© 2024 Alpha Spread Limited. All Rights Reserved.
www.alphaspread.com is not operated by a broker, a dealer, or a registered investment adviser. Under no circumstances does any information posted on www.alphaspread.com represent a recommendation to buy or sell a security. The information on this site, and in its related newsletters, is not intended to be, nor does it constitute, investment advice or recommendations. The information on this site is in no way guaranteed for completeness, accuracy or in any other way. In no event shall Alpha Spread Limited be liable to any member, guest or third party for any damages of any kind arising out of the use of any content or other material published or available on www.alphaspread.com, or relating to the use of, or inability to use, www.alphaspread.com or any content, including, without limitation, any investment losses, lost profits, lost opportunity, special, incidental, indirect, consequential or punitive damages. Past performance is a poor indicator of future performance.
You don't have any saved screeners yet
Intrinsic Value is all-important and is the only logical way to evaluate the relative attractiveness of investments and businesses.
[Starts Abruptly] Earnings Video Conference Call. We inform that this video conference is being recorded and will be available at the company's [indiscernible] website, where you will find the company's presentation. Should you need simultaneous interpreting, the feature is available by clicking on the globe icon located on the bottom of the screen using interpretation and then the language of your choice, Portuguese or English. If you choose to follow the call in English, you can also select mute original audio.
Now, I would like to turn the floor over to Carolina Senna, Investor Relations, Superintendent. Please, Ms. Senna, you may proceed.
Thank you. Good afternoon, everyone. I'm Carolina Senna. I'm Cemig's Investor Relations Superintendent. We now start Cemig's second quarter 2023 earnings call and webcast with the following executives: Reynaldo Passanezi Filho, CEO; Leonardo George de Magalhaes, CFO and IR Officer; Marco da Camino Ancona Lopez Soligo, Chief Participation Officer; Marney Tadeu Antunes, Chief Distribution Officer; and Thadeu Carneiro da Silva, Chief Generation and Transmission officer.
For the initial remarks, I turn the floor over to our CEO, Reynaldo Filho.
Good afternoon, everyone. Once again, it is a pleasure to be here, bringing to you the results of another quarter. And these keep being sound and consistent results, as you can see in this first slide, I can say that this is our main message. The company is effectively in a sound and consistent growth route. This is thanks to a very clear strategy that here we called to focus in Minas Gerais and to win.
As you see in the last bullet, we have been very successful in executing the largest investment program in Cemig's history. And this program is focused on the businesses that we know in the territories and the areas and the clients that we know. You have BRL42 billion investments for the next five years, focused in distribution, transmission and generation of energy in Minas Gerais, and also in the trading area all over the country.
In addition to investments in distributed generation and natural gas, but these are territories that we know well and also in a situation which we fully control the decisions, that also means the divestment of the assets that are a minority shareholding in areas that are outside the state of Minas Gerais. This strategy has proven to be sound and consistent that is what allows us to be bringing to you once again a robust cash generation and also robust net profit.
We are talking about an adjusted EBITDA already recurring one of BRL2 billion (ph) in the quarter, annualized almost BRL8 billion. And at profit, once again, growth of almost 7% vis-a-vis the prior quarter, already adjusted. This is a net profit of BRL1.2 billion. These are the consistent results, the recurrent results that prove the soundness of this company.
And now I go to the first bullet, bringing to you also how sound our internal controls are. We did have the surveyance Oxy certification of a balance sheet with no problems in its internal controls, an unqualified approval after six years. So this -- we are very sound in terms of our internal controls and governance and that comes in a great moment because we are celebrating 10 years of the law clean company. Also sound results consistent cash generation, net profit consistent as well, BRL1.2 billion, the cash generation also very robust.
And also, we aim to continue generating value to society, to shareholders and stakeholders by the means of the largest investment program in history. And in order to complete this strategy, we have another topic, which is capital allocation, just like I mentioned, the BRL42 million, the largest investment plan in the company's history.
And you will see in the presentation that in one semester, we have invested in distribution almost double of what we invested in 2018. Just to give you an idea, in the first half, we invested in the double amount that we invested in 2018. And this is the topic that we are talking about in terms of capital allocation. And another dear topic for the company in the company's strategy is our operating efficiency.
So we move forward and these consistent results of cash generation are there because we are meeting all the regulatory OpEx, regulatory losses. So we are within the parameters there. This is our strategies for -- is to have a robust cash generation because we are efficient in this operation. And we are under the regulatory OpEx. We are lower than the regulatory losses allowed and we have a strategy to allocate capital, which is a record in the businesses that we know. And we are divesting from assets which -- in which we have a minority shareholding.
And as you know, we have already divested in a large number of these assets. The presentation will also go over another great effort of this company in the digitization area, almost BRL1 million in digitization, automation, modernization, new systems to operate and control our businesses record investments and modernization. And we also have future perspectives in this capital allocation.
In terms of investments and return, not only return on distribution investments, but also the company's investments in generation after a number of years, we are now building almost 180 megawatts of photovoltaic plants. We have a bold plan and distributed generation, whether solar photovoltaic generation whether it is flowing. We're talking about 540 megawatts already growing in land plants to ensure the market leadership in addition to our objective to renewal our generation concessions. So this is the broader overview.
And I also would like to talk about our leadership in energy trading. We have a very comfortable situation for the next three years, as far as the needs that we have are concerned because we have a situation where we can see this opportunity of lower prices in the short term for electric energy. So I would say that here, once again, we are in a very consistent and sound position in terms of our results.
And all these are my initial remarks. The slide is up. I can comment also on that. We have BRL1.7 billion in investments here. And here, we have a capital allocation, right, that I was talking about. So it's BRL1.7 billion in the first half of the year. If you all remember, how it was in 2018. For the whole year, it was BRL950 million. So almost all that amount in a single semester.
So in fact, now we have a large part of our investment program already contracted. So we have everything that we need to be able to execute our investment plan, especially in the regulated sectors, where we have greater perspective to generate value. We do have a challenge. The Brazilian electric sector has a challenge in centralized generation because of a large amount of supply, and you're still picking up in terms of demand for energy consumption.
And the country also consistent results in gas and the super generation, once again, record in terms of investments. We are building a pipeline here from the metro region of Belo Horizonte up to the and also in the distributor generation area, our objective is to maintain our leadership and the state of Minas Gerais.
These were my initial remarks, and we are available who once again show you and hear your contributions -- about another quarter of sound results in this company.
Thank you very much, Dr. Reynaldo Filho. Now, I will turn the floor to our CFO, Leonardo George de Magalhaes. Leonardo?
Thank you, Carol. As Reynaldo mentioned, we did have important investments already. This year, we have a bold investment program, a little bit over BRL5 billion. We are very optimistic about our investments in distribution. We understand that we'll be able to complete these BRL3.2 billion in the year and we believe that it has a number of positive consequences. We have some precious numbers that will be considered in the next tariff review.
And also these figures help the company to have more energy available in the market, which is important for society in order to ensure the society's growth and the society that is carried by this company. Some investments in distributor generation -- and here, the performance, the execution in this first half of the year was shy on considering the total that we have forecasted for the year because we believe that most of these investments will happen in the second half of the year.
So in the second half of the year, we expect more investments in the other businesses in the company other than distribution as well. So we are very optimistic. We believe we are going to get close to this BRL5.4 billion that we have forecasted for 2023. And as Reynaldo mentioned in the next slide, we have some of the challenges of the trading area. And we understand this is a great opportunity for Cemig as it was when we had the free market becoming open a few years ago and Cemig saw a new opportunity then, and now it generates a lot of results, great results.
And Cemig's EBITDA of our trading company in the first half of the year was higher than BRL600 million of very relevant result. And that is a material fact -- material proof that the trading area of Cemig is correctly reading the market. And this is a relationship that adds value, both for the clients as well as for the company in its operations.
And now with the opening of the retail market in new markets, Cemig is already prepared to cater to this client by our website, energialivre.cemig and this is constantly being developed so that every day, we can have a friendlier platform so that we can read consumers, not only in the state of Minas Gerais because we understand that -- thanks to the company's reputation, the top of mind of our brand here in Minas Gerais. This allows us some competitive advantage, and we have to see this competitive advantage to have a large share of this market.
But also for to allow us cater to this retail consumer and client out of Minas Gerais. So we understand that we can have -- and we do have that ambition in terms of a stake in this retailers marketplace. This is a new market or the company adds value, considering especially this moment where energy has low prices in the free market. And that's an important market for us. We want to cater to this market in a way that we can create value to the company and our shareholders.
Moving on Reynaldo talked about these important investments that we'll be doing in the next few years. It's within our strategic plan. There are some special topics here. So investment in security and safety. We see cyberattacks happening frequently, Cemig has resilience and its security information, we are prepared to face effects in this environment. And also platform development in terms of quality of service to clients, and that reflects in a better productivity in our teams, avoiding frustrated teams being displaced because they do not have the best algorithm or the best optimized intelligence to be used in their daily operations. So we understand that this platform modernization allows us to have greater security and sustainability.
In our operations, digital channels and also operating efficiency. These are important investments and we understand that the company cannot like all updating itself in this digital environment. These are important investments we'll be making in the next few years and I think this is going to generate value.
Now moving on our ESG actions. This is a very dear topic to us. This is in our DNA. Cemig has always been within the sustainability indexes, the national ones and international ones. Cemig has part of these indexes. And we play a significant role there. And in this quarter, we launched our program, but -- diversity program for our employees. So we have also training and diversity. This is important for us.
In the second quarter, we had the largest issuance of sustainable bonds in Brazil BRL2 billion and mission our bonds were placed in the market and that shows how much the market trusts on us, and they are attached to important investments that we are making in social areas, 3-Phase Minas, Mais Energia and Efficiency programs that bring more energy and have energy available to clients.
So we change lives of people that are serviced by us. And we also generate value to our shareholders because these investments are also recognized in the remuneration base. And also we have disclosures in our TCFD report. And these are events related to climate change. And here, we were able to remove a large amount of CO2, 10,156 tons of CO2. This is a relevant figure. It is equivalent to 100,000 fuel tanks. And also, we have a certification of renewable energy certificates. This is the energy that we deliver to our clients, and it has the seal of proving that the energy comes from renewable sources, that's another value that we create for our clients when we have this special seal.
Now we are going to dive into the results analysis. I will comment on overview and then Carol will continue the presentation. As Reynaldo mentioned, another result -- another quarter of consistent results and EBITDA close to BRL1.9 billion and the half of the year, close to BRL4 billion and net profit close to BRL1.2 billion. And in the half of the year took almost BRL2.5 billion. So we can get very optimistic in terms of our results for the end of the year.
Our bylaws defines a payout of 50% of dividend payment. So it is a very attractive payout. And I would say one of the best dividend paying companies, I would say that Cemig is. And the results that we bring to it every quarter allows investors to view secure in terms and confident regarding their trust that they have on us. So as I mentioned, over 40% growth vis-a-vis the prior year in the six months over BRL600 million in EBITDA.
And dividends, we have had interest on equity already almost BRL900 million of interest on equity, showing that the company is really interested to work with investors as well. We did have a positive tariff review. We understand that the results of this review will be better seen in the second half of the year. And this was in May 28, this tariff review. So just one month after this tariff review that has affected the company's results for the second quarter of 2023 for the -- now by the end of the year, we will have the whole semester with the results of the tariff review, which were positive. It was fair regarding our operations.
And also regulatory loss at PMS, so within the regulatory limits. And Cemig’s GT with financial discipline, consistent results, we bid at annual transmission auction in January of 2023. You understand that we were competitive because we are in Minas Gerais, we understand that our proposals were competitive.
We were not awarded that the auction, but we also understand that we have a commitment with our shareholders investing on assets that will generate positive present value. So we were not awarded this big but we have a number of other investments for the next few years that will generate value for our shareholders. So that's fine. It's part of the game. We bid. We were not aware of the concession, but that shows also that we have a financial discipline in our capital allocation.
And also here, we have the sale of Baguari and Retiro Baixo HPPs that -- these are almost concluded. We are just waiting for the final approvals to conclude the operations and then to have the funds coming into our cash.
So now I will turn the floor to Carolina, and she's going to go into the details on the results.
Thank you, Leonardo. Now moving on. On this slide, we have Cemig's consolidated 2Q '23 results. Here, we have had no non-recurring effects. In 2022, we had a number of effects that affected the results. I will go over them very briefly. We sold Renova. As we said, that is within our plan of sale of assets of non-performing assets, and we also had the write-off of financial assets. These are assets that we have, but we had other assets that we need to be reimbursed. So those were written off. We also have the provision for credits -- for tax credits and that was provisioned in 2022.
Also, the use of the distribution infrastructure. This was a non-occurring revenue also in 2022. Reversal of Santo Antônio provision and the FX exposure and this affects the quarter. And remember that we still have an Eurobond share or part of that is due in 2024. When we remove all these effects, we report another quarter with sound results, we grew 3.8% in our EBITDA, 6.6% in our net profit, showing our commitment and the company's commitments in adding value to its shareholders.
About operating costs and expenses. There was an increase of 9% in the PMSO affected by outsourced services. That increase is because of a company's management change by -- because of preventive maintenance. Since the 4Q '22, we mentioned that we were going to change that in our management because this is going to bring a better services provided to our clients. Also Resolution 1,000. And here, we have financial compensations for consumers.
On the other hand, on the positive note, we did have our -- a voluntary redundancy program, and that was the cost of 9%, but the highest increase here is the outsourced services. This is an expense that is going to bring us in the long-term reduction in future costs and better services provided to our consumers.
On the next slide, we see the company's cash flow, the strong generation of operating cash in six months, we generated BRL4 billion. So the cash in December was BRL3.3 billion. We are returning the tax credits and the tariffs we paid dividends. We raised BRL2 million in Cemig D, as we mentioned with sustainable bonds. We paid debt with a net effect here of BRL1,388 million. We paid Santo Antonio, we are investing the largest investment program, as Reynaldo said, and we ended with a cash of BRL3.8 billion in six months and it tends to be used over the second half of the year because of our robust investment program, which we already discussed.
About the debt profile and the consolidated but that profile. I already talked about the Eurobond, we already bought back parcels of this Eurobond and it is due in 2024. And 2023, we'll do another buyback. So -- for December, we do not have a premium anymore for the buyback. So we are going to improve our structure. But the cost of that is down because of the IPCA and the dollar and our leverage. Although, we had the funding for Cemig D of BRL2 billion is still low. But like I said, naturally, because of the robust investment program, this leverage is going to increase and it should reach 2027 2 times in the consolidated results. So despite of being a low leverage, it will naturally increase because of the investment program.
Now going into Cemig D results, we have the nonrecurring here. The provision for these COFINS credits and also the use of distribution infrastructure. If we remove those, we have an EBITDA of 14.3% and net profit of 10.9%. And again, we have just concluded the 5th -- the tariff review for the company. Then we have now a net average increase of 13.3%. So here in this quarter, we had just one month of effect of this adjustment for this tariff review. And our regulatory remuneration base here increased from BRL8.9 billion to BRL15.2 billion.
And the electricity market for Cemig D here, if we add consumer and transported energy, we have a 0.7% growth. It might seem small, but if we look at the whole market, the DG market is affecting the whole company compared to -- quarter-to-quarter, we had a 56% increase. And this energy when it migrates to DG, it is growing. The state of Minas Gerais is bringing in opportunities for growth and development. And we see this in transported energy because you see that it grew 3.3% and a cap despite of the drop of 1.7%.
We draw your attention to the residential growth here, 6.4%. The number for residential consumers increased and the average consumption also increased. And this is important information showing that the strategy of investing distribution -- strategy that does bring return to the company in addition to better services provided to clients in our concession.
About regulatory limits, we are committed to meet the regulatory limits. The losses are important. We were able to be under the regulatory limits in 2021, and we ended the quarter at 10.78% and the limit is 11.16% (ph). So we are very well positioned. So our limits for the end of the year is going to be 10.8%, and we will be and within the regulatory limits. Thanks to the initiatives that have already carried out in the past six months, and we'll continue working on them. We have already made 210,000 inspections. We replaced 312,000 absolute meters. Also, we replaced meters by smart meters and the Energia Legal program is already working with low-income families to have their legal energy actions.
Now in Cemig D, this proves how our digital channels are improving our collection. It's very important to have the new system, the PIS, which is the instant payment system that already represents 14.03% of all collections and are ARFA, which measures the receivables collection index. In 2022, we are very close to 100%. And in this half of the year, we went over 100%. That is because we are able to collect a debt of [indiscernible] in Minas Gerais and we brought BRL12 million to the company in that action.
Another important metric here is that we are committed, and we are still delivering and we'll continue to deliver our regulatory OpEx that we have no tariffs. So the OpEx for six months, we have BRL2 billion as the regulatory OpEx. And our performance or realized was BRL1.9 billion. And the regulatory EBITDA, we are above that. So we are committed to meeting the regulatory limits and with efficiency, and that's what we are doing. And we see greater opportunities to improve even more with the post-retirement as we have shared with you.
And now turning to Cemig's GT results. This slide is a little bit different. We also had non-recurring effects, and I talked about them, which was the disposal of assets. Also the write-off of financial assets, the reversal of Santo Antonio provision and the FX exposure affecting our profits. But when I remove these effects and -- also important information here, we are transferring the trading activity from Cemig's GT to the holding company, this process has not been concluded.
And when I go back to the EBITDA that has already been migrated that is under Cemig-H, if I bring it back to the fact, we had a small drop of 2.2%, affected by inflation, which also affects the transfer of rights bonus. But if I bring back the effect of the profit regarding trading activity, I had an increase of 14.3%, influenced by the dollar. This is the FX effect on Cemig's GT financial results.
Important highlights for Cemig's GT that we have already shared. And it's important to stress our permitted transmission revenue did not affect the results in this quarter, but we did have an increase of 23.5% for the next cycle, affected by the inflation in the period also strengthening and improvement of the network with the addition of permitted transmission revenue. And also the reprofile of the Cemig's GT National Grid contribution and the amount that we will be receiving is higher than the prior years.
And I would like also to highlight something else. We have already shared that, but this is just hint on the development of these projects. Here, the [indiscernible] projects, we have already invested year BRL360 million. The works are ongoing. All the suppliers are contracted. And as Dr. Reynaldo mentioned, we have already requested the renewal concessions for Sá Carvalho, Emborcação, Nova Ponte. [indiscernible] also consolidated these results, Cemig is important for our consolidated results. So every quarter, we bring this results.
We can see that we had an EBITDA growth of 55.4% affected by the repositioning of the tariff review and higher consumption, especially -- the consumption from industrial and thermal clients increasing 36.5%. GASMIG has showing growth opportunities. And because of that, it launched a centralized project that will bring the gas pipeline up to Divinopolis, CapEx of BRL780 million. Up to June, we have already invested BRL73 million. And by the end of the year, we will have invested BRL367 million. We are concluding the bidding process and environmental licensing. And in the second half of the year, we will be accelerating the works.
We are also investing in distributed generation part of that by Cemig's [indiscernible]. And another part by the floating ones, which will be in Cemig's GT. So now we have an operation 19 plants, in construction 51 plants and being developed the three floating plants, the solar plants. Installed capacity is growing. So we have 52 megawatts in operation; in construction, 168; and being developed 174. A significant growth in distributed generation. And that is going to be going into our EBITDA in the next few years. And recently, we have concluded the bidding process to build 23 solar plants that will gradually be in operation by 2024.
Now to conclude, I will turn the floor to Leonardo, who is going to discuss and talk about our commitments and challenges and opportunities.
Thank you, Carol. We like to finish with this slide because this is our commitment with the investors. And these commitments come from our strategic planning. And most of these commitments are being mapped by the company. Some of them have already achieved such as the OpEx below regulatory limits. Our EBITDA is over the regulatory limit. The losses also are within the regulatory limits.
And also the strengthening of Cemig's D investments program, and that's a great advancement from what we had in the past. So you used to invest BRL800 million -- BRL900 million in the past. And now we have a broad investment program for this year, 3.2 and we understand that and we feel confident and the company has -- the company has already contracted these materials, these services, and we are ready to invest.
Now what is in progress, the divestment of non-strategic methods. We understand that a large part of these assets have already been sold, such as Light, Renova, Axxiom (ph) and other assets in Santo Antônio also was divested, and we continue with the divestment process. Digital transformation, we invest -- we intend to invest BRL1 billion up to 2027.
Renewables investments that are going on at full power, as Carol mentioned. Also growth in retail electricity sales and the bonds, liability management because little by little, we are reducing our FX exposure. For the future, we will continue investing in renewable holding generation sources and renewals of concessions and the company is already preparing itself. But to be ready to renew the important concessions in our portfolio for energy generation. That's it.
Thank you very much. I'll turn the floor back to Carol. And now we can start our Q&A session.
Thank you all very much. We'll now start the Q&A session, please. [Operator Instructions] The first question is from Andre Sampaio, sell-side analyst from Santander. Please Andre, you may open your microphone.
Good afternoon, everyone. I have a question about GASMIG. Can you comment on the results? Why was the results so much higher than the regulatory limit. Is there anything there that this is non-cash or is that non-recurring effect, and it makes sense to imagine that huge gap, vis-a-vis the regulatory limit?
I will turn the floor to Leonardo.
Hello, Andre. Thank you for your question. Yes, GASMIG is a company in the group that has very relevant and important results. Since last year, it is bringing consistent results in EBITDA and profit. The company has low leverage. I just went through the tariff review and it has some special aspects, differently from the electric sector. All the regulatory payments for the electric sectors are posted in the balance sheet. For GASMIG, they are off balance. And when you have a tariff review, that's when they are integrated into tariff review in the tariff and all these offsets that are off balance. And GASMIG, it has had a very important tariff review, this year 15%, and that's a way of bringing into this balance, the offset of these regulatory balances. That explains the results.
Last year already, we had good results, but this year, it is even more significant. And maybe this is one of the explanations because it is over the regulatory limit. So this is a company that has low delinquency levels, and we understand that these are consistent results. Of course, that, as I mentioned, because the regulatory assets are off balance and you have adjustments. This ends up affecting the results. And we might have a period when the results are much higher than the regulatory. But in the long term, these are consistent results. The company is fully within the regulatory limits. And so we are very optimistic about GASMIG's results in the future. It was another good quarter in terms of results, it already was good in first quarter. But in this quarter, the adjustment of 15% and the rates improved the results for GASMIG in this quarter and the semester of 2023.
Thank you, Leonardo. Our next question is from Marcelo Sa, sell-side analyst from Itau. Our officer for generation and transmission will answer that. I will open the microphone.
Hello, everyone., Thank you very much for the call. I have two questions. The first one is to try to understand what is the company's position as far as Argentina exports are concerned. The current role is to be able to export. But my question is, can you also export this extra investment in the future? So maybe you need to convince the government that makes sense to be done. So I would like to understand your position about that. Second question about the plans. So you will request to the renewal for the quota system. It's not going to be a renewal with control sale that would have to go through the government or the state government's administration, right?
Okay. About the first question, yes, trading makes sense for that energy, whether when it's being turned or transformed or in the future, we know that the reservoirs have high levels right now. And with -- they tend to end the dry period also at a high level. So it is possible that we see new transformations in the near future. So we believe that this makes sense and we are part of the group that is trying to work on that possibility.
Now about concessions, Cemig is working with all possibilities of renewal and they include the request to renew per quotas, also the renewal by selling the plants or transferring the control of the mother company. So what we are working on today are all opportunities. And obviously, that depends on the granting power and for us to see which one will happen. So we're not leaving anything on the table, but we are not choosing one for the other. No. We are looking at all the alternatives right now.
Thank you, Thadeu. Okay, Marcelo, go ahead.
About exports, I understand that -- but how is the negotiation going with the government? Do you have already a method on how this is going to happen? In a thermal dispatch in order to compensate for it, is this something that is going to be defined in the next few months or is this something that is going to take a long.
I don't have the answer for you right now. We are still discussing the methodology. If that involves the study of hydrology, study of the sector, the energy surplus. So I cannot give you a straight answer right now. But the discussions are having via the associations of [indiscernible] for the HPPs, for the hydroelectric power generating plants, whether the big plants or the SHPPs. These are the groups that are ahead of this movement, but we don't know how long this will take. We understand -- we would like it to happen as soon as possible so that we can be successful in the next water season next wet period.
Thank you, Thadeu and Marcelo. Now moving on, I will open the microphone. The next question is for Leonardo George. The question is from Daniel Travitzky, sell-side analyst from Safra Bank. Daniel?
Hello, everyone. Thank you very much for taking my question. I actually have two questions. The first that investment of BRL1 billion in automation and technology. Is that going into the remuneration base of the distributing company or just part of that and how much? Second question about the strategy for the Eurobond rollover -- Eurobond debt rollover. How do you intend to deal with it? Are you going to maintain that as a dollar denominated debt because of the high interest rates that we have now? I would like to better understand that. Thank you.
Thank you, Daniel, and thank you for your questions. About our Eurobond debt, in 2021, we published our strategic planning for the first half of the year. We said that we are going to do the liability management in different stages. We have already reduced that debt. We reduced it in 50% our FX exposure, and we intend to take another step at the end of the year. And by December of 2023, Cemig can rebuy the bonds without paying premiums. So we intended to by around BRL350 million, BRL370 million of buyback by the end of the year. We understand that this is part of the process. So that little by little, by the end of the year in 2024, we can eliminate our FX exposure via Eurobond.
And we're always comparing the cost of international emission and now here including 100% of a hedge with the local emission, we understand that it's more attractive for the company right now, it's cheaper to have a local emission. So our strategy right now is to switch this Eurobond via a local debt. This is the strategy that we are choosing to follow right now, and we intend to do this for the next franchise. And the Eurobond buyback, we have around $750 million. Remember that we have a protection of up to BRL5 in principle, and we will continue buying back. Right now, local emission is more affordable for us. We are a company that has all the revenues that -- in real denominated revenues. So this local emission is more interesting for us, this is our expectation for our Eurobond.
And the first question, Daniel, it's about our IT investment, right? So we are investing there. And most of that investment is OpEx. But it goes under announced coverage of tariff review. This is the investment. This is already forecasted in the rate. I remember that even considering robust investments that we'll be making in IT, we are committed because even having those investments, all our OpEx will be within the regulatory limits established and tariff review. We are not going to go over BRL0.01 in that -- of the regulatory limit. So we do have an internal challenge of being -- to cover these costs in a way that we have 100% of the costs, including this investment and technology being covered by the tariff by the rates.
Excellent. Thank you very much, Leonard. Next question, I will read, it is for Marco Soligo. Please, as an update on GASMIG, if you're going to list the company and about the divestment in Taesa?
Great. So first, let's talk about Taesa. So the studies -- internal studies and the banks also that help us that aiming a possible divestment, all of those continue to happen. And we are -- we want to be prepared for when the opportunity arises, that can be applied for Taesa and also for Allianz and for the other ones. So there are several studies running and being developed.
About GASMIG, all the preparation work -- internal preparation work of the company or a possible IPO have been concluded, that IPO is not has not been decided yet. So we might not move forward with it because that has to do with the process of privatization of Cemig. So maybe Cemig’s can become a corporation in itself in the future. So that is up to be decided.
Thank you for your answer. So now back to Reynaldo, our CEO, will conclude our earnings call. Once again, I would like to thank you all for your participation.
Thank you very much for your participation. Thank you for the questions. We hope to be here in the next quarter, right, Carol, bringing to you once again sound and consistent results. A company that is happy, helping to develop and to faster development in Minas Gerais. And at the same time, generating values to stakeholders and to investors and shareholders of the company. Thank you very much.
Cemig's second quarter 2023 conference call has ended. IR Superintendents are available to take further questions. Thank you very much and have a nice afternoon.