conditions and/or Applicable Law applicable to any Executive, in each case from time to time in force, and/or pursuant to any other legal remedies
available to any member of the Group. Recovery (or similar) may be applied pursuant to both this NYSE Clawback Policy and any such other policies, plans, awards, agreements, terms, conditions, Applicable Laws or similar
in respect of the same award of remuneration, provided that there shall be no duplication of recovery.
4.3
5
5.1
6
6.1
7
DISCLOSURE
7.1
In the event of any Restatement, the Company shall disclose certain information in its annual report on Form 20-F, as required by Form 20-F. This information shall include, without limitation:
7.1.1
the date on which the Company was required to prepare the Restatement;
7.1.2
the aggregate Recoverable Amount (in US dollars), including an analysis of how the Recoverable Amount was calculated, or, if not determined, an explanation of the reasons;
7.1.3
any estimates used to determine the Recoverable Amount for Financial Reporting Measures related to share price or total shareholder return and an explanation of the methodology used for such estimates;
7.1.4
any required details of Recoverable Amounts that remain outstanding (on an aggregate, individual, group or other basis, as required) and for which recovery has been forgone due to impracticability and the reasons
why, for the relevant annual report on Form 20-F and otherwise pursuant to the requirements of any other annual report or statement it is obligated to prepare and file under the Exchange Act.
7.2
This NYSE Clawback Policy shall be filed as an exhibit to the first annual report on Form 20-F that the Company is required to file under the Exchange Act after the adoption of this NYSE Clawback Policy. If this NYSE
Clawback Policy is amended, the amended policy shall be filed as an exhibit to the first annual report on Form 20-F that the Company is required to file under the Exchange Act after such amendment.
6
8
8.1
8.2
8.3
9
9.1
9.2
9.3
9.4
9.5
9.6
9.7
ADMINISTRATION AND OPERATION
The Board has the exclusive power and full and final authority to: (i) administer this NYSE Clawback Policy, including, without limitation, the right and power to interpret the provisions of this NYSE Clawback Policy; (ii)
make all determinations deemed necessary or advisable in applying this NYSE Clawback Policy (which in every case shall be made at the Board’s absolute discretion, without this being limited by references in certain clauses
but not others to a discretion being absolute), including, without limitation, determinations as to: (a) what constitutes Incentive-Based Compensation, a Recoverable Amount or other remuneration; (b) that a Restatement has
occurred (in reliance on any decision in this respect of the Audit Committee); and (c) whether a recovery is impracticable; and (iii) delegate any power or discretion under this NYSE Clawback Policy to such person or persons
as it may determine (and in which case this NYSE Clawback Policy shall be applied accordingly). The Board may delegate ministerial administrative duties with respect to this NYSE Clawback Policy to one or more officers
or employees of the Company.
Any action, interpretation or determination taken or made by the Board pursuant to this NYSE Clawback Policy will be final, conclusive, and binding.
From and after the adoption of this NYSE Clawback Policy, each award agreement or other document setting forth the terms and conditions of any annual incentive or other performance-based award granted to an Executive
shall include a provision incorporating the requirements of this NYSE Clawback Policy.
GENERAL
Any provision in this NYSE Clawback Policy can apply even if the Executive was not responsible for the Restatement in question or if it took place before the grant and/or vesting/release of any remuneration which is subject
to recovery.
The means of recovery can be different for different Executives in relation to the same or different events depending on the particular facts and circumstances of the Executive and their compensation.
An Executive will not be entitled to any remuneration or compensation from the Group in respect of any application of this NYSE Clawback Policy.
The remedy specified in this NYSE Clawback Policy shall not be exclusive and shall be in addition to every other right or remedy at law or in equity that may be available to the Company or a member of the Group.
The terms of this NYSE Clawback Policy shall apply regardless of any agreement, undertaking or suggestion (or similar), whether or not contractual, that any remuneration shall not be subject to recovery.
The invalidity or unenforceability of any provision of this NYSE Clawback Policy shall not affect the validity or enforceability of any other provision.
Argentine law governs this NYSE Clawback Policy and its construction. The competent Argentine courts shall have non-exclusive jurisdiction in respect of disputes arising under or in connection with this NYSE Clawback
Policy.
9.8
References in this NYSE Clawback Policy to the phrase “including” (or similar) shall not limit or prejudice the generality of the following words (without this being limited by such references in some clauses but not others).
7