Ladies and gentlemen, welcome, and thank you for waiting. Welcome to the teleconference of Eletrobras, to talk about the results regarding the Second Quarter of 2017. We inform you that all participants will be hearing the presentation. Next we will start a Q&A session. We remind you that this presentation is available in PowerPoint at the website of Eletrobras, Investor Relations. Before we continue, anything that will be said during this teleconference regarding the business perspectives of the company projections and financial goals are premises of the Board of Directors of Electrobras, based on information that is available to the company. Considerations, thoughts about the future do not assure the performance. The investors must understand that economical issues and operational issues may influence into results of the future. Now, I would like to give the word to Mr. Wilson Ferreira Junior. Mr. Wilson?

I would like to talk about the results. We’re going to have an in-depth analysis of the results, our business plan. Also, quickly we’re going to talk about investments. And conclude the presentation with some observations about new marketing strategies. On transmission lines, a highlight of the second -- on the second quarter, the growth in revenue from 9% in regards to the second quarter of last year, close to BRL2 billion over the same period of the last year. In managerial terms, we are positive in BRL144 million. We have an improvement in the indicators. The net revenue over the EBITDA is better Q4 0.7% regards -- increase in regards to the second quarter of last year. Our strategy is aligned. We have had an investment of over BRL 2 billion in this quarter, and our plan is for the total investment of the year is aligned with the investment in the assets of the RBSE. We have a very positive outcome. We achieved 95% of our goal in financial terms. We also had the transference of subsidiaries and her debts. And an important information, we are using the resources of the law 8787, totaling over BRL1 billion of investment in our subsidiaries. This is part of the global investment to remove the debt from these companies, and it's a further step in our business plan. We had - at the Council substituting - and we had a set of policies from the administrators to the controllership. We did a public bid for the entire Eletrobras Group. And in the legal framework, we started to invoice in July, the resources of. Now let’s go to Page 6. We have a scenario that mirrors the financial performance of the company. First slide, reported results. According to the CDM, the Brazilian…

[Operator Instructions] Very well. First question, Mr. [indiscernible]

Two questions. First, in regards to the distributing companies. If we don’t have the privatization until the end of the year due to any reason, how will the company, since they didn’t renew the concessions, these concessions leave the company and they will not be adding liabilities, how would you deal with this issue if you cannot privatize, given that the companies have now renewed the concession? And the second question is regards to the net liabilities. You have a lot of provisions, a lot of things and -- compulsory. But, I wanted to know if you consider all that, how much of the net losses, net debt? And do you consider this value as -- how do you treat this in the company?

In regards to the plan of the distributing companies. The first question and the second question, the balance of the company the budget or the losses of investment well, we’ve done already investments. And you can have in these specific cases, a reversion, giving a better perspective for the enterprise. I will give you an example. We will have some structuring investments. You had the opportunity of un-hire the regulated and obviously, getting a risk position for the private with a higher risk. This will allow you not only drive a better performance, increase the rate but also, you have the two sides. I agree that in this specific case, the compulsory loan, we have a legal issue, but its cost to the company an annual value. The average values yearly were about BRL500 million on average, maybe a bit above annually. This is not only in the provisions but we have this over the cash. We have BRL4 billion that I know of. But the full amount that we have, based in the view of the lawyers, BRL14 billion are compulsory loans. If you account for their debt, we do an exercise through the long term. The financial result of that is that over the last years, we've doubled this in the judicial system. We will have to address an alternative for this. And this is one of the items that we need to deal with. In regards to the distributing companies, obviously, we're working here. It's not that we don't have a Plan B. These companies are operated by Eletrobras. If it doesn't work, you'll get January 1, you just leave them alone? No. You can remove the company from Eletrobras and the system is not automatic. I am saying that this is the good and bad side…

Next question. Carolina Carneiro, Santander.

My question is in regards to the issue about the new framework. What would be your view in regards to the impact of the [disquotazation] of the company? Where do you see the advantages, disadvantages? The second one. Could you talk about the global reserve or reversion? They are discussing how much do you have of the stock of that resource? And within what you have, would it be enough to do the relevant payments of RBSE? What is your view?

The impacts of the [disquotazation], there's advantages, disadvantages, advantages depending on the price that you establish has shown 2 numbers. We're talking about 130, BRL130 on average. You are offering to higher this amount for a value that you can manage, and you get a margin or you will have to do something smaller. The numbers that we are mentioning are in the range of BRL150 to BRL100 megawatt hour. So our first advantage is to maintain our price. Now to be very transparent, the disquotazation process has to be seen in the context of privatization. This means that if you have an asset in O&M regime, there you have costs. And now you exchange it through a regime, where I answer with the new price, and if you could do this based on the real cost. The companies have contingencies, corporate flows, corporate costs. So you have to see the advantage. You have to see the price and you have to see the cost that you can provide. We, as sellers of this option, we have the interest of looking at the price in the amount of research, [retailable] and corporate to this quota. This is one of the evaluations. We have a lot of resources that are not amortized. The costs of operation are higher. And you might have to remain with a part of their cost. The disadvantage of that, these efforts are very good. I am sure that there is an enormous interest in evaluation of these assets in a private way, and we see from the state side that they want this opportunity. And the advantages are positioned from now on that there will be no surprises. And in case of Eletrobras, there’s only one option, which is to get the operation and the value of the cost established by the agency, if you have an alternative, then you have a GPL that it’s positive. It’s a better alternative than what we have. We want to have an option that we want you to consider the benefits for the consumer and the benefit for Eletrobras in the country, we have to take -- we are paying attention to that. In regards to your second question, LGL has a set of values of the distributing companies themselves of Eletrobras. You have financing there, not just distributing companies in the period that is over BRL3 billion. So once we do that proposal, they consider not only the stock but the incoming and a longer deadline, so this will be sufficient for the negotiation. Thank you.

[Operator Instructions] Next question, Liliana, HSBC.

I’m sorry if I’m being redundant, but I wanted to understand better, what are the impediments for a potential privatization of the assets of distribution? How is that negotiation ongoing about tariffs and basis of future assets?

Tell me if I understood correctly. What is the status of the privatization process of our distribution companies?

Yes. What will be the biggest impediment for that to take place?

At this moment, we have a small delay. We should get the recognition of all the fees and this is an object of --. Four of the six distributing companies have a contract where of debt with Eletrobras that are being part of this fiscalization by the agency. The northern companies mainly, not the other ones. The -- within the process of modeling, this is what we are considering. So in regards to the tariff, we have territory adjustments that are annual. We hadn't had an extraordinary review of tariff. What is important? Why is the base as important? The proposal of the new contract for the concession, these concessions will have the opportunity of doing two reviews through a tariff cycle. You will have an intermediary moment. The basis of payout for Eletrobras, I still cannot disclose. We have the basis closed and we took it to a new yield. We are waiting for the next step in about a room and we've done a good job. There is no impediment for the privatization. There is a closing closure. There is relevance in this contract, and we are discussing this with the agency. And we understand that given the case, we will have to work with the minute, an agreement directly and the legal contingency. But I understand that our position over the values is very robust. So we've done that contextually with the agency and this process is ongoing in this month of August. We have a better room that is being prepared. The issue of evaluation and modeling has been submitted. And there wouldn't be an issue, perhaps we have learned in the process and the normal course of the process, which is the easiest part in making the companies available for the interested parties. Obviously, we've worked and there is a work in the agency and Eletrobras as well, with our controller companies and the difference is that we are accounting for in values, we're still optimistic in the sense of receiving what we, we have to prove what we’ve received to the agency in terms of amount, and the agency has to see the budget of OCDE, and we have to close it in a definite way. Our position with Petrobras, we won a very important step for the process.

And another question. In regards to the mine and energy ministry and the regulatory framework, the proposal, and the part that deals with Eletrobras in terms of potential for privatization or selling of the assets that have in the model that the tariff becomes a price and the government offers a third of the value for Eletrobras. Do you think that the third is enough? And along these lines, within this government proposal, is there a possibility to sell the assets, but also the assets with the liabilities, so that they are free from the risk that Eletrobras won't sell only the assets and will remain with the liability so we have to sell both.

That's what I just mentioned. This modeling is not clear nowadays. And the way to this has been described, I don't think that this is what they mean, but we have to -- they are discounting the price and they're receiving the cost of the quota. If we think that it costs more or less, so the quota costs this much, and you will do a [valuation] based on deadlines on support risk management, and then you will have the recapturing of the sell-in. This appears immediately. What we've made available on these slides are very relevant event, it's the issue of value. If you consider Chesf is our main quota holder and one-third of our quota is our Chesf, then that's just me giving these costs. And it has a higher cost and we wouldn't be covered by that. The price is what we have mentioned but the cost is higher. So that type of treatment to the higher costs with the eventual contingency, this is not clear in the modeling. And this gets us closer to a privatization model. And if you privatize a power plant, there will be a part of the cost, the -- not only the vocalized costs connected to the power plant, but also the ones that are viewed to provide the services, corporate costs, financial costs, managerial costs. This is not clear and we hope that it will be clear. I think that this was not something that they started to -- that they realized before. This has to be clarified. We have to get the context of what this privatization means. And the third, the part that would be given to Eletrobras, if that's reasonable or is this something that has to discuss and think about. If one-third is higher than the…

[Operator Instructions] We close at this time the Q&A session. This way we return the word to Wilson Ferreira Junior for the final considerations. Mr. President?

So thank you for all of you that are participating in this teleconference. Two points. We are in a restructuring process of Eletrobras, those retailers. I understand that we are undergoing the first year of management, and I am very happy to share the first results in the effective reduction of the cost, effective reduction of our debt by [GFDE], the privatization of distributing companies. We are convinced that the work are undergoing. And can -- they will produce the results. But we -- in addition to that, we have a bonus, Eletrobras are consuming -- we have this new perspective of a model. And we have a set of complexities. And this is important. We are replacing, repositioning the Brazilian electrical center -- sector in a very aligned way to what we see in the world and with the more advanced economies. The digitalization of our system with GFDE and subcontracting RBSE are symptoms of effectuation in our effectiveness and this needs to change. I have to recognize the work that was done not only by how -- it is modern. I have mentioned awhile the issue of separation. But it is important to mention that we have risk, and it doesn’t seem to be an element that has been adequately mentioned in the past. And the main agents, these risks cannot be managed without us taking into consideration digitalization. So when you clearly state, what is the operation? Who will assume and will be responsible for the risk and this is in a more adequate agent, we have a perspective of sustainable risk. This is what we are mentioning. We will verify in the near future, an evolution that is beyond the one that we live, which is that distributor generation. We have here, it is now reasonable…

The teleconference of Eletrobras is closed. Thank you for your participation, and have a wonderful afternoon.