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Companhia Energetica de Minas Gerais(NYSE: CIG)
Q1 2022 Earnings Call
May 16, 2022, 9:00 a.m. ET
Contents:
- Prepared Remarks
- Questions and Answers
- Call Participants
Prepared Remarks:
Operator
Good morning, and welcome to Cemig's conference call. We're releasing the the results of the first quarter of 2022. This conference call is being recorded and will be made available at the company's IR website, where the presentation is also available. [Operator instructions].
At this time, I'd like to turn the floor to Carolina Sena, superintendent of investor relations. Carolina, please you may go ahead.
Carolina Senna -- Superintendent of Investor Relations
Good morning. My name is Carolina Sena, Superintendent of investor relations at Cemig. We begin the release of the financial results of the first quarter of 2022 with the presence of Reynaldo Passanezi Filho, CEO; Dimas Costa, commercialization director; Eduardo Soares, regulatory and legal Director; Leonardo George de Magalhaes, chief financial and investor relations officer; Marco da Camino Ancona Soligo, participations director; Marney Tadeu Antunes, distribution director; Thadeu Carneiro da Silva, generation and transmission director. For the opening remarks, we turn the floor to our CEO, Mr.
Reynaldo Passanezi Filho.
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Reynaldo Passanezi Filho -- Chief Executive Officer
Good morning, everyone. It is a great pleasure to bring here the quarterly results. They have been actually excellent and [Inaudible] where Cemig is celebrating 70 years of a company that has actually grown. It is one of the main landmarks of the national electricity industry.
It started with President Juscelino Kubitschek 70 years ago -- 71, but Cemig was created 70 years ago and it is a very significant part of the electricity segment in Brazil, building, landmark industries and the power plants. We have distribution, transmission, engineering in all corners of the country. Cemig employees who are at Cemig today or have retired, at Cemig they are a great role model. So the first thing is to thank and congratulate each one of those who have been responsible for such an important history, Cemig's history, and we're very proud to be able to be part of this and to continue onwards.
And to move forward presenting results, such as the ones we're showing you now for the first quarter of 2022. For me, it's important to say and this results more than the numbers themselves, it's the consistency, and the adherence of the strategic plan that we have approved at the board in January '21. It's a strategic plan focused on a very clear purpose: that with our energy, we transform lives, the lives of people from Minas and will focus our investments in Minas Gerais and will succeed. And for that, we must be first of all, extremely efficient in the technical aspect and efficient in the economic aspect.
That's what we've been able to bring, and I believe you are all witnesses of how the efficiency results have improved. I would say that since 2018, there's been a major turnaround in terms of efficiency, in terms of operating expenses, general administrative expenses and technical efficiency in services provider [Inaudible] indexes and the losses within regulatory parameters. So the financial adjustments that we've had combined to the compliance to the regulatory opex and being compliant to the losses within regulatory parameters exceed BRL 1 billion per year. From 2009 until 2018, Cemig had never been below regulatory expenses.
On average, we've been BRL 700 million above regulatory expenses over the last 10 or nine years, from 2009 to 2018. Within making a lot of effort to contain expenses, and we're very proud to say today that we have reached the limits within the regulatory parameters for expenses. There's a BRL 700 million adjustment at least to reach the regulatory limits. And sometimes we're better than the regulatory limits, but that's just say the number of the limit.
Same thing in terms of losses. Our adjustment is higher than 1% in the index from 12.5% to 11.5%, which is a very significant adjustment worth hundreds of millions of Reals amounting to at least BRL 1 billion adjustment in meeting the target of regulatory parameters for losses and expenses. So overall that places us within the limits of the regulatory EBITDA of the institution for the first time in the company's history. So it's a turnaround adjustments very significant compared to what we saw in the past 10 years from 2009 to 2018.
That's a huge point of focus, and that's precisely this additional cash generation that allows us to face a very ambitious investment plan in Mina, Minas Gerais, I mean more in terms of distribution, but also operating expenses in transmission. And we've also been achieving results in terms of technical performance improvements, increasing wind power generation, generation in the areas where we can go beyond generating additional revenue and a operational use of our hydropower plants and our wind power plants, specifically those that allow us to generate greater revenue levels. So there is great effort here and the turnaround either to recover revenue and to reduce expenses. And that's what I said.
It's an adjustment above BRL 1 billion per year. You can do the math at present value, what it represents. With upsides, with topics that are being negotiated and they're public, and we always talk about them in terms of the post-retirement or post-employment aspects, which are important to the company, and the position that we have for long-term sustainability, that's pillar one to be efficient. Pillar two, to invest in the core business in Minas Gerais has also been changed here compared to the previous strategy.
That was a strategy to diversify for investment and minority shares outside of Minas Gerais in the most part without a mixed control. But today, Cemig's investments are in our core business, distribution, generation and transmission in Minas Gerais, entirely under Cemig's control. So it's BRL 22.5 billion over the next five years from 2021 to 2025. This is a process that's ongoing.
We see a higher volume of hires, and we renegotiated many contracts with our suppliers. In terms of investment, we have more than double the historical investments from 2009 to '18, which was investments below -- much below depreciation even with plans to continue to grow, and we have our main challenges, which is more energy to grow 50% in the number of substations. The conversion of 30 kilometers of grid into a three-phase grid. Minas latched us to bring public lighting to the municipalities, this created ways to digitalize customer service, bringing more quality to the services provided, which is a investment of 1.5 gig in generation and a strategy of first buying energy from outsourced providers, but now we have the position as market leader, an example of new business that brings great results to the company.
And we want to make the most of the capacity that they have to access customers to have our own production. So these are the programs that are the most important ones enabling 1.5 gig in generation to start growing again. And the biz in Minas, strengthening the improvement in this ambitious program of BRL 2.5 billion in distribution that goes well beyond and above depreciation to actually be able to provide the best service to our clients. Over 100% Cemig within our core business, including BRL 1 billion of investment at Gasmig, BRL 1 billion of investment in Cemig 5.
So that's the second pillar, and we'll also see during the presentation the recovery of investments and our ambition and the attraction that we're being able to gain despite the challenges, especially seen in the supply chain, but we will certainly succeed. And this year, 2022 is the final year pre-tariff review, which is, of course, very important, and there's this acceleration. So efficiency investment in our core business in Minas Gerais, divestment in nonstrategic assets, especially those that are outside of the state of Minas Gerais. We concluded the sale of Light last year.
Now, we closed the sale of Renova, just being, what, 10 days, which also eliminated a big risk that the company had. The risk of the potential non-conclusion of Renova and the potential failure of this traditional recovery. We effectively concluded the sale par value of BRL 60 billion worn out and pre-tax. So these are positive figures that reinforce cash, along with the increase in efficiency for us to be able to meet the objections of such an ambitious investment program.
So these are the three main pillars: efficiency, investment in Minas, divestment in nonstrategic assets. We'll continue to do that. We'll continue this divestment process in nonstrategic assets, especially those outside Minas and a new vision of the future of sustainability and innovation in sustainability. Our indices of decapitalization are very positive over the last few years.
We closed the thermal plant in [Inaudible]. We are in Dow Jones Sustainability Index since the beginning. I don't remember exactly, but I think it's been more than 15 years that we've been in this index. We have recently approved with our board of directors the net zero commitment by 2040.
So Cemig's 70 anniversary, it's to bring modernity and a commitment to the major trends for modernization for a cleaner world, all of our energy is renewable, 100% of our portfolio. Everything we do is within renewable energy. And in the viewpoint of innovation, we've been discussing with the regulators on ONS, and we understand it will help us modernize these systems such as hybridization, association, and we have just formed a partnership with the university of Itajuba to study storage, hydrogen laboratory. These are all topics that I see very positively for the Brazilian electricity industry.
And Cemig needs to be a leading player and proactive for us to be able to develop, for example, hydrogen to become an exporter of energy to the world. And finally, in this world of the future, we're very prepared for this market opening moment considering our very strong historical presence in energy commercialization. So I'd like to go over very quickly over the 70 years of Cemig are and congratulate everyone who has been part of this history saying that we're committed to be able to continue generating more results as you've been seeing record EBITDA, record net income. Quality of services also at the highest historical levels, historic results in terms of being the first time where we made the regulatory EBITDA losses, expenses within regulatory parameters, seriousness in the vision of the business of what we do.
Fulfilling the mission of not participating in nonstrategic assets, delivering what is included in our strategic plan, and this makes us very proud and able to make this company more solid and make everyone proud, everyone who's here and has Cemig as their employers or contractors. So we're available here, I'm talking more in broader times and financial summary, I'll leave to Leo and Carol. But of course, the numbers in my view, reflect the consistency with our strategic plan. Our strategic plan is focused in Minas, has its ambitions in Minas and a wide capacity to meet the goal that for me, maybe the central aspect.
So here, we're within our core capabilities. This is what we know how to do, and you can count on us to deliver. Thank you.
Leonardo de Magalhaes -- Chief Finance and Investor Relations Officer
Thank you, Reynaldo. Good morning, everyone. Thank you all for participating at our conference call in the earnings of the first quarter of 2022. We'll talk a little bit about the execution of our investment program.
It's an ambition program -- ambitious program for the year close to BRL 500 million in the first quarter, we were slightly below expectations, close to BRL 500 million, and we highlight our distribution with investments close to BRL 3 billion in the year 2022 in our budget. Investment in the first quarter was BRL 423 million. As we mentioned, slightly below our expectation, but we are mobilized and involved with many internal initiatives with our entire team engaged to be able to accelerate this program. There's many substations and works that are ongoing expected to be concluded over the next few quarters.
The program will accelerate over the next quarters, and we will be able to get as close as possible to our expectation in the budget. We are very optimistic with the investments that we're making this year. Reynaldo already mentioned, these investments will be part of the 2023 base. And this tariff review for us, we're optimistic considering the investments we're making.
Last year, we were able to invest BRL 1.6 billion. That was already much higher than our historic average. And this year, we have an ambitious program. And these investments coming in the remuneration base for 2023 combined with the adjustment of our market, considering all the losses that we had on GT in the tariff cycle close to 5% that Carolina will show you in a while will also be reformed in the tariff review.
Combined to our operational efficiency measures make us very optimistic concerning the future results of our distribution branch. These are the quality indicators. We remain with very positive quality indicators. It's important to show the historic series to see the considerable progress Cemig made since 2019 where we were at above the regulatory parameters.
And from then on, the company has been able to turn around significantly. In this quarter, we've been able once again to the constant improvement scale, increasing the quality of service to our clients with the best deck of the company closing at 9.26%, very close to the limit of nine hours compared to the regulatory indicator that's closer to 10 hours. So the company has been able to constantly achieve in distribution, not only better financial results, but also better operating quality that can also be seen in the next slide. We'll talk a little bit about default.
We remain at collection indexes that are very favorable at almost 100%, our ARFA definitely one of the best indicators compared to other distributors in the Brazilian electricity industry, and that's a result of many actions that the company has implemented over the past few years to be able to reach this goal. On the slide here, we see some of these initiatives that involve daily monitoring, new collection instruments, number of disconnections is smaller as well, that's also decreased default and the expansion of our collection channels. Another important indicator we'd like to share is the percentage of collection through digital channels, where we came from close to 35% in 2020 that the total collection through digital channels, and now we get to 54%, 53.97% in the first quarter of 2022. This collection indicate us through digital channels, indicates a reduction of delinquency, as well as a reduction of cost of collection of energy bills.
So they're completely convergent with our operating efficiency pillar that has already been mentioned by our CEO, Reynaldo, in his opening remarks. And within our operational efficiency measurements, we've implemented a voluntary retirement program in the second quarter, but it's already released in the information of the first quarter. This will be in between May 2 and 20, where we offer severance pay for the payments who wish to retire from the company, and we understand this program is very important to reduce our costs and for us to be able to maintain our costs at the distributors and transmitters within the regulatory parameters. We understand that this is important for cost reduction and allows the company to -- with this process is able to bring new workers to the company who will help in our cultural program with new employees with new ideas that are also important in this cultural transformation process at our company.
Moving on, as Reynaldo mentioned, the sale of Renova occurred in the second quarter and will have a positive effect in the second quarter, close to BRL 400 million -- BRL 372 million to be more specific in the second quarter. So in addition to the cash entry of BRL 60 million, there is the fiscal credit that's also helped in having affected the results of the second quarter. With the sale, the company is also able to achieve another important effect, which is to focus its strategic plan in the investments inside the state of Minas Gerais compared to what we did in the past. We had a lot of participation and the company divided its focus between investments in Minas, but also in the management of these stakes.
Moving on sustainability. It is a very important topic for the company. As I mentioned, it's in our DNA. We're a company with 100% generation of renewable energy.
And here, we have some of the highlights of this quarter. We expect that over the next few days, we'll get other important achievements in the ESG agenda that we understand to be very important for the company and completely in line with our strategic plan. We released our annual sustainability report according to the best international standards and consultancy from independent parties, we acquired a lot of energy. All our energy is, pretty much most of it is acquired from renewable sources.
And remember that the company made a while ago to acquire 1.2 gigas of renewable energy, and we sell -- we have this REC, this renewable energy certificates that are sold in the market. So they have the power that made contracts from sustainable sources has value. And I realized the Recupera Minas program, we know the first quarter of '21 was a lot of rain in the state with the facts in the society and the state and the company participated in this process assisting Minas Gerais families in negotiations with the clients that have been affected by storms with the donation of refrigerators, which is in line with all the actions that Cemig implemented during the pandemic. Sponsoring more than 400 municipalities in the state of Minas Gerais contributing with the state society within our ESG agenda.
We understand that the company's social responsibility on the society where we operate. Moving on. We'll talk a little bit about the results analysis of this quarter. Turning over the floor to Carolina, so she can talk a little bit about the highlights of the company's consistent results since 2020 at each quarter, we highlight this.
The company has been presenting consistent growing results always above expectations of the market, and this was another quarter where we saw very positive results. So I'll turn the floor to Carolina to talk about these results in more detail.
Carolina Senna -- Superintendent of Investor Relations
Good morning, everyone. Thank you, Leonardo. So we'll present the results of the first quarter of 2022. And we'd like to highlight once again the results and the commercialization activity, Cemig as the largest commercialization company in the country has once again brought robust results for this activity.
Part of this activity has already migrated to Cemig H. So consolidated what remains Cemig GT and H, we get to an EBITDA with BRL 262 million in the first quarter. As already been mentioned by Leonardo, the importance of the PDVP in 2022 generating greater operating efficiency and cost reduction, bringing new employees to the company through highlighting the equity income with a growth of 55.9%, a gain of BRL 184 million. When we look at Cemig D, similarly, is in the first quarter.
The intense rainfall that happened, especially in Minas Gerais decreased the energy -- the volume of energy distributed that also happened in the first quarter since it rains until February, but that's when we see in the captive market, the drop was higher, the rainfall brought a reduction, especially in the rural category, in irrigation. And we remain in transport for clients in line with the 0.3%. Cemig GT, in addition to the strong commercialization activity, we also have the FX effect, the foreign exchange in the first quarter was below closure from December. So there's a positive effect in the financial results of BRL 255 million.
And we're comparing with the first quarter of '21, it was the opposite effect. We had a negative effect of BRL 619 million. Now, looking at the evolution of the growth of EBITDA and profit, we can see that Cemig presented recurring growth of about 16%. We had some effects that impacted EBITDA in the first quarter of '21, the sale of Light in January, BRL 500 million, and the review of -- the tax review effect.
But excluding them, we see imported growth of close to 16%. On the net profit side, we see growth of almost 50%. So in addition to the effects mentioned, we also had the effect of FX exposure, as I mentioned before, in 2022, this was a positive effect since the FX was below the closing value of December. As for Cemig GT, we see the results as we mentioned, the commercialization activities that took opportunities from the market and brought an increase of 26% on EBITDA, achieving BRL 944 million.
And then, the income effect when we removed that FX exposure effect, we see growth of 82%. And at GT, there's already part of the EBITDA that migrated to Cemig H. So even with the beginning of this transfer of activity to Cemig H, Cemig GT still had a highlight position in the group. As for Cemig D, as we mentioned, rainfall has affected consumption and the market -- the demand of the captive market.
So excluding the nonrecurring effect of the tax provision we talked about, the EBITDA had a very small reduction of 1.7%. And excluding this effect, despite the rainfall being intense, the company presented an increase of 10.6% in its recurring net profit, achieving BRL 376 million in the first quarter 2022. Now, breaking down the market, as we talked about, in the captive market, we had a reduction of 6.6%, especially due to the rainfall on rural customers because of irrigation. There's also been some customers that have been reclassified in this category for not meeting any health regulation.
And as Dr. Reynaldo already said, it's important to note the increase in the injected -- energy injected achieving 5.3% of the energy consumed at Cemig D. Next year is an important year as we said because of tariff reviews and our market will be adjusted. And these effects will be mitigated since the 14300 bill addresses this point that affects not only Cemig but all distributors in the country.
Here, Dr. Reynaldo already mentioned, we are within or below the regulatory opex and above the regulatory EBITDA, and this accomplishment of the EBITDA was in the fourth quarter of 2021. So we see that looking at opex since 2020, we've been able to remain underneath the regulatory parameters for opex, the main impacts we have in the realizes, the post-employment program that we're working to mitigate the effect of the post-retirement costs in Cemig's balance sheet, we addressed that in the fourth quarter with life insurance. We still have health plans and pension funds that are ongoing.
And when we look at EBITDA, as I mentioned, at the end of 2021, we were able to exceed the regulatory parameter for EBITDA, achieving in the first quarter of 2022, BRL 655 million. As for operational costs and expenses, Cemig has been working strongly to maintain its costs below, especially the regulatory parameters. The PMSO had an increase of 4.5%. But when we look at the effect of inflation on costs that was 11.3%, it remained below noting the reduction of expenses with personnel, the collective bargaining at Cemig, the base date is November.
So that was the inflation reposed in the personnel costs, but there was still a reduction of 8.2%, as a highlight of the increase of our services for maintenance of electrical equipment and IT expenses, which are important investments to bring quality and efficiency to the services provided and the post-retirement with the actuarial assumptions for the rates, which were very high in 2021, and they had an effect in the costs. But as for the other costs, there has been an increase but those costs that are transferred to consumers that are the energy purchase costs and gas purchase prices. These effects are evened out with the tariff adjustment. As for Gasmig, Gasmig is having a more and more important role in the Cemig group.
We see in 2021 due to the thermo dispatch the volume sold was above the previous years. In the first quarter, despite this thermo dispatch being reduced, there was an important EBITDA growth of about 11% and a net profit about 20% to be 2.9 million of cubic meters negotiated per day, especially with industrial customers. Gasmig should be noted, was in the tariff review process ongoing that was concluded now in April 2022 with some very important effects for the company. So despite the average reduction of 10.05% in the tariffs, we need to highlight the WACC.
There was a reduction to maintain it in line with other players, other companies that also distribute natural gas. So we maintained it similar. The WACC is very important, 8.71%, regulatory EBITDA for '22 is BRL 620 million. With this tariff review, Gasmig renewed ahead of time its concession contracts for another 30 years.
It will go to 2053 and there was a payment of grant bonus that was integrated into this remuneration base. So the net remuneration base at Gasmig after the review is BRL 3.4 million, and all PMSO costs were recognized in full by the regulator. That's a very important item for the company and it will bring greater returns. Noting, as was mentioned, Gasmig has a huge potential for growth in the state of Minas Gerais since the state still lacks a lot of gas supply, especially in the interior of the state.
Now, I'll turn over to Leonardo, and who will talk about the consolidated debt profile.
Leonardo de Magalhaes -- Chief Finance and Investor Relations Officer
The company presents very comfortable leverage levels, close to one times EBITDA. And we see that in this quarter, the cost of debt had a increase, a result of the increase of interest rates and inflation as well. This is a scenario issue that Brazilian companies will go through 2022, maybe '23, with this increase before it starts to go down. But this is something that we understand to be a scenario related to the economic scenario, the macroeconomic scenario that Brazilian companies in general are experiences.
But the company's debt profile is very comfortable today. In 2024, we have the maturities of eurobonds at BRL 1 billion. And as we mentioned, the company is very mindful of the possibility of reducing this wall in 2024 with the use of some instruments, either repurchase of bonds or U.S. dollar block that allows the company to have no FX exposure risk in 2024.
The company now has the best moment understanding how to generate more value to the shareholders and work toward the reduction of these maturities concentrated in 2024. Now, our cash flow is very robust in the quarter, close to BRL 3 billion. It was efficient. We had higher costs with the purchase of energy.
So we had about BRL 1 billion. On the cost of energy purchase and the CPA that was not in our tariff and will be integrated in the upcoming tariff adjustments. This cash generated was sufficient for the company to meet this higher cost of energy purchase, as well as the payment of loans and funding of BRL 830 million this quarter, as well as the company's activities and investments closing the quarter with a comfortable cash level of BRL 2.5 billion. Basically, these are the information of the quarter.
We always like to close with this slide showing the commitments made by Cemig with the market and with our shareholders. And these results that the company has been showing as we complete them quarter over quarter with consistent results, and they're a result of these different actions that the company has been implementing related not only to positive financial results but the improvement of operational quality for the Cemig Group as a whole. So the objectives that have been met. We have many that are related to quality and service, to our customers, operational efficiency, liability management of our bonds, the divestments aspect at Renova and Light that we did in '21, as well as the strengthening of Cemig D's investment program, partially achieved because they're still ongoing as the divestment of nonstrategic assets restructuring of the retirement benefit plans at this time.
We are discussing with the trade entities, with employees to discuss this aspect that generates value to the company, and we have the possibility to achieve a convergence in understanding, and our digital transformation process where the company has been investing heavily in 2022. Our digital transformation process has already started to present positive results as we already mentioned. Even the percentage of collection through digital channels exceeded 50% in 2022 compared to slightly more than 32% in 2020. That's also a result of the investments that companies are making.
In progress, renewal of concessions, investment in renewable generation sources and grow retail electricity sales. The company is paying attention to this very closely in '23 and '24 will have important years for this process of market opening. And just as the company has a history of success in service, when the market started to open for the service to free customers, we understand that this is also a time for the company to take an opportunity and we're prepared to also serve this market. So that's basically what we had to say.
I thank you all for your participation, and we will be available to answer any questions that you may have.
Questions & Answers:
Operator
[Operator instructions] Our first question, from Natalia, sell-side analyst. We're opening your audio for you to ask your question. Please go ahead.
Unknown speaker
Good morning. First, congratulations on your results. I'm here to ask if you can give us more detail about the energy allocation strategy in Cemig GT that led to an improvement on margins in the quarter? Also, if you can please tell us more about the benefits of this contract allocation at the holding.
Dimas Costa -- Commercialization Director
Natalia, thank you for your question. This is Dimas, commercialization director. About your question, the quarter results, I'll try to answer both questions in one. And then, if it's OK, you let me know.
But the first question is that we transfer and we're in the process of transferring energy from GT to the holding, especially or only the energies acquired from third parties. Third outsource energy respond for three-thirds of our portfolio due to the history of the loss of the plants, and for us to maintain our market, we chose to acquire energy from third parties. The first in the short and midterms and now in more -- in the long term. So we are in this transfer process, which brings a gain and the tax aspect to the fact that these energies are directed to the holding, we have this tax benefit.
And in combination with that comparing '22 to '21, we had an increase of sales at around 20% in the amount traded. And this is occurring at the same time when we started the auctions in 2018. The beginning of delivery was more affordable energy when we bought and the beginning of delivery started now in 2022. So we had a sales increase at a good market price at the same time, as the beginning of the entry of these energies that we acquired in the bids.
Also, in December, we made a sale of around 300 megawatts and BRL 200. When the market was believing that the power will be expensive, and we believe it would go down, there's a structure there in the hydro meteorology analysis that indicated a good year as it was, in terms of rainfall, so we made a sale of around 300 mega at around BRL 200 versus the PMD of around the minimum for the quarter, which also brought significant gains. And in combination with all that, with the turn of the year, and most of our contracts changed in the anniversary adjustments at the end of December, so we still have a percentage of around 18% of our contracts corrected according to the IGP-M index that's also higher than the IPCA index. So this 18% have also contributed greatly to this improvement in results.
I don't know if I've been able to answer everything you asked.
Unknown speaker
Yes, you did. Thank you.
Operator
Next question. Francisco, sell-side analyst, BBI. Francisco we will open your microphone for you to ask your question. Please go ahead.
Francisco Navarrete -- BBI Bradesco -- Analyst
Good morning. Can you hear me?
Carolina Senna -- Superintendent of Investor Relations
Yes, Francisco. Go ahead.
Francisco Navarrete -- BBI Bradesco -- Analyst
I have a few questions, but I'd like to elaborate more on our colleagues' previous question. The impression that we have, at least looking at the numbers, is that GT in this first quarter sold around 3,300 megawatts of energy combining GT and holding, commercialization business at the holding. When we look at this total volume, it represents about 75% of the guidance for the year of energy sales is 4,370 in the last guidance. So my question is, is everything remains constant? We should imagine that the sales volume in the second, third and fourth quarters should not be much higher than the guidance of 4,300? Of course, to make up for the fact that the first quarter was lower and the guidance is an average for the year.
So that's the question that is related somewhat to our previous question from our colleague. And if it is so, would that be related to the ramp-up of sales of incentivized energy? But in the guidance, this 1,515 mega and we're not certainly if all this is being delivered to Cemig and if they're selling all this volume or if it's to be gradual throughout the year? So that would be my first question.
Unknown speaker
Francisco, thank you for your question. It's almost a continuation to Natalia's question. We, as every year, will start to allocate energy as best as possible. So our seasonality contemplates that.
You've looked at it with a lot of knowledge there, but there was seasonality in line with where we concentrated our consumption, our energy more in the second half of the year and a little bit more in the first half than the second. There is a ramp-up because we also have, as I said, there's been an increase of sales of 20%, and these energies will come in. Throughout 2022, we had almost the amount already guaranteed. There's already a 20% sales increase, but we're in a sales process where we will meet the guidance reaching that target that is proposed at the guidance.
But it was basically, as I said, it's a seasonality movement and a ramp-up for sales increase. Did I answer?
Francisco Navarrete -- BBI Bradesco -- Analyst
Yes. I just wanted to add a follow-up. In qualitative terms, if you were to make an educated guess of how you see GT's results for the rest of the year, GT plus the trading at the holding altogether, assuming that Galileo is at the current levels. GT's EBITDA plus the trading in your opinion, should it be in line with the first quarter of '22, should it be higher or lower? I would guess higher, but I'd like to hear, qualitatively, your opinion about this.
Unknown speaker
Qualitative, you mean in terms of sales volume?
Francisco Navarrete -- BBI Bradesco -- Analyst
No, in terms of EBITDA.
Unknown speaker
Looking at the first quarter, it should be higher. It's higher. It will be higher. We have here an internal challenge to reach more than BRL 1 billion in EBITDA for 2022.
It is doable. It's not a dream. We've had results from the fourth quarter that guide us to an EBITDA in commercialization and trading at around BRL 1 billion in EBITDA.
Francisco Navarrete -- BBI Bradesco -- Analyst
OK. Thank you for the opportunity to ask my questions.
Unknown speaker
Thank you, Francisco.
Operator
Thank you, Francisco. Continuing our next question, Andre Sampaio, Santander. Andre, we're opening your microphone for you to ask your question. Please go ahead.
Andre Sampaio -- Banco Santander -- Analyst
Good morning. I have two questions. If I could start with Santo Antonio. If you can tell us a little bit how it's progressing and the capital increase negotiation.
If you have any information about the other partners? And also about Santo Antonio, if you can comment whether there's any other lawsuit or arbitration that we can expect for the coming months or years? And the second question would be, if you can tell us about the evolution of works to reduce the post-retirement liabilities?
Marco Da Camino Ancona Soligo -- Participations Director -- Analyst
Hello, Andre. This is Marco, the company's Participation Director. About Santo Antonio, we already released that we are not interested in capital allocation. Speaking for Cemig, we will not allocate or invest any money in Santo Antonio.
As for the other partners we have nothing to comment. As for the arbitration as far as to the best of my knowledge, there's no new arbitration coming in, in the next few years. Just to locate it, this is my 11th day in the company. So I haven't heard anything about other arbitration processes aside from Santo Antonio.
And post-employment, post-retirement, Leonardo will answer. Thank you.
Leonardo de Magalhaes -- Chief Finance and Investor Relations Officer
Excellent. So about the post-retirement, Andre, I thank you for your question. We know how complex these processes are. They involve restructuring our pension plan, our health plan.
We've been talking to the market since 2020 that we are in this negotiation process. We hired consulting services that could help us develop those structuring proposals. And as for the potential plan, we're discussing at the Forlus level, our proposal to create a financial plan that removes Cemig's risk that is also more flexible for the participants in the management of their resources. We understand it would be interesting for both bodies to be involved in this restructuring process.
We are optimistic. And for the health plan, the restructuring of this plan includes a discussion process with the trade entities to change the health plan that we offer today both for the retired and active participants and the means of contributions since they're complex, they take longer. But we've been able to -- with our negotiations to bring down the obligations for life insurance. That's one of the three post-employment obligations.
So we've been able to bring that down from our balance at the end of '21. We're optimistic for the other two processes as well. We know that the issues that involve pension plans and approvals. Of course, the process has already started and will be concluded by '23.
We believe the process is moving along. And health plan, we hope that we expect that in this year 2022, we may be able to receive favorable news in terms of results that can reduce both the obligation on the balance sheet, as well as the expenses that we register every year in our financial statements. So they're complex processes, but they are following along. They are being discussed with the class entities, regulatory entities like the pension plans with Britvic, and we expect to have positive news to provide in the short time in a conference call as we had in the fourth quarter.
So when we had news about life insurance.
Andre Sampaio -- Banco Santander -- Analyst
Excellent. Thank you.
Operator
Moving on next question, Daniel, Banco Safra. Daniel, we'll open your microphone.
Daniel Carabolante Travitzky -- Banco Safra -- Analyst
Good morning. I'd like to ask you to please talk about the announcement of the suspension of the capex guidance. I'd also like to understand the perspective for tariff review next year. Is the suspension of this guidance will affect in any way, the perspective of asset base for next year's tariff review? And my second question, if I may.
If you could talk about the divestment process of your stake at Taesa, how this is moving along? What your mindset is?
Unknown speaker
Daniel, thank you for your question. As for the guidance, there's no connection to the tariff review. As I mentioned, we are very optimistic with our tariff review. We believe it's a process where it is going to be important for Cemig D in terms of cash generation and profitability in 2022.
We understand that we have a lot of investments to make this year and these investments will be considered within a next year's remuneration base, along with the market adjustment. So we're optimistic with Cemig D's results. The guidance effect what we released in the last guidance last year in May, there's been a cold year, we should tell something up to the market versus require us to do that. So we shall have a Cemig day in the third quarter to be able to discuss more about the company's strategy as for investments, and our expectations for future results.
So we understand that in the third quarter, we will have the valuable opportunity to discuss the future of the company. But as for the tariff review, we're very optimistic with the distribution service in the coming years. And as we mentioned, with the market adjustment and the new remuneration base for 2023. Now, for divestment, I'll turn over to Marco, so he can tell you.
Marco Da Camino Ancona Soligo -- Participations Director -- Analyst
So Daniel, we maintain our interest in the sale. We're studying intensively with the contracted banks to format the sale because it must be something good for all partners. And considering we're in May, we would really like to conclude this process or at least sign the contract this year if we succeed in the process. What I can tell you is that we are very dedicated to -- and we want to do it, make it happen.
Daniel Carabolante Travitzky -- Banco Safra -- Analyst
Thank you.
Operator
Great. Thank you. Next question, Luiza, Itau BBA. We'll open your mic, Luiza.
You may go ahead, please.
Unknown speaker
Good morning. Can you hear me? It's a follow-up to Daniel's question. Part of the question was already answered, but I'd like to understand if the suspension of the guidance for the coming years, if this is more related to the restrictions in the global supply chain that would impact the development of renewable projects that you already have side. I'd like to understand if that was the main motivation?
Reynaldo Passanezi Filho -- Chief Executive Officer
Luiza, thank you for your question. I'd just like to make it clear that the guidance suspension is not related to any sort of reduction in the company's expectation of future results, as I said. This is basically related to the fact that it's been one year from the last guidance and our next Cemig day will occur in the third quarter. We understand that that's when we need to give information to the market, and it's best to suspend that guidance since it's been more -- one year.
But there's no -- we understand that the company is on track. We're very optimistic with the company's results and its many businesses. So there's no relationship with that and the frustration of future reductions or future results or reduction of expectations.
Unknown speaker
OK. Thank you.
Operator
Next question from [Inaudible], investor.
Unknown speaker
Congratulations on your results. What the expectation to the proceeds distribution in 2022 in terms of percentage figures?
Leonardo de Magalhaes -- Chief Finance and Investor Relations Officer
Thank you for your question. As for the dividend, we have a dividend policy that's the payment of -- it's a payout of 50% of our profit. In 2021, the dividend was very attractive. It was above 8%.
And considering our results expectations for 2022, which will be positive, we consider that the dividends will follow the same policy and will provide a very attractive yield to our investors. Of course, we need to wait for the years to develop, but our expectation is that it will be a year with positive results and consequently attractive dividend to our investors.
Operator
Next question, Daniel Francisco, Investor. Opening your mic. Go ahead, please. Daniel, please go ahead.
Unknown speaker
Good morning. Can you hear me?
Carolina Senna -- Superintendent of Investor Relations
Yes, we can. Please go ahead.
Unknown speaker
Good morning. Congratulations on your results. Actually, I have two questions basically. I saw the report, and I congratulate you, and I have two questions to ask you.
The company has an investment capex from what I calculated here from what I saw is at least BRL 5 billion. I would like to ask my first question, does the company intend to focus in wind, power, renewable energy and so on? How does the company expect with the holdings? Should this develop in the medium to long term, if the company no longer buys energy? I apologize for my language, but the energy from other companies are being self-sufficient.
Reynaldo Passanezi Filho -- Chief Executive Officer
Thank you for your question, it's Reynaldo. So we purchased energy in the past, for covenant reasons, we were prevented to invest and the option for us to maintain our market was to make these purchases in the long term so as to fill our portfolio, but once we already have the investment capacity, our trend now is to start to reduce the purchase of outsourced energy as it may be clear we're going to run an auction in June where we're buying pipelines, energy pipelines for solar and wind power generation combined with a percentage of energy that we may or may not acquire from third parties. So the idea now is to move on to our own generation. We are already investing, and we're also acquiring pipelines, as you can see in the auction will hold in July -- in June.
So that's the trend considering that now we have investment capacity. Did I answer your question?
Unknown speaker
Yes. If I may add another question.
Reynaldo Passanezi Filho -- Chief Executive Officer
Yes. Please go ahead.
Unknown speaker
I apologize for intruding, but if the company went down to the 25% minimum, I would not see anything wrong. But since the company intends to participate in this auction and invest in other areas in the state of Minas, as what's already mentioned in different municipalities and so on. Does the company intend to participate in public bids, for example, for energy transmission? And in this case, the cash disbursement, wouldn't it be or you are the ones who know the amount should be paid. But wouldn't it be better to get a cash reduction to give stamina for the company and in that case, reduce the dividend so that the company has more stamina to participate?
Reynaldo Passanezi Filho -- Chief Executive Officer
Thank you for your question. We understand that maintaining the policy of 50% of dividends is sustainable and gives the company the possibility to continue to invest, maintain its leverage at low levels, giving attractive returns to our investors in terms of remuneration for the investments in the company. I take this opportunity to thank you all for participating at our results earnings conference call. We have very robust results, and we have reason to remain optimistic as for the company's future and the results of coming quarters.
And we conclude our results conference call for this quarter.
Operator
[Operator signoff]
Duration: 68 minutes
Call participants:
Carolina Senna -- Superintendent of Investor Relations
Reynaldo Passanezi Filho -- Chief Executive Officer
Leonardo de Magalhaes -- Chief Finance and Investor Relations Officer
Unknown speaker
Dimas Costa -- Commercialization Director
Francisco Navarrete -- BBI Bradesco -- Analyst
Andre Sampaio -- Banco Santander -- Analyst
Marco Da Camino Ancona Soligo -- Participations Director -- Analyst
Daniel Carabolante Travitzky -- Banco Safra -- Analyst
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