Good morning, ladies and gentlemen and thank you waiting. At this time, we would like to welcome everyone to Pampa Energia and Edenor's joint second quarter 2016 results conference call. We would like to inform you that this event is being recorded and all participants will be in listen-only mode during both companies’ presentations. After the companies' remarks are completed, there will be a question-and-answer session. At that time, further instructions will be given. [Operator Instructions] Before proceeding, let me mention that forward-looking statements are based on the beliefs and assumptions of Pampa Energia and Edenor's management and on information currently available to both companies. They involve risks, uncertainties and assumptions because they relate to future events and therefore depend on circumstances that may or may not occur in the future. Investors should understand that general economic conditions, industry conditions and other operating factors could also affect the future results of Pampa Energia and Edenor and could cause results to differ materially from those expressed in such forward-looking statements. Now I will turn the conference call over to Mr. Leandro Montero, CFO of Edenor. Mr. Montero, you may begin your conference.

Thank you very much. Good morning, everyone and thanks for joining us on this joint conference call of Pampa Energia and Edenor. As we usually do, myself, Leandro Montero, will be presenting for Edenor first and then for this quarter, Lida Wang will present for Pampa Energia. First, we will focus on the main events that lately took place and then briefly review the results of the second quarter of 2016. As you know, you can always call any member of our team for more details on the results of the period or any doubts you might have. So going to the relevant events, on June this year and before we announced and before the measures taken by the charter, we announced the call for reduction of our notes issued 2017, at that moment the outstanding principal amount of the loan was $14.7 million. On July 12, we made a redemption payment totalizing $15 million out of which 400,000 corresponds to our grids interest. As a consequence, our current total debt amount to $176 million maturing in 2022. In June this year, we were given notice of certain resolutions or the release issued by courts of different judicial department of the province of Buenos Aires, applicable for La Matanza, Escobar and Pilar districts establishing a three month suspension of the tariff increases set forth on the resolution’s number 6 and 7 of the Ministry of Energy and Mining and resolution number 1 issued by ENRE this year. These suspensions apply structurally from February 1, 2016, so the customers affected were credited in the invoices for the payments they made in excess in the previous month taking into account this change in the tariff applied. This measure resulted in ARS618 million impact in our gross margin in the first semester. In…

Thank you Leandro, lately lot of developments have happened but one of them in Pampa’s history, the takeover of Petrobras on July 27. Since our last call on May, when we announced the signing of FDA, we have been working very hard on fulfilling all the conditions presented in record time, especially in successfully refinancing Petrobras Argentina's outstanding bonds Series S by issuing another bond Series T $500 million bond due in seven years and on a 7.5 yield. We are proud because we not only acquired a terrific company with great assets; we started with the right foot by coming back to the international market at a very attractive yield [indiscernible]. The final purchase price after adjustments amounted to $897 million which implies a value of $1.3 billion for 100% of the equity of Petrobras Argentina. Still we are waiting for the closing of the assignment in the Aguarague block by Petrobras Argentina in favor of Tecpetrol which might imply a reduction of the price of approximately $2.5 million. Without this ticket, Pampa funded with a combination of own cash for $280 million which partly paid the 20% advance of purchase price at the signing of the SPA. Collected sale proceeds of TGS for $161 million, transaction that we closed in the same day as Petrobras Argentina for the final price of $241 million, which I will briefly comment about this later. A syndicated loan granted to Pampa which originally was up to $700 million and increased $50 million more as Crédit Agricole and Banco Hipotecario joined the syndicate originally composed by Deustche Bank, Citibank, ICBC and Banco Galicia. As well as another high probability that the Argentine National Pension Fund (ANSES) will dispose it’s assets among them are 11.8% of Petrobras Argentina. However, as a result of the…

[Operator Instructions] Our first question comes from Frank McGinnis of Bank of America Merrill Lynch. Please go ahead.

Couple of straightforward questions, one in Edenor, I was just wondering if you could comment on the demand trends that you're seeing, how you are seeing the evidence you have as to, if and how residential customers when they did have the prospects for higher tariffs, if you saw any response in terms of conservation or change in consumer habits. Also just from - same thing on the industrial side and commercial side whether it's related to the tariff itself or the economy. Then second question would be, Leandro, you had mentioned something about capital limits are reaching some capital limit, I'm just wondering if you could provide a little bit more detail on that and the risks associated with that, how you can deal with that. And then lastly, Lida you mentioned the availability of gas being an issue, and I was just wondering how serious that is if you think that in a broad sense or just it’s some specific moments when gas availability is more limited?

Good morning Frank, this is Leandro, I’m going to answer your question, you had basically two questions about Edenor. First of all, we started to build the new tariff structure or scheme in February, in fact the full impact of the new tariff with a monthly billing was effective since April this year, and despite this new tariff scheme, we didn't see any change in consumer habits. In fact, during May, May, it was a very cold month in comparison to the history. It was one of the five more colder - one of the five colder months in the history in May. The residential conception increased about more than 19% in comparison to the same month a year before. So as you can see, we didn't see any changes in the conception habit. Maybe one explanation for that is that still with the tariff increase, approximately 90% of our customers pay bill between 80 and 300 pesos per month, which is still much more lower than other services and other monthly billing conceptions like the cable TV, Internet or whatever. So we didn't see any changes in the consumer habits. On the other side, in comparison, when we take the full semester, it remained the same conception than last year. So, in the same period, so we didn't see yet any changes, but maybe in the month in June, it was a bit lower than the year before. Then in connection with your question about our capital issue, in fact we have been in that situation in the past during 2013, and during, and in 2014, we were in the situation, we have two different situations. If we are at the moment and with the financial assignment as of June, we are under the terms of the article 206…

About the [indiscernible], we are talking which segment. Remember that, generation business, we have all generation business and regarding the whole, it means that, for example, CTG requirements or capacity is not able to generate, because of the lack of fuel, but it’s - so it’s not collecting the generation remuneration, like variable costs, the additional costs, but because if it is available, they can collect the fixed cost. But it’s in pesos and it’s not enough to cover their cost entirely. So it affects a little bit. That's for the whole generation units. For the new generation unit, when there is no gas and we have to back out the gas, the gas for the PPAs that we are involved. So when we have to assign it for commence, they pay us the same price that we buy it, for example, in the 220 PPAs with CAMMESA, we buy it at $5.2 per MMbtu if we assign it to CAMMESA, we get payback. We will get that price again. So the margin is zero, we don't lose money, we don’t earn money in that. That's the situation, of course, this is one of the most important incentives for government incentivize local production that is where we are heading our strategy there to be very bullish in the gas distribution business.

Okay, great. Thank you.

Our next question comes from Carolina Carneiro of Santander. Please go ahead.

Hi, guys. Good morning. I also have two questions. First one, when you mentioned that, and we agree that probably with the tariff suspensions, the way they are, resolution 7 2016, we go back to the previous model, where a resolution 32 if I’m not mistaken, was valid. But before you start to receive back from the gold mine the compensation for costs through subsidies, should we wait legally for a final decision from the court or do you think that the government could resume the payments, given the severe situation that you already mentioned how to avoid negative equity or problems with the capital structure, given the lack of funds to cover the costs? And secondly, when you guys mentioned about the renewable business and acquisition of a project wind farm to potentially participate in the next auction in Argentina. I just wanted to get a little bit more of the color on the government idea for this auction to have an update on when it’s coming, when it’s going to occur and when should be know the results of such auction? That's it, thank you.

Hi, Carolina. First, I will answer about your question about revenue. Such as we mention, all the news about the current measures and this objective released comes today. We have news every day, we change the billing for our different customers almost every weeks. So we are adopting our cash flows and our predictions to the everyday news we have from them. First of all, we - currently, we have two different situations, first of all with La Matanza district, we are still with a shaded relief. [indiscernible] today or yesterday, we were aware that the shaded relief is not effective by the moment. So it is the effect, the retroactive effect is not working, so we will have to rebuild for those customers, again. But at the same time, we have instruction relief from the province of Buenos Aires as I mentioned before for all the promise of Buenos Aires clients under which we have the tariff increase suspended for the following three months. So, and the other thing to mention is that under this Corti’s measure from the province of Buenos Aires, for the province, for the record of La Plata, we expect that the court, the Supreme Court will treat this resolution or will have at least an initial solution to this claim next Thursday, as it has been mentioned in the media. So we will see, first of all, we will see what the Supreme Court tells about the situation and then if the Supreme Court decision is to keep these measures in force, we will have to ask the government for the financial assistance.

Okay.

Alright, Carolina. Hi, good morning. About the renewal tender, it's made public by the government. They want to cover the increase in full capacity for the next few years with renewables. The tender that is coming on next September 8 I think, finally, that is the date that we have to also meet. September 5, sorry, of the participant wants to submit their bids, the final day. The government wants to award 600 megawatts. That’s what they say for the permanent tender that it was carried out in June, they wanted to only award 1000 megawatts and they - at the end, they did for almost 3000 megawatts. So that could change in the meantime. I think, and the company thinks that this tender is going to be very competitive. There is a lot of projects out there. The results - we think that the results said to October, so by then, we will know which projects were awarded.

Okay, thank you.

Our next question comes from Alan Siow of BlueBay Asset Management. Please go ahead.

Hi, there. Thanks. A portion of my question has already been answered by the other callers. My question was - the remaining one I have, a general one around the attractiveness of the auctions for generation in general. And second is really about the mechanics of these public hearings. As I understand it, part of the reason why you have received the judgments sort of freezing the tariffs or asking you to retrospectively reduce them to refund to customers the difference between the current tariffs and the old tariff is because of these public hearings have not been held. Is it just the case that that's a procedural thing, you just have to hold the public hearings and regardless of the outcome, i.e., whether or not people complain or not complain, it was just that you were missing the hearings or is there a feedback from the hearing, which needs to be taken into account? And therefore as you run that hearing, is there a chance that for example if many customers or many people say this is not acceptable, we don't like it or, even though you mentioned all the good points about the average electricity building lower that for many other services, if enough people are upset, does that feedback somehow affect the process or is it just the case of you just need to have, it's a box you need to tick, that's the first question. The second question was, in general how attractive have the auctions been in Pampa’s view and does this now change, given the impact of this ruling, because if this ruling can come and affect tariffs that were put in place by the federal government, then how should investors view long-term PPA fine with CAMMESA, is that also subject to change? Thank you.

Hi, Alan. First of all, I will answer about the public hearings questions your made. In fact, the proceedings established that public hearings should be made in the case of increases or to approve the new tariff scheme related to the distribution added value. This is - you need to approve or you need to not to approve, you need to make these forums, when you are in the process of increasing the remuneration for the distribution companies. Public hearings are not needed under the law to increase the price in the cost of energy in the market price of energy. So we have two different situations. So, regarding the public hearings needed for the increase in the VAD, we have two different views from the lawyers. One of them say they are needed because of the - because it’s the normal process. And the other part of the library says that these increases were made under the agreement [indiscernible] and the public hearings were made at that moment and the increasing tariff we're having now are just because the - applying - because of applying the proceeds that were supposed to be applied under that agreement. So we have two different views here. So, at the same time, we are in the process of the internal tariff revision that we have started with our regulation in April this year. And until the schedule established by the regulator, we expect to have our public hearings, in the next October and in that case, we will have all the proceedings complied under the law and as you say, these public hearings are not - are just part of the process, but they are not mandatory for the regulator. So the process ends with the tariff scheme issued by the regulator and that issuance is made, taken into account the tariff requested by the companies, the opinions of the customers and all the opinions they collect in the public hearings, but it is not mandatory for the regulator. And so we expect to have the public hearings in October and November, to end the process to establish the new tariff scheme in the future. So I leave you with Lida in order to answer the question about the auctions for generation.

Hi, Alan. Auctions for generation, for thermal generation, it's done. The results have been disclosed in July. It was a very competitive auction actually, more than 6000 awards were bid. To give you an idea how big it was at the beginning, the generation companies that participated with the idea of only being awarded 1000, it looks very well, it looks prospective. This is for the first time in years, a lot of players from abroad participated, many of them backed with financing credit players. So its various perspectives, very good, that's good. We presented four and unfortunately, we only got one. Always our strategy is to enhance our power plants, especially the old capacity power plants with new capacity and without that there, we can be very competitive in those economies of scale. The one that we are going to install is going to be due next year and it's the same machine that we recently installed, we know it very well, we installed in premise, we installed it here again as it’s commissioning and now, we're doing it again with GE. That turbine that we are going to install, it’s 85% financed by GE. It tells a lot because in the previous years when the last administration wanted to do something like this, we couldn't even afford - we had to pay it in cash. Now, the prospect one is the renewables tender. There is a lot of expectations about it. We assume that in September, we will know what’s going to be the preliminary results, after the presentations, the government, what they do is to see if all the bids qualify technically and then they will do like a filtering in the economic proposal, as again, I think this one is going to be very competitive. There is a lot of purchase out there. We are going to present two, maybe three and at the beginning, we are going to present 150 megawatts, where we will see. And the other question that you did is if this really is effective, the intention of the government to do the tender of anyway and bidders to do the bid, right. I don't think so. I think the gap is there, the install capacity deficit in generation is out there and the government is very clear about it. For many years, the administration and this one is tackling with this is kind of old versus new, the new with being contract with PPAs, it is working very well to give you an idea of the PPAs in the thermal tender. We are very competitive, but they are very well remunerated in dollars, right. So they are very attractive still and I don't think it's going to stop or any way affect us.

Thank you for answering the question.

Our next question comes from Gustavo Fingeret of Itaú. Please go ahead.

Hi, good morning, guys. Thank you for the call. I have two questions. And number one is regarding the regulatory tariff, the internal tariff review, which basically the government pointed out in our solution that they will, they said when they were going to be coming out, et cetera and so far they were not able to comply with those deadlines, do you know if they will be moving those deadlines, if they will be releasing to the market. What is going to be the rub of the company and for the companies and what they will be using before they - before September or before October, they go to the public hearings. That is question number one. And number two, Lida, if you can please say again, what are the pension - what do you think the pension funds in Argentina will do regarding the exchange of tariff on the tender offer on Petrobras Argentina? Thank you.

Hi, Gustavo. How were you? First of all about your question, two questions about the internal tariff revisions. First of all, yes, the regulator at the moment, they issue or they started with the process. They defined certain deadlines. After that, the regulator moved certain dates, certain deadlines, they had to comply. So we are still expecting to be issued quality service levels that should be established in this space. And it is expected to have the definition in August 24. So we are waiting for those definitions in order to comply or to complete our presentation. We are working with some deadline, which is September 1 in order to present our request and it is still without moving. And regarding the regulated asset base, the regulator established two methodologies in order to present the regulated asset base. One of that is the renewal value, which is the current value of the assets we’ve presented to the regulator and the other way was established by the regulator in the Resolution 55, it was the idea to present the asset that result from adjusting all the increases and decreases of the assets since the start of the concession till now taken into account certain indexes that we should propose - we prepare that asset base too, to be presented with our request.

About pension fund, well, it's been a lot of developments in there. We publicly disclosed our intention of doing the cash offering with the acquisition of the minority shares of Petrobras Argentina in order to be in compliance with the capital markets law. They weren't allowed so, they weren't allowed to do anything at all actually. And now, after all these legislative changes that have been made a couple of months, we think that there is a chance that they might participate in the cash tender or in exchange offering that those changes allow them to do whatever they want in those two offerings. So it's a huge probability because we think the ratio there is going to be in the merger not going to be the same in the offerings. Okay, and the exchange offering, the ratio is not going to be this one. That it’s almost kind of guidelines. The ratio exchange that is going to be the merger is going to be totally set by the market and after crawling out of all of the shareholders of Petrobras Argentina, it might be the start or Petrobras Argentina maybe linked with. So we will see. This announcement that they have been able to get allowed them totally to participate either in the cash offering or in the exchange offering. So we prepare ourselves for that in getting more commitment from the syndicated loans or in the exchange offerings, offering the shares.

Okay, thank you.

[Operator Instructions] Our next question comes from [indiscernible]. Please go ahead.

Hi, good afternoon. Thanks for the conference call. Two questions from me on distribution. The first is on energy losses, which spiked sequentially and year-over-year. I’m just wondering what drove that spike in losses. And secondly also on distribution, could you guide us to some type of a normalized run rate of fines going forward. They have surprised on the upside, both in the first quarter and more so in the second quarter, and I'm wondering what the driver of those fines is and what a reasonable expectation is for what they should be going forward? Thank you.

Hi, Francisco. About energy losses, yes, we have suffered a great increase, especially during the last two months of the semester. This is because - mainly because we have a very higher increase in the demand from residential customers. For sure, we have two effects here, first of all, the colder winter we have. And on the other hand, the higher tariff in the gas may - we suppose made people to change their heating from gas to electricity. So this had an impact in the demand and at the same time with the increased tariff, it made our energy losses in order to rise for sure. And at the same time, we have certain restrictions in order to take certain measures in order to produce the energy losses, especially in those areas where it’s more dangerous to reduce that. And regarding the penalties and fines charged in the quarter, as I mentioned in my speech, what we have made, especially in the semester, was to recalculate a great part of our accurate fines and penalties, taken into account the interest and updating in the tariff rate taken into account to calculate the fines, taken into account this note from the regulator. So it’s difficult to say which will be the normalized fine charge in the future, first of all, because we expect to have a new quality level agreement with - after the internal tariff revision in order to agree with the regulator about - in order to get a better quality standards in the future, but starting from a real - or taking into account the real situation of the agreement of the beginning of this new period after internal tariff revision. So it’s very difficult to estimate what will be the normalized fines in the future, but we should, at least what I can say is that we should have a normalized charge in the third quarter, taking into account that all the adjustment for the crude fins have been - having accounted for at June 30. On the other hand, if all these measures, traditional measure suspended resolution, number one remains in force, we will have to recalculate the fines and penalties again to reduce them, because all these adjustments were made because the increase in the tariff, so if the tariff increase is suspended, we will have to recalculate the fine and penalties as well. So I know it’s very difficult to follow our results and expenses, but this is a situation in which we are and the changes comes every day.

This concludes the question-and-answer session. At this time, I would like to turn the floor back to Mr. Montero and Ms. Wang for any closing remarks.

Thank you very much for your interest in our company and have a nice day.