Item 3.

Key Information

Item 3.A.

Selected Financial Data

The following tables present selected consolidated financial data for us as of the dates and for the periods indicated. You should read this information in conjunction with our audited consolidated financial statements and related notes beginning on page F-1, and the information under “Item 5.A Operating Results” included elsewhere in this annual report.

The selected consolidated financial data as of December 31, ~~2017~~2019 and ~~2016~~2018 and for the years ended December 31, ~~2017, 2016~~2019, 2018 and ~~2015~~2017 has been derived from our audited consolidated financial statements ~~included in this annual report. The selected consolidated financial data as of December 31, 2015 has been derived from our audited consolidated financial statements not~~ included in this annual report. Prior period amounts have been restated to reflect the La Plata plant operations as discontinued operations in all periods presented. Please see Note 21 to our audited consolidated financial statements for further information on how we have accounted for the La Plata Plant Sale in our audited consolidated financial statements. Our historical results are not necessarily indicative of our future results. Our audited consolidated financial statements have been audited by Pistrelli, Henry Martin y Asociados S.R.L. (a member firm of Ernst & Young Global), an independent registered public accounting firm, whose audit report is included elsewhere in this annual report.

We maintain our financial books and records and publish our audited consolidated financial statements in Argentine pesos, which is our functional currency. We prepare our audited consolidated financial statements in Argentine pesos and in conformity with IFRS as issued by the IASB.

In accordance with IAS 29, the restatement of the financial statements is necessary when the functional currency of an entity is the currency of a hyperinflationary economy. To define a hyperinflationary state, IAS 29 provides a series of non-exclusive guidelines that consist of (i) analyzing the behavior of the population, prices, interest rates and wages before the evolution of price indexes and the loss of the currency’s purchasing power, and (ii) as a quantitative characteristic, verifying if the three-year cumulative inflation rate approaches or exceeds 100%. Due to macroeconomic factors, the triennial inflation was above that figure in 2018 and Argentina has been considered hyperinflationary since July 1, 2018. See “Risks Relating to Argentina—As of July 1st, 2018, the Argentine Peso qualifies as a currency of a hyperinflationary economy and we are required to restate our historical financial statements to apply inflationary adjustments, which could adversely affect our results of operations and financial condition and those of our Argentine subsidiaries” and “—If the current levels of inflation do not decrease, the Argentine economy could be adversely affected.”

Therefore, our audited consolidated financial statements included herein, including the figures for the previous periods (this fact not affecting the decisions taken on the financial information for such periods), and, unless otherwise stated, the financial information included elsewhere in this annual report, were restated to consider the changes in the general purchasing power of the functional currency of the Company (Argentine peso) pursuant to IAS 29 and General Resolution no. 777/2018 of the CNV. Consequently, the financial statements are stated in the current measurement unit as of December 31, 2019. The information included in our audited consolidated financial statements, is not comparable to the financial statements previously published by us. For more information, see “Item 5.A. Operating Results—Factors Affecting our Results of Operations—Inflation” and Note 2.1.2 to our audited consolidated financial statements.

The selected consolidated statement of comprehensive income data for the years ended December 31, 2017 and 2016 and the selected consolidated statement of financial position data as of December 31, 2017 have been restated pursuant to IAS 29 to reflect the effect of hyperinflation in Argentina. As a result of such restatement, the selected financial information included in this annual report differ from previously reported financial information.

The selected consolidated statement of financial position data as of December 31, 2016 and the selected consolidated statement of financial position and statement of comprehensive income as of and for the year ended December 31, 2015 have not been presented as they cannot be provided on a restated basis without unreasonable effort or expense.

Solely for convenience of the reader, Peso amounts as of and for the year ended December 31, ~~2017~~2019 have been translated into U.S. dollars. The rate used to translate such amounts as of December 31, ~~2017~~2019 was Ps. ~~18.649~~59.89 to US$1.00, which was the reference exchange rate reported by the Banco de la Nación Argentina for wire transfers (divisas) as of December ~~29, 2017.~~ 30, 2019.

The U.S. dollar equivalent information presented in this annual report is provided solely for the convenience of the reader and should not be construed to represent that the Peso amounts have been, or could have been or could be, converted into, U.S. dollars at such rates or any other rate.

See “Item 3.A. Selected Financial Data—Exchange Rates.”

Selected Consolidated Statement of Comprehensive Income Data

Year Ended December 31,

(in thousands of US$)(1)

(in thousands of Ps.)

2017

2017

2016

2015

Continuing operations
Revenues
  319,406
  5,956,596
  3,562,721
  2,654,180
Cost of sales
  (147,040)
  (2,742,147)
  (2,069,752)
  (1,397,365)
Gross income
  172,366
  3,214,449
  1,492,969
  1,256,815
Administrative and selling expenses
  (34,917)
  (651,168)
  (445,412)
  (371,485)
Other operating income
  34,344
  640,480
  1,137,736
  735,517
Other operating expenses
  (4,960)
  (92,497)
  (84,845)
  (52,702)
Operating income
  166,833
  3,111,264
  2,100,448
  1,568,145
Finance income
  49,988
  932,227
  420,988
  362,363
Finance expenses
  (37,409)
  (697,638)
  (620,448)
  (138,308)
Share of the profit of associates
  38,340
  715,001
  147,513
  43,390
Income before income tax from continuing operations
  217,752
  4,060,854
  2,048,501
  1,835,590
Income tax for the year
  (56,405)
  (1,051,896)
  (717,639)
  (625,451)
Net income for the year from continuing operations
  161,347
  3,008,958
  1,330,862
  1,210,139
Discontinued operations









Income after tax for the year from discontinued operations
  26,009
  485,041
  437,974
  131,859





Net income for the year
  187,356
  3,493,999
  1,768,836
  1,341,998
Other comprehensive income, net
  (16,407)
  (305,976)
  199,075
  132,953
Total comprehensive income for the year
  170,949
  3,188,023
  1,967,911
  1,474,951
Number of Outstanding Shares (basic and diluted)
  1,505,695,134
  1,505,695,134
  1,505,695,134
  1,505,695,134
Net income per share (basic and diluted) (Ps.)
  0.12
  2.33
  1.17
  0.89
Net income per share from continuing operations (Ps.)
  0.11

  2.01

  0.88

  0.80

Cash dividend per share (Ps.)
  0.05
  0.85
  0.925
  0.226

~~(1)~~

Solely for the convenience of the reader, peso amounts as of December 31, 2017 have been translated into U.S. dollars at the exchange rate as of December 29, 2017 of Ps.18.649 to US$1.00. See “Exchange Rates” and “Presentation of Financial and Other Information” for further information on recent fluctuations in exchange rates.

	Year Ended December 31,
	(in thousands of US$)(1)	(in thousands of Ps.)
	2019	2019	2018	2017	2016
Continuing operations
Revenues	600,447	35,960,784	21,944,761	14,827,241	10,836,014
Cost of sales	(316,525)	(18,956,674)	(9,978,643)	(7,997,976)	(7,661,201)
Gross income	283,922	17,004,110	11,966,118	6,829,265	3,174,813
Administrative and selling expenses	(43,971)	(2,633,405)	(2,137,249)	(1,624,866)	(1,373,148)
Other operating income	306,449	18,353,204	20,341,015	1,430,737	3,575,439
Other operating expenses	(4,521)	(270,755)	(204,414)	(215,578)	(264,518)
Impairment of property, plant and equipment and intangible assets	(73,542)	(4,404,441)	–	–	–
CVO receivables update	–	–	16,947,737	–	–
Operating income	468,337	28,048,713	46,913,207	6,419,558	5,112,586
Loss on net monetary position	(40,604)	(2,431,753)	(6,208,977)	(233,678)	(2,825,326)
Finance income	60,122	3,600,707	3,507,676	2,397,964	1,344,364
Finance expenses	(265,902)	(15,924,867)	(9,692,797)	(1,846,995)	(1,864,368)
Share of the profit of associates	18,589	1,113,297	1,652,445	1,804,460	650,173
Income before income tax from continuing operations	240,543	14,406,097	36,171,554	8,541,309	2,427,429
Income tax for the year	(95,930)	(5,745,242)	(10,159,632)	(1,663,201)	(1,548,195)
Net income for the year from continuing operations	144,613	8,660,855	26,011,922	6,878,108	879,234
Discontinued operations
Income after tax for the year from discontinued operations	-	-	424,850	1,217,236	1,241,411
Net income for the year	144,613	8,660,855	26,436,772	8,095,344	2,120,645
Other comprehensive income, net	(535)	(32,070)	(297,840)	(801,290)	550,583
Total comprehensive income for the year	144,077	8,628,785	26,138,932	7,294,054	2,671,228
Number of Outstanding Shares (basic and diluted)	1,505,170,408	1,505,170,408	1,505,170,408	1,505,170,408	1,505,170,408
Net income per share (basic and diluted)	0.10	5.85	17.91	5.41	1.42
Net income per share from continuing operations (Ps.)	0.10	5.85	17.62	4.60	0.58
Cash dividend per share (Ps.) in nominal terms	0.01	0.71	0.70	0.85	0.925

Dividend declaration date	November 22, 2019	April 27, 2018	August 15, 2017	October 26, 2016
Foreign exchange rate as of the dividend declaration date (2) Ps. per US$)	59.77	20.54	17.07	15.21
Convenience translation of cash dividend per share (US$) in nominal terms (2)	0.011879	0.034080	0.049795	0.060815

(1)

Solely for the convenience of the reader, peso amounts as of December 31, 2019 have been translated into U.S. dollars at the exchange rate as of December 30, 2019 of Ps. 59.89 to US$1.00. See “Exchange Rates” and “Presentation of Financial and Other Information” for further information on recent fluctuations in exchange rates.

(2)

Peso amounts have been translated into U.S. dollars at the exchange rate quoted by Banco de la Nación Argentina for wire transfers as of the date of each dividend declaration date.

Selected Consolidated Statement of Financial Position

As of December 31,

(in thousands of US$)(1)

(in thousands of Ps.)

2017

2017

2016

2015

Non-current assets

Property, plant and equipment

US$ 398,505

Ps. 7,431,728

Ps. 2,811,539

Ps. 1,968,148

Intangible assets
  10,072
  187,833
  236,530
  276,691
Investment in associates
  52,852
  985,646
  307,012
  210,529
Trade and other receivables(2)
  139,536
  2,602,213
  3,553,129
  2,780,635
Other non-financial assets
  682
  12,721
  1,466,547
  487,429
Inventories
  2,585
  48,203
  30,830
  29,619
Total non-current assets
  604,233
  11,268,344
  8,405,587
  5,753,051
Current assets




Inventories
  5,914
  110,290
  137,965
  82,672
Other non-financial assets
  25,250
  470,895
  137,110
  135,012
Trade and other receivables(2)
  208,433
  3,887,065
  2,215,535
  1,267,032
Other financial assets
  59,560
  1,110,728
  1,796,756
  1,912,016
Cash and cash equivalents
  4,753
  88,633
  30,008
  292,489
Total current assets
  303,910
  5,667,611
  4,317,374
  3,689,221
Assets held for sale
  7,669
  143,014
  -
  -
Total assets
  915,812
  17,078,969
  12,722,961
  9,442,272
Equity and liabilities




Equity




Capital stock
  81,185
  1,514,022
  1,514,022
  199,742
Adjustment to capital stock
  35,658
  664,988
  664,988
  664,988
Merger premium
  20,193
  376,571
  376,571
  366,082
Legal and other reserves
  27,840
  519,189
  431,007
  363,289
Voluntary reserve
  24,176
  450,865
  68,913
  1,507,513
Retained earnings
  187,841
  3,503,046
  1,757,051
  1,347,763
Accumulated other comprehensive income
  2,321
  43,284
  334,747
  122,286
Non-controlling interests
  15,499
  289,035
  6,717
  -
Total equity
  394,713
  7,361,000
  5,154,016
  4,571,663
Non-current liabilities




Other non-financial liabilities
  25,132
  468,695
  635,162
  596,632
Other loans and borrowings
  79,293
  1,478,729
  -
  318,410
Borrowings from CAMMESA
  56,601
  1,055,558
  1,284,783
  542,858
Compensation and employee benefits liabilities
  6,065
  113,097
  87,705
  56,112
Deferred income tax liabilities
  37,736
  703,744
  1,136,481
  770,737
Provisions
  -
  -
  125,201
  133,284
Total non-current liabilities
  204,827
  3,819,823
  3,269,332
  2,418,033
Current liabilities




Trade and other payables
  54,550
  1,017,306
  655,598
  381,128
Other non-financial liabilities
  35,373
  659,668
  476,785
  177,664
Other loans and borrowings
27,112
505,604
  1,293,178
  511,555
Borrowings from CAMMESA
94,002
1,753,038
  1,047,722
  661,086
Compensation and employee benefits liabilities
  17,324
  323,078
  205,923
  147,770
Income tax payable
  58,814
  1,096,817
  278,922
  330,496
Provisions
  22,171
  413,474
  341,485
  242,877
Total current liabilities
  309,346
  5,768,985
  4,299,613
  2,452,576
Liabilities directly associated with the assets held for sale
  6,926
  129,161
  -
  -
Total liabilities
  521,099
  9,717,969
  7,568,945
  4,870,609
Total equity and liabilities
  915,812
  17,078,969
  12,722,961
  9,442,272

	As of December 31,
	(in thousands of US$)(1)	(in thousands of Ps.)
	2019	2019	2018	2017	2016
Capital stock	25,280	1,514,022	1,514,022	1,514,022	1,514,022
Equity	987,657	59,150,797	50,655,159	26,199,932	21,038,164
Total Assets	1,983,569	118,795,975	88,084,228	52,839,883	46,763,175

~~(1)~~	Solely for the convenience of the reader, peso amounts as of December 31, 2017 have been translated into U.S. dollars at the exchange rate as of December 29, 2017 of Ps.18.649 to US$1.00. See “—Exchange Rates” and “Presentation of Financial and Other Information” for further information on recent fluctuations in exchange rates.
~~(2)~~		~~Trade and other receivables include receivables from CAMMESA. See “Item 5. Operating and Financial Review and Prospects—Receivables from CAMMESA,” and “—Liquidity and Capital Resources.”~~

(1)

Solely for the convenience of the reader, peso amounts as of December 31, 2019 have been translated into U.S. dollars at the exchange rate as of December 30, 2019 of Ps.59.89 to US$1.00. See “—Exchange Rates” and “Presentation of Financial and Other Information” for further information on recent fluctuations in exchange rates.

~~EXCHANGE RATES~~

	As of December 31,
	(in thousands of US$)(1)	(in thousands of Ps.)
	2019	2019	2018	2017
Non-current assets
Property, plant and equipment	928,700	55,619,873	34,715,815	26,846,322
Intangible assets	136,010	8,145,647	3,438,508	3,059,116
Investment in associates	57,615	3,450,569	3,074,088	2,815,345
Trade and other receivables (2)	404,895	24,249,144	25,646,335	5,910,324
Other non-financial assets	11,508	689,185	343,163	28,893
Deferred tax asset	-	-	-	4,609
Inventories	2,407	144,169	114,893	109,507
Total non-current assets	1,541,135	92,298,587	67,332,802	38,774,116
Current assets
Inventories	10,980	657,594	339,810	299,418
Other non-financial assets	16,802	1,006,247	761,670	1,069,617
Trade and other receivables(2)	261,161	15,640,947	16,273,973	8,820,661
Other financial assets	128,548	7,698,732	3,022,238	2,522,761
Cash and cash equivalents	24,944	1,493,868	353,735	201,310
Total current assets	442,434	26,497,388	20,751,426	12,913,767
Assets held for sale	-	-	-	1,151,999
Total assets	1,983,569	118,795,975	88,084,228	52,839,882
Equity and liabilities
Equity
Capital stock	25,280	1,514,022	1,514,022	1,514,022
Adjustment to capital stock	307,510	18,416,762	18,416,762	18,416,759
Legal reserve	39,718	2,378,736	589,783	249,947
Voluntary reserve	442,662	26,511,002	6,778,288	1,568,895
Retained earnings	159,285	9,539,556	22,636,866	3,394,024
Accumulated other comprehensive income	974,454	58,360,078	49,935,721	319,970
Non-controlling interests	13,203	790,719	719,438	736,402
Total equity	987,657	59,150,797	50,655,159	26,200,019
Non-current liabilities
Other non-financial liabilities	72,711	4,354,668	3,013,397	1,064,534
Other loans and borrowings	512,394	30,687,277	8,005,484	3,358,589
Borrowings from CAMMESA	-	-	1,544,945	2,397,455
Compensation and employee benefits liabilities	3,828	229,279	228,395	256,874
Previsions	156	9,348	-	-
Deferred income tax liabilities	105,363	6,310,170	7,373,778	5,917,983
Total non-current liabilities	694,452	41,590,742	20,165,999	12,995,435
Current liabilities
Trade and other payables	98,505	5,899,436	2,661,249	2,310,386
Other non-financial liabilities	28,959	1,734,349	2,555,070	1,498,283
Other loans and borrowings	134,011	8,025,892	1,034,781	3,981,618
Borrowings from CAMMESA	-	-	2,788,843	1,148,363
Compensation and employee benefits liabilities	11,667	698,709	601,743	733,990
Income tax payable	27,861	1,668,594	6,794,536	2,491,165
Provisions	458	27,456	826,848	939,110
Total current liabilities	301,460	18,054,436	17,263,070	13,102,915
Liabilities directly associated to the assets held for sale	-	-	-	541,513
Total liabilities	995,912	59,645,178	37,429,069	26,639,863
Total equity and liabilities	1,983,569	118,795,975	88,084,228	52,839,882

(1)

Solely for the convenience of the reader, peso amounts as of December 31, 2019 have been translated into U.S. dollars at the exchange rate as of December 30, 2019 of Ps.59.89 to US$1.00. See “—Exchange Rates” and “Presentation of Financial and Other Information” for further information on recent fluctuations in exchange rates.

(2)

Trade and other receivables include receivables from CAMMESA. See “Item 5. Operating and Financial Review and Prospects—Liquidity and Capital Resources,” and “—Receivables from CAMMESA.”

Exchange Rates

From April 1, 1991 until the end of 2001, Law No. 23,928 (the “~~Convertibility Law~~”“Convertibility Law”) established a regime under which the Central Bank was obliged to sell U.S. dollars at a fixed rate of one peso per U.S. dollar. On January 6, 2002, the Argentine Congress enacted the Public Emergency Law, formally ending the regime of the Convertibility Law, abandoning over ten years of U.S. dollar-peso parity and eliminating the requirement that the Central ~~Bank~~’sBank’s reserves in gold, foreign currency and foreign currency denominated debt be at all times equivalent to 100% of the monetary base.

The Public Emergency Law, which was in effect until December 31, 2017, granted the Argentine ~~government~~Government the power to set the exchange rate between the peso and foreign currencies and to issue regulations related to the MULC. Following a brief period during which the Argentine ~~government~~Government established a temporary dual exchange rate system, pursuant to the Public Emergency Law, the peso has been allowed to float freely against other currencies since February 2002. However, the Argentine Central Bank has had the power to intervene in the exchange rate market by buying and selling foreign currency for its own account, a practice in which it engaged on a regular basis. ~~In recent years and particularly~~Particularly since 2011, the Argentine ~~government~~Government has increased controls on exchange rates and the transfer of funds into and out of Argentina.

With the tightening of exchange controls beginning in late 2011, in particular with the introduction of measures that allowed limited access to foreign currency by private sector companies and individuals (such as requiring an authorization of tax authorities to access the foreign currency exchange market), the implied exchange rate, as reflected in the quotations for Argentine securities that trade in foreign markets, compared to the corresponding quotations in the local market, increased significantly over the official exchange rate. Most of the foreign exchange restrictions were gradually lifted in since December 2015, and ~~finally~~ on May 19, 2017, the Central Bank issued Communication “A”“A” 6244, which substantially modified the applicable foreign exchange regulations and eliminated the set of restrictions for accessing the MULC. As a result of the elimination of the limit amount for the purchase of foreign currency without specific allocation or need of prior approval the substantial spread between the official exchange rate and the implicit exchange rate derived from securities transactions has substantially decreased. In addition, by virtue of the 2018 IMF Agreement (see “Item 4. Information of the Company—Recent Political and Economic Developments in Argentina— IMF Agreement”), from October 1, 2018, the Central Bank introduced an exchange rate band. The peso’s exchange rate with the U.S. Dollar was allowed to fluctuate between Ps.34.00 and Ps.44.00 per US$1.00 (range that was adjusted daily at an annual rate of 3% until December 2018, and for the first quarter of 2019, was adjusted daily at an annual rate of 2%) without the Central Bank’s intervention. On April 29, 2019, the Monetary Policy Counsel (Comité de Política Monetaria) of the Central Bank (the “COPOM”) decided to introduce changes to the monetary policy, with an aim to reducing volatility in the foreign exchange market.

After the results in the primary elections in August 2019, the peso devalued almost 30% and the share price of listed companies collapsed 38%. The ‘Country Risks’ peaked to one of the highest levels in Argentine history, placing itself above 2000 points on August 28, 2019. As a consequence of the aforementioned effects, in order to control the currency outflow and restrict exchange rate fluctuations, the Central Bank re-implemented exchange controls, in hopes of strengthening the normal functioning of the economy, fostering a prudent administration of the exchange market, reducing the volatility of financial variables and containing the impact of the variations of financial flows on the real economy. For a description of the measures adopted by the Argentine Government and the Central Bank beginning September 1, 2019, see “Item 10.D.—Exchange Controls.”

After several years of moderate variations in the nominal exchange rate, in 2012 the peso ~~lost~~depreciated approximately 14% ~~of its value~~ with respect to the U.S. dollar. This was followed in 2013 and 2014 by a ~~devaluation~~depreciation of the peso with respect to the U.S. dollar that exceeded 30%, including a loss of approximately 23% in January 2014. In 2015, the peso ~~lost~~depreciated approximately 52% ~~of its value~~ with respect to the U.S. dollar, including, approximately, a 10% devaluation from January 1, 2015 to September 30, 2015 and a 38% devaluation during the last quarter of the year, mainly concentrated after December 16, 2015 when certain exchange controls were lifted. ~~From January 1,~~In 2017, ~~to December 31, 2017,~~2018 and 2019, the peso ~~lost~~depreciated approximately ~~17% of its value~~17.36%, 102.16% and ~~from January 1, 2016 to December 31, 2016, the peso lost approximately 22% of its value~~58.86%, respectively, in each case, with respect to the U.S. ~~dollar~~dollar. The peso depreciated approximately 10.92% from December 31, 2019 through April 24, 2020 ( see “Item 3.D. Risk Factors—Risk Relating to Argentina—Significant fluctuations in the value of the peso could adversely affect the Argentine economy and, in turn, adversely affect our results of operations”).

The following table sets forth the annual high, low, average and period-end exchange rates for the periods indicated, expressed in pesos per U.S. dollar and not adjusted for inflation. There can be no assurance that the peso will not depreciate or appreciate again in the future. The Federal Reserve Bank of New York does not report a buying rate for pesos.

	Exchange Rates				Exchange Rates
	High(1)	Low(1)	Average(1)(2)	Period-end(1)	High(1)	Low(1)	Average(1)(2)	Period-end(1)
2013	6.5210	4.9250	5.5458	6.5210
2014	8.5570	6.5210	8.2267	8.5510
2015	13.4000	8.5550	9.4468	13.0400	13.4000	8.5550	9.2653	13.0400
2016	16.0300	13.2000	14.9916	15.8900	16.0300	13.2000	14.8403	15.8900
2017	19.2000	15.1900	16.4473	18.6490	19.2000	15.1900	16.5704	18.6490
2018					41.2500	18.4100	28.1762	37.7000
2019					60.4000	36.9000	48.2802	59.8900
October	17.7000	17.3350	17.4619	17.6550	60.0000	57.6400	58.5403	59.6700
November	17.6500	17.3050	17.4762	17.3050	59.9500	59.4700	59.7315	59.9400
December	19.2000	17.2300	17.7342	18.6490	59.9900	59.8150	59.8748	59.8900
2018
2020
January	19.6500	18.4100	19.0380	19.6500	60.3500	59.8150	60.0114	60.3500
February	20.2000	19.3800	19.8331	20.1100	62.2100	60.4700	61.3561	62.2100
March	20.4100	20.1490	20.2422	20.1490	64.4690	62.2590	63.1241	64.4690
April (3)	20.2600	20.135	20.1933	20.2600	66.4300	64.5290	65.5290	66.4300

(1)

~~(1)~~	~~Pesos to U.S. dollars exchange rate as quoted by the Banco de la Naci~~óPesos to U.S. dollars exchange rate as quoted by the Banco de la Nación Argentina for wire transfers (divisas). (2) Average of the exchange rates based on working day’s averages for each month. (3) Through April 24, 2020.
~~(2)~~	~~For 2013-2017, average of the exchange rates on the last day of each month during the period. For 2018, based on working day~~’~~s averages for each month.~~
~~(3)~~	~~Through April 24, 2018.~~

Item 3.B

Capitalization and indebtedness

Not applicable.

Item 3.C

Reasons for the offer and use of proceeds

Not applicable.

Item 3.D

Risk Factors

You should carefully consider the risks described below, as well as the other information in this annual report. Our business, results of operations, financial condition or prospects could be materially and adversely affected if any of these risks occurs, and as a result, the market price of our common shares and ADSs could decline. The risks described below are those known to us and that we currently believe may materially affect us.

Risks Relating to Argentina

Substantially all of our revenues are generated in Argentina and thus are highly dependent on economic and political conditions in Argentina

Central Puerto is an Argentine corporation (sociedad anónima). All of our assets and operations are located in Argentina. Accordingly, our financial condition and results of operations depend to a significant extent on macroeconomic, regulatory, social and political conditions prevailing in Argentina, including the level of growth, inflation rates, foreign exchange rates, interest rates and international developments and conditions that may affect Argentina. ~~Between 2007 and 2015,~~In the ~~Fern~~á~~ndez de Kirchner administrations~~past, some governments increased direct intervention in the Argentine economy, including the implementation of expropriation measures, price controls, exchange controls and changes in laws and regulations affecting foreign trade and investment. These measures had a material adverse effect on private sector entities, including us. It is possible that similar measures could be adopted by the current or future Argentine ~~government~~Government or that economic, social and political developments in Argentina, over which we have no control, could have a material adverse effect on the Argentine economy and, in turn, adversely affect our financial condition and results of operations. See “~~Management~~’s“Management’s Discussion and Analysis of Financial Condition and Results of ~~Operations~~—Operations—Factors Affecting our Results of ~~Operations~~—Operations—Argentine Economic ~~Conditions.~~Conditions and the impact of COVID-19.”

The Argentine economy remains vulnerable and any significant decline could adversely affect our results of operations

The Argentine economy has experienced significant volatility in recent decades, characterized by periods of low or negative growth, high levels of inflation and currency devaluation. Sustainable economic growth in Argentina is dependent on a variety of factors, including the international demand for Argentine exports, the stability and competitiveness of the peso against foreign currencies, confidence among consumers and foreign and domestic investors, a stable rate of inflation, national employment levels and the circumstances of ~~Argentina~~’sArgentina’s regional trade partners.

~~The Argentine~~Argentina’s economy contracted during 2019 and the country’s economy remains vulnerable and unstable, as reflected by the following economic conditions:

●

inflation remains high and may continue at similar levels in the future; according to a report published by INDEC, cumulative consumer price inflation from December 2018 to December, 2019 was 53.83%, and inflation during January 2020 and February2020, was 2.3% and 2.0%, respectively;

●

according to the revised calculation of the 2004 ~~GDP~~Gross Domestic Product (“GDP”) published by the INDEC in March 2017, which forms the basis for the real GDP calculation for every year after 2004, GDP decreased by 2.3% in 2016 (as compared to 2015) and increased by 2.6% in 2015, as compared to a decline of 2.5% in 2014 and growth of 2.4% in 2013. According to the INDEC GDP for 2017 increased by 2.9% while it decreased by 2.5% in 2018. According to preliminary data published by the INDEC on March ~~22, 2018~~25, 2020, GDP for ~~2017 increased by 2.9%~~2019 decreased 2.2%. ~~Argentina~~’Argentina’ s GDP performance has depended to a significant extent on high commodity prices which ~~despite having favorable long-term trends,~~ are volatile in the short-term and beyond the control of the Argentine ~~government~~Government and private sector;

●

~~Argentina~~’ sArgentina’s public debt as a percentage of GDP remains high;

●

the discretionary increase in public expenditures has resulted, and could continue to result, in a fiscal deficit;

●

investment as a percentage of GDP remains ~~too low to sustain the growth rate of the past decade;~~low;

●

a significant number of protests or strikes could take place, as has occurred in the past, which could adversely affect various sectors of the Argentine economy;

●

energy or natural gas supply may not be sufficient to supply industrial activity (thereby limiting industrial development) and consumption;

●

unemployment and informal employment remain ~~high;~~high, according to INDEC, unemployment rate during the fourth quarter of 2019 was 8.9%; and

●

in the climate created by the above mentioned conditions, demand for foreign currency could grow, generating a capital flight effect as in recent years.

Argentina’s fiscal imbalances, its dependence on foreign revenues to cover its fiscal deficit, and material rigidities that have historically limited the ability of the economy to absorb and adapt to external factors, have added to the severity of the current crisis.

As a result of the Argentine Peso’s increased volatility, the Argentine government and the Central Bank implemented several measures to restore market confidence and stabilize the value of the Peso. Such measures included, among others, a US$55.7 billion stand-by credit agreement (“SBA”) with the International Monetary Fund (“IMF”), from which, as of the date of this annual report, Argentina has drawn the equivalent of US$44 billion, measures intended to control money supply during 2018 and the first half of 2019 that have been since relaxed, an increase of short term interest rates and the sale by the Central Bank of foreign currency reserves.

In addition, in September 2019, in light of the economic instability and the significant devaluation that followed the primary elections as described below, the Argentine government and the Central Bank adopted a series of measures reinstating foreign exchange controls, which apply with respect to access to the foreign exchange market by residents for savings and investment purposes abroad, the payment of external financial debts, the payment of dividends in foreign currency abroad, payments of goods and services in foreign currencies, payments of imports of goods and services, and the obligation to repatriate and settle for pesos the proceeds from exports of goods and services, among others. Other financial transactions such as derivatives and securities related operations, were also covered by the new foreign exchange regime. Following the change in government, the new administration extended the validity of such measures, which were originally in effect until December 31, 2019, and established further restrictions by means of the recently enacted Solidarity Law (as defined below), including a new tax on certain transactions involving the purchase of foreign currency by both Argentine individuals and entities. Although the official exchange rate has stabilized since the adoption of the foreign exchange controls, we cannot assure you that the official exchange rate will not fluctuate significantly in the future. There can be no assurances regarding future modifications to exchange controls. Exchange controls could adversely affect our financial condition or results of operations and our ability to meet our foreign currency obligations and execute our financing plans.

As in the recent past, ~~Argentina~~’sArgentina’s economy may be adversely affected if political and social pressures inhibit the implementation by the Argentine ~~government~~Government of policies designed to control inflation, generate growth and enhance consumer and investor confidence, or if policies implemented by the Argentine ~~government~~Government that are designed to achieve these goals are not successful. These events could materially adversely affect our financial condition and results of operations.

Any decline in economic growth, increased economic instability or expansion of economic policies and measures taken by the Argentine ~~government~~Government to control inflation or address other macroeconomic developments that affect private sector entities such as us, all developments over which we have no control, could have an adverse effect on our financial condition or results of operations.

~~The Macri administration has implemented significant~~Certain risks are inherent in any investment in a company operating in a developing country such as Argentina

Argentina is developing country and investing in developing countries generally carries risks. These risks include political, social and economic instability that may affect Argentina’s economic results which can stem from many factors, including the following:

●

high interest rates;

●

abrupt changes in ~~policy~~currency values;

●

high levels of inflation;

●

exchange controls;

●

wage and ~~announced additional measures, but its ability~~price controls;

●

changes in performing contracts;

●

regulations to ~~successfully implement such additional measures,~~import equipment and ~~the eventual outcome of such~~ other necessities relevant for operations;

●

changes ~~is unknown~~in governmental economic, administrative or tax policies; and

●

political and social tensions.

~~Presidential and congressional elections in Argentina took place on October 25, 2015, and a runoff election (ballotage) between the two leading presidential candidates was held on November 22, 2015, which resulted in Mr. Mauricio Macri being elected President~~Any of ~~Argentina. The Macri administration assumed office on December 10, 2015.~~

~~On October 22, 2017, mid-term legislative elections were held at the federal and provincial government levels. Macri~~’s ~~Cambiemos~~ ~~alliance obtained the most votes in the City of Buenos Aires,~~these factors, as well as volatility in the ~~provinces~~capital markets, may adversely affect our business, results of ~~Buenos Aires, Chaco, C~~ó~~rdoba, Corrientes, Entre Ríos, Jujuy, La Rioja, Mendoza, Neuqu~~é~~n, Salta, Santa Cruz~~operations, financial condition, the value of our ADSs, and ~~Santa Fe. As a result, as~~our ability to meet our financial obligations.

Economic and political developments in Argentina and future policies of ~~December 10, 2017,~~ ~~Cambiemos~~ ~~increased its representation in~~ the Argentine ~~Congress by nine senators (holding in~~Government, may affect the ~~aggregate 24 of a total of 72 seats in~~economy, as well as the ~~Senate) and by 21 members~~operations of the ~~Chamber~~energy industry, including the operations of ~~Deputies (holding in the aggregate 107 of a total of 257 seats in such Chamber).~~Central Puerto

Since assuming office on December 10, 2019, the ~~Macri~~Fernandez administration has announced and implemented several significant economic and policy reforms ~~including:~~

●

~~INDEC reforms~~. On January 8, 2016, based on its determination that the INDEC had failed to produce reliable statistical information, particularly with respect to the CPI, GDP, poverty and foreign trade data, the Macri administration declared the national statistical system and the INDEC in a state of administrative emergency through December 31, 2016, which was not renewed. The INDEC implemented certain methodological reforms and adjusted certain macroeconomic statistics on the basis of these reforms. See “—~~The credibility of several Argentine economic indices has been called into question, which has led to a lack of confidence in the Argentine economy and could affect your evaluation~~(see “Item 4. Information of the ~~market value of~~Company—Recent Political and Economic Developments in Argentina.”), including those related to public health concerns derived from the ~~ADSs.~~”COVID-19 pandemic crisis and its scale and duration discussed elsewhere herein which remain uncertain but could impact our earnings, cash flow and financial condition. As of the date of this annual report, the ~~INDEC has begun publishing certain revised data, including GDP, poverty, foreign trade~~long-term impact of these measures and ~~balance of payment statistics.~~

●

~~Agreement with holdout creditors.~~ The Macri administration has reached agreements with a large majority of holdout creditors (in terms of claims) and regained access to the international financial markets for the country. For more information on these agreements, see “—~~A lack of financing for Argentine companies due to the unresolved litigation with holdout bondholders may negatively impact our financial condition or cash flows.~~”

●

~~Foreign exchange reforms.~~ ~~The Macri administration eliminated a significant portion of foreign exchange restrictions, including currency controls that were imposed~~any future measures taken by the ~~previous administration. With the aim of providing more flexibility to the foreign exchange system and promoting competition, the Decree N° 27/2018 published~~current administration on January 11, 2018 created the free-floating exchange market (the “Exchange Market”). Furthermore, on August 8, 2016, the Central Bank introduced material changes to the foreign exchange regime and established a new foreign exchange regime by means of Communication “A” 6037 and Communication “A” 6244 which significantly ease access to the Exchange Market. Furthermore, on December 26, 2017, by virtue of Communication “A” 6401, the Central Bank replaced the reporting regimes set forth by Communications “A” 3602 and “A” 4237 with a new, unified regime applicable for information as of December 31, 2017. The unified reporting regime involves an annual mandatory statement filing for every person whose total flow of funds or balance of assets and liabilities is or exceeds US$1 million during the previous calendar year. See ~~“Item 10.D~~ ~~Exchange Controls.~~”

●

~~Foreign trade reforms. The Kirchner and Fern~~ández de Kirchner administrations imposed export duties and other restrictions on several sectors, particularly the agricultural sector. The Macri administration eliminated export duties on wheat, corn, beef, mining and regional products, and reduced the duty on soybean exports by 5%, from 35% to 30% beginning in January 2018 and until December 2019. Further, a 5% export duty on most industrial exports was eliminated. With respect to payments for imports of goods and services, the Macri administration eliminated the restrictions on access to the MULC.

●

~~Fiscal policy.~~ The Macri administration took steps to anchor the fiscal accounts, reducing the primary fiscal deficit by approximately 1.3% of GDP in December 2015 through a series of taxation and other measures and announced its intention to reduce the primary fiscal deficit in 2016 and 2017 from approximately 5.8% of GDP in 2015, in part by eliminating public services subsidies that were in place, such as those applying to electric power and gas services. For 2018, the Argentine ~~government set~~economy as a ~~fiscal deficit target of 3.2% of GDP. For 2017, the aggregate primary fiscal deficit was reported to be 3.8% of GDP. The Macri administration~~’~~s aim is to achieve a primary fiscal deficit of 2.2% GDP in 2019,~~whole and ~~1.2% in 2020.~~

●

~~Correction of monetary imbalances.~~ The Macri administration announced the adoption of an inflation targeting regime in parallel with the floating exchange rate regime and set inflation targets for the next three years. The Central Bank has increased its efforts to reduce excess monetary imbalances and also raised peso interest rates to counterbalance inflationary pressure. On December 28, 2017, the Central Bank announced its inflation targets for 2018, 2019 and 2020. The inflation target for 2018 is 15%, an increase from the Central Bank’~~s previous target range of 8%-12% for the same year. Inflation targets for 2019 and 2020 are 10% and 5%, respectively.~~

●

~~National electric power state of emergency and reforms. Following years of very limited investment in~~ the energy sector ~~as well as the continued freeze on electric power and natural gas tariffs since the 2001-2002 economic crisis, Argentina began to experience energy shortages~~ in 2011. In response to the growing energy crisis. In December 2015, the Macri administration declared a state of emergency with respect to the national electric power system, which remained in effect until December 31, 2017. The state of emergency allowed the Argentine government to take actions designed to ensure the supply of electric power to the country, such as instructing the Ministry of Energy and Mining to design and implement, with the cooperation of all federal public entities, a coordinated program to guarantee the quality and security of the electric power system. In addition, the Macri administration announced the elimination of certain energy subsidies and a substantial increase in electric power rates. By correcting tariffs and subsidies and modifying the regulatory framework, the Macri administration aims to correct distortions in the energy sector and stimulate investment. Following tariff increases, preliminary injunctions suspending such increases were requested by customers, politicians and non-governmental organizations that defend customers’ rights, which preliminary injunctions were granted by Argentine courts. Among the different rulings in this respect, two separate rulings led to the suspension of end-users tariff increases of electric power in the Province of Buenos Aires and in the whole territory of Argentina. However, on September 6, 2016, the Supreme Court denied these injunctions that suspended end-users electric power tariff increases, arguing formal objections and procedural defects and therefore, as of the date of this annual report, increases of the electric power end-users tariffs are not suspended.

Pursuant to Resolution No. 522/16, the ENRE ordered a public hearing to be held to evaluate the proposals for the full tariff review filed by EDENOR and EDESUR for the period beginning January 1, 2017 to December 31, 2021. The hearing was held on October 28, 2016, and following such hearing, on January 31, 2017, the ENRE issued Resolution No. 63/17, by virtue of which such administrative authority approved the tariffs to be applied by EDENOR. Similarly, Resolution No. 64/17 approved EDESUR’s tariffs. With regards to transmission tariffs, seven public hearings were held pursuant to Resolutions Nos. 601/16, 602/16, 603/16, 604/16, 605/16, 606/16, 607/16 of the ENRE. In such public hearings the tariff proposals filed by transmission companies Transener S.A, Distrocuyo S.A., Transcomahue S.A., Ente Provincial de Energía de Neuquén, Transba S.A., Transnea S.A., Transnoa S.A., and Transpa S.A. for the period beginning January 1, 2017 to December 31, 2021 were evaluated. Pursuant to Resolutions Nos. 66/17, 68/17, 69/17, 71/17, 73/17, 75/17, 77/17 and 79/17, the ENRE approved the new applicable tariffs of such companies.

~~The Macri administration’s political party~~ ~~Cambiemos~~ does not have a majority of seats in the Argentine Congress and, therefore, it may be difficult to adopt some of those measures unless he obtains support from the opposition, creating uncertainty as to the ability of the Macri administration to pass any measure that it expects to implement. In addition, recent judicial decisions substantially limiting the Macri administration’s efforts to raise tariffs and protests throughout Argentina in respect of such efforts have added to political uncertainty. This political uncertainty in respect of economic measures could lead to volatility in the market prices of securities of Argentine companies.

The fiscal, monetary and currency adjustments undertaken by the Macri administration may subdue growth in the short-term. For example, immediately after the foreign exchange controls were lifted on December 16, 2015, the dismantling of the multiple exchange regime resulted in the official peso exchange rate (available only for certain types of transactions) falling in value by 40.1%, as the peso-U.S. dollar exchange rate reached Ps.13.76 to US$1.00 on December 17, 2015. The Central Bank has since allowed the peso to float with limited intervention intended to ensure the orderly operation of the MULC. On April 24, 2018, the exchange rate was Ps.20.26 to US$1.00, as quoted by the Banco de la Nació~~n Argentina for wire transfers (divisas~~).

particular remains uncertain.

As of the date of this annual report, the impact that these measures and any future measures taken by the current administration will have on the Argentine economy as a whole and the electric power industry in particular cannot be predicted. The proposed economic liberalization could be disruptive to the economy and fail to benefit, or harm, our business. There remains uncertainty as to which additional measures announced during the presidential campaign will be taken by the Macri administration and when these will be implemented, if ever. In particular, we have no control over the implementation of the reforms to the regulatory framework that governs our operations and cannot guarantee that these reforms will be implemented or implemented in a manner that will benefit our business. The failure of these measures to achieve their intended goals could adversely affect the Argentine economy, which, in turn may have an adverse effect on our financial condition and results of operations.

In addition, we cannot assure you that future economic, regulatory, social and political developments in Argentina will not impair our business, financial condition or results of operations, or cause the market value of our shares to decline.

In the event of any economic, social or political crisis, companies operating in Argentina may face the risk of strikes, expropriation, nationalization, mandatory amendment of existing contracts, and changes in taxation policies including tax increases and retroactive tax claims. In addition, Argentine courts have sanctioned modifications on rules related to labor matters, requiring companies to assume greater responsibility for the assumption of costs and risks associated with sub-contracted labor and the calculation of salaries, severance payments and social security contributions. Since we operate in a context in which the governing law and applicable regulations change frequently, also as a result of changes in government administrations, it is difficult to predict if and how our activities will be affected by such changes.

We cannot assure you that future economic, regulatory, social and political developments in Argentina will not adversely affect our business, financial condition or results of operations, or cause the decrease of the market value of our securities.

If the current levels of inflation do not decrease, the Argentine economy could be adversely affected

Historically, inflation has materially undermined the Argentine economy and the Argentine ~~government~~’sgovernment’s ability to create conditions that permit growth. In recent years, Argentina has experienced high inflation rates. See “—“—The credibility of several Argentine economic indices has been called into question, which has led to a lack of confidence in the Argentine economy and could affect your evaluation of the market value of the ~~ADSs~~”ADSs” below.

During 2016, the City of Buenos Aires CPI inflation rate was 41.05%~~, while according to the Province of San Luis CPI, the inflation rate was 31.53%..~~. During 2017, the INDEC’s CPI inflation rate was recorded at 24.8%. The CPI for 2018 was 47.64%, and it was of 53.83% in 2019. In the past, ~~and particularly throughout the Fern~~á~~ndez de Kirchner administration,~~ the Argentine ~~government~~Government has implemented programs to control inflation and monitor prices for essential goods and services, including ~~attempts to freeze~~the freezing of the price of certain supermarket products and price support arrangements agreed between the Argentine ~~government~~Government and private sector companies in several industries and ~~markets, that~~markets. Such programs did not address the structural causes of inflation and ~~failed to~~generally did not reduce inflation.

High inflation rates affect ~~Argentina~~’sArgentina’s foreign competitiveness, social and economic inequality, negatively impacts employment, consumption and the level of economic activity and undermine confidence in ~~Argentina~~’sArgentina’s banking system, which could further limit the availability of and access by local companies to domestic and international credit.

Inflation remains a challenge for Argentina given its persistent nature in recent years. ~~The Argentine government has announced its intention to reduce the primary fiscal deficit as a percentage of GDP over time and also reduce the Argentine government~~’~~s reliance on Central Bank financing. If, despite the measures adopted by the Argentine government, these measures fail to address Argentina~~’~~s structural inflationary imbalances, the current levels of inflation may continue and have an adverse effect on Argentina~~’~~s economy and can also lead to an increase in Argentina~~’~~s debt. Moreover, certain objectives of the Argentine government, such as the increase in tariffs to incentivize investment in the energy sector, may create inflationary pressures.~~ Inflation in Argentina has contributed to a material increase in our costs of operation, in particular labor costs, and negatively impacted our financial condition.

Inflation rates could escalate in the future, and there is uncertainty regarding the effects that the measures adopted, or that may be adopted in the future, by the Argentine ~~government~~Government to control inflation may have. As of the date of this annual report, since our sales under Energía Base are denominated in Argentine pesos, any further increase in the rate of inflation that is not coupled with a corresponding increase in our tariffs, or a delay in such tariff increase, would decrease our revenues in real terms and adversely affect our results of operations. See “—“—Government intervention may adversely affect the Argentine economy and, as a result, our business and results of operations.” Increased inflation could adversely affect the Argentine economy, which in turn may have an adverse effect on our financial condition and results of operations. See “Item 5.A. Operating Results—Factors Affecting Our Results of Operations—Inflation.”

~~The IAS 29,~~ ~~Financial Reporting in Hyperinflationary Economies, requires that financial statements~~

As of any entity whose functional currency is the currency of a hyperinflationary economy, whether based on the historical cost method or on the current cost method, be stated in terms of the measuring unit current at the end of the reporting period. Although the current rate of inflation does not rise to the level required for Argentina to be considered a hyperinflationary economy under IAS 29, if inflation rates continue to escalate in the future,July 1, 2018, the Argentine ~~peso may qualify~~Peso qualifies as a currency of a hyperinflationary economy ~~according~~and we are required to restate our historical financial statements to apply inflationary adjustments, which could adversely affect our results of operations and financial condition and those of our Argentine subsidiaries.

Pursuant to the ~~guidelines~~International Accounting Standard 29, Financial Reporting in Hyperinflationary Economies (“IAS 29”), the financial statements of entities whose functional currency is that of a hyperinflationary economy must be adjusted for the effects of changes in a general price index. IAS 29 does not prescribe when hyperinflation arises and the International Accounting Standards Board (“IASB”) does not identify specific hyperinflationary jurisdictions. However, IAS 29 provides a series of non-exclusive guidelines that consist of (i) analyzing the behavior of the population, prices, interest rates and wages before the evolution of price indexes and the loss of the currency’s purchasing power, and (ii) as a quantitative characteristic, verifying if the three-year cumulative inflation rate approaches or exceeds 100%. In June 2018, the International Practices Task Force of the Centre for Quality (“IPTF”), which monitors countries experiencing high inflation, categorized Argentina as a country with projected three-year cumulative inflation rate greater than 100%. In addition, certain qualitative macroeconomic factors provided under IAS 29 were also identified. Therefore, Argentine companies using IFRS, such as us, are required to apply IAS 29 to their financial statements for periods ending on and after July 1, 2018.

Adjustments to reflect inflation, including tax indexation, such as those required by IAS 29, were originally prohibited pursuant to Law No. 23,928 (the “Law 23,928”). In addition, Decree No. 664/03, issued by the Argentine Government, instructed regulatory authorities, such as the CNV, to accept only financial statements reported in ~~which case~~constant currency. However, on December 4, 2018, Law 27,468 (“Law 27,468”) abrogated Decree No. 664/03 and amended Law 23,928 indicating that the prohibition of inflation adjustments no longer applies to financial statements submitted for regulatory purposes. Certain regulatory authorities, such as the CNV, now require that financial statements for periods ended on and after December 31, 2018 should be adjusted for inflation pursuant to IAS 29. As a result, our audited consolidated financial statements included in this annual report, including the figures for the previous periods (this fact not affecting the decisions taken on the financial information for such periods), and, unless otherwise stated, the financial information included elsewhere in this annual report, were restated to consider the changes in the general purchasing power of the functional currency of the Company (Argentine peso) pursuant to IAS 29 and General Resolution no. 777/2018 of the CNV.

Accordingly, we have recognized a loss regarding the effect of adjustment by inflation of Ps.2,432 million, Ps.6,209 million and Ps.234 million in our financial statements for the years ended 2019, 2018 and ~~other~~2017, respectively. See Note 2.1.2 to our financial ~~information may need to be adjusted by applying a general~~statements.

Law 27,468 also substituted the wholesale price index (“WPI”) for the CPI as the index to benchmark tax indexation, and ~~expressed~~modified the standards for triggering the tax indexation procedure. In addition, Law 27,468 provides that during the first three years beginning on January 1, 2018, tax indexation will be required if the variation of the CPI exceeds 55% in 2018, 30% in 2019 and 15% in 2020. On December 23, 2019, the National Congress enacted Law No. 27,541 Ley de Solidaridad Social y Reactivación Productiva en el Marco de la Emergencia Pública (the “Solidarity Law”), which, among other measures amended the periods which the tax indexation should be allocated. According to the Solidarity Law, the positive or negative result generated by the application of the inflation adjustment corresponding to the first and second fiscal year beginning on January 1, 2019, shall be charged one sixth (1/6) in that fiscal year and the remaining five sixths (5/6), in equal parts, in the ~~measuring unit (the hyperinflationary currency) current at~~next five fiscal years. For 2019, we recorded a net loss of Ps.426 million in our Income Tax line item of our Statement of Income regarding the ~~end~~application of ~~each reporting period.~~ the above-mentioned tax inflation adjustment.

We cannot ~~determine at this time~~predict the full future impact ~~this would~~that any modifications in the application of the tax indexation procedure and related adjustments will have on our financial ~~condition. See~~ “~~Item 5.A. Operating Results~~—~~Factors Affecting Our Results~~statements, or the effects on our effective tax rate or on our business, results of ~~Operations~~—~~Inflation.~~”operations and financial condition.

The credibility of several Argentine economic indices has been called into question, which has led to a lack of confidence in the Argentine economy and could affect your evaluation of the market value of the ADSs

~~During the administrations of Kirchner~~Between 2007 and ~~Fern~~á~~ndez de Kirchner,~~2015, the INDEC, the Argentine ~~government~~’sGovernment’s principal statistical agency, underwent institutional and methodological reforms that gave rise to controversy regarding the reliability of the information that it produced. Reports published by the IMF ~~have~~had stated that their staff ~~uses~~used alternative measures of inflation for macroeconomic surveillance, including data produced by private sources, which have shown inflation rates considerably higher than those published by the INDEC between 2007 and 2015. The IMF also censured Argentina for failing to make sufficient progress, as required under the Articles of Agreement of the IMF, in adopting remedial measures to address the quality of official data, including inflation and GDP data.

On January 8, 2016, based on its determination that the INDEC had failed to produce reliable statistical information, particularly with respect to its CPI, GDP, foreign trade and poverty data, the Macri administration declared the national statistical system and the INDEC in a state of administrative emergency through December 31, 2016, which was not renewed. The INDEC suspended publication of certain statistical data until it completed reorganization of its technical and administrative structure to recover its ability to produce sufficient and reliable statistical information. During the first six months of this reorganization period, the INDEC published official CPI figures published by the City of Buenos Aires and the Province of San Luis for reference. On June 29, 2016, the INDEC published a report that included revised GDP data for the years 2004 through 2015. Among other adjustments, in calculating GDP for 2004, the INDEC made changes to the composition of GDP that resulted in a downward adjustment of approximately 12% for that year. In calculating real GDP for subsequent years based on the revised 2004 GDP, the INDEC used deflators that are consistent with its revised methodology to calculate inflation. By understating inflation in the past, the INDEC had overstated growth in real terms. The adjustments made by the INDEC resulted in a determination of real GDP growth for the period 2004-2014 of 44.8%, as opposed to a 63% growth in real terms for the same period resulting from the information used prior to June 29, 2016.

Following the publication of revised data and a new inflation index, on November 9, 2016, the IMF lifted the censorship against Argentina, stating that the country had resumed the publication of data in a manner consistent with its obligations under the Articles of Agreement of the IMF.

The Argentine ~~government~~’sGovernment’s reforms seek to produce official data that meets international standards. In order to be effective, however, reforms require certain implementation steps and the timely collection of data, the success of which may be outside of the Argentine ~~government~~’sGovernment’s control. If these reforms cannot be successfully implemented, such failure may adversely affect the Argentine economy, in particular by undermining consumer and investor confidence. The ~~INDEC~~’sINDEC’s past or future data may be materially revised to reveal a different economic or financial situation in Argentina, which could affect ~~investors~~’investors’ perception of Argentina, including the market value of the ADSs. In addition, the failure or delays in implementing the expected changes may impair other measures taken by the Central Bank to tackle inflation. This, in turn, could have a negative impact on ~~Argentina~~’sArgentina’s economy and, as a result, could have an adverse effect on our ability to access international capital markets to finance our operations and growth, adversely affecting our results of operations and financial condition.

~~Fluctuations~~On February 27, 2020, the Secretariat of Energy issued Resolution 31/20, which replaces the regulatory framework for Energía Base applicable from February 1, 2020. This Resolution established that prices are set in Argentine pesos, and adjusted monthly with the following formula: (i) 60% of the CPI, plus (ii) 40% of the WPI. However, on April 8, 2020, Central Puerto learned that the Secretary of Energy may have instructed CAMMESA to postpone until further notice the application of Annex VI of Res.31/20, related to the price update mechanism described under “Item 4.B. Business Overview—The Argentine Electric Power Sector—Remuneration Scheme—The Current Remuneration Scheme” (“Annex VI”). Accordingly, CAMMESA did not apply the price update mechanism for the March 2020 monthly payments under Energy Base. The Company is evaluating the effects that the non-application of the aforementioned Annex VI would have, as well as the steps to be followed in this regard.

Any delay on the application of the price update mechanism described above or deficiency in quality of official data for the CPI and WPI indexes, that significantly underestimates the real inflation in the country, may imply a reduction in our revenues under Energía Base, which may grow less than our costs, affecting our results from operations.

Significant fluctuations in the value of the peso could adversely affect the Argentine economy and, in turn, adversely affect our results of operations

The ~~devaluation~~depreciation of the peso may have a negative impact on the ability of certain Argentine businesses to service their foreign currency-denominated debt, lead to inflation, significantly reduce real wages and jeopardize the stability of businesses, such as ours, whose success depends on domestic market demand and adversely affect the Argentine ~~government~~’sGovernment’s ability to honor its foreign debt obligations. After several years of moderate variations in the nominal exchange rate, the peso ~~lost~~depreciated more than 30% ~~of its value~~ with respect to the U.S. dollar in each of 2013 and 2014. In 2015, the peso ~~lost~~depreciated approximately 52% ~~of its value~~ with respect to the U.S. dollar, including a 10% ~~devaluation~~depreciation from January 1, 2015 to September 30, 2015 and a 38% ~~devaluation~~depreciation during the last quarter of the year, mainly concentrated after December 16, 2015 once the Macri administration eliminated exchange ~~controls imposed by the prior administration.~~controls. In 2016, 2017, 2018 and ~~2017,~~2019, the peso ~~lost~~depreciated approximately ~~22%~~21.86%, 17.36%, 102.16% and ~~18% of its value~~58.86% respectively, in each case, with respect to the U.S. ~~dollar, respectively.~~dollar. The peso depreciated approximately 10.92% from December 30, 2019 through April 24, 2020. On April 24, ~~2018,~~2020, the exchange rate was ~~Ps.20.26~~Ps. 66.43 to US$1.00, as quoted by the Banco de la ~~Naci~~óNación Argentina for wire transfers (divisas).

~~Persistent high inflation during 2013, 2014, 2015, 2016~~

As a result of the increased volatility of the Argentine peso (see “Item 3.A. Selected Financial Data—Exchange Rates”), the previous Argentine Government announced several measures aimed at restoring market’s confidence and ~~2017, resulted~~stabilize the value of the Argentine peso. Measures implemented by the previous Argentine Government included, among others, the 2018 IMF Agreement (see “Item 4. Information of the Company—Recent Political and Economic Developments in Argentina— IMF Agreement”), increase of interest rates and sale of the Central Bank’s foreign currency reserves. More recently, and by virtue of the 2018 IMF Agreement, a new regime was established. This regime sets forth a strict control of the local monetary base, in an ~~increasingly overvalued official~~attempt to reduce the demand for foreign currency. As of October 1, 2018, the Central Bank introduced an exchange rate band. The peso’s exchange rate with the U.S. Dollar was allowed to fluctuate between Ps.34.00 and ~~highly distorted relative prices resulted~~Ps.44.00 per US$1.00 (range that was adjusted daily at an annual rate of 3% until December 2018, and for the first quarter of 2019, was adjusted daily at an annual rate of 2%) without the Central Bank’s intervention. On April 29, 2019, the Monetary Policy Counsel (Comité de Política Monetaria) of the Central Bank (the “COPOM”) decided to introduce changes to the monetary policy, with an aim to reducing volatility in the ~~loss~~foreign exchange market. After the results in the primary elections in August 2019, the peso devalued almost 30% and the share price of ~~competitiveness of Argentine production, impeded investment and caused economic stagnation. A significant appreciation~~listed companies collapsed 38%. The ‘Country Risks’ peaked to one of the ~~peso against the U.S. dollar also presents risks for the~~highest levels in Argentine ~~economy, including the possibility of a reduction in exports (as~~history, placing itself above 2000 points on August 28, 2019. As a consequence of the ~~loss~~aforementioned effects, in order to control the currency outflow and restrict exchange rate fluctuations, the Central Bank re-implemented exchange controls, in hopes of ~~external competitiveness). Any such appreciation could also have~~strengthening the normal functioning of the economy, fostering a ~~negative effect~~prudent administration of the exchange market, reducing the volatility of financial variables and containing the impact of the variations of financial flows on the real economy.

Moreover, it is not possible to predict whether the Argentine Government will be able to comply with all the terms of under its credit with the IMF by 2020. The ability of the Argentine Government to stabilize the exchange market, restore economic growth and ~~employment~~comply with the terms of the Agreement with the IMF by 2020 is uncertain. The Argentine macroeconomic environment, in which we operate, was affected by the depreciation referred to above, which had an effect on our financial and ~~reduce tax revenues in real terms.~~economic position. If the Peso depreciates further, all of the negative effects on the Argentine economy related to such depreciation could recur, with adverse consequences to our business, financial condition and results of operations. In addition, we cannot predict whether the Argentine Government will be able to comply with all terms of the 2018 IMF Agreement. The ability of the Argentine Government to stabilize the foreign exchange market, restore economic growth and meet the terms of the 2018 IMF Agreement, is uncertain.

~~From time~~In addition, the Republic’s future tax revenue and fiscal results may be insufficient to ~~time,~~meet its debt service obligations and the ~~Central Bank~~Republic may ~~intervene~~have to rely in part on additional financing from domestic and international capital markets, the ~~MULC~~IMF and other potential creditors, in order to ~~maintain~~meet future debt service obligations. In the ~~currency. Additional volatility, appreciation~~future, the Republic may not be able or ~~depreciation of~~willing to access international or domestic capital markets, which could have a material adverse effect on the ~~peso or reduction of the Central Bank~~’~~s reserves as a result of currency intervention could adversely affect the Argentine economy, which~~Republic’s ability to make payments on its outstanding public debt, and in turn, ~~may have an adverse effect on~~could materially adversely affect our financial condition and results of operations.

~~If the peso devalues further, the negative effects on the Argentine economy could have adverse consequences for our financial condition.~~

Government intervention may adversely affect the Argentine economy and, as a result, our business and results of operations

~~The two~~Previous administrations ~~of President Fern~~á~~ndez de Kirchner, who governed from 2007 through December 9, 2015,~~ increased state intervention in the Argentine economy, including through expropriation and nationalization measures, price controls and pervasive exchange controls.

In 2008, the ~~Fern~~á~~ndez de Kirchner~~national administration absorbed and replaced the former private pension system for a public “~~pay~~“pay as you go”go” pension system. As a result, all resources administered by the private pension funds, including significant equity interests in a wide range of listed companies, were transferred to a separate fund (Fondo de Garantía de Sustentabilidad, or the “~~FGS~~”“FGS”) to be administered by the National Social Security Administration (Administración Nacional de la Seguridad Social, or the “~~ANSES~~”“ANSES”). The dissolution of the private pension funds and the transfer of their financial assets to the FGS have had important repercussions on the financing of private sector companies. Debt and equity instruments that previously could be placed with pension fund administrators are now entirely subject to the discretion of the ANSES. Since acquiring equity interests in privately owned companies, through the process of replacing the pension system, the ANSES is entitled to designate representatives of the Argentine ~~government~~Government to the boards of directors of those entities. Pursuant to Decree No. 1,278/12, issued by the ~~executive~~Executive branch on July 25, 2012, the ~~ANSES~~’sANSES’s representatives must report directly to the Ministry of Economy and are subject to a mandatory information-sharing regime, under which, among other obligations, the representatives must immediately inform the Ministry of Economy of the agenda for each board of ~~directors~~’directors’ meeting and provide related documentation.

In ~~April 2012,~~May 2013, the ~~Fern~~á~~ndez de Kirchner administration decreed~~Argentine Congress passed a law providing for the ~~removal~~expropriation of ~~directors and senior officers~~51% of the share capital of YPF (Yacimientos Petroliferos Fiscales S.A.), the ~~country~~’~~s largest~~principal Argentine oil ~~and gas~~ company, which ~~was controlled~~shares were owned by Repsol, S.A. and its affiliates. In February 2015, the ~~Spanish group Repsol, and submitted~~Argentine Government sent a bill to the Argentine Congress in order to ~~expropriate~~revoke certain train concessions, return the national rail network to state control and provide authority to review all concessions currently in effect. The bill was enacted on May 20, 2015 as Law No. 27,132.

In addition, on September 23, 2015 the Argentine Congress passed Law No. 27,181, which limits the sale of the Argentine Government’s shares held ~~by Repsol representing 51%~~in Argentine companies without prior approval of two-thirds of the ~~shares~~members of ~~YPF. The~~the Argentine Congress, ~~approved~~with the ~~bill~~exception of the Argentine Government’s shareholding in ~~May 2012~~YPF. That law has been abrogated by the new Administration through ~~the passage of~~ Law No. ~~26,741, which declared~~27,260, the ~~production, industrialization, transportation and marketing of hydrocarbons to be activities of public interest and fundamental policies of Argentina and empowered~~“Ley de Sinceramiento Fiscal y Reparación Histórica a los Jubilados”, dated on May 26, 2016.

In the future, the Argentine government ~~to adopt any measures necessary to achieve self-sufficiency~~could re-introduce regulations that result in ~~hydrocarbon supply. In February 2014, the Argentine~~an increased government and Repsol announced that they had reached an agreement on the terms of the compensation payable to Repsol for the expropriation of the YPF shares. Such compensation totaled US$5 billion payable by delivery of Argentine sovereign bonds with various maturities. The agreement, which was ratified by Law No. 26,932, settled the claim filed by Repsol with the ICSID.

intervention. It is widely reported by private sector economists that expropriations, price controls, exchange controls and other direct involvement by ~~the Fern~~á~~ndez de Kirchner administration~~previous governments in the economy had an adverse impact on the level of investment in Argentina, the access of Argentine companies to the international capital markets and ~~Argentina~~’sArgentina’s commercial and diplomatic relations with other countries. Further actions taken by the Argentine ~~government~~Government concerning the economy, including decisions with respect to interest rates, taxes, price controls,

salary increases, provision of additional employee benefits and foreign exchange controls could continue to have a material adverse effect on ~~Argentina~~’sArgentina’s economic growth and in turn affect our financial condition and results of operations. Moreover, any additional Argentine ~~government~~Government policies established to preempt, or in response to, social unrest could adversely and materially affect the economy, and therefore our business, results of operations and financial condition.

Government measures, as well as pressure from labor unions, could require salary increases or added benefits, all of which could increase companies’ operating costs

In the past, the Argentine ~~government~~Government has passed laws and regulations forcing privately owned companies to maintain certain wage levels and provide added benefits for their employees. Additionally, both public and private sector employers have been subject to strong pressure from the workforce and trade unions to grant salary increases and certain benefits. See “—“—Risks Relating to Our ~~Business~~—Business—We could be affected by material actions taken by the trade unions.”

Labor relations in Argentina are governed by specific legislation, such as Labor Law No. 20,744 and Collective Bargaining Law No. 14,250, which, among other things, dictate how salary and other labor negotiations are to be conducted. Every industrial or commercial activity is regulated by a specific collective bargaining agreement (“~~CBA~~”(“CBA”) that groups companies together according to industry sector and trade union. Although the process of negotiation is standardized, each chamber of industrial or commercial activity separately negotiates the increases of salaries and labor benefits with the relevant trade union of such commercial or industrial activity.

Argentine employers, both in the public and private sectors, have experienced significant pressure from their employees and labor organizations to increase wages and to provide additional employee benefits. In August 2012, the Argentine ~~government~~Government established a 25% increase in minimum monthly salary to Ps.2,875, effective as of February 2013. The Argentine ~~government~~Government increased the minimum salary to Ps.3,300 in August 2013, to Ps.3,600 in January 2014, to Ps.4,400 in September 2014 and to Ps.5,588 in August 2015. It further decreed an increase of the minimum salary to Ps.6,060 in January 2016, to Ps.6,810 in June 2016, to Ps.7,560 in September 2016 and to Ps.8,060 in January 2017. In June 2017, the Ministry of Labor raised the minimum salary to Ps.10,000, effective in three tranches: Ps.8,860 as of July 2017, Ps.9,500 as of January 2018, and Ps.10,000 as of July 2018. In August 2018, the Ministry of Labor raised the minimum salary to Ps. 10,700 as of September 2018, Ps. 11,300 as of December 2018, and Ps. 12,500 as of March 2019. In August 2019, the Ministry of Production and Labor raised the minimum salary to Ps. 14,125 as of August 2019, Ps. 15,625 as of September 2019, and Ps. 16,875 as of October 2019. Due to high levels of inflation, both public and private sector employers are experiencing significant pressure from unions and their employees to further increase salaries. In 2015, the INDEC published the Coeficiente de Variación Salarial (Salary Variation Index, or the “~~CVS~~”“CVS”), an index that shows the evolution of salaries. The Salaries Index showed an increase of approximately ~~33.00%~~27.30%, 30.41% and ~~27.30%~~44.30% in registered private sector salaries in ~~2016~~2017, 2018 and ~~2017,~~2019, respectively.

In the future, the Argentine ~~government~~Government could take new measures requiring salary increases or additional benefits for workers, and the labor force and labor unions may apply pressure for such measures. Any such increase in wage or worker benefit could result in added costs and reduced results of operations for Argentine companies, including us. Such added costs could adversely affect our business, financial condition and result of operations.

~~The implementation of new exchange~~Exchange controls and restrictions on capital inflows and outflows could limit the availability of international credit and could threaten the financial system, adversely affecting the Argentine economy and, as a result, our business

In 2001 and 2002, Argentina imposed exchange controls and transfer restrictions, substantially limiting the ability of companies to retain foreign currency or make payments abroad. After 2002, these restrictions, including those requiring the Central ~~Bank~~’sBank’s prior authorization for the transfer of funds abroad to pay principal and interest on debt obligations, were substantially eased through 2007. In addition to the foreign exchange restrictions applicable to outflows, in June 2005 the Argentine ~~government~~Government adopted various rules and regulations that established restrictive controls on capital inflows into Argentina, including a requirement that, for certain funds remitted into Argentina, an amount equal to 30% of the funds must be deposited into an account with a local financial institution as a U.S. dollar deposit for a one-year period without any accrual of interest, benefit or other use as collateral for any transaction.

From 2011 and until ~~President Macri assumed office in~~ December 2015, the Argentine ~~government~~Government increased controls on the sale of foreign currency and the acquisition of foreign assets by local residents, limiting the possibility of transferring funds abroad. Furthermore, under regulations issued since 2012 certain foreign exchange transactions were subject to prior approval by the Federal Administration of Public Income (“~~AFIP~~”(“AFIP”). Through a combination of foreign exchange and tax regulations, ~~the Fern~~á~~ndez de Kirchner administration~~previous administrations significantly curtailed access to the MULC by individuals and private-sector entities. In addition, during the ~~last few~~ years ~~under the Fern~~á~~ndez de Kirchner administration,~~preceding 2015, the Central Bank exercised a de facto prior approval power for certain foreign exchange transactions otherwise authorized to be carried out under the applicable regulations, such as dividend payments or repayment of principal of intercompany loans as well as the import of goods, by means of regulating the amount of foreign currency available to companies to conduct such transactions. The number of exchange controls introduced in the past and in particular after ~~2011 during the Fern~~á~~ndez de Kirchner administration~~ gave rise to an unofficial U.S. dollar trading market, and the peso/U.S. dollar exchange rate in such market substantially differed from the official peso/U.S. dollar exchange rate. See “~~Exchange~~“Exchange Controls.”

Additionally, the level of international reserves deposited with the Central Bank significantly decreased from US$47.4 billion as of November 1, 2011 to US$25.6 billion as of December 31, 2015, resulting in a reduced capacity of the Argentine ~~government~~Government to intervene in the MULC and to provide access to such markets to private sector entities like us. The ~~Macri~~previous administration announced a program intended to increase the level of international reserves deposited with the Central Bank through the execution of certain agreements with several Argentine and foreign entities. As a result of the measures taken under such program and due to the issuance by the Argentine ~~government~~Government of US$16.5 billion and US$2.75 billion of new debt securities in the international capital markets on April 22, 2016 and July 6, 2016, respectively, the level of international reserves increased to US$38.8 billion as of December 31, 2016. As of December 31, ~~2017,~~2019, the level of international reserves of the Central Bank totaled US$~~55.1 billion, an increase from US$38.8 billion as of December 31, 2016.~~44.8 billion.

~~Since assuming office, the Macri~~The previous administration gradually implemented a series of reforms related to the foreign exchange restrictions, including certain currency controls, ~~which had been imposed under the Fern~~á~~ndez de Kirchner administration,~~ in order to provide greater flexibility and access to the MULC. On August 8, 2016 the Central Bank issued Communication “A”“A” 6037, which substantially modified the applicable foreign exchange regulations and eliminated the set of restrictions for accessing the MULC. Effective as of July 1, 2017, pursuant to Communication “A”“A” 6244, all regulations that restricted access to the MULC were repealed, leaving in place only the obligation to comply with a reporting regime. Pursuant to Communication “A”“A” 6401, dated December 26, 2017, a new reporting regime was created, pursuant to which the “~~Survey~~“Survey on the issuance of foreign notes and liabilities by the financial and private non-financial sector,” established by Communication “A”“A” 3602, and the “~~Survey~~“Survey on direct investments,” established by Communication “A”“A” 4237, were replaced by a unified report on direct investments and debt. Moreover, by virtue of Communication “A” 6443, which came into force as of March 1, 2018, any company from any sector, which usually operates through the Exchange Market can act as an exchange agency by only registering in the exchange operators’ registry. Argentine residents must comply with the reporting regime, even when the funds have not been sold in the MULC and/or there is no expectation to access the MULC in the future in relation to the funds that must be reported.

Since September 2019, with the purpose of strengthening the normal functioning of the economy, fostering a prudent administration of the exchange market, reducing the volatility of financial variables and containing the impact of the variations of financial flows on the real economy, the Argentine Government has reinstated foreign exchange restrictions. The new controls apply with respect to access to the foreign exchange market by residents for savings and investment purposes abroad, the payment of dividends in foreign currency abroad, payments of imports of goods and services, and the obligation to repatriate and settle for pesos the proceeds from exports of goods and services, among others. In that regard, the Company has access to the MULC to pay dividends to non-resident shareholders, without the prior consent of the Central Bank subject that the total amount of transfers executed through the exchange market regulated by the Central Bank for payment of dividends to non-resident shareholders may not exceed 30% of the total value of any new capital contributions made in the Company that had been entered and settled through such exchange market. The total amount paid to non-resident shareholders shall not exceed the corresponding amount denominated in Argentine pesos that was determined by the shareholders' meeting. For further information, see “~~Exchange~~“Exchange Controls.”

~~Notwithstanding the measures adopted by the Argentine government, in~~In the future the Argentine ~~government~~Government could impose further exchange controls, transfer restrictions or restrictions on the movement of capital and/or take other measures in response to capital flight or a significant depreciation of the peso, which could limit our ability to access the international capital markets and impair our ability to make interest, principal or dividend payments abroad. Such measures could lead to renewed political and social tensions and undermine the Argentine ~~government~~’sGovernment’s public finances, which could adversely affect ~~Argentina~~’sArgentina’s economy and prospects for economic growth and, consequently, adversely affect our business and results of operations.

~~A lack of~~

Argentina’s ability to obtain financing ~~for Argentine companies due~~from international markets is limited, which could affect its capacity to ~~the unresolved litigation with holdout bondholders~~implement reforms and sustain economic growth, and may negatively impact our financial condition or cash flows

InAfter Argentina’s default on certain debt payments in 2001, the government successfully restructured 92% of the debt through two debt exchange offers in 2005 and 2010, Argentina conducted exchange offers to restructure part of its sovereign debt that had been in default since the end of 2001. As a result of these exchange offers, Argentina restructured over 92% of its eligible defaulted debt.

~~Commencing in 2002,~~2010. Nevertheless, holdout creditors filed numerous lawsuits against Argentina in several jurisdictions, including the United States, Italy, Germany and ~~Japan. These lawsuits generally assert~~Japan, asserting that Argentina failed to make timely payments of interest and/or principal on their bonds, and ~~seek~~seeking judgments for the ~~outstanding principal~~face value of and/or accrued interest on those bonds. Judgments ~~have been~~were issued in numerous proceedings in the United States, Germany and ~~Germany, but to date~~Japan. Although creditors ~~have~~with favorable judgments did not ~~succeeded,~~succeed, with a few minor exceptions, in ~~executing~~enforcing on those ~~judgments.~~

~~In 2012, plaintiffs in~~judgments, as a result of decisions adopted by the New York ~~obtained a U.S. district court order enjoining~~courts in support of those creditors in 2014, Argentina was enjoined from making ~~interest~~ payments ~~in full~~ on ~~the~~its bonds issued ~~pursuant to~~in the 2005 and 2010 exchange offers unless ~~Argentina paid~~it satisfied amounts due to the ~~plaintiffs in full, under the theory that the former payments violated the~~ ~~pari passu~~ ~~clause in the 1994 Fiscal Agency Agreement (the~~ “~~FAA~~”~~) governing those non-performing~~holders of defaulted bonds. The ~~Second Circuit Court of Appeals affirmed the so-called~~ ~~pari passu~~ ~~injunctions, and on June 16, 2014 the U.S. Supreme Court denied Argentina~~’~~s petition for a writ of certiorari and the~~ ~~pari passu~~ ~~injunctions became effective on June 18 of that year.~~

~~In 2014, the~~ Argentine government took a number of steps intended to continue servicing the bonds issued in the 2005 and 2010 exchange offers, which had limited success. Holdout creditors continued to litigate and succeeded in preventing the Argentine government from regaining market access.

~~The Argentine government engaged in negotiations with holders of defaulted bonds in December 2015 with a view to bringing closure to fifteen years of litigation. In~~Between February and April 2016, the Argentine government entered into ~~an agreement~~agreements in principle ~~to settle~~ with certain holders of defaulted debt and put forward a proposal to other holders of defaulted debt, including those with pending claims in U.S. courts, ~~subject to two conditions: (i) obtaining approval by the Argentine Congress and the lifting of the~~ ~~pari passu~~ ~~injunctions. On March 2, 2016, the U.S. district court agreed to vacate the~~ ~~pari passu~~ ~~injunctions, subject to two conditions: first, the repeal of all legislative obstacles to settlement with holders of defaulted debt securities issued under the FAA; and (ii) full payment to holders of~~ ~~pari passu~~ ~~injunctions with whom the Argentine government had entered into an agreement~~which resulted in ~~principle on or before February 29, 2016. The U.S. district court~~’~~s order was affirmed by the Second Circuit Court of Appeals on April 13, 2016. On June 30, 2016, the Argentine Congress repealed the legislative obstacles to~~ the settlement of substantially all remaining disputes and ~~approved the settlement proposal.~~closure to 15 years of litigation. On April 22, 2016, Argentina issued bonds for US$16.5 billion, ~~of new debt securities in the international capital markets,~~ and applied US$9.3 billion of ~~these~~the proceeds to satisfy payments under the settlement ~~payments on~~ agreements reached with holders ~~with~~of defaulted debt. Since then, substantially all of the remaining claims ~~amounting to approximately US$4.2 billion. The District Court ordered the vacatur of all~~ ~~pari passu~~ ~~injunctions upon confirmation of such payments.~~under defaulted bonds have been settled.

As of the date of this annual report, although litigation initiated by bondholders that have not accepted ~~Argentina~~’sArgentina’s settlement offer continues in several jurisdictions, ~~although~~ the size of the claims involved has decreased significantly.

~~Although~~In addition, since 2001 foreign shareholders of some Argentine companies initiated claims for substantial amounts before the ~~vacatur~~International Centre for Settlement of Investment Disputes (“ICSID”) against Argentina, pursuant to the arbitration rules of the ~~pari passu~~ ~~injunctions removed~~United Nations Commission on International Trade Law. Claimants allege that certain measures of the Argentine government issued during the economic crisis of 2001 and 2002 were inconsistent with the norms or standards set forth in several bilateral investment treaties by which Argentina was bound at the time. To date, several of these disputes have been settled, and a ~~material obstacle to~~significant number of cases are in process or have been temporarily suspended by the agreement of the parties.

Between 2016 and early 2018, Argentina regained access to ~~capital~~the market and incurred approximately in US$96.3 billion of additional debt. However, as a result of various external and internal factors, during the first half of 2018, access to the market became increasingly onerous. On May 8, 2018, the Macri administration announced that the Argentine government would initiate negotiations with the IMF with a view to entering into a stand-by credit facility that would give Argentina access to financing by the IMF. On June 7, 2018, the Argentine government and the IMF staff reached an understanding on the terms of the SBA for disbursements totaling approximately US$50 billion, which was approved by the IMF’s Executive Board on June 20, 2018. The SBA was intended to provide support to the Macri administration’s economic program, helping build confidence, reduce uncertainties and strengthen Argentina’s economic prospects. On June 22, 2018 the Argentine government made a first drawing of approximately US$15 billion under the SBA. Argentina has received disbursements under the SBA for US$44 billion. Notwithstanding the foregoing, the current administration has publicly announced that they will refrain from requesting additional disbursements under the agreement, and instead vowed to renegotiate its terms and conditions in good faith.

Following the execution of the SBA, in August 2018, Argentina faced an unexpected bout of volatility affecting emerging markets generally. In September 2018, the Macri administration discussed with the IMF staff further measures of support in the face of renewed financial volatility and a challenging economic environment. On October 26, 2018, in light of the adjustments to fiscal and monetary policies announced by the Argentine government ~~future transactions may be affected as litigation with holdout bondholders continues, which in turn could affect~~and the Central Bank, the IMF’s Executive Board allowed the Argentine government’s to draw the equivalent of US$5.7 billion, bringing total disbursements since June 2018 to approximately US$20.6 billion, approved an augmentation of the SBA increasing total assets to approximately US$57.1 billion for the duration of the program through 2021 and the front loading of the disbursements. Under the revised SBA, IMF resources for Argentina in 2018-19 increased by US$18.9 billion. IMF disbursements for the remainder of 2018 more than doubled compared to the original IMF-supported program, to a total of US$13.4 billion (in addition to the US$15 billion disbursed in June 2018). Disbursements in 2019 were also nearly doubled, to US$22.8 billion, with US$5.9 billion planned for 2020-21.

On August 28, 2019, the Macri administration issued a decree deferring the scheduled payment date for 85% of the amounts due on short-term notes maturing in the fourth quarter of 2019, governed by Argentine law and held by institutional investors. Of the deferred amounts, 30% will be repaid 90 days after the original payment date and the remaining 70% will be repaid 180 days after the original payment date, except for payments under Lecaps due 2020 held domestically, which will be repaid entirely 90 days after the original payment date. Amounts due on short-term notes held by individual investors will be paid as originally scheduled. In December 2019, the Fernández administration further extended payments of a series of short term notes denominated in U.S. dollars until the end of August 2020, which were held by institutional investors.

Moreover, in December 2019, the Fernández administration further extended by decree payments of a series of short term Argentine-law governed treasury notes denominated in U.S. dollars held by institutional investors through August 2020. Additionally, on February 11, 2020, the Argentine government decreed the extension of maturity to September 30, 2020 of a dollar-linked treasury note governed by Argentine law, which had been originally subscribed to a large extent with U.S. dollar remittances, to avoid a payment with Argentine pesos that would have required significant sterilization efforts by the monetary authority. Also in February 2020, the Argentine Congress enacted a law enabling the government to take all necessary steps toward rendering the Argentine sovereign debt governed by foreign law sustainable. Additionally, an IMF team visited Buenos Aires in February, 2020 to discuss the recent macroeconomic developments and learn more about the Argentine authorities’ economic plans and policies. On February 19, 2020 the IMF staff issued a statement concluding that in light of recent developments and the materialization of certain risks to debt sustainability that were considered during the previous Debt Sustainability Analysis (DSA) published in July 2019, the IMF staff assesses Argentina’s debt to be unsustainable. Accordingly, the IMF staff stated that “a definitive debt operation—yielding a meaningful contribution from private creditors—is required to help restore debt sustainability with high probability”.

On April 21, 2020, the Argentine Government announced its offer to exchange external bonds in the aggregate of amount of approximately US$64 billion for new bonds. The Argentine Government did not make the interest payment due on April 22, 2020 with respect to three of its US$-denominated bonds and availed itself of the 30-day grace period provided under the indenture. As of the date of this annual report, there is no certainty on the acceptance the exchange offer will have among the bondholders or whether further negotiations and proposals will be carried out and the consequences of such negotiations.

Without renewed access to the financial market the Argentine government may not have the financial resources to implement reforms and boost growth, which could have a significant adverse effect on the country’s economy and, consequently, on our activities. Likewise, Argentina’s inability to obtain credit in international markets could have a direct impact on the Company’s ability to access ~~international credit~~those markets ~~thus affecting our ability~~ to finance its operations and its growth, including the financing of capital investments, which would negatively affect our ~~growth.~~

financial condition, results of operations and cash flows. In addition, we cannot predict the outcome of any future restructuring of Argentine sovereign debt. Any new event of default by the Argentine government could negatively affect their valuation and repayment terms, as well as have a material adverse effect on the Argentine economy and, consequently, our business and results of operations.

High public expenditures could result in long-lasting adverse consequences for the Argentine economy

In recent years, the Argentine ~~government~~Government has substantially increased public expenditures. In 2016, 2017, and 2018, national public sector expenditures increased by 37.0%, 21.8% and 22.4% year over year, respectively (measured in nominal Argentine pesos) and the government reported a primary fiscal deficit of 4.6%, 3.8% and 2.4% of GDP, according to the Argentine Ministry of ~~Economy (which is, as of the date of this annual report, divided into two parts~~—~~the Ministry of Treasury~~Treasury. In 2019, national public sector expenditures increased by 37.2%, and the ~~Ministry~~government reported a primary fiscal deficit of ~~Public Finance).~~1.0% of GDP. During recent years, the Argentine ~~government~~Government has resorted to the Central Bank and to the ANSES to alleviate part of its funding requirements. Moreover, the primary fiscal balance could be negatively affected in the future if public expenditures continue to increase at a rate higher than revenues due to, for example, social security benefits, financial assistance to provinces with financial problems and increased spending on public works and subsidies, including subsidies to the energy and transportation sectors. A further deterioration in fiscal accounts could negatively affect the ~~government~~’sgovernment’s ability to access the long-term financial markets and could in turn result in more limited access to such markets by Argentine companies. Additionally, a further deterioration in fiscal accounts could affect the Argentine ~~government~~’sGovernment’s ability to continue subsidies for consumers in the energy sector.

A decline in international prices for Argentina’s main commodity exports could have an adverse effect on Argentina’s economic growth

~~Argentina~~’sArgentina’s financial recovery from the 2001-2002 crisis occurred in a context of price increases for ~~Argentina~~’sArgentina’s commodity exports, such as soy. High commodity prices contributed to the increase in Argentine exports since the third quarter of 2002 and to high government tax on revenues from export withholdings. However, the reliance on the export of certain commodities has caused the Argentine economy to be more vulnerable to fluctuations in their prices.

Commodity prices, including for soy, have declined significantly since peak prices due in part to slower growth in China. In addition, from the end of 2017 until April 2018, rains below the average, for several months, plunged Argentina into a severe drought that is presumed to have been the worst drought in the country in a 50 years period. The effects of the drought in agriculture caused important economic problems in the country, with a fall in the soybean harvest of 31% over the previous year, and corn, by 20%, which implied losses by US$6 billion. A continuing decline in the international prices for ~~Argentina~~’sArgentina’s main commodity exports or any future climatic conditions that may have an adverse effect in agriculture could have a negative impact on the levels of government revenues and the ~~government~~’sgovernment’s ability to service its sovereign debt, and could either generate recessionary or inflationary pressures, depending on the ~~government~~’sgovernment’s reaction. Either of these results would adversely impact ~~Argentina~~’sArgentina’s economy and, therefore, our financial condition.

The novel coronavirus could have an adverse effect on our business operations and financial conditions

In late December 2019 a notice of pneumonia originating from Wuhan, Hubei province (COVID-19, caused by a novel coronavirus) was reported to the World Health Organization, with cases soon confirmed in multiple provinces in China, as well as in other countries. On March 11, 2020, the World Health Organization characterized the COVID-19 as a pandemic. Several measures have been undertaken by the Argentine government and other governments around the globe, including the use of quarantine, screening at airports and other transport hubs, travel restrictions, suspension of visas, nation-wide lockdowns, closing of public and private institutions, suspension of sport events, restrictions to museums and tourist attractions and extension of holidays, among many others. However, the virus continues to spread globally and, as of the date of this annual report, has affected more than 150 countries and territories around the world, including Argentina. To date, the outbreak of the novel coronavirus has caused significant social and market disruption. For example, the Dow Jones declined by about 18.19% between February 11 and April 14, 2020. The long-term effects to the global economy and the Company of epidemics and other public health crises, such as the on-going novel coronavirus, are difficult to assess or predict, and may include a further decline in the market prices of our shares and ADSs, risks to employee health and safety, risks for the deployment of our services, reduction in the demand of energy, and delays or suspensions in the construction of our expansion projects, among others. Any prolonged restrictive measures put in place in order to control an outbreak of a contagious disease or other adverse public health development may have a material and adverse effect on our business operations. We may also be affected due to the need to implement policies limiting the efficiency and effectiveness of our operations, including home office policies. It is unclear whether these challenges and uncertainties will be contained or resolved, and what effects they may have on the global political and economic conditions in the long term. Additionally, we cannot predict how the disease will evolve in Argentina, nor anticipate what additional restrictions the Argentine government may impose.

On March 20, 2020 the Argentine Government issued Decree No. 297/2020 establishing a preventive and mandatory social isolation policy (“the Quarantine”) as a public health measure to contain the effects of the COVID-19 outbreak. Such decree established that during the Quarantine, people must remain in their residence beginning midnight on March 20, 2020 and must refrain from going to their workplaces and may not travel along routes, roads or public spaces. Since the adoption of the Quarantine, the Argentine Government has extended it three times, and as of the date of this annual report it has been extended until May 11, 2020 with some additional excluded activities. We cannot exclude any further extensions or even the restoration of excluded activities after it is lifted.

The Quarantine is expected to have a deep impact in the Argentine economy, including drastic reduction in the demand and supply of goods and services, increase in the unemployment rate and poverty levels, businesses bankruptcies, disruption in the payment chain, among many others. Although the Argentine government has adopted measures intended to alleviate the situation (see “Item 4––Recent Developments- Measures Designed to Address the Covid-19 Outbreak”), such measures are expected to significantly increase the governments’ fiscal deficit. If that increase in the deficit is financed with monetary emission, it is highly possible that it will lead to an increase in the rate of inflation and disruptions in the foreign exchange markets.

Pursuant to Decree 297/2020, the electricity generation activity was considered an essential service and thus, exempt from the work attendance and travel restrictions. Although our operations personnel was allowed to continue their activities under certain health and sanitary precautions, the rest of our staff continued working remotely. As of the date of this annual report, these restrictions remain in effect.

Initially, the construction of energy infrastructure, including our ongoing expansion projects, was not included as an exemption to the Quarantine. On April 7, 2020, the construction of private sector energy infrastructure was included as an essential activity, and consequently, after taking the necessary precautions, the construction resumed on April 9, 2020 for La Genoveva I, and on April 27, 2020 for Terminal 6-San Lorenzo.

As additional measures to contain the expansion of COVID-19, international travel (except for certain specific repatriation flights) was suspended.

We have identified the following items where this crisis has and may have an impact in the Company:

Operations – Power generation

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Reduction in the electric energy dispatched. Due to the Quarantine, most of the businesses in Argentina, especially in the industrial sector, have not been able to continue operating normally. According to information from CAMMESA, during the first week of April, the total electric energy demand declined by 13.4 %, compared to the same week of the prior year. This reduction is likely to have an impact on the Company’s thermal energy generation department, in particular our units with higher heat rate (less efficient) under the Energía Base Regulatory framework.

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Increased delays in payments and/or risk of uncollectability from our private clients. Despite the fact that CAMMESA is paying its obligations, the reduced economic activity due to the Quarantine may also affect the cash flows of CAMMESA and of our private clients and increase the delays in their payments and the risk of uncollectabilty of private clients. (See “Item 3.D Risk Factors—Risks Relating to Argentina—We have, in the recent past, been unable to collect payments, or to collect them in a timely manner, from CAMMESA and other customers in the electric power sector”).

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Greater dependency of CAMMESA on subsidies from the Argentine government. CAMMESA’s cash flows depend on (i) payments from electric energy distribution companies, and (ii) subsidies from the Argentine government. Due to the Law 27,132, tariffs that eligible end users pay to some public utilities under federal jurisdiction, including electric energy distribution companies, were frozen for 180 days until June 30, 2019 (See Item 4. Information of the Company- Recent Political and Economic Developments in Argentina). Furthermore, the Argentine government established a 180-day period, beginning on March 1, 2020, in which the suspension of the electric energy distribution service is not permitted, upon the beneficiary’s failure to pay less than three consecutive invoices, from March 1, 2020. As a consequence, electric energy distribution companies may see a reduction in their collections from clients, which may reduce their payments to CAMMESA, which in turn, may increase CAMMESA’s dependency on subsidies received from the Argentine government to pay for electric energy generation, including payments to electric energy generation companies, such as Central Puerto.

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Personnel safeguard. We have set a protocol with multiple measures to protect the health of all our personnel. Some of those measures include: a) the isolation of the teams that operate our different units, preventing contact between different teams; b) the avoidance of contact between personnel from different shifts; c) the use of extra protection, and additional sanitary measures; d) using virtual meetings; e) identify key personnel in order to have the necessary back-up teams should a contingency arise and keeping all non-essential personnel for the operation and maintenance of the units working remotely. Although these measures have been effective for the safeguard of our personnel, as of the date of this annual report, we cannot assure you that none of our employees (including key personnel) will be affected by COVID-19.

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Lack of necessary supplies/equipment, or delays in supplies. The Quarantine may also affect the provision of essential supplies. Although the provision of the necessary supplies is also considered an essential activity under the enacted emergency framework and we usually keep a stock of spare parts, we cannot assure you that the provision of the necessary supplies will not be affected. Furthermore, measures taken by foreign countries in which some of our supplies and spare parts for our units are produced, may also affect our stock of spare parts. Any delay in the provision of essential equipment or supplies may affect our operations.

Projects under construction/development

The COVID-19 outbreak has had an impact on the projects currently under construction. On February 21, 2020, Vestas Argentina S.A. (“Vestas”) the supplier of the wind turbines of the La Genoveva I wind project, notified the Company that the COVID-19 outbreak affected its manufacturing activities worldwide, causing delays on the supply chain for the delivery of certain Chinese-origin manufacturing components required for the completion of the wind turbines. In its communication, Vestas did not specify the specific impact this situation may have on the agreed upon schedule. However, we reasonably expect delays on the project’s completion. We sent a notice to CAMMESA with the updates received from Vestas in accordance with the force majeure clauses of the PPA to avoid potential penalties should the project suffer unexpected and unforeseen delays. On April 7, 2020, CAMMESA acknowledged receipt of our notice and requested a report on the consequences that the force majeure events have had on the schedule. We expect to experience delays in the estimated COD of the wind farm La Genoveva I (owned by our subsidiary Vientos La Genoveva S.A.U.) which in accordance with the PPA entered into with CAMMESA, had to be completed in May 2020.

Additionally, our subsidiary Vientos La Genoveva S.A.U., entered into a loan agreement with the IFC for the construction of the wind farm La Genoveva I. Under the IFC Loan (see Item 5.B. Liquidity and Capital Resources—Indebtedness— Loan from the IFC to the subsidiary Vientos La Genoveva S.A.U.)., Central Puerto S.A., a guarantor, completely, unconditionally and irrevocably guarantees, as the main debtor, all payment obligations undertaken by Vientos La Genoveva S.A.U until the project reaches the project completion date. Any delay in the COD could delay the project completion date, and thus, Central Puerto would remain as the main debtor of this facility.

Additionally, although the Quarantine was lifted for private sector energy infrastructure construction on April 7, 2020, we have experienced delays on our project schedule. After taking the necessary precautions, the construction was resumed on April 9, 2020 for La Genoveva I. However, due to these precautionary measures (reduction of personnel working in the project, working hours reduction, and the establishment of a staggered shift) we expect the completion of the project to be delayed.

The Quarantine also affected the construction of the Terminal 6-San Lorenzo thermal plant, that was suspended on March 20, 2020, scheduled to be completed in September 2020. After the Quarantine was lifted, we resumed activities on April 27, 2020 after taking the necessary precautions. However, due to the precautionary measures mentioned above, we expect the completion of the project to be delayed. Additionally, travel restrictions and national borders lockdown imposed by the Argentine Government, among others, may delay the arrival of necessary personnel for the project, some of which were expected to arrive from countries affected by the outbreak. We sent a notice to CAMMESA informing about this situation to avoid potential penalties should the project suffer unexpected and unforeseen delays. Although we are confident that due to the extreme circumstances that affect the projects we will be able to obtain a waiver on the Committed COD, we cannot assure you we will in fact secure such waiver from CAMMESA.

The effects of the COVID-19 crisis pose challenges to our expansion plans for the Brigadier López plant and the development of the El Puesto solar farm, delaying the start of construction of these projects, not only because of the restrictions to the construction mentioned above, but also due to lower energy demand and difficulties to obtain the necessary financing for the projects in the current markets situation. For more information on see “Item 3D. Risk Factors—Risks Relating to our Business— Factors beyond our control may affect or delay the completion of the awarded projects, or alter our plans for the expansion of our existing plants”. In addition, the COVID-19 crisis may reduce the possibility of new expansion projects and opportunities, for which the company has purchased 3 gas turbines. Item 5.A Operating Results—Factors Affecting our Results from Operations—Proposed Expansion of Our Generating Capacity.

The factors mentioned above for both our operation of power generation and the projects under construction/development, may also lead to an impairment of property, plant and equipment and intangible assets, related to a reduction in the assessed value-in-use of certain assets that may exceed their previously-recorded book value, such us our Brigadier López plant and intangible assets associated to it, and some of the gas turbines that the Company holds for potential new projects. Some of the factors that may influence this reduction are the limited useful life of these assets, the current economic uncertainties, the reduction and conversion of the electric and power spot market tariff into Argentine pesos, and in the particular case of the Company’s gas turbines, the uncertainty about the feasibility of new projects that would enable the use of the acquired turbines. For more information, see Item 5.A. Operating Results—Critical Accounting Policies—Impairment of property, plant and equipment and intangible assets.

Access to the Capital and Financial Markets

Due to the Argentine sovereign debt restructuring ongoing process and to the outbreak of COVID-19, access to the capital and financial markets in Argentina and/or in foreign markets may also be substantially reduced. Although we believe our cash flow and liquidity are adequate and sufficient to meet our working capital debt service obligations and capital expenditure requirements for the foreseeable future, any further deterioration of the current economic situation may result in a deterioration of the Company’s finances, in a context of lack of access or substantial reduction of credit availability in the financial markets, which could affect our financial condition and results of operation.

Additionally, the COVID-19 pandemic crisis may also affect the results from our natural gas distribution affiliates. Although these economic activities were also declared essential, and exempt from the Quarantine, the economic downturn caused by this measure is expected to reduce volumes distributed to clients. Moreover, some measures adopted by the Argentine Government to mitigate the effects of the COVID-19 outbreak in the economy are also expected to affect Ecogas’ financial performance, which had already been affected by the 180-day tariff freeze established by Law 27,132, which was in effect until June 30, 2019 (See Item 4. Information of the Company- Recent Political and Economic Developments in Argentina). The Argentine Government established a 180-day period, beginning on March 1, 2020, where the suspension of the natural gas service is not permitted, upon the beneficiary’s failure to pay less than three consecutive invoices, from March 1, 2020. This measure is only applicable to certain users identified in the decree adopting it. This measure is expected to increase the delays and or the uncollectability of payments from such clients. Furthermore, some of the clients may not have access to electronic payment platforms and may typically pay in cash, which may be an obstacle for their ability to pay the bills on time due to the mandatory Quarantine. In the year ended December 31, 2019, IGCE (including a direct interest in DGCE) accounted for 11.80% of our consolidated net income (see Item 4.B. Business Overview—Our Affiliates— Ecogas Group - Inversora de Gas del Centro S.A. (IGCE)”.

Finally, any additional measure taken by Argentina or any foreign country to mitigate the effects of the COVID-19 crisis, may directly or indirectly affect our operations, projects under construction/development or our results of operation and financial condition.

For more information see “Item 4.A.—Recent Developments—Measures Designed to Address the Covid-19 Outbreak”.

The Argentine economy could be adversely affected by economic developments in other markets and by more general “contagion” effects

Weak, flat or negative economic growth of any of ~~Argentina~~’sArgentina’s major trading partners, such as Brazil, China or the United States, could have a material adverse effect on Argentina’s trade balance and adversely affect Argentina’s economic growth. The economic performance of other trading partners such as Chile, Spain and Canada may also affect Argentina’s trade balance.

The economy of Brazil, ~~Argentina~~’sArgentina’s largest export market and the principal source of imports, ~~is currently experiencing~~has experienced heightened negative pressure due to the uncertainties stemming from ongoing political crisis and extensive corruption ~~investigations, including the impeachment of Brazil~~’~~s former president, Ms. Dilma Rousseff. The Brazilian economy contracted by 3.6% during 2016.~~investigations. Although the Brazilian economy slightly expanded by 1%1.1% during ~~2017,~~2018 and 1.1% during 2019, a deterioration of economic conditions in Brazil may reduce demand for Argentine exports and create advantages for Brazilian imports. ~~While~~In October 2018, candidate Jair Bolsonaro was elected president of Brazil. As a result, uncertainty and expectations have increased in relation to the ~~impact~~future management of the president who, might include substantial economic reforms and changes in Brazil’s foreign policy, as stated during his campaign. A further deterioration of economic conditions in Brazil’~~s downturn on Argentina cannot be predicted, we cannot exclude~~ could reduce the demand for Argentine exports and generate advantages for Brazilian imports. There is a possibility that continued uncertainty with respect to Brazil’s economic and political conditions or the ~~Brazilian~~occurrence of an economic and political ~~and economic~~ crisis ~~could have a further negative~~in Brazil might result in an impact on the Argentine ~~economy.~~economy, and in turn, have a material adverse effect on our business, financial condition and result of operations.

The Argentine economy may be affected by “~~contagion~~”“contagion” effects. International ~~investors~~’investors’ reactions to events occurring in one developing country sometimes appear to follow a “~~contagion~~”“contagion” pattern, in which an entire region or investment class is disfavored by international investors. In the past, the Argentine economy has been adversely affected by such contagion effects on a number of occasions, including the 1994 Mexican financial crisis, the 1997 Asian financial crisis, the 1998 Russian financial crisis, the 1999 ~~devaluation~~depreciation of the Brazilian real, the 2001 collapse of ~~Turkey~~’sTurkey’s fixed exchange rate regime and the global financial crisis that began in 2008.

The Argentine economy may also be affected by conditions in developed economies, such as the United States, that are significant trading partners of Argentina or have influence over world economic cycles. If

interest rates increase significantly in developed economies, including the United States, Argentina and its developing economy trading partners, such as Brazil, could find it more difficult and expensive to borrow capital and refinance existing debt, which could adversely affect economic growth in those countries. Decreased growth on the part of ~~Argentina~~’sArgentina’s trading partners could have a material adverse effect on the markets for ~~Argentina~~’sArgentina’s exports and, in turn, adversely affect economic growth. Any of these potential risks to the Argentine economy could have a material adverse effect on our business, financial condition and result of operations.

On June 23, 2016, the United Kingdom ~~voted in favor~~held an in-or-out referendum on the United Kingdom’s membership of ~~exiting~~ the European ~~Union. As~~Union the result of which favored the exit of the ~~date of this annual report, the actions that the~~ United Kingdom ~~will take to effectively exit~~ from the European Union or “Brexit.” On October 2, 2016, the ~~length~~United Kingdom prime minister announced that Article 50 of ~~such process are uncertain.~~the Lisbon Treaty would be triggered before the end of March 2017 and that the Queen's speech will include a Great Repeal Bill to repeal the European Communities Act 1972. On March 16, 2017, the European Union (Notification of Withdrawal) Bill was enacted and a notification under Article 50 was made on March 29, 2017. The triggering of Article 50 initiated a two-year period of negotiation for the United Kingdom to leave the European Union. Following a series of extensions to this period, on January 31, 2020, the United Kingdom left the European Union and entered into a transition period that will end on December 31, 2020. The impact of Brexit on our results of ~~the United Kingdom~~’~~s referendum have caused,~~operations is unclear and ~~are anticipated~~its long-term effects remain uncertain. Brexit could lead to ~~continue causing, volatility~~additional political, legal and economic instability in the ~~financial markets, which may in turn have~~European Union and produce a ~~material adverse effect~~negative impact on ~~our business, financial condition and results~~the commercial exchange of ~~operations.~~

Argentina with that region.

On November 8, 2016, Mr. Donald J. Trump was elected president of the United States. The results of the presidential election have created significant uncertainty about the ~~future~~ relationship between the United States and other countries, including with respect to the trade policies, treaties, government regulations and tariffs that could apply to trade between the United States and other nations. Even though President Trump's protectionist measures are not, for the time being, aimed at Argentina, we cannot predict how they will evolve, nor will the effect that the same or any other measure taken by the Trump administration could cause on global economic conditions and the stability of global financial markets. Furthermore, the ongoing trade dispute between United States and China due to tariffs placed on goods traded between them, might have a potential impact in trade-dependent countries such as Argentina.

During August 2018, an increase in inflation and a sustained deficit in current accounts, as well as the protectionist measures taken by the United States, doubling the tariffs on steel and aluminum from Turkey, caused a collapse of the Turkish lira against the Dollar that triggered a wave of sales of assets from emerging markets and the significant fall in the prices of shares from these markets, generating a contagion effect in international markets and several stock exchanges in the world, including Argentina.

These developments, or the perception that any of them could occur, may have a material adverse effect on global economic conditions and the stability of global financial markets. Any of these factors could depress economic activity and restrict our access to suppliers and have a material adverse effect on our business, financial condition and results of operations.

The Argentine banking system may be subject to instability which may affect our operations

In recent years, the Argentine financial system grew significantly with a marked increase in loans and private deposits, showing a recovery of credit activity. In spite of the fact that the financial system’s deposits continue to grow in nominal terms, they are mostly short-term deposits and the sources of medium and long-term funding for financial institutions are currently limited. In 2019, although nominal private deposits in pesos increased 36% year-over-year (fueled by the growth of savings and current accounts with a 46% increase) and nominal time deposits increased 25% year-over-year, such nominal increases did not match inflation for the period. Peso-denominated loans increased at a slightly higher pace than that of 2018. During the same period, loans in foreign currency (composed mainly of corporate loans) evidenced a decrease of 33% at the end of 2019. In 2019, private deposits in U.S. dollars declined by 33%.

Financial institutions are particularly subject to significant regulation from multiple regulatory authorities, all of whom may, among other things, establish limits on commissions and impose sanctions on the financial institutions. The lack of a stable regulatory framework, or changes to such regulatory framework by the government, could impose significant limitations on the activities of the financial institutions and could induce uncertainty with respect to the financial system stability.

The persistence of the current economic crisis or the instability of one or more of the larger banks, public or private, could have a material adverse effect on the prospects for economic growth and political stability in Argentina, resulting in a loss of consumer confidence, lower disposable income and fewer financing alternatives for consumers. These conditions would have a material adverse effect on us by resulting in lower usage of our services, lower sales of devices and the possibility of a higher level of uncollectible accounts or increase the credit risk of the counterparties regarding the Company investments in local financial institutions.

Exchange controls and restrictions on transfers abroad and capital inflows limit the availability of international credit.

Failure to adequately address actual and perceived risks of institutional deterioration and corruption may adversely affect Argentina’s economy and financial condition, which in turn could adversely affect our business, financial condition and results of operations

A lack of a solid institutional framework and corruption have been identified as, and continue to be a significant problem for Argentina. In Transparency International’s 2017 Corruption Perceptions Index survey of 180 countries, Argentina was ranked 85, improving from the previous survey in 2016. In the World Bank’s Doing Business 2019 report, Argentina ranked 119 out of 190 countries, down from 117 in 2018.

Recognizing that the failure to address these issues could increase the risk of political instability, distort decision-making processes and adversely affect Argentina’s international reputation and ability to attract foreign investment, the Macri administration has announced several measures aimed at strengthening Argentina’s institutions and reducing corruption. These measures include the reduction of criminal sentences in exchange for cooperation with the government in corruption investigations, increased access to public information, the seizing of assets from corrupt officials, increasing the powers of the Anticorruption Office (Oficina Anticorrupción) and the passing of a new public ethics law, among others. The Argentine Government’s ability to implement these initiatives is uncertain as it would require the involvement of the judicial branch, which is independent, as well as legislative support from opposition parties.

Argentina’s political environment has historically influenced, and continues to influence, the performance of the country’s economy. Political crises have affected and continue to affect the confidence of investors and the general public, which have historically resulted in economic deceleration and heightened volatility in the securities with underlying Argentine risk. The recent economic instability in Argentina has contributed to a decline in market confidence in the Argentine economy as well as to a deteriorating political environment.

In addition, various ongoing investigations into allegations of money laundering and corruption being conducted by the Office of the Argentine Federal Prosecutor, including the largest such investigation, known as “Los Cuadernos de las Coimas,” or “the Chauffeur's Books” have negatively impacted the Argentine economy and political environment. Certain government officials of previous administrations as well as high ranked officers of companies holding government contracts or concessions have faced or are currently facing allegations of corruption and money laundering as a result of these investigations. These individuals are alleged to have accepted or paid, as applicable, bribes by means of kickbacks on contracts granted by the government to several infrastructure, energy and construction companies. The proceeds from these kickbacks allegedly financed the political campaigns of political parties forming the government from 2011 to 2015. These funds were unaccounted for or not publicly disclosed and were allegedly used to personally enrich certain individuals. Several senior politicians, including members of Congress, and high-ranking executives and officers of major companies in Argentina (i) have been arrested on account of various charges relating to corruption, (ii) entered into plea agreements with prosecutors and (iii) have resigned or been removed from their positions. The potential outcome of the Chauffer’s Books as well as other ongoing corruption-related investigations is uncertain, but they have already had an adverse impact on the reputation of those companies that have been implicated, as well as on the general market perception of the economy, political environment and the capital markets in Argentina. We have no control over and cannot predict for how long the corruption investigations will continue nor whether such investigations or allegations (or any other future investigations or allegations) will lead to further political and economic instability. In addition, we cannot predict the outcome of any such allegations nor their effect on the different sectors of the Argentine economy. See also “—We are subject to anticorruption, anti-bribery, anti-money laundering and other laws and regulations.”

Risks Relating to the Electric Power Sector in Argentina

The Argentine ~~government~~Government has intervened in the electric power sector in the past, and is likely to continue intervening

Historically, the Argentine ~~government~~Government has played an active role in the electric power industry through the ownership and management of state-owned companies engaged in the generation, transmission and distribution of electric power. Since 1992 and the privatization of several state-owned companies, the Argentine ~~government~~Government has reduced its control over the industry. However, as is the case in most other countries, the Argentine electric power industry remains subject to strict regulation and government intervention. Moreover, to address the Argentine economic crisis of 2001 and 2002, the Argentine ~~government~~Government adopted Law No. 25,561 (the “~~Public~~“Public Emergency ~~Law~~”Law”) and other regulations, which made a number of material changes to the regulatory framework applicable to the electric power sector. These changes have had significant adverse effects on electric power generation, distribution and transmission companies and included the freezing of distribution margins, the revocation of adjustment and inflation indexation mechanisms for tariffs, a limitation on the ability of electric power distribution companies to pass on to the consumer increases in costs due to regulatory charges and the introduction of a new price-setting mechanism in the WEM, all of which had a significant impact on electric power generators and caused substantial price differences within the market.

~~The Fern~~á~~ndez de Kirchner administration continued to intervene~~Previous administrations intervened in the electric power industry by, for example, granting temporary margin increases, proposing a new tariff regime for residents of poverty-stricken areas, increasing remunerations earned by generators for capacity, operation and maintenance services, creating specific charges to raise funds that are transferred to government-managed trust funds that finance investments in generation and distribution infrastructure and mandating investments for the construction of new generation plants and the expansion of existing transmission and distribution networks.

For example, in March 2013, pursuant to Resolution No. 95/13, issued by the former Secretariat of Energy, the ~~Fern~~á~~ndez de Kirchner administration~~Argentine Government suspended the renewal of sales contracts in the term market and execution of new agreements in the WEM, and ordered that any demand not satisfied by Argentine generators must be directly supplied by CAMMESA. As a result, Argentine generators are required to supply capacity and energy to CAMMESA at prices fixed by the former Secretariat of Energy.

~~Since~~When the ~~Macri~~previous administration assumed office, the Argentine ~~government has~~Government initiated significant reforms to the Argentine electric power industry. On December 16, 2015, the Macri administration declared a state of emergency with respect to the national electric power system that remained in effect until December 31, 2017. The state of emergency allowed the Argentine ~~government~~Government to take actions designed to guarantee the supply of electric power in Argentina, such as instructing the Ministry of Energy and Mining to elaborate and implement, with the cooperation of all federal public entities, a coordinated program to guarantee the quality and security of the electric power system and rationalize public ~~entities~~’entities’ consumption of energy. In addition, the Argentine ~~government~~Government and certain provincial governments have approved significant price adjustments and tariff increases applicable to certain generation and distribution companies. Following the tariff increases, preliminary injunctions suspending such increases were requested by customers, politicians and non-governmental organizations that defend ~~customers~~’customers’ rights, which preliminary injunctions were granted by Argentine courts. Among the different rulings in this respect, two recent rulings issued by the Second Division of the Federal Court of Appeals for the City of La Plata and a federal judge from the San Martín district court led to the suspension of end-users tariff increases of electric power in the Province of Buenos Aires and in the whole territory of Argentina, respectively.

Pursuant to these injunctions, (i) the end-user tariff increases granted as of February 1, 2016 were suspended retroactively to that date, (ii) end-user bills sent to customers were not to include the increase and (iii) the amounts already collected from end-users as a consequence of consumption recorded before these rulings had to be reimbursed. However, on September 6, 2016, the Supreme Court denied these injunctions that suspended end-users electric power tariff increases, arguing formal objections and procedural defects and therefore, as of the date of this annual report, increases of the electric power end-users tariffs are not suspended.

Pursuant to Resolution No. 522/16, the ENRE ordered a public hearing to be held to evaluate the proposals for the full tariff review filed by EDENOR and EDESUR for the period from January 1, 2017 to December 31, 2021. The hearing was held on October 28, 2016. A non-binding public hearing was conducted by the Ministry of Energy and Mining and the ENRE to discuss tariff proposals submitted by distribution companies covering the greater Buenos Aires area (with approximately 15 million inhabitants), including Edenor, for the 2017-2021 period within the framework of the RTI. Following such hearing, on January 31, 2017, the ENRE issued Resolution No. 63/17, pursuant to which such administrative authority approved the tariffs to be applied by EDENOR. In the same sense, Resolution No. 64/17 approved ~~EDESUR~~’sEDESUR’s tariffs.

On February 1, 2017, the ENRE enacted several resolutions, which, among other policy changes, implemented a reduction of electric power tariff subsidies and an increase in electric power tariffs for residential customers. Such increases ranged between 61% and 148%, depending on to the amount of the ~~consumer~~’sconsumer’s electric power consumption.

Regarding transmission tariffs, seven public hearings were held pursuant to Resolutions Nos. 601/16, 602/16, 603/16, 604/16, 605/16, 606/16 and 607/16 of the ENRE. In such public hearings, the tariff proposals filed by transmission companies Transener S.A., Distrocuyo S.A., Transcomahue S.A., Ente Provincial de Energía de ~~Neuqu~~éNeuquén, Transba S.A., Transnea S.A., Transnoa S.A. and Transpa S.A. for the period from January 1, 2017 to December 31, 2021 were evaluated. Pursuant to Resolutions Nos. 66/17, 68/17, 69/17, 71/17, 73/17, 75/17, 77/17 and 79/17, the ENRE approved the new applicable tariffs for such companies.

Additionally, in March 2016, the Secretariat of Electric Energy enacted Resolution SEE No. 22/16, through which it adjusted the electric power prices for the sale of energy by generation companies under the Energía Base. See “~~See~~ “~~Management~~’s“Management’s Discussion and Analysis of Financial Condition and Results of ~~Operations~~—Operations—Factors Affecting Our Results of ~~Operations~~—Operations—Our ~~Revenues~~—Revenues—The Energía Base.” The Secretariat of Electric Energy cited the fact that WEM prices have been distorted and discourage private sector investment in power generation and that it was necessary to raise tariffs to partially compensate for increasing operation and maintenance costs and to improve the cash flow generation capacity of these companies. On February 1, 2017, the tariff revision process was completed and the new tariff scheme for the following five-year period was enacted.

In a change of its criteria on policies applied in the electric power industry, on April 17, 2019, the Macri Administration announced that the tariffs applied by electricity distribution companies will not be increased during the rest of 2019.

In addition, on March 1, 2019, by means of Resolution SRRyME No. 1/19, the Argentine Government reduced prices for power capacity and energy under Energía Base, which had been previously increased by Resolution SEE No. 19/17. Furthermore, on February 27, 2020, the Secretary of Energy of the National Ministry of Production Development issued Resolution 31/20, which abrogated Resolution No. 1/19, reducing the remuneration scheme applicable from February 1, 2020 for Authorized Generators in the Wholesale Electricity Market, establishing Energía Base prices in Argentine pesos. We cannot assure you that further reductions of these tariffs will not occur in the future. See “Item 4.B. Business Overview—The Argentine Electric Power Sector—Remuneration Scheme—The Current Remuneration Scheme.”

The Argentine ~~government~~Government has also established public bidding processes for the development of new generation projects from both thermal and renewable sources. These measures aim not only to satisfy domestic electric power demand, but also to promote investments in the electric power sector and improve the economic situation of the WEM, which, as discussed above, has faced challenges since 2001.

Notwithstanding the recent measures adopted by the Argentine ~~government,~~Government, we cannot guarantee that the expected changes to the electric power sector will happen as expected, within the anticipated timeframe or at all. It is possible that certain measures may be adopted by the Argentine ~~government~~Government that could have a material adverse effect on our business and results of operations, or that the Argentine ~~government~~Government may adopt emergency legislation similar to the Public Emergency Law or other similar resolutions in the future that could have a direct impact on the regulatory framework of the electric power industry and indirectly adversely affect the electric power generation industry, and therefore, our business, financial condition and results of operations.

On December 23, 2019, the Solidarity Law was passed, by which the economic, financial, administrative, social, sanitary, tariff and energetic emergency was declared. In connection to our business such law provides that (i) natural gas tariffs and energy tariffs to the end user under federal jurisdiction shall remain unchanged for one hundred and eighty (180) days, commencing on December 23, 2019, and (ii) empowered the Executive branch to renegotiate tariffs under federal jurisdiction, either within the framework of the current comprehensive tariff reviews or through an extraordinary revision, in accordance with Law No. 24,065 (Régimen de Energía Eléctrica). In addition, the Solidarity Law also entitles the Executive branch to intervene the ENARGAS and the Federal Electricity Regulatory Agency (“ENRE”).

For further updates on the Argentine Government role in the electric power sector, please see “Item 4––Recent Developments”.

Electricity generators, distributors and transmitters have been materially and adversely affected by emergency measures adopted in response to Argentina’s economic crisis of 2001 and 2002, many of which remain in effect

Since the Argentine economic crisis of 2001 and 2002, ~~Argentina~~’sArgentina’s electric power sector has been characterized by government regulations and policies that have resulted in significant distortions in the electric power market, particularly with respect to prices, throughout the whole value chain of the sector (generation, transmission and distribution). Historically, Argentine electric power prices were calculated in U.S. dollars and margins were adjusted periodically to reflect variations in relation to costs. In January 2002, the Public Emergency Law authorized the Argentine ~~government~~Government to renegotiate its public utility contracts. Under this law, the Argentine ~~government~~Government revoked provisions in the public utility contracts related to the adjustment and inflation indexation mechanism. Instead, the tariffs on such contracts were frozen and converted from their original U.S. dollar values to Argentine pesos at a rate of Ps.1.00 per US$1.00. For further information on the changes to the legal framework of the Argentine electric power industry caused by the Public Emergency Law, see “~~The~~“The Argentine Electric Power Sector.”

These measures, coupled with the effect of high inflation and the ~~devaluation~~depreciation of the peso in recent years, led to a significant decline in revenues and a significant increase of costs in real terms, which could no longer be recovered through margin adjustments or market price-setting mechanisms. This situation, in turn, led many public utility companies to suspend payments on their financial debt (which continued to be denominated in U.S. dollars despite the pesification of revenues), effectively preventing these companies from obtaining further financing in the domestic or international credit markets and making additional investments.

After declaring a state of emergency with respect to the national electrical system, the Argentine ~~government~~Government increased electric power tariffs in the WEM under the Energía Base. Preliminary injunctions suspending such increases were requested by customers, politicians and non-governmental organizations, and recent rulings suspended the increases in the whole territory of Argentina. On September 6, 2016, the Supreme Court denied these injunctions that suspended end-users electric power tariff increases, and a public hearing to evaluate the proposals for a full tariff review filed by EDENOR and EDESUR was held on October 28, 2016. The tariff increases were approved on January 31, 2017. In addition, the Argentine ~~government~~Government issued Resolution SE No. 21/16 calling for a public bid process for the installation of new generation capacity from both thermal and renewable sources, offering generators U.S. dollar-denominated rates linked to generation costs for newly available generation capacity. However, tariffs under the Energía Base remain well below historical levels, although there have been important increases and, they are now denominated in U.S. dollars which mitigates the effect of variations in the foreign exchange rate. These measures, or any future measures, may not be sufficient to address the structural problems created by the economic crisis of 2001 and 2002 and its aftermath, and measures similar to those adopted during the economic crisis may not be enacted in the future.

On March 1, 2019, by means of Resolution SRRyME No. 1/19, the Argentine Government reduced prices for power capacity and energy under Energía Base, which had been previously increased by Resolution SEE No. 19/17. Furthermore, on February 27, 2020, the Secretary of Energy of the National Ministry of Production Development issued Resolution 31/20, which abrogated Resolution No. 1/19, reducing the remuneration scheme applicable from February 1, 2020 for Authorized Generators in the Wholesale Electricity Market, establishing Energía Base prices in Argentine pesos. We cannot assure you that further reductions of these tariffs will not occur in the future. See “Item 4.B. Business Overview—The Argentine Electric Power Sector—Remuneration Scheme—The Current Remuneration Scheme.”

See “—The Argentine Government has intervened in the electric power sector in the past, and is likely to continue intervening.”

We have, in the recent past, been unable to collect payments, or to collect them in a timely manner, from CAMMESA and other customers in the electric power sector

For the years ended December 31, ~~2017~~2019 and ~~2016, we derived~~2018, approximately ~~93.97%~~76.14% and ~~93.91%~~88.80%, respectively, of our total revenues ~~from continuing operations~~came from our sales to CAMMESA (under the Energía Base, the spot market and remuneration under Resolution No. 724/2008, relating to agreements with CAMMESA to improve existing power generation capacity), or 82.87% in 2017 and 74.66% in 2016 over our total revenues, from both continuing and discontinuing operations.CAMMESA. In addition, we receive significant cash flows from CAMMESA in connection with the FONINVEMEM and similar programs. Payments to us by CAMMESA, ~~including installments in connection with returns from FONINVEMEM and similar programs,~~ depend upon payments that CAMMESA in turn receives from other WEM agents such as electric power distributors as well as subsidies from the Argentine ~~government.~~Government.

Regarding the CVO Agreement, effective as of March 20, 2018, CAMMESA granted the CVO Commercial Approval in the WEM, as a combined cycle, of the thermal plant Central Vuelta de Obligado, which entitled us to receive the collection of the trade receivables under the CVO Agreement. A PPA between the CVO Trust and CAMMESA, through which the CVO Trust makes energy sales and, consequently, receives the cash flow to pay the trade receivables, had to be signed in order to start the collections.

The PPA agreement was signed on February 7, 2019, with retroactive effect to March 20, 2018.

As a result, the original amortization schedule from the CVO Agreement is in full force and effect.

During June and July 2019, Central Puerto collected Ps.2,562 million, in nominal terms (approximately US$58.41 million converted at the exchange rate Communication A 3500 quoted by the Central Bank as of the date of payment) and Ps.825 million, in nominal terms (approximately US$19.70 million converted at the exchange rate Communication A 3500 quoted by the Central Bank as of the date of payment), in both cases including VAT, related to the installments corresponding to the March-December 2018 period of the CVO agreement.

During 2019, we collected Ps. 8.45 billion in CVO receivables (including installments 1 to 10), measured in current amounts as of December 31, 2019. Subsequent installments (from installment No. 11) have been collected on their respective due dates.

We also receive payments under term market contracts with CAMMESA and FONI trade receivables, which are denominated in U.S. dollars, and converted into Argentine pesos, at the exchange rate of the day prior to the due date of such monthly transaction or installment.

In recent years, due to regulatory conditions and long periods of frozen tariffs in ~~Argentina~~’sArgentina’s electric power sector that affected the profitability and economic viability of power utilities, certain WEM agents defaulted on their payments to CAMMESA, which adversely affected ~~CAMMESA~~’sCAMMESA’s ability to meet its payment obligations towith electric power generators, including us. ~~In the recent past, when CAMMESA experienced a lack of funds to pay to generators, a significant amount of unpaid balances were converted into LVFVD. See~~ “~~Business~~—~~FONINVEMEM and Similar Programs.~~” As a consequence of delays in payments that CAMMESA received from other WEM agents, ~~in the past,~~ we also saw delays in the payments we received under the Energía Base, receiving payments from CAMMESA within approximately 90 days of month-end, rather than the required 42 days after the date of billing. Such payment delays resulted in higher working capital requirements that we would typically finance with our own financing sources. ~~Since~~From September 2016 to November 2017 CAMMESA has paid without delays, and since then, there were periods in ~~accordance with~~which CAMMESA experienced delays in paying (for more information on the duration of these delays see “Item 11. Quantitative and Qualitative Disclosures about Market Risk—Credit Risk”). For example, for the monthly transaction related to Energía ~~Base. However,~~Base and thermal PPAs of December 2019, with due date on February 12, 2020, we collected 20.40% on February 28, 2020, 45.26% on March 11, 2020, 11.56% on March 19, 2020, 12.47% on March 27, 2020 and the rest on April 8, 2020, 2020. For these delays, we received interests from CAMMESA. Payments related to PPAs under the Renovar Regulatory Framework have not suffered delays. CAMMESA may once again be unable to make payments to generators both in respect of energy dispatched and generation capacity availability on a timely basis or in full, which may substantially and adversely affect our financial position and the results of our operations.

In the short term, due to the COVID-19 pandemic crisis, we expect to continue experiencing delays in certain payments from CAMMESA.

Electricity demand may be affected by tariff increases, which could lead generation companies like us to record lower revenues

During the 2001 and 2002 economic crisis, electric power demand in Argentina decreased due to the decline in the overall level of economic activity and the deterioration in the ability of many consumers to pay their electric power bills. In the years following the 2001 and 2002 economic crisis, electric power demand experienced significant growth, increasing at an estimated average of approximately 3.86% per annum from 2002 through 2015 (despite a decline in 2009), due to its reduced cost as a result of certain energy subsidies, freezing of margins and elimination of inflation adjustment provisions in distribution concessions. In March 2016, the Argentine ~~government~~Government unified and increased wholesale energy prices for all consumption in Argentina, eliminated certain energy subsidies and implemented an incentive plan (through discounts) for residential customers whose electric power consumption is at least 10.00% lower than their consumption for the same month of the previous year. These measures ~~are currently~~may have caused a reduction in ~~an early stage~~energy demand in Argentina. Demand of ~~implementation,~~electric energy decreased 2.3% in 2016, increased 2.7% in 2017, and wedecreased 2.5% and 2.16% in 2018 and 2019, respectively. We cannot ascertain as of the date of this annual report ~~what the effect~~if such measures will have further effects on our ~~revenues could be.~~revenues. Any significant increase in energy prices to consumers (whether through a tariff increase or through a cut in consumer subsidies) could result in a decline in demand for the energy that we generate. Any material adverse effect on electric power demand, in turn, could lead electric power generation companies, like us, to record lower revenues and results of operations than currently anticipated.

Argentina has certain energy transmission and distribution limitations that adversely affect the capacity of electric power generators to deliver all of the energy they are able to produce, which results in reduced sales

The energy that generators are able to deliver to the transmission system for the further delivery to the distribution system at all times depends on the capacity of the transmission and distribution systems that connects them to it. ~~The~~In the past, the transmission and distribution system ~~are currently operating~~operated at near full capacity and both transmission and distributors ~~may~~were not be able to guarantee an increased supply of electric power to their customers. In the past years, the increase in demand for electric power resulted in blackouts in Buenos Aires and other cities around Argentina, which ~~results~~resulted in excess capacity for generators. As a result, the amount of hydroelectric energy and thermal energy generated iswas larger than what the transmission and distribution systems are capable of transmitting or distributing. Any transmission or distribution limitation for generators could reduce the energy sold, which could adversely affect our financial condition.

Our equipment, facilities and operations are subject to environmental, health and safety regulations

Our generation business is subject to federal and provincial laws, as well as to the supervision of governmental agencies and regulatory authorities in charge of enforcing environmental laws and policies. We operate in compliance with applicable laws and in accordance with directives issued by the relevant authorities and CAMMESA; however, it is possible that we could be subject to controls, which could result in penalties to be imposed on us, such as the termination of the HPDA Concession Agreement. In addition, future environmental regulations could require us to make investments in order to comply with the requirements set by the authorities, instead of making other scheduled investments and, as a result, could have a material adverse effect on our financial condition and our results of operations.

We operate in a heavily regulated sector that imposes significant costs on our business, and we could be subject to fines and liabilities that could have a material adverse effect on our results of operations

We are subject to a wide range of federal, provincial and municipal regulations and supervision, including laws and regulations pertaining to tariffs, labor, social security, public health, consumer protection, the environment and competition. Furthermore, Argentina has 23 provinces and one autonomous city (the City of Buenos Aires), each of which, under the Argentine National Constitution, has power to enact legislation concerning taxes, environmental matters and the use of public space. Within each province, municipal governments can also have powers to regulate such matters. Although the generation of electric power is considered an activity of general interest (actividad de interés general) subject to federal legislation, due to the fact that our facilities are located throughout various provinces, we are also subject to provincial and municipal legislation. Future developments in the provinces and municipalities concerning taxes (including sales, security and health and general services taxes), environmental matters, the use of public space or other matters could have a material adverse effect on our business, results of operations and financial condition. Compliance with existing or future legislation and regulations could require us to make material expenditures and divert funds away from planned investments in a manner that could have a material adverse effect on our business, results of operations and financial condition.

In addition, our failure to comply with existing regulations and legislation, or reinterpretations of existing regulations and new legislation or regulations, such as those relating to fuel and other storage facilities, volatile materials, cyber security, emissions or air quality, hazardous and solid waste transportation and disposal and other environmental matters, or changes in the nature of the energy regulatory process may subject us to fines and penalties and have a significant adverse impact on our financial results.

A cyberattack could adversely affect our business, balance sheet, results of operations and cash flow

We depend on the efficient and uninterrupted operation of our inter-plant communication systems, for which we have all our links redundant, providing greater security and minimizing the risks of outage. Additionally, we have redundant links with CAMMESA. Temporary or long-lasting failures of our inter-plant communication systems, including their links redundant, could have a material adverse effect on our operations. In general, information security risks have increased in recent years as a result of the proliferation of new and more sophisticated technologies and also due to cyberattack activities. As part of our development and initiatives, more equipment and systems have been connected to the Internet. We also rely on digital technology including information systems to process financial and operational information. Due to the critical nature of our infrastructure and our business and the increased accessibility allowed through the Internet connection, we could face an increased risk of cyberattacks such as computer break-ins, phishing, identity theft and other disruptions that could negatively affect the security of information stored in and transmitted through our computer systems and network infrastructure. In the event of a cyberattack, we could experience an interruption of our commercial operations, material damage and loss of customer information; a substantial loss of income, suffering response costs and other economic losses; and it could subject us to more regulation and litigation and damage to our reputation. Although we intend to continue to implement security technology devices and establish operational procedures to prevent disruption resulting from, and counteract the negative effects of cybersecurity incidents, it is possible that not all of our current and future systems are or will be entirely free from vulnerability and these security measures will not be successful. Accordingly, cybersecurity is a material risk for us and a cyber-attack could adversely affect our business, results of operations and financial condition.

Our power plants are subject to the risk of mechanical or electrical failures and any resulting unavailability may affect our ability to fulfill our contractual and other commitments and thus adversely affect our business and financial performance

Our power generation units are at risk of mechanical or electrical failure and may experience periods of unavailability affecting our ability to generate electric power. For example, certain of our turbogenerators at the Puerto Complex, including generators 5, 6, 7 and 8, began operating in the 1960s and are, therefore, over 50 years old. Because of their age, these generators may face a higher risk of mechanical or electrical failure. Our combined cycle plant located in the Puerto Complex has suffered major failures in the past, for example in the rotor of one of the gas turbines and in the generator. Any unplanned unavailability of our generation facilities may adversely affect our financial condition or results of operations.

Risks arise for our business from technological change in the energy market

The energy market is subject to far-reaching technological change, both on the generation side and on the demand side. For example, with respect to energy generation, the development of energy storage devices (battery storage in the megawatt range) or facilities for the temporary storage of power through conversion to gas (so-called “~~power-to-gas-technology~~”“power-to-gas-technology”), the increase in energy supply due to new technological applications such as fracking or the digitalization of generation and distribution networks should be mentioned.

New technologies to increase energy efficiency and improve heat insulation, for the direct generation of power at the consumer level, or that improve refeeding (for example, by using power storage for renewable generation) may, on the demand side, lead to structural market changes in favor of energy sources with low or zero carbon dioxide emissions or in favor of decentralized power generation, (for instance, via small-scale power plants within or close to residential areas or industrial facilities.)

If our business is unable to react to changes caused by new technological developments and the associated changes in market structure, our equity, financial or other position, or our results, operation and business, could be materially and adversely affected.

We may face competition

The power generation markets in which we operate are characterized by numerous strong and capable participants, many of which may have extensive and diversified developmental or operating experience (including both domestic and international) and financial resources similar to or significantly greater than ours. See ~~“Item~~“Item 4.B. Business ~~Overview~~—Overview—Competition.” An increase in competition could cause reductions in prices and increase acquisition prices for fuel, raw materials and existing assets and, therefore, adversely affect our results of operations and financial condition.

We compete with other generation companies for the megawatt of capacity that are allocated through public auction processes. On October 7, 2016, the Ministry of Energy finalized the auction process for the installation of new renewable energy units and granted awards in the amount of 1,108.65 MW, including one biomass project, 12 wind energy projects and four solar energy projects. Of these, we were awarded one wind energy project for 99 MW of generating capacity at the price of US$61.50 per MWh. On October 31, 2016, the Ministry of Energy and Mining, pursuant to Resolution No. 252/16, launched Round 1.5 of the RenovAR Program as a continuation of Round 1 and on November 25, 2016, granted awards in the amount of 1281.5 MW, including 10 wind energy projects and 20 solar energy projects. Of these, we were awarded one wind energy project for 48 MW of generating capacity at the price of US$59.38 per MWh. Following Rounds 1 and 1.5 of the RenovAR Program, the Ministry of Energy and Mining pursuant to Resolution No. 275/17, which launched Round 2 of the program on August 17, 2017, granted awards in the amount of 2,043 MW of renewable power capacity. We submitted bids for Round 2 of the RenovAR Program on October 19, 2017 and, on November 29, 2017, we were awarded a wind energy project called, “La“La Genoveva I,” which will allow us to add an additional capacity of 86.6 MW to our portfolio and to continue to build a presence in the renewable energies sector.

The Secretariat of Electric Energy, pursuant to Resolution SEE No. 287-E/17, called for proposals for supply of electric power to be generated through existing units, the conversion of open combined cycle units into closed combined cycle units or the installation of co-generation units. We submitted bids on August 9, 2017, and, on September 25, 2017, we were awarded the two co-generation projects. Our ~~newly awarded~~ Terminal 6 San Lorenzo and ~~Luj~~áLuján de Cuyo projects have the following two sources of income: (i) electric power and electric energy sales to CAMMESA through PPAs with a 15-year term which are priced in U.S. ~~dollars;~~dollars and (ii) steam sales pursuant to separate steam supply agreements with T6 Industrial S.A. and YPF, respectively, which are priced in U.S. dollars.

In addition, we have acquired four heavy-duty, highly efficient gas turbines and 130 hectares of land in the north of the Province of Buenos ~~Aires,~~Aires. We expect that ~~could~~these assets will potentially allow us to develop new power ~~capacity that could add 1,255 MW to our total installed capacity through one or more projects working under a simple cycle configuration.~~capacity. For example, we ~~plan to use~~are currently installing one of the Siemens gas ~~turbine,~~turbines, with a capacity of 286 MW, for the Terminal 6 San Lorenzo co-generation project described above. Our objective is to ~~use~~develop new generating capacity, through one or more projects, using the remaining three units and the aforementioned land, ~~in which we have already invested US$134 million,~~ to ~~participate in~~install new generation capacity, through one or more potential future projects. This could add 969 MW to our installed capacity through one or more projects ~~in future bidding processes called by the Argentine government for new generation capacity.~~under a simple cycle configuration. Because of the competition among generation companies in these auction processes, we cannot predict whether we will be awarded the projects and whether we will be able to utilize these assets as intended. In addition, as of the date of this annual report, we have already paid SEK$381.37 million (which, converted at the exchange rate quoted by the Central Bank as of the date of each payment, equals US$45.46 million) to purchase two additional Siemens gas turbines for our Lujá~~n de Cuyo project.~~

We and our competitors are connected to the same electrical grid that has limited capacity for transportation, which, under certain circumstances, may reach its capacity limits. Therefore, new generators may connect, or existing generators may increase, their outputs and dispatch more electric power to the same grid that would prevent us from delivering our energy to our customers. In addition, the Argentine ~~government~~Government (or any other entity on its behalf) might not make the necessary investments to increase the ~~system~~’ssystem’s capacity, which, in case there is an increase of energy output, would allow us and existing and new generators to efficiently dispatch our energy to the grid and to our customers. As a result, an increase in competition could affect our ability to deliver our product to our customers, which would adversely affect our business, results of operations and financial condition.

Our business is subject to risks arising from natural disasters, catastrophic accidents and terrorist attacks

Our generation facilities, or the third-party fuel transportation or electric power transmission infrastructure that we rely on, may be damaged by flooding, fires, earthquakes and other catastrophic disasters arising from natural or accidental or intentional human causes. We could experience severe business disruptions, significant decreases in revenues based on lower demand arising from catastrophic events, or significant additional costs to us not otherwise covered by business interruption insurance clauses. There may be an important time lag between a major accident, catastrophic event or terrorist attack and our definitive recovery from our insurance policies, which typically carry non-recoverable deductible amounts, and in any event are subject to caps per event. In addition, any of these events could cause adverse effects on the energy demand of some of our customers and of consumers generally in the affected market. Some of these considerations, could have a material adverse effect on our business, financial condition and our result of operations.

We may be subject to expropriation or similar risks

All or substantially all of our assets are located in Argentina. We are engaged in the business of power generation and, as such, our business or our assets may be considered by the government to be a public service or essential for the provision of a public service. Therefore, our business is subject to political uncertainties, including expropriation or nationalization of our business or assets, loss of concessions, renegotiation or annulment of existing contracts, and other similar risks. ~~For example, the HPDA Concession Agreement pursuant to which we are permitted to operate our Piedra del~~ Á~~guila plant expires on December 29, 2023.~~

In such an event, we may be entitled to receive compensation for the transfer of our assets. However, the price received may not be sufficient, and we may need to take legal actions to claim appropriate compensation. Our business, financial condition and results of our operations could be adversely affected by the occurrence of any these events.

Changes in regulatory frameworks under which we sell our electricity may affect our financial condition and results of operations

We currently sell our capacity availability and electricity under various regulatory frameworks, including the Energía Base and Energía Plus. See ~~“Item 4.B.~~ ~~Business Overview~~—~~Our Customers~~” ~~and~~ ~~“Item~~“Item 4.B. Business ~~Overview~~— Overview—Our Customers” and “Item 4.B. Business Overview—The Argentine Electric Power Sector.”

On December 16, 2016, the Argentine ~~government~~Government declared a state of emergency with respect to the national electrical system until December 31, 2017. We cannot assure you what further changes the Argentine ~~government~~Government may make to the Energía Base or the other regulatory frameworks under which we sell power availability or electricity, including whether these changes future changes will not negatively impact our results of operations. Moreover, we cannot assure you under what regulatory framework we will be able to sell our generation capacity and electricity in the future.

As a result of the enactment of the Solidarity Law and from February 1, 2020, the establishment of a new remuneration scheme for Authorized Generators in the Wholesale Electricity Market, setting Energía Base prices in Argentine pesos (see “Item 4.B. Business Overview—The Argentine Electric Power Sector—Remuneration Scheme—The Current Remuneration Scheme.”), we cannot assure you that changes in the current applicable laws and regulations, or adverse judicial or administrative interpretations of such laws and regulations, will not adversely affect our results of operations. In addition, some of the measures proposed by the new government may also generate political and social opposition, which may in turn prevent the new government from adopting such measures as proposed.

Risks Relating to Our Business

Our results depend largely on the compensation established by the Secretariat of Electric Energy and received from CAMMESA

Since the enactment of Resolution SE No. 95/13, issued by the former Secretariat of Electric Energy, as amended, our compensation has depended largely on the ~~variable~~ compensation determined by energy output and availability. This resolution was replaced in February 2017 by Resolution SEE No. 19/17, issued by Secretariat of Electric ~~Energy.~~ Energy, which in turn was replaced by Resolution No. 1/19 of the Secretary of Renewable Resources and Electric Markey of the National Ministry of Economy (the “Resolution SRRyME No. 1/19”). Furthermore, on February 27, 2020, the Secretary of Energy of the National Ministry of Production Development issued Resolution 31/20, which abrogated Resolution No. 1/19, reducing the remuneration scheme applicable from February 1, 2020 for Authorized Generators in the Wholesale Electricity Market, establishing Energía Base prices in Argentine pesos. We cannot assure you that further reductions of these tariffs will not occur in the future. See “Item 4.B. Business Overview—The Argentine Electric Power Sector—Remuneration Scheme—The Current Remuneration Scheme.”

Except for sales under contracts, revenues from energy production are calculated and paid by CAMMESA ~~under the Energía Base based on~~pursuant to a fixed and variable ~~costs~~prices system ~~which was determined by~~arising from the ~~Secretariat of Electric Energy pursuant to the new~~ Resolution ~~SEE No. 19/17.~~31/20, and set in Argentine pesos. See “~~Item~~“Item 5.A. Operating ~~Results~~—Results—Factors Affecting Our Results of ~~Operations~~—Operations—Our ~~Revenues~~—Revenues—The Energía ~~Base~~”Base” and ~~“Item~~“Item 3.D. Risk ~~Factors~~—Factors—Risks Relating to the Electric Power Sector in ~~Argentina~~—Argentina—We have, in the recent past, been unable to collect payments, or to collect them in a timely manner, from CAMMESA and other customers in the electric power sector.” ~~These~~ The tariffs under the Energía Base ~~which were~~had been increased in February, May and November 2017 ~~are denominated in U.S. dollars. The resulting sales are converted into Argentine pesos at~~pursuant to Resolution SEE No. 19/17. However, on March 1, 2019, pursuant to Resolution SRRyME No. 1/19 the ~~exchange rate as~~prices for power capacity and energy under Energía Base were decreased. Further, on February 27, 2020, the Secretary of Energy of the ~~last day~~National Ministry of Production Development issued Resolution 31/20, which abrogated Resolution No. 1/19, reducing the ~~month of~~remuneration scheme applicable from February 1, 2020, for Authorized Generators in the ~~transaction and are paid 42 days later.~~Wholesale Electricity Market, establishing Energía Base prices in Argentine pesos. See “Item 4.B. Business Overview—The Argentine Electric Power Sector—Remuneration Scheme—The Current Remuneration Scheme.”

As a result of this system, our revenues are highly dependent on actions taken by regulatory authorities. ~~Any change~~The lack of regulated tariffs increases by the Argentine Government and/or delays to implement such increases in ~~the current system~~a timely manner could have a material adverse effect on our revenues and, as a result, our results of operations.

Factors beyond our control may affect ~~our ability to win public bids for new generation capacity, or affect~~ or delay the completion of ~~new power plants once we have been~~the awarded projects, or alter our plans for the expansion of our existing plants

~~Our business plan contemplates an investment in new energy generation~~With regards to our projects in order to expand our generating capacity by more than 2,020.27 MW. This includes more than 628.27 MW from renewable sources, including wind energy projects, as well as the installation of new thermal generation units with an installed generating capacity of 1,392 MW.

On October 7, 2016, the Ministry of Energy finalized the auction process for the installation of new renewable energy units and granted awards in the amount of 1,108.65 MW. Of these, we were awarded one wind energy project for 99 MW of generating capacity at the price of US$61.50 per MWh. On October 31, 2016, the Ministry of Energy and Mining, pursuant to Resolution No. 252/16, launched Round 1.5 of the RenovAR Program as a continuation of Round 1 and on November 25, 2016, granted awards in the amount of 1281.5 MW. Of these, we were awarded one wind energy project for 48 MW of generating capacity at the price of US$59.38 per MWh. Followingcurrently under construction, following Rounds 1 and 1.5 of the RenovAR Program, the former Ministry of Energy and Mining pursuant to Resolution No. 275/17, ~~which~~ launched Round 2 of the program on August 17, 2017 and granted awards in the amount of 2,043 MW of renewable power capacity. We submitted bids for Round 2 of the RenovAR Program on October 19, 2017 and, on November 29, 2017, we were awarded a wind energy project called, “La“La Genoveva I,” which will allow us to add an additional capacity of ~~86.6~~88.20 MW to our portfolio and to continue to build a presence in the renewable energies sector. The original commitment for the COD for this plant was scheduled for May 2020. However, due to the effect of the COVID-19 crisis, we expect delays in the construction of this plant. For more information see “Item 3.D Risk Factors—Risk Relating to Our Business—The novel coronavirus could have an adverse effect on our business operations and financial conditions”.

~~The~~Furthermore, the Secretariat of Electric Energy, pursuant to Resolution SEE No. 287-E/17, called for proposals for supply of electric power to be generated through existing units, the conversion of open combined cycle units into closed combined cycle units or the installation of co-generation units. We submitted bids on August 9, 2017, and, on September 25, 2017, we were awarded the two co-generation ~~projects with the characteristics set forth in the table below.~~projects. The Terminal 6 San Lorenzo and ~~Luj~~áLuján de Cuyo projects have the following two sources of income: (i) electric power sales to CAMMESA through PPAs with a 15-year term which are priced in U.S. dollars; and (ii) steam sales pursuant to separate steam supply agreements with T6 Industrial S.A. and YPF, respectively, which are also priced in U.S. dollars.

The COD of the Terminal 6 San Lorenzo project was originally scheduled for May 22, 2020. On September 2, 2019, pursuant to Resolution SRRYME 25/2019, the generation companies that had projects under construction under Resolution SEE No. 287-E/17 were invited to confirm their expected COD, which will become the New Committed COD (in Spanish, Nueva Fecha de Habilitación Comercial Comprometida or NFHCC). If a generator decided to inform a New Committed COD, it would not have been subject to penalties under the PPA contracts entered into with CAMMESA, unless the actual COD exceeded the New Committed COD.

Accordingly, on October 1, 2019, we informed CAMMESA that our New Committed COD was September 1, 2020 for Terminal 6-San Lorenzo and on December 18, 2019, CAMMESA and the Company entered into an amendment to the PPA.

However, due to the outbreak of COVID-19, the COD of this plant may be further delayed. Accordingly, we sent a notice to CAMMESA informing about this situation to avoid potential penalties. For more information see “Item 3.D Risk Factors—Risk Relating to Our Business—The novel coronavirus could have an adverse effect on our business operations and financial conditions”.

With regards to projects currently under development or new potential projects, several factors may affect, delay or cancel the completion of such projects currently under development or new projects: a) the effects of the outbreak of COVID-19, b) the economic recession in Argentina, c) the decrease in demand of electric energy, d) the lack of available financing, and e) the reduction in the prices of electric energy for power units under Energía Base beginning in February 2020 (Res. 31/20, among others.

Regarding our projects currently under development, in June 2019, Central Puerto was awarded the acquisition of the Brigadier Lopez Power plant from IAESA (formerly ENARSA), pursuant to the National and International Public Tender No. CTBL 1/2018. The Company purchased the Brigadier López Power Plant and assumed certain assets and liabilities relating to such plant. In ~~addition,~~2010, ENARSA began the construction of the plant and in 2012 reached the Commercial Operation Date (COD) of the open cycle Gas Turbine with a capacity of 280.50 MW, completing the first stage of the project. In accordance to the Public Tender No. CTBL 1/2018, Central Puerto acquired the plant with the objective of installing the existing steam turbine, which will add a capacity of 140 MW in a combined cycle configuration, reaching a total capacity of 420 MW. Such expansion does not have a committed date to be completed. As of the date of this annual report, due to the factors mentioned above, the plant’s expansion has not begun. The capital expenditures associated to this expansion are estimated at US$120 million and the construction is estimated to take between 18 and 22 months.

Furthermore, in August 2018, Central Puerto purchased the solar project El Puesto, located in the Province of Catamarca. This solar energy project is authorized to sell up to 12 MW of power to private purchasers under MATER. The original committed COD for this project is August 2020. According to the provisions of Resolution No. 281-E/17, which regulates the MATER projects, Central Puerto has provided CAMMESA with a first demand guarantee of US$250,000 per MW. The committed COD may be extended for a period of up to one hundred eighty (180) days by CAMMESA, if the following conditions are met:

a) the extension is requested at least thirty (30) days before the expiration of the original term and it is proven that one hundred and eighty (180) days before said expiration the project reached at least a progress in the construction of sixty percent (60%), or

b) regardless of the progress achieved in the construction, the extension is requested before the expiration of the term and, together with the request, the amount of pesos equivalent to one thousand five hundred US dollars per megawatt for every thirty (30) days of requested extension is paid to CAMMESA. The request and payment may be made every thirty (30) days and for each thirty (30) days extension requested, for a maximum of one hundred eighty (180) days of extension;

c) in the cases contemplated in a) and b) above, with the first request for an extension, the first demand guarantee is increased by US$62,500 per megawatt.

Before the expiration of the extension of up to one hundred and eighty (180) days previously provided, the project holders may request CAMMESA for an additional extension, for a maximum period of three hundred sixty (360) days, regardless of the progress in the construction achieved. Along with the request, they must pay CAMMESA the amount of pesos equivalent to four thousand five hundred United States dollars (USD 4,500) per megawatt for each thirty (30) days of extension requested. The request and payment may be made every thirty (30) days and for the period of extension requested, for a maximum of three hundred sixty (360) days of extension.

If Central Puerto fails to timely achieve the committed COD, including the extensions that Central Puerto may have requested, the Company may be subject to penalties. However, as of the date of this annual report, due to the factors mentioned above, the construction has not begun. In this regard, the Association of Electric Energy Generators of the Republic of Argentina (Asociación de Generdores de Energía Eléctrica de la República Argentina, AGEERA), and the chamber that groups all the electric power generators of the country, and Wind Chamber of Argentina (Cámara Eólica Argentina), a chamber that groups wind power generators, from which, in both cases, Central Puerto is part of, have formally informed CAMMESA of the consequences that the Quarantine and the rest of the measures to contain the COVID-19 pandemic crisis, have and may potentially have on the projects under construction and requested that such circumstances should be taken into account in terms of the schedule of each projects, in order to avoid penalties due to the extraordinary circumstances. We cannot assure that the such penalties could be effectively avoided. The estimated capital expenditures for this project are estimated to be US$12 million and the construction is estimated to take between 10 and 14 months.

Finally, regarding our potential new projects we have acquired ~~four~~three heavy-duty, highly efficient gas turbines and 130 hectares of land in the north of the Province of Buenos Aires that could potentially allow us to develop new power capacity that could add 1,255 MW to our total installed capacity through one or more projects working under a simple cycle configuration. For example, we plan to use the Siemens gas turbine, with a capacity of 286 MW, for the ~~Terminal 6 San Lorenzo co-generation project described above. Our objective is~~development of new capacity projects. Due to ~~use~~ the remaining three units and the aforementioned land, in which we have already invested US$134 million, to participate, through one or more projects, in future bidding processes called by the Argentine government for new generation capacity. Because of the competition among generation companies in these auction processes,circumstances mentioned above, we cannot predict ~~whether we will be awarded the projects and~~ whether we will be able to utilize these assets as intended. In addition, as of the date of this annual report, we have already paid SEK$381.37 million (which, converted at the exchange rate quoted by the Central Bank as of the date of each payment, equals US$45.46 million) to purchase two additional Siemens gas turbines for our Lujá~~n de Cuyo project.~~

Delays in construction or commencement of operations of expanded capacity in our existing power plants or our new power plants could lead to an increase in our financial needs and also cause our financial returns on new investments to be lower than expected, which could materially adversely affect our financial condition and results of operations. Furthermore, delays in the commencement of operations of these acquired three gas turbines has negatively affected its estimated recoverability. See “Item 5.A. Operating Results—Critical Accounting Policies—Impairment of Property, Plant and Equipment”.

Factors that may impact our ability to commence operations at our existing power plants, expand their power capacity or build new power plants include: (i) the failure of contractors to complete or commission the facilities or auxiliary facilities by the agreed-upon date or within budget; (ii) the unexpected delays of third parties such as gas or electric power distributors in providing or agreeing to project milestones in the construction or development of necessary infrastructure linked to our generation business; (iii) the delays or failure by our turbine suppliers in providing fully operational turbines in a timely manner; (iv) difficulty or delays in obtaining the necessary financing in terms satisfactory to us or at all; (v) delays in obtaining regulatory approvals, including environmental permits; (vi) court rulings against governmental approvals already granted, such as environmental permits; (vii) shortages or increases in the price of equipment reflected through change orders, materials or labor; (viii) opposition by local and/or international political, environmental and ethnic groups; (ix) strikes; (x) adverse changes in the political and regulatory environment in Argentina; (xi) unforeseen engineering, environmental and geological problems; ~~and~~ (xii) adverse weather conditions, natural disasters, accidents or other unforeseen ~~events.~~events, and (xiii) the Covid-19 pandemic crisis (See “Item 3.D. Risk Factors—Risks Relating to Argentina”, in particular “—the Novel Coronavirus could have an adverse effect on our business operations and financial conditions”, which describes the potential impact of COVID-19 over certain of our projects.”). Any cost overruns could be material. In addition, any of these other factors may cause delays in the completion of expanded capacity at our existing power plants or the construction of our new power plant, which could have a material adverse effect on our business, financial condition and results of operations. These delays may also result in short-term sanctions by CAMMESA and, in extreme cases, sanctions for the duration of the contract.

Our business may require substantial capital expenditures for ongoing maintenance requirements and the expansion of our installed generation capacity

Incremental capital expenditures may be required to fund ongoing maintenance necessary to maintain our power generation and operating performance and improve the capabilities of our electric power generation facilities. Furthermore, capital expenditures will be required to finance the cost of our current and future expansion of our generation capacity. If we are unable to finance any such capital expenditures in terms satisfactory to us or at all, our business and the results of our operations and financial condition could be adversely affected. Our financing ability may be limited by market restrictions on financing availability for Argentine companies. See “—“—Risk Relating to ~~Argentina~~— ~~A lack of~~Argentina— Argentina’s ability to obtain financing ~~for Argentine companies due~~from international markets is limited, which could affect its capacity to ~~the unresolved litigation with holdout bondholders,~~implement reforms and sustain economic growth, and may negatively impact our financial condition or cash ~~flows~~”flows” and “~~Item~~“Item 4.B. Business Overview.”

The non-renewal or early termination of the HPDA Concession Agreement would adversely affect our results of operations

The HPDA Concession Agreement executed between us and the Argentine ~~government,~~Government, pursuant to which we are permitted to operate our Piedra del Á~~guila~~Águila plant, expires on December 29, ~~2023.~~2023 and does not provide for an automatic renewal. This plant has a total installed capacity of 1,440 MW, and it represented approximately ~~28.30% of our generation from continuing operations and 22.59%~~26.40% of our total electric energy generation, and ~~20.39% of our revenues from continuing operations in 2017 and 14.90%~~12.34% of our total revenues in ~~2017.~~2019 (or 17.72% excluding income related to the self-supplied fuel under Res. 70/18). We currently intend to renew the HPDA Concession Agreement prior to its expiration. If the HPDA Concession Agreement expires without renewal, we will be required to revert the assets to the Argentine ~~government.~~Government. The HPDA Concession Agreement also contains various requirements related to the operation of the hydroelectric plant and compliance with laws and regulations. The non-performance of the HPDA Concession Agreement could give rise to certain penalties and even the termination of the concession. If the concession were terminated, it would be granted to a new company organized by the Argentine ~~government~~Government and a tender offer would be carried out for selling the new ~~company~~’scompany’s shares of stock. The proceeds to be received by us in such tender offer would be calculated based on a formula in which the proceeds of the tender decrease as the expiration of the concession term comes closer. Any non-renewal or early termination of the HPDA Concession Agreement would materially and adversely affect our financial condition and results of operation.

Our interests in TJSM, TMB and CVOSA ~~may~~will be significantly diluted

As of ~~the date of this annual report,~~December 31, 2019, we ~~have~~had a 30.8752% interest in TJSM and a ~~30.9464%~~30.9464 % interest in TMB, both companies that are engaged in managing the purchase of equipment, building, operating and maintaining power plants constructed under the FONINVEMEM program. We have the right to name two out of nine directors on the board of directors of each company. As of the date of this annual report, we also own 56.19% of CVOSA, the company that operates the thermal power plant in ~~Timbues.~~ Timbúes.

After ten years of operations, ~~of each company (which will occur on February 2, 2020 for TJSM, January 7, 2020 for TMB and March 20, 2028 for CVOSA),~~ each company is entitled to receive property rights to such power plants from the respective trusts currently holding such power plants. At such time, ~~since~~the term of the trusts expires and the Argentine ~~government~~Government, that financed part of the construction, ~~it will~~should be incorporated as a shareholder of TJSM ~~TMB~~ and ~~CVOSA, and~~TMB. Consequently, our interests in TJSM and TMB ~~and CVOSA may~~will be ~~diluted.~~significantly diluted In the case of TMB and TJSM, the ten-year period expired on January 7, 2020 and on February 2, 2020, respectively. From such dates, during the following 90-days, TJSM and TMB and their shareholders have to perform all the necessary acts to allow the Argentine Government to receive the corresponding shares in the equity stake of TJSM and TMB that their contributions entitle the Argentine Government to receive. The restrictions imposed by the Argentine Government since March 20, 2020 to address the outbreak of COVID-19 made the performance of such acts impossible within the 90-day period. Accordingly, TJSM and TMB invoked said circumstances as a force majeure event and postponed such acts to May 2020.

On January 3, 2020, the Argentine Government sent a notice to the Company stating that, in accordance with FONINVEMEM Agreement, TJSM and TMB should perform all necessary acts to incorporate the Argentine Government as shareholder of both companies, claiming, in each case, the following equity interest rights: 65.006% in TMB and 68.826% in TJSM.

On January 9, 2020, Central Puerto, together with the other generation companies, shareholders of TJSM and TMB, replied such notice stating that the Argentine Government’s equity interest claims does not correspond with the contributions made for the construction of the power plants under the terms of the FONINVEMEM Agreement that give rights to claim such equity interest. On March 4, 2020, the Argentine Government reiterated its previous claim to the Company. As of the date of this annual report, Central Puerto is evaluating future steps, and as a consequence, we cannot estimate the exact ~~effects of such~~ potential dilution ~~due to the fact that the Argentine government~~’~~s stake~~of our interests in ~~these companies depends on the funds provided by the Argentine government for the construction of each plant, which has not yet been defined.~~ TJSM and TMB.

In the case of CVOSA, ~~although the effect of the potential dilution has also not yet been defined for the same reasons,~~ the Argentine ~~government~~’sGovernment’s stake ~~in CVOSA~~ will be at least 70% pursuant to FONINVEMEM arrangements for CVOSA. Any dilution of our interest in TJSM, TMB or CVOSA could reduce our income, from these power plants, which could adversely affect our results of operations. See ~~“Item~~“Item 4.B. Business ~~Overview~~—Overview—FONINVEMEM and Similar Programs.”

Future changes in the rainfall amounts in the Limay River basin could adversely affect the revenues from the Piedra del Águila concession and, therefore, our financial results

As a hydroelectric facility, Piedra del Á~~guila~~Águila depends on the availability of water resources in the Limay River basin for electric power generating purposes, which in turn depends on the rainfall amounts in the area. In 1996, 2007 and 2012, and in particular in 1998, 1999 and 2016, the area experienced record-low rainfall levels. Lack of water resulted in lower electric power generation and, therefore, lower revenue. However, rainfall levels, and therefore electric generation, were significantly higher than average during 1995, 2001, 2002, 2005 and 2006. For more information about Piedra del Á~~guila~~’sÁguila’s seasonality, see ~~“Item~~“Item 4.B. Business ~~Overview~~—Overview—Seasonality.”

In the event of critically low water levels, the Intergovernmental Basin Authority, which is in charge of managing the basin of the Limay, ~~Neuqu~~éNeuquén and Negro rivers, is entitled to manage the water flows according to its flow control standards, which could result in lower water resources for us, which in turn, would result in decreased generation activities. Further, under the HPDA Concession Agreement, we are not entitled to receive any compensation for revenue losses as a result of such actions.

The Limay River ~~basin~~’sbasin’s flow may not be sufficient to maintain a regular generation level at Piedra del Á~~guila~~Águila and the enforcement authority may implement unfavorable measures for Piedra del Á~~guila,~~Águila, and therefore, for us, which could adversely affect our financial condition and our results of operations.

Our ability to operate wind farms profitably is highly dependent on suitable wind and associated weather conditions

The amount of energy generated by, and the profitability of, wind farms are highly dependent on climate conditions, particularly wind conditions, which can vary materially across locations, seasons and years. Variations in wind conditions at wind farm sites occur as a result of daily, monthly and seasonal fluctuations in wind currents and, over the longer term, as a result of more general climate changes and shifts. Because turbines will only operate when wind speeds fall within certain specific ranges that vary by turbine type and manufacturer, if wind speeds fall outside or towards the lower end of these ranges, energy output at our wind farms would decline.

If in the future the wind resource in the areas where our wind farms are located is lower than expected, electricity production at such wind farms would be lower than expected and consequently could materially adversely affect our results of operations.

Our insurance policies may not fully cover damage, and we may not be able to obtain insurance against certain risks

We maintain insurance policies intended to mitigate our losses due to customary risks. These policies cover our assets against loss for physical damage, loss of revenue and also third-party liability. However, we may not have sufficient insurance to cover any particular risk or loss. If an accident or other event occurs that is not covered by our current insurance policies, such as cybersecurity risk, we may experience material losses or have to disburse significant amounts from our own funds, all of which could have a material adverse effect on our operations and financial position. In addition, an insufficiency in our insurance policies could have an adverse effect on us. In such case, our financial condition and our results of operations could be adversely affected. See ~~“Item~~“Item 4.B. Business ~~Overview~~—Overview—Insurance.”

Our generation operations require us to handle hazardous elements such as fuels, which could potentially result in damage to our facilities or injuries to our personnel

Although we comply with all applicable environmental safety laws and best practices, any accident involving the fuels with which we operate could have adverse environmental consequences and could damage our industrial facilities or our personnel.

Any structural damage to the dam or any other structure located in any of our hydroelectric plants could compromise its electric power generating capacity. Any generation constraints resulting from structural damage could have a material adverse effect on our financial condition and results of operations.

We may be exposed to lawsuits and or administrative proceedings that could adversely affect our financial condition and results of operations

In the ordinary course of our business we enter into agreements with CAMMESA and other parties. ~~Even though we do not currently have any material litigation or administrative proceeding, litigation~~Litigation and/or regulatory proceedings are inherently unpredictable, and excessive verdicts do occur. Adverse outcomes in lawsuits and investigations could result in significant monetary damages, including indemnification payments, or injunctive relief that could adversely affect our ability to conduct our business and may have a material adverse effect on our financial condition and results of operations.

Energy demand is seasonal, largely due to climate conditions

Energy demand fluctuates according to the season and climate conditions may materially and adversely impact energy demand. During the summer (December through March), energy demand may increase significantly due to the need for air conditioning and, during winter (June through August), energy demand may fluctuate according to the needs for lighting and heating. As a result, seasonal changes could materially and adversely affect the demand for energy and, consequently, affect our results of operations and financial condition (in particular sales derived from the Energía Plus regulatory framework, which is dependent on demand rather than on capacity committed under contract).

We may undertake acquisitions and investments to expand or complement our operations that could result in operating difficulties or otherwise adversely affect our financial conditions and results of operations

In order to expand our business, from time to time, we may carry out acquisitions and investments which offer added value and are consistent with or complementary to our business strategy.

For example, in 2015, we acquired: (i) a direct and indirect interest of 24.99% in ~~DGCU~~’sDGCU’s stock capital; and (ii) a direct and indirect interest of 44.10% of ~~DGCE~~’sDGCE’s stock capital, both of which operate in a highly regulated industry. Following the Merger between IGCE, IGCU, RPBC and MAGNA (See Item 4.A - Merger between IGCE, IGCU, RPBC and MAGNA), as of the date of this annual report, we hold a 42.31% interest in IGCE, the controlling company of DGCU and DGCE. IGCE holds a 51.00% interest in DGCU, and therefore, we indirectly hold a 21.5781% equity interest in DGCU. As of the date of this annual report, we hold a 42.31% interest in IGCE and a direct 17.20% interest in DGCE. Therefore, we hold, directly and indirectly, a 40.593199% interest in DGCE.

The results of these ~~companies~~’companies’ operations are influenced by the applicable regulatory framework and the interpretation and enforcement of such regulatory framework by ENARGAS, the governmental authority created to regulate privatized natural gas transmission and distribution companies. Their licenses are subject to revocation under certain circumstances. If any of these events were to occur, it could have a material adverse effect on them and, as a result, on us.

In connection with potential acquisition and investment transactions, we may be exposed to various risks, including those arising from: (i) not having accurately assessed the value, future growth potential, strengths, weaknesses and potential profitability of potential acquisition targets; (ii) difficulties in successfully integrating, operating, maintaining or managing newly-acquired operations, including personnel; (iii) unexpected costs of such transactions; (iv) difficulties in obtaining the necessary financing and successfully reaching any required financial closing; or ~~(iv)~~(v) unexpected contingent or other liabilities or claims that may arise from such transactions. If any of these risks were to materialize, it could adversely affect our financial condition and results of operations.

If we were to acquire another energy company in the future, such acquisition could be subject to the Argentine Antitrust Authority’s approval

The Antitrust Law provides that any transactions involving the acquisition, transfer or control of another ~~company~~’scompany’s assets will be subject to the Comisión Nacional de Defensa de la Competencia (CNDC) (“(“Argentine Antitrust ~~Authority~~”Authority”) prior consent and approval in the event that (i) the total revenues of the companies involved for the last fiscal year exceeds the sum of Ps.200 million in Argentina; and (ii) the transaction amount or the value of the transferred assets located in Argentina exceeds Ps.20 million.

The Argentine Antitrust Authority will determine whether any acquisition subject to its prior approval negatively impacts competitive conditions in the markets in which we compete or adversely affects consumers in these markets. Although we are not contemplating any business combination as of the date of this annual report, if the Argentine Antitrust Authority were to reject any business combination or if such authority were to take any action to impose conditions or performance commitments on us as part of the approval process for any business combination, it could adversely affect our financial condition and results of operations and prevent us from achieving the anticipated benefits of such acquisition.

We depend on senior management and other key personnel for our current and future performance

Our current and future performance depends to a significant degree on our qualified senior management team, and on our ability to attract and retain qualified management. Our future operations could be harmed if any of our senior executives or other key personnel ceased working for us. Competition for senior management personnel is intense, and we may not be able to retain our personnel or attract additional qualified personnel. The loss of a member of senior management may require the remaining executive officers to divert immediate and substantial attention to fulfilling his or her duties and of seeking a replacement. Any inability to fill vacancies in our senior executive positions on a timely basis could harm our ability to implement our business strategy, which would harm our business and results of operations.

We could be affected by material actions taken by the trade unions

Although we have stable relationships with our work force, in the past we experienced organized work stoppages and strikes, and we may face such work stoppages or strikes in the future. Labor claims are common in the Argentina energy sector, and in the past, unionized employees have blocked access and caused damages to the facilities of various companies in the industry. Moreover, we have no insurance coverage for business interruptions caused by ~~workers~~’workers’ actions, which could have an adverse effect on our results of operations.

Moreover, the Argentine government has enacted laws and regulations requiring private sector companies to maintain certain salary levels and provide their employees with additional benefits. On December 13, 2019, the Fernández Administration declared a labor emergency for a 180-day term. In this context, during the labor emergency period, payments for severances without cause double the amounts contemplated in the labor code for such severance in normal circumstances.

We are subject to anticorruption, anti-bribery, anti-money laundering and other laws and regulations

We are subject to anti-corruption, anti-bribery, anti-money laundering and other laws and regulations. We may be subject to investigations and proceedings by authorities for alleged infringements of these laws. Although we perform compliance processes and maintain internal control systems, these proceedings may result in fines or other liabilities and could have a material adverse effect on our reputation, business, financial conditions and result of operations. If any such subsidiaries, employees or other persons engage in fraudulent, corrupt or other unfair business practices or otherwise violate applicable laws, regulations or internal controls, we could become subject to one or more enforcement actions or otherwise be found to be in violation of such laws, which may result in penalties, fines and sanctions and in turn adversely affect our reputation, business, financial condition and result of operations.

Our ability to generate electricity at our thermal generation plants partially depends on the availability of natural gas and, to a lesser extent, liquid ~~fuel.~~fuel

The supply and price of natural gas and liquid fuel used in our thermal generation plants has been in the past, and may in the future be, affected by, among other things, the availability of natural gas and liquid fuel in Argentina, given the current shortage of natural gas supply, especially during the winter, and declining reserves in Argentina. In particular, many oil and gas fields in Argentina are mature and ~~in recent years~~due to the current economic scenario have not been subject to significant investment into development and exploration activities and, therefore, reserves are likely to be depleted.

Pursuant to Resolution No. 95/2013, as amended, CAMMESA is in charge of managing and supplying all fuels required to run our thermal plants. If in the future we were to become required to purchase our own natural gas or liquid fuel from third parties, we cannot assure you that we will be able to purchase natural gas or liquid fuel at prices that are fully reimbursable by CAMMESA and, even if CAMMESA accepted to reimburse us for such amounts, it may be uncertain when such reimbursements would occur. In addition, natural gas delivery depends on the infrastructure (including barge facilities, roadways and natural gas pipelines) available to serve each generation facility. As a result, our thermal plants are subject to the risks of disruptions or curtailments in the fuel delivery chain and infrastructure. Any such disruption or curtailment may result in the unavailability, or higher prices, of natural gas or liquid fuel. Moreover, if in the future we are required to purchase our own natural gas or liquid fuel from third parties at prices that are not fully reimbursable by CAMMESA, such situation may have a material adverse effect on our financial condition and results of operations. Resolution No. 70/2018 enabled generators to purchase fuel in the open market. However, since the enactment of Resolution No. 12/2019, the effectiveness of Section 8 of Resolution No. 95/2013 and Section 4 of Resolution No. 529/2014 was reinstated, centralizing fuel purchases through CAMMESA.

We may be adversely affected by changes in LIBOR reporting practices or the method in which LIBOR is determined

As of December 31, 2019, we had trade receivables under the CVO Agreement for US$459.68 million (including VAT), plus accrued interests after the CVO Commercial Approval which were indexed to the London Interbank Offered Rate (“LIBOR”). Furthermore, as of December 31, 2019, we had the following outstanding loans with maturity dates after 2021 indexed to LIBOR:

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Loan with Kreditanstalt für Wiederaufbau (“KfW”) for US$45.52 million;

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CP Achiras and CP La Castellana Loans from the IIC—IFC Facilities for US$139.82 million;

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Vientos La Genoveva S.A.U. Loan from the IFC for US$74.33 million;

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Loan from Banco de Galicia y Buenos Aires S.A. to CPR Energy Solutions S.A.U. (wind farm La Castellana II) for US$12.40 million;

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Loan from Banco Galicia y Buenos Aires S.A. to our subsidiary Vientos La Genoveva II S.A.U. for US$37.45 million; and

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the Brigadier López Financial Trust Agreement (as defined below) for US$128.80 million.

In an announcement on 27 July 2017, the U.K. Financial Conduct Authority (FCA), which is the competent authority for the regulation of benchmarks in the UK, advocated a transition away from reliance on LIBOR to alternative reference rates and stated that it would no longer persuade or compel banks to submit rates for the calculation of the LIBOR rates after 2021 (the “FCA Announcement”). The FCA Announcement formed part of ongoing global efforts to reform LIBOR and other major interest rate benchmarks. At this time, the nature and overall timeframe of the transition away from LIBOR is uncertain and no consensus exists as to what rate or rates may become accepted alternatives to LIBOR. On 25 March 2020, the FCA stated that although the central assumption that firms cannot rely on LIBOR being published after the end of 2021 has not changed, there has been impact on the timing of some of the transition milestones due to the recent COVID-19 outbreak.

It is not possible to predict the further effect of the rules of the FCA, any changes in the methods by which LIBOR is determined, or any other reforms to LIBOR that may be enacted in the United Kingdom, the European Union or elsewhere. Any such developments may cause LIBOR to perform differently than in the past or cease to exist. It is also not possible to predict whether the global COVID-19 crisis will have further effects on the LIBOR transition plans. In addition, any other legal or regulatory changes made by the FCA, ICE Benchmark Administration Limited, the European Money Markets Institute (formerly Euribor-EBF), the European Commission or any other successor governance or oversight body, or future changes adopted by such body, in the method by which LIBOR is determined or the transition from LIBOR to a successor benchmark may result in, among other things, a sudden or prolonged increase or decrease in LIBOR, a delay in the publication of LIBOR, and changes in the rules or methodologies in LIBOR, which may discourage market participants from continuing to administer or to participate in LIBOR’s determination, and, in certain situations, could result in LIBOR no longer being determined and published. If a published U.S. Dollar LIBOR rate is unavailable after 2021, the interest rates on our debt which is indexed to LIBOR will be determined using various alternative methods, any of which may result in interest obligations which are more than or do not otherwise correlate over time with the payments that would have been made on such debt if U.S. Dollar LIBOR was available in its current form. Further, the same costs and risks that may lead to the discontinuation or unavailability of U.S. Dollar LIBOR may make one or more of the alternative methods impossible or impracticable to determine. In addition, we may be adversely affected or we may need to renegotiate the terms of our credit agreement to replace LIBOR with the new standard that is established, if any, or to otherwise agree with the trustees or agents under such facilities or instruments on a new means of calculating interest. Any of these proposals or consequences could have a material adverse effect on our financing costs or in the valuation of the trade receivables under the CVO Agreement.

Risks Relating to our Shares and ADSs

It may be difficult for you to obtain or enforce judgments against us

We are incorporated in Argentina. All of our directors and executive officers reside outside the United States, and substantially all of our and their assets are located outside the United States. As a result, it may not be possible for you to effect service of process within the United States upon these persons or to enforce judgments against them or us in U.S. courts. We have been advised by our special ~~Argentine~~ counsel, Bruchou, ~~Fern~~áFernández Madero & Lombardi, that there is doubt as to the enforceability in original actions in Argentine courts of liabilities predicated solely on U.S. federal securities laws and as to the enforceability in Argentine courts of judgments of U.S. courts obtained in actions predicated upon the civil liability provisions of U.S. federal securities laws. The enforcement of such judgments will be subject to compliance with certain requirements under Argentine law, such as Articles 517 through 519 of the Argentine Code of Civil and Commercial Procedure, including the condition that such judgments do not violate the principles of public policy of Argentine Law, as determined by an Argentine court. In addition, an Argentine court will not order an attachment on property located in Argentina and determined by such court to be essential for the provision of a public service.

~~Future~~Restrictions on transfers of foreign exchange ~~controls~~ and ~~restrictions on~~ the repatriation of capital from Argentina may impair ~~the~~your ability ~~of holders of ADSs~~ to receive dividends and distributions on, and the proceeds of any sale of, ~~the~~ shares underlying ~~the ADSs, which could affect the market value of~~ the ADSs

In 2001 and 2002 Argentina imposed exchange controls and transfer restrictions, substantially limiting the ability of companies to retain foreign currency or make payments abroad, including payments of dividends. In addition, new regulations were issued in the last quarter of 2011, which significantly curtailed access to the MULC by individuals and private sector entities. More recently, since December 2015 the new Argentine administration has lifted many of the foreign exchange restrictions imposed in 2011, including the lifting of certain restrictions for the repatriation of portfolio investment by non-resident investors. As a consequence, with respect to the proceeds of any sale of common shares underlying the ADSs, as of the date of this annual report, the conversion from pesos into U.S. dollars and the remittance of such U.S. dollars abroad is not subject to prior approval of the Argentine Central Bank, provided that the foreign beneficiary is either a natural or legal person residing in or incorporated and established in jurisdictions, territories or associated states that are considered “~~cooperators~~“cooperators for the purposes of fiscal transparency.”

~~Argentina may impose new stricter~~After almost four years of unrestricted capital flows, the Argentine Government recently reimposed restrictions on the conversion of Argentine currency into foreign currencies and on the remittance to foreign investors of proceeds from their investments in Argentina. Beginning in September 2019, the Argentine Government implemented monetary and foreign exchange ~~controls and~~control measures that included restrictions on the transfer ~~restrictions in~~of funds abroad, including dividends, without prior approval by the ~~future, among other things, in response to capital flight~~Central Bank or ~~a significant depreciation~~fulfillment of ~~the peso.~~certain requirements. In such a case, the ~~ADS~~ Depositary for the ADSs may ~~be prevented from converting~~hold the Argentine pesos it ~~receives in Argentina~~cannot convert for the account of the ADS holders. ~~If this conversion is not possible,~~In addition, any future adoption by the ~~deposit agreement allows~~Argentine Government of restrictions to the ADS Depositary to distribute the foreign currency only to those ADS holders to whom it is possible to do so. If the exchange rate fluctuates significantly during a time when the ADS Depositary cannot convert the foreign currency, holdersmovement of ~~our ADSs may lose some or all~~capital out of ~~the value of the dividend distribution. Also, if payments cannot be made in U.S. dollars abroad, the repatriation of any funds collected by foreign investors in pesos in~~ Argentina may ~~be subject to restriction. In such event,~~affect the ability of our foreign shareholders and holders of ADSs to obtain the full value of their shares and ADSs, and may adversely affect the market value of ~~our shares and ADSs may be adversely affected.~~

the ADSs.

We will be traded on more than one market and this may result in price variations; in addition, investors may not be able to easily move shares for trading between such markets

Our common shares are listed on the BYMA and, since February 2, 2018, our ADSs are listed on the NYSE. Any markets that may develop for our common shares or for the ADSs may not have liquidity and the price at which the common shares or the ADSs may be sold is uncertain.

Trading in the ADSs or our common shares on these markets takes place in different currencies (U.S. dollars on the NYSE and pesos on the BYMA), and at different times (resulting from different time zones, different trading days and different public holidays in the United States and Argentina). The trading prices of the securities on these two markets may differ due to these and other factors. Any decrease in the price of our common shares on the BYMA could cause a decrease in the trading price of the ADSs on the NYSE. Investors could seek to sell or buy our shares to take advantage of any price differences between the markets through a practice referred to as arbitrage. Any arbitrage activity could create unexpected volatility in both our share prices on one exchange, and the ADSs available for trading on the other exchange. In addition, holders of ADSs will not be immediately able to surrender their ADSs and withdraw the underlying common shares for trading on the other market without effecting necessary procedures with the ADS Depositary. This could result in time delays and additional cost for holders of ADSs.

Under Argentine Corporate Law, shareholder rights may be fewer or less well defined than in other jurisdictions

Our corporate affairs are governed by our bylaws and by Argentine Law No. 19,550, as amended (the “~~Argentine~~“Argentine Corporate ~~Law~~”Law”), which differ from the legal principles that would apply if we were incorporated in a jurisdiction in the United States (such as Delaware or New York), or in other jurisdictions outside Argentina. Thus, the rights of holders of our ADSs or holders of our common shares under the Argentine Corporate Law to protect their interests relative to actions by our Board of Directors may be fewer and less well defined than under the laws of those other jurisdictions. Although insider trading and price manipulation are illegal under Argentine law, the Argentine securities markets may not be as highly regulated or supervised as the U.S. securities markets or markets in some of the other jurisdictions. In addition, rules and policies against self-dealing and regarding the preservation of shareholder interests may be less well defined and enforced in Argentina than in the United States, or other jurisdictions outside Argentina, putting holders of our common shares and the ADSs at a potential disadvantage.

Holders of our common shares and the ADSs located in the United States may not be able to exercise preemptive or accretion rights

Under the Argentine Corporate Law, if we issue new shares as part of a capital increase, our shareholders may have the right to subscribe to a proportional number of shares to maintain their existing ownership percentage. Rights to subscribe for shares in these circumstances are known as preemptive rights. In addition, shareholders are entitled to the right to subscribe for the unsubscribed shares remaining at the end of a preemptive rights offering on a pro rata basis, known as accretion rights. Upon the occurrence of any future increase in our capital stock, United States holders of common shares or ADSs will not be able to exercise the preemptive and related accretion rights for such common shares or ADSs unless a registration statement under the Securities Act is effective with respect to such common shares or ADSs or an exemption from the registration requirements of the Securities Act is available. We are not obligated to file a registration statement with respect to those common shares or ADSs. We may not file such a registration statement, or an exemption from registration may not be available. Unless those common shares or ADSs are registered or an exemption from registration applies, a U.S. holder of our common shares or ADSs may receive only the net proceeds from those preemptive rights and accretion rights if those rights can be sold by the ADS Depositary; if they cannot be sold, they will be allowed to lapse. Furthermore, the equity interest of holders of common shares or ADSs located in the United States may be diluted proportionately upon future capital increases.

~~Non-Argentine companies that own our common shares directly and not as ADSs may not be able to exercise their rights as shareholders unless they are registered in Argentina~~

~~Under Argentine law, foreign companies that own shares in an Argentine corporation are required to register with the~~ ~~Inspección General de Justicia~~ ~~(Superintendency of Legal Entities, or the~~ “~~IGJ~~”), in order to exercise certain shareholder rights, including voting rights. Holders owning common shares directly (rather than ADSs) that are non-Argentine companies and are not registered with the IGJ may be limited in their ability to exercise their rights as holders of our common shares.

Voting rights, and other rights, with respect to the ADSs are limited by the terms of the deposit agreement

Holders may exercise voting rights with respect to the common shares underlying ADSs only in accordance with the provisions of the deposit agreement. There are no provisions under Argentine law or under our bylaws that limit ADS ~~holders~~’holders’ ability to exercise their voting rights through the ADS Depositary with respect to the underlying common shares, except if the ADS Depositary is a foreign entity and it is not registered with the IGJ. The ADS Depositary is registered with the IGJ. However, there are practical limitations upon the ability of ADS holders to exercise their voting rights due to the additional procedural steps involved in communicating with such holders. For example, Law No. 26,831 requires us to notify our shareholders by publications in certain official and private newspapers of at least 20 and no more than 45 days in advance of any ~~shareholders~~’shareholders’ meeting. ADS holders will not receive any notice of a ~~shareholders~~’shareholders’ meeting directly from us. In accordance with the deposit agreement, we will provide the notice to the ADS Depositary, which will in turn, if we so request, as soon as practicable thereafter provide to each ADS holder:

●

~~the notice of such meeting;~~

the notice of such meeting;

●

~~voting instruction forms; and~~

voting instruction forms; and

-Financial assets are measured at fair value through other comprehensive income if they are held in a business model whose objective is achieved by both collecting contractual cash flows and selling financial assets.

~~Loans and receivables;~~

At the closing of these consolidated financial statements, the Group has not financial assets at fair value through other comprehensive income.

~~Held-to-maturity investments; and~~

~~Available-for-sale financial assets.~~

~~The Group’s financial assets include cash and cash equivalents, trade and other receivables, foreign currency forward contracts, mutual funds and investments in quoted debt securities.~~

~~F-18~~

~~CENTRAL PUERTO S.A.~~

~~The subsequent measurement of financial assets depends on their classification at initial recognition, as described below:~~

–

Financial assets at fair value through profit or loss

Financial assets at fair value through profit or loss include financial assets held for trading and financial assets designated upon initial recognition at fair value through profit or loss. Financial assets are classified as held for trading if they are acquired for the purpose of selling or repurchasing in the near term. This category includes derivative financial assets that are not designated as effective hedging instruments as defined by IAS 39.

Financial assets at fair value through profit and loss are carried in the statement of financial position at fair value with changes in fair value recognized in finance income (positive net changes in fair value) or finance costs (negative net changes in fair value) in the statement of income.

The Group periodically evaluates its financial assets held for trading, other than derivatives, to determine whether the intention to sell them in the near term is still appropriate. When the Group is unable to trade these financial assets due to inactive markets and its intention to sell them in the foreseeable future significantly changes, the Group may elect to reclassify these financial assets in rare circumstances. The reclassification of a financial asset designated as loans and receivables to available-for-sale or held to maturity depends on the nature of the asset. This evaluation does not affect any financial assets designated at fair value through profit or loss using the fair value option at designation, as these instruments may not be reclassified following initial recognition.

~~The~~Any financial assets at fair value through profit or loss ~~include listed debt securities, foreign exchange forward contracts and mutual funds.~~

~~Loans and receivables~~

~~Loans and receivables are non-derivative~~belong to a residual category that includes the financial assets ~~with fixed or determinable payments~~ that are not ~~quoted~~held in ~~an active market. After~~one of the two business models mentioned, including those kept to negotiate and those classified at fair value at initial recognition.

At the closing of these consolidated financial statements, the financial assets of the Group at fair value through profit or loss include mutual funds accounted under other financial assets.

Recognition and measurement ~~such~~

The purchase and sale of financial assets are ~~subsequently~~recognized at the date on which the Group commits to purchase or sale the asset.

Financial assets valued at amortized cost are initially recognized at their fair value plus cost of transaction. These assets accrue interest according to the effective interest rate method.

Financial assets valued at fair value through profit or loss and other comprehensive income are initially recognized at fair value, and transaction costs are recognized as expenses in the comprehensive income statement. Subsequently, they are valued at fair value. Changes in fair value and income from the sale of financial assets at fair value through profit or loss and other comprehensive income are recorded in Finance Income or Finance Expenses and Other comprehensive income, respectively, in the consolidated statement of income and comprehensive income, respectively.

In general, the Group uses the transaction price to determine the fair value of a financial instrument at the initial recognition. In the rest of the cases, the Group only records revenue or loss at initial recognition if the fair value of the instrument is evidenced with other comparable and visible transactions of the market for the same instrument or if it is based on a valuation technique that only includes visible market data. Revenue or loss not recognized at the initial recognition of a financial asset is later recognized as long as they derive from a change in factors (including time) in which the market participants consider establishing the price.

The profit or loss of debt instruments are measured at amortized cost and are not determined in a hedge relationship. They are recognized in profit or loss when the financial assets are removed or when impairment is recognized; and during the amortization process using the effective interest rate method (EIR), less impairment. Amortized cost is calculated by taking into account any discount or premium on acquisition and fees or costs that are an integral part of the EIR. The EIR amortization is included in finance income or other operating income in the statement of income, depending on the nature of the asset giving rise to it. The losses arising from impairment are recognized in the statement of income in other operating expense.

~~The “Loans and receivables” account includes trade and other receivables.~~

~~Held-to-maturity investments~~

Non-derivative financial assets with fixed or determinable payments and fixed maturities are classified as held-to-maturity when the Group has the positive intention and ability to hold them to maturity. After initial measurement, held-to-maturity investments are measured at amortized cost using the effective interest method, less impairment. Amortized cost is calculated by taking into account any discount or premium on acquisition and fees or costs that are an integral part of the EIR. The EIR amortization is included in finance income in the statement of income. The losses arising from impairment are recognized in the statement of income in finance costs.method. The Group ~~did not have any held-to-maturity~~only reclassifies all investments ~~during 2017 and 2016.~~

~~Available-for-sale financial assets~~

~~A financial asset is classified as available for sale if~~in debt instruments when it ~~is not included in any of~~changes the ~~other three categories of financial~~business model used to manage those assets.

Available-for-sale financial assets include mutual funds and debt securities. Debt securities and mutual funds in this category are those classified as available-for-sale and which are intended to be held for an indefinite period of time and which may be sold in response to needs for liquidity or in response to changes in the market conditions.

~~F-19~~

CENTRAL PUERTO S.A.

After initial measurement, available-for-sale financial assets are subsequently measured at fair value, and the unrealized gains or losses are recognized as other comprehensive income in the accumulated other comprehensive income (loss) reserve until the investment is derecognized. Upon derecognition, the cumulative gain or loss is recognized as finance income or finance costs, or determined to be impaired, at which time the cumulative loss is reclassified to the statement of income under finance costs, as the case may be, and removed from the accumulated other comprehensive income (loss) reserve. Interest earned on investments in available-for-sale government securities is measured through the effective interest rate method and recognized as finance income in the statement of income.

The Group regularly evaluates its available-for-sale financial assets to determine whether the ability and positive intention to sell them in the near term is still appropriate. When the Group is unable to trade these financial assets due to inactive markets and its intention to sell them in the foreseeable future significantly

changes, the Group may elect to reclassify these financial assets in rare circumstances. Reclassification to loans and receivables is permitted when the financial assets meet the conditions and definition of loans and receivables provided for by IAS 39 and the Group has the positive intent and ability to hold these assets for the foreseeable future or until maturity. Reclassification to the held-to-maturity category is permitted only when the Group has the ability and positive intention to hold the financial asset accordingly.

For a financial asset reclassified out of the available-for-sale category, the fair value carrying amount at the date of reclassification becomes its new amortized cost, and any previous gain or loss on that asset that has been recognized in equity is amortized to profit or loss over the remaining life of the investment using the EIR. Any difference between the new amortized cost and the expected cash flows is also amortized over the remaining life of the asset using the EIR. If the asset is subsequently determined to be impaired, then the amount recorded in equity is reclassified to the statement of income.

Derecognition of financial assets

A financial asset (or, where applicable, a part of a financial asset or part of a group of similar financial assets) is derecognized; that is to say, it is deleted from the statement of financial position, when:

-–

the contractual rights to receive cash flows from the asset have expired;

-–

the contractual rights to receive cash flows from the asset have been transferred or an obligation has been assumed to pay the received cash flows in full without material delay to a third party under a ‘pass-through’ arrangement; and either (a) all the risks and rewards of the asset have been transferred substantially, or (b) all the risks and rewards of the asset have neither been transferred nor retained substantially, but control of the asset has been transferred.

When the contractual rights to receive cash flows from an asset have been transferred or a pass-through arrangement has been entered into, but all of the risks and rewards of the asset have neither transferred nor retained substantially and no control of it has been transferred, such asset shall continue to be recognized to the extent of the Group’s continuing involvement in it. In this case, the Group shall also recognize the associated liability. The transferred asset and the associated liability are measured on a basis that reflects the rights and obligations that the Group has retained.

Impairment of financial assets

IFRS 9 establishes an “expected credit loss” model (“ECL”). This requires the application of considerable judgment with regard to how changes in economic factors affect ECL, which is determined over a weighted average base. ECL results from the difference between contractual cash flows and cash flows at current value that the Group expects to receive.

The ~~Group assesses at~~impairment model set forth by IFRS 9 is applicable to the ~~end of each reporting period whether there is any objective evidence that a financial asset or a group of~~ financial assets ~~is impaired. A~~measured at amortized value or at fair value through changes in other comprehensive income, except for the investment in equity securities and assets from the contracts recognized under IFRS 15.

Pursuant to IFRS 9, loss allowances are measured using one of the following bases:

–

The 12-month ECL: these are expected credit losses that result from those default events on the financial ~~asset or a group of financial assets is deemed to be impaired if, and only if, there is objective evidence of impairment as a result of one or more events~~instrument that ~~has occurred~~are possible within 12 months after the ~~initial recognition of~~reporting date; and

–

Full lifetime expected credit losses: these are expected credit losses that result from all possible default events over the ~~asset (an incurred ‘loss event’) and that loss event has an impact on the estimated future cash flows~~life of the financial asset or the group of financial assets that can be reliably estimated. Evidence of impairment may include, among others, indications that the debtors or a group of debtors is experiencing significant financial difficulty, default or delinquency in interest or principal payments, the probability that they will enter bankruptcy or other financial reorganization and where observable data indicate that there is a measurable decrease in the estimated future cash flows, such as adverse changes in arrears or economic conditions that correlate with defaults.

~~F-20~~

~~CENTRAL PUERTO S.A.~~instrument.

~~Charges arising from the impairment of financial assets, net of related recoveries, are booked in the statement of income under finance costs and other operating expenses, depending on~~Given the nature of the ~~asset from~~clients with which ~~they arise.~~the Group operates and its history of uncollectibility, the Group did not identify expected credit losses.

~~Financial assets carried at amortized cost~~

~~For~~With regard to financial ~~assets carried at amortized cost,~~placements and according to the placement policies in force, the Group ~~first assesses whether objective evidence~~monitors the credit rate and the credit risk of ~~impairment exists individually for financial assets that are individually significant, or collectively for financial~~

~~assets that are not individually significant. If~~these instruments. Pursuant to the analysis, the Group ~~determines that no objective evidence~~did not identify the need to record impairment of ~~impairment exists for an individually assessed financial asset, whether significant or not, it includes the asset in a group~~these types of financial assets with similar credit risk characteristics and collectively assesses them for impairment. Assets that are individually assessed for impairment and for which an impairment loss is, or continues to be, recognized are not included in a collective assessment of impairment.

If there is objective evidence that an impairment loss has been incurred, the amount of the loss is measured as the difference between the assets’ carrying amount and the present value of estimated future cash flows (excluding future expected credit losses that have not yet been incurred). The present value of the estimated future cash flows is discounted at the financial asset’s original effective interest rate. If a loan has a variable interest rate, the discount rate for measuring any impairment loss is the current effective interest rate.

The asset carrying value is reduced through an impairment allowance account and the loss is recognized in the statement of income under finance costs or other operating expenses, depending on the nature of the asset that gave rise to it. Interest income continues to be accrued on the reduced carrying amount and is accrued using the rate of interest used to discount the future cash flows for the purpose of measuring the impairment loss. Interest income is recorded as part of finance income or other operating income in the statement of income, depending on the nature of the asset that gave rise to it.

Assets and the related allowance for impairment are written off when there is no realistic prospect of future recovery and all collateral has been realized or has been transferred to the Group. If, in a subsequent period, the amount of the estimated impairment loss increases or decreases because of an event occurring after the impairment was recognized, the previously recognized impairment loss is increased or reduced by adjusting the impairment allowance account. If a future write-off is later recovered, the recovery is credited to finance costs or other operating expenses in the statement of income, based on the nature of the asset that gave rise to it.

~~Available-for-sale financial investments~~

~~For available-for-sale financial investments, the Group assesses at the end of each reporting period whether there is objective evidence that an investment or a group of investments is impaired.~~

Regarding equity investments classified as AFS, objective evidence would include a significant or prolonged decline in the fair value of the investment below its cost. The investment is deemed to be “significant” with respect to the original cost of the investment and “prolonged” with respect to the period during which the fair value was below its original cost. Whenever there is evidence that there has been impairment in value, accumulated losses, measured as the difference between the acquisition cost and the current fair value, less any impairment loss previously recognized in the statement of income, are removed from other comprehensive income and recognized in the statement of income as finance costs. Impairment losses related to equity investments classified as available-for-sale are not reversed through profit or loss. After impairment was recognized, fair value increases are directly recognized under comprehensive income.

In the case of debt instrument investments classified as available-for-sale, the impairment is assessed and recognized based on the same criteria as financial assets carried at amortized cost. The amount recorded for impairment is the cumulative loss measured as the difference between the amortized cost and the current fair value, less any impairment loss previously recognized in the statement of income.

~~F-21~~

~~CENTRAL PUERTO S.A.~~

Future interest income continues to be accrued based on the reduced carrying amount of the asset, using the rate of interest used to discount the future cash flows for the purpose of measuring the impairment loss. The interest income is recorded as part of operating income in the statement of income. If, in a subsequent year, the fair value of a debt instrument increases and the increase can be objectively related to an event occurring after the impairment loss was recognized in the statement of income, the impairment loss is reversed through the statement of income as finance cost.instruments.

2.2.9.2.

Financial liabilities

Initial recognition and subsequent measurement

Financial liabilities are classified, at initial recognition, as financial liabilities at fair value through profit or loss, loans and borrowings, or as derivatives designated as hedging instruments in an effective hedge ratio, as appropriate.

~~All financial liabilities are recognized initially at fair value and, in the case of loans and borrowings carried at amortized cost, directly attributable transaction costs.~~

~~The Group’s financial liabilities include trade and other payables, bank overdrafts, borrowings received from CAMMESA and interest-accruing payables and loans.~~

~~The subsequent measurement of financial liabilities depends on their classification, as described below:~~

~~Financial liabilities at fair value through profit or loss~~

Financial liabilities at fair value through profit or loss includes financial liabilities held for trading and financial liabilities designated upon initial recognition at fair value through profit or loss.CENTRAL PUERTO S.A.

Financial liabilities are ~~classified~~initially recognized at their fair value, net of the incurred transaction costs. Since the Group has no financial assets whose characteristics require the fair value accounting according to IFRS, after the initial recognition, the financial assets are valued at amortized cost. Any difference between the amount received as ~~held for trading if they are acquired for~~financing (net of transaction costs) and the ~~purpose~~reimbursement value is recognized in comprehensive income throughout the life of ~~selling in~~ the ~~near term. This category includes derivative~~debt financial instrument using the method of effective interest rate.

At the closing of these consolidated financial statements, the financial liabilities ~~payable by the Group that are not designated as hedging instruments in hedge relationships as defined by IAS 39. Separate derivatives are also~~ classified as ~~held for trading, unless they are designated as effective hedging instruments.~~

~~Gains or losses on liabilities held for trading are recognized in the statement of income as finance income or costs, as the case may be.~~

~~Financial liabilities designated upon initial recognition at fair value through profit or loss are designated as such only if they meet the criteria in IAS 39.~~

~~The Group has not designated any financial liabilities upon initial recognition as at fair value through profit or loss.~~

~~Other debts and borrowings~~

~~After initial recognition, interest bearing~~ loans and borrowings are subsequently measured at amortized cost using the effective interest rate method. Gains and losses are recognized as finance costs in the statement of income when the liabilities are derecognized, as well as through the effective interest rate method (EIR) amortization process.

~~Amortized cost is calculated by taking into account any discount or premium on acquisition and fees or costs that are an integral part~~ of the ~~EIR. The EIR amortization is included~~Group include Trade and other payables, overdrafts in ~~finance costs in the statement of income.~~bank accounts, Borrowings from CAMMESA and Loans and borrowings that accrue interest.

Derecognition of financial liabilities

A financial liability is derecognized when the obligation under the liability is discharged or cancelled or expires.

~~F-22~~

~~CENTRAL PUERTO S.A.~~

When an existing financial liability is replaced by another from the same lender on substantially different terms, or the terms of an existing liability are substantially modified, such an exchange or modification is treated as a derecognition of the original liability and the recognition of a new liability, and the difference in the respective carrying amounts is recognized as finance income or costs in the statement of income, as the case may be.

2.2.9.3.

Offsetting financial assets and financial liabilities

Financial assets and financial liabilities are offset, and the net amount presented in the statement of financial position if, and only if, there is a currently enforceable legal right to offset the recognized amounts and there is an intention to settle on a net basis, or to realize the assets and settle the liabilities simultaneously.

2.2.9.4.

Financial assets and liabilities with related parties

Assets and liabilities with related parties are recognized initially at fair value plus directly attributable transaction costs. As long as credits and debts with related parties do not derive from arms-length transactions, any difference arising at the initial recognition between such fair value and the consideration given or received in return shall be considered as an equity transaction (capital contribution or payment of dividends, which will depend on whether it is positive or negative).

Following initial recognition, these receivables and payables are measured at their amortized cost through the EIR method. The EIR amortization is included in finance income or costs or other operating income or expenses in the statement of income, depending on the nature of the liability giving rise to it.

2.2.9.5.

Derivative financial instruments and hedge accounting -

Initial recognition and subsequent measurement

The derivative financial instruments used by the Group are initially recognized atthrough their fair ~~value on~~values at the date on which ~~a derivative~~the contract is entered into, and they are subsequently ~~re-measured~~measured again at their fair value. ~~Derivatives~~The derivative financial instruments are ~~carried~~accounted as financial assets when ~~the~~their fair value is positive and as financial liabilities when ~~the~~their fair value is negative.

~~Any gains~~The method to recognize the loss or ~~losses arising~~income from the change in fair value depends on whether the derivative was determined as a hedge instrument; in such case, on the nature of the item it is covering. The Company can determine certain derivative as:

–

Fair value hedge;

CENTRAL PUERTO S.A.

–

Cash flow hedge;

At the beginning of the transaction, the Group records the relationship between the hedge instruments and items covered, as well as its objectives for risk management and the strategy to make different hedge operations. It also records its assessment, both at the beginning and on a continuous base, on whether the derivatives used in the hedge transactions are highly effective to compensate changes in fair value or in the cash flows of the items covered.

Fair value hedge

Changes in fair value of derivatives determined and classified as fair value hedge are recorded in the statement of comprehensive income together with any change in the fair value of ~~derivatives are taken directly~~the covered asset or liability attributable to ~~income or loss, except for~~ the ~~portion that meets requirements to be considered effective hedges, if applicable, which is recognized in other comprehensive income and later reclassified to income or loss when the~~covered risk.

Cash flow hedge ~~item affects income or loss.~~

The ~~portion~~effective part of changes in fair value of the ~~gain or loss on the hedging instrument that meets the requirements to be considered effective~~derivatives determined and classified as cash flow hedge isare recognized in ~~other~~Other comprehensive income. The loss or income ~~while any portion that does not meet~~related to the ~~requirements to be considered effective hedge~~non-effective part is immediately recognized ~~immediately~~ in the statement of comprehensive income within the Finance Expenses or Finance Income, respectively.

The cumulative amounts in Other comprehensive income are recorded in the statement of comprehensive income in the periods in which the item covered affects the comprehensive income. In the case of interest rates hedge, this means the amounts recognized in equity are reclassified as net finance income as ~~other financial~~interest is accrued on associated debts.

Swap contracts of interest rate are measured at their current value at the closing of each period or fiscal year and are stated as assets or liabilities depending on the rights and obligations emerging from the respective contracts. Swap contracts were classified as efficient hedge of cash flows risk. Changes in the accounting measure of swap contracts are recognized in equity in the account Other comprehensive income. These changes recognized in equity are reclassified at the loss or income ~~/ expenses.~~for the period or fiscal year in which the interest of variable rate loans object of the hedge, are recognized in the statement of comprehensive income.

If the ~~hedging~~hedge instrument expires or is sold, ~~terminated~~it is expired or ~~exercised~~executed without a replacement or ~~rollover~~successive renewal (as part of the hedging strategy), or if its ~~designation~~appointment as a hedge is revoked, or ~~when~~if the hedge no longer ~~meets~~complies with the ~~criteria for~~requirements to apply hedge ~~accounting,~~accountability, any cumulative ~~gain~~revenue or loss previously recognized in the other comprehensive income ~~remains separately~~will stay separate in equity until the expected transaction ~~occurs or~~takes place. If in the ~~foreign currency firm commitment~~future transaction it is ~~met.~~

~~As of December 31, 2015,~~not expected to have the ~~Group held derivative financial instruments mentioned~~amount included in ~~note 12.6~~the cash flow hedge reserve, it must be immediately reclassified to ~~these~~the consolidated ~~financial statements, which do not meet the requirements to be considered hedging instruments.~~comprehensive income.

2.2.10.

Inventories

Inventories are valued at the lower of acquisition cost restated according to Note 2.1.2 and net realizable value. ~~Net realizable value is~~In the ~~estimated selling price in~~estimation of recoverable values, the ~~ordinary course~~purpose of ~~business, less estimated costs of completion~~the asset to be measured and the ~~estimated costs necessary to make the sale.~~movements of items of slow or scarce rotation are taken into account. Inventories balance is not higher than its net realizable value at the corresponding dates.

~~F-23~~

CENTRAL PUERTO S.A.

2.2.11.

Cash and cash equivalents

Cash is deemed to include both cash fund and freely-available bank deposits on demand. Short-term deposits are deemed to include short-term investments with significant liquidity and free availability that, subject to no

previous notice or material cost, may be easily converted into a specific cash amount that is known with a high degree of certainty upon the acquisition, are subject to an insignificant risk of changes in value, maturing up to three months after the date of the related acquisitions, and whose main purpose is not investment or any other similar purpose, but settling short-term commitments.

For the purpose of the consolidated statement of financial position and the consolidated statement of cash flows, cash and cash equivalents comprise cash at banks and on hand and short-term investments meeting the abovementioned conditions.

~~Interest paid is shown as financing activities and interest received from customers is shown as operating activities.~~

2.2.12.

Provisions

Provisions are recognized when the Group has a present obligation (legal or constructive) as a result of a past event, it is probable that an outflow of resources embodying economic benefits will be required to settle the obligation and a reliable estimate can be made of the amount of the obligation. Where the Group expects some

or all of a provision to be reimbursed, for example under an insurance contract, the reimbursement is recognized as a separate asset but only when the reimbursement is virtually certain. The expense relating to any provision is presented in the statement of income under the item that better reflects the nature of the provision net of any reimbursement to the extent that the latter is virtually certain.

If the effect of the time value of money is material, provisions are discounted using a current pre-tax market rate that reflects, where appropriate, the risks specific to the liability. Where discounting is used, the increase in the provision due to the passage of time is recognized as a finance cost in the statement of income.

-–

Provision for lawsuits and claims

In the ordinary course of business, the Group is exposed to claims of different natures (e.g., commercial, labor, tax, social security, foreign exchange or customs claims) and other contingent situations derived from the interpretation of current legislation, which result in a loss, the materialization of which depends on whether one more events occur or not. In assessing these situations, Management uses its own judgment and advice of its legal counsel, both internal and external, as well as the evidence available as of the related dates. If the assessment of the contingency reveals the likelihood of the materialization of a loss and the amount can be reliably estimated, a provision for lawsuits and claims is recorded as of the end of the reporting period.

2.2.13.

Contingent liabilities

A contingent liability is: (i) a possible obligation that arises from past events and whose existence will be confirmed only by the occurrence or non-occurrence of one or more uncertain future events not wholly within

the control of the entity; or (ii) a present obligation that arises from past events but is not recognized because:

(a) it is not probable that an outflow of resources embodying economic benefits will be required to settle the obligation; or (2) the amount of the obligation cannot be measured with sufficient reliability.

A contingent liability is not recognized in financial statements; it is reported in notes, unless the possibility of an outflow of resources to settle such liability is remote. For each type of contingent liability as of the relevant reporting period-end dates, the Group shall disclose (i) a brief description of the nature of the obligation and, if possible, (ii) an estimate of its financial impact; (iii) an indication of the uncertainties about the amount or timing of those outflows; and (iv) the possibility of obtaining potential reimbursements.

~~F-24~~

CENTRAL PUERTO S.A.

2.2.14.

Contingent assets

A contingent asset is a possible asset that arises from past events and whose existence will be confirmed only by the occurrence or non-occurrence of one or more uncertain future events not wholly within the control of the ~~entity.~~Group.

A contingent asset is not recognized in financial statements; it is reported in notes only where an inflow of economic benefits is probable. For each type of contingent asset as of the relevant reporting period-end dates, the Group shall disclose (i) a brief description of the nature thereof and, if possible, (ii) an estimate of its financial impact.

2.2.15.

Employee benefits

Employee short-term benefits:

The Group recognizes short-term benefits to employees, such as salary, vacation pay, bonuses, among others, on an accrued basis and includes the benefits arising from collective bargaining agreements.

Post-employment employee long-term benefits:

The Group grants benefits to all trade-union employees when obtaining the ordinary retirement benefit under the Argentine Integrated Pension Fund System, based on multiples of the relevant employees’ salaries.

The amount recognized as a liability for such benefits includes the present value of the liability at the end of the reporting period, and it is determined through actuarial valuations using the projected unit credit method.

Actuarial gains and losses are fully recognized in other comprehensive income in the period when they occur and immediately allocated to unappropriated retained earnings (accumulated losses), and not reclassified to income in subsequent periods.

The Group recognizes the net amount of the following amounts as expense or income in the statement of income for the reporting year: (a) the cost of service for the current period; (b) the cost of interest; (c) the past service cost, and (d) the effect of any curtailment or settlement.

Other long-term employee benefits:

The Group grants seniority-based benefits to all trade-union employees when reaching a specific seniority, based on their normal salaries.

The amount recognized as liabilities for other long-term benefits to employees is the present value of the liability at the end of the reporting period. The Group recognizes the net amount of the following amounts as

expense or income: (a) the cost of service for the current period; (b) the cost of interest; (c) actuarial income and loss, which shall be recognized immediately and in full; (d) the past service cost, which shall be recognized immediately and in full; and (e) the effect of any curtailment or settlement.

2.2.16.

Share-based payments

The cost of share-based payments transactions that are settled with equity instruments of one of our subsidiaries is determined by the fair value at the date when the grant is made using an appropriate valuation model.

This cost is recognized in the consolidated financial statements under employee benefits expense, together with a corresponding total increase in non-controlling interest.

CENTRAL PUERTO S.A.

During the ~~year~~years ended December 31, 2019, 2018 and 2017 the expense booked in the consolidated financial statements under employee benefits expense amounts to ~~2,942.~~

~~F-25~~

~~CENTRAL PUERTO S.A.~~

48,557, 20,566 and 7,930, respectively.

2.2.17.

Investment in associates

The Group’s investments in associates are accounted for using the equity method. An associate is an entity over which the Group has significant influence. Significant influence is the power to participate in the financial and operating policy decisions of the investee, but is neither control nor joint control.

According to the equity method, investments in associates are originally booked in the statement of financial position at cost, plus (less) the changes in the Group’s ownership interests in the associates’ net assets subsequent to the acquisition date. If any, goodwill relating to the associate is included in the carrying amount of the investment and is neither amortized nor individually tested for impairment.

If the cost of the investments is lower than the proportional share as of the date of acquisition on the fair value of the associate’s assets and liabilities, a gain is recognized in the period in which the investment was acquired.

The statement of income reflects the share of the results of operations of the associates adjusted on the basis of the fair values estimated as of the date on which the investment was incorporated. When there has been a change recognized directly in the equity of the associates, the Group recognizes its share of any changes and includes them, when applicable, in the statement of changes in equity.

The Group’s share of profit of an associate is shown in a single line on the main body of the consolidated statement of income. This share of profit includes income or loss after taxes of the associates.

The financial information of the associates is prepared for the same reporting period as the Group. When necessary, adjustments are made to bring the accounting policies of the associates in line with those of the Group.

After application of the equity method, the Group determines whether it is necessary to recognize impairment losses on its investment in its associates. At each reporting date, the Group determines whether there is objective evidence that the value of investment in the associates has been impaired. If such was the case, the Group calculates the amount of impairment as the difference between the recoverable amount of the investment in the associates and its carrying value, and recognizes the loss as “Share of losses of an associate” in the statement of income.

Upon loss of significant influence over the associate, the Group measures and recognizes any retained investment at its fair value. If such was the case, any difference between the carrying amounts of the investment in the associate and the fair value on any retained investment, as well as the disposal proceeds, are recognized in the statement of income.

The information related to associates is included in ~~note~~Note 3.

2.2.18.

Information on operating segments

For management purposes, the Group is organized in ~~three~~four different business units to carry out its activities, as follows:

–

Electric power ~~generation: through its own assets~~generation from conventional sources: the Group is engaged in the production of electric power from conventional sources and its sale. This business unit does not include La Plata plant operations due to the sale of such facility (See ~~note~~Note 22.8).

CENTRAL PUERTO S.A.

–

Electric power generation from renewable sources: the Group also is engaged in the production of electric power from renewable sources and its sale.

–

Natural gas transport and distribution: through its equity investees companies Distribuidora de Gas del Centro S.A. and Distribuidora de Gas Cuyana S.A. the Group is engaged in the natural gas distribution public sector service in the Cuyo and Centro regions of Argentina and it is also engaged in the natural gas transport sector service through its equity investee Company Transportadora de Gas del ~~Mecrosur~~Mercosur S.A. Also, the Company resells certain gas transport and distribution capacity that was previously contracted by the Company.

–

Management and ~~operations:~~operations of thermal plants: through its equity investees Termoeléctrica José de San Martín S.A. and Termoeléctrica Manuel Belgrano S.A. and its subsidiary Central Vuelta de Obligado S.A. the Group is engaged in the management and operations of these thermal plants.

~~F-26~~

~~CENTRAL PUERTO S.A.~~

The Group has ~~two~~three reporting segments: production of electric power from conventional sources, production of electric power from renewable sources and natural gas transport and distribution. Management and operations activities are included in others, because the information is not material.

The financial performance of segments is evaluated based on net income and measured consistently with the net income disclosed in the financial statements ~~(note~~(Note 4).

2.2.19.

Non-current assets held for sale and discontinued operations

The Group classifies non-current assets and disposal groups as held for sale if their carrying amounts will be recovered principally through a sale transaction or its distribution to the shareholders rather than through continuing use. Such assets are measured at the lower of their carrying amount and fair value less costs to sell. Costs to sell are the incremental costs directly attributable to the disposal of an asset (disposal group), excluding finance costs and income tax expense.

The criteria for held for sale classification is regarded as met only when the sale is highly probable and the asset or disposal group is available for immediate sale in its present condition. Actions required to complete the sale should indicate that it is unlikely that significant changes to the sale will be made or that the decision to sale will be withdrawn. Management must be committed to the plan to sell the asset and the sale expected to be completed within one year from the date of the classification.

Property, plant and equipment and intangible assets are not depreciated or amortized once classified as held for sale.

Assets and liabilities classified as held for sale are presented separately as current items in the consolidated statement of financial position.

A disposal group qualifies as discontinued operation if:

-–

It is a component of the Group that represents a cash generating unit or a group of cash generating units,

-–

it is classified as held for sale or as for distribution to equity holders, or it has already been disposed for distribution to the shareholders, and;

-–

it represents a separate major line of business or geographical area of operations or it is a subsidiary acquired exclusively with a view to resale.

CENTRAL PUERTO S.A.

Discontinued operations are excluded from the results of continuing operations and are presented as a single amount as income or loss after tax from discontinued operations in the consolidated statement of income.

Additional disclosures are provided in ~~note~~Note 21. All other notes to the consolidated financial statements include amounts for continuing operations, unless indicated otherwise.

2.2.20.

Business combinations

Business combinations are accounted for using the acquisition method when the Group takes effective control of the acquired business.

The Group will recognize in its financial statements the acquired identifiable assets, the liabilities assumed, any non-controlling interest and, if any, goodwill according to IFRS 3.

The cost of an acquisition is measured as the aggregate of the consideration transferred, which is measured at acquisition date fair value, and the amount of any non-controlling interest in the acquiree. The Group elects whether to measure the non-controlling interest in the acquiree at fair value or at the proportionate share of the acquiree´s identifiable net assets.

If the business combination is made in stages, the Group will measure again its previous holding at fair value at the acquisition date and will recognize income or loss in the consolidated statement of comprehensive income.

Goodwill is initially measured at cost, being the excess of the aggregate of the consideration transferred and the amount recognized for non-controlling interests and any previous interest held over the net identifiable assets and the liabilities assumed. If this consideration transferred is lower than the fair value of the identifiable assets and the liabilities assumed, the gain is recognized in the consolidated statement of comprehensive income.

As described in Note 22.10, on June 14, 2019, the Company acquired the Thermal Station Brigadier López (“the Station”) and the land on which the Station is located. The fair value of the identifiable assets and liabilities transferred at the date of the acquisition, which was determined in accordance with IFRS 3, is as follows:

	ARS 000
Assets
	��
Property, plant and equipment	10,490,386
Intangible assets	6,094,377
Other non-financial assets	37,177
Trade and other receivables, net	751,875
	17,373,815
Liabilities

Other loans and borrowings	(8,429,947)
Compensation and employee benefits liabilities	(9,028)
	(8,438,975)
Total identifiable net assets measured at fair value	8,934,840

The business combination was accounted for using the “acquisition method” set forth in IFRS 3. Even though the legal, economic-financial, tax, technical effects and any other effects produced after the execution of the transference agreement, were deemed as produced as from April 1, 2019, the Company considered, in order to comply with IFRS 3, that the acquisition date was June 14, 2019; thus, the Company has recognized the business combination as from that date. As a result of the application of such method, the Company considers that the consideration transferred is similar to the fair value of the assets acquired and liabilities assumed at the acquisition date.

CENTRAL PUERTO S.A.

The Company has made the purchase price allocation and the valuation at fair value of the identifiable assets and the liabilities assumed based on an independent assessment made by a specialist.

The results from the operation of the Station and the results related to the associated financial debt, that were both accrued after the acquisition date, amounted to: 3,413,265 for revenues; 3,071,360 for financial costs of the financial debt; and 119,047 loss before income tax (without considering impairment of property, plant and equipment and intangible assets for 3,158,799 described in Note 2.2.8). These results have been included in the consolidated statement of income for the year ended December 31, 2019.

The Company does not have the necessary information to disclose the foregoing figures as if the acquisition of the Station took place at the beginning of this fiscal year.

2.3.

Significant accounting estimates and assumptions

The preparation of the Group’s financial statements requires management to make significant estimates and assumptions that affect the recorded amounts of revenues, expenses, assets and liabilities, and the disclosure of contingent liabilities, at the end of the reporting period. In this sense, the uncertainties related to the estimates and assumptions adopted could give rise in the future to final results that could differ from those estimates and require significant adjustments to the amounts of the assets and liabilities affected.

The key assumptions concerning the future and other key sources of estimation uncertainty at the end of the reporting period, that have a significant risk of causing a material adjustment to the carrying amounts of assets and liabilities within the next financial year, are described below. The Group based its accounting assumptions and significant estimates on parameters available when the financial statements were prepared. Existing circumstances and assumptions about future developments, however, may change due to market changes or circumstances arising beyond the control of the Group. Such changes are reflected in the assumptions when they occur.

~~F-27~~

~~CENTRAL PUERTO S.A.~~

~~The significant estimates used by management are mentioned below:~~

The terms for collection and the valuation of accumulated amounts related to receivables under Resolution 95 and receivables under Resolution 406 (from 2008 and thereafter).

Collection of the principal and interest on these receivables is subject to various business risks and uncertainties including, but not limited to, ~~the completion and operation of power plants which are expected to generate cash for payments of these receivables,~~ regulatory changes that could impact the timing and amount of collections, and economic conditions in Argentina. The Group accrues interest on these receivables once the recognition criteria have been met. The Group’s collection estimates are based on assumptions that it believes to be reasonable, but are inherently uncertain. These assumptions are reviewed at the end of each reporting period. Actual future cash flows could differ from these estimates.

Recoverability of property, plant and equipment and intangible assets:

At each closing date of the reported period, the Group evaluates if there is any sign that the property, plant and equipment and/or intangible assets with finite useful lives may have their value impaired. Impairment exists when the ~~carrying~~book value of ~~an asset or CGU~~assets related to the Cash Generating Unit (CGU) exceeds its recoverable ~~amount,~~value, which is the higher ofbetween its fair value ~~less~~loss costs of ~~disposal~~sale of such asset and ~~its~~ value in use. The value in use ~~calculation~~ is ~~based on a Discounted Cash Flow (DCF) method. The~~calculated through the estimation of future cash flows ~~are derived from~~discounted at their present value through a discount rate that reflects the ~~budget for~~current assessments of the ~~next five years.~~market over the temporal value of money and the specific risks of each CGU. Projection calculations cover a five-year period. The recoverable ~~amount~~value is sensitive to the used discount rate, ~~used for the DCF model~~ as well as the ~~expected future cash-inflows~~estimated inflows and the growth ~~rate used. A key assumption used to determine the recoverable amount for the different CGUs is the compensation that the Group obtained for the regulation enacted.~~rate.

The probability of occurrence and the amount of liabilities related to lawsuits and claims:

The Group based its estimates on the opinions of its legal counsel available when the consolidated financial statements were prepared. Existing circumstances and assumptions, however, may change due to changes in circumstances arising beyond the control of the Group.

CENTRAL PUERTO S.A.

Long-term employee benefit plan

The plan costs are determined by actuarial valuations. Actuarial valuations involve several assumptions that might differ from the results that will actually occur in the future.

These assumptions include the assessment of the discount rate, future salary increases and mortality rates. Due to the complexity of the valuation, the underlying assumptions and its long-term nature, the benefit obligations are sensitive to changes in these assumptions. These assumptions are reviewed at the end of each reporting period.

2.4.

New standards and interpretations adopted

As from the fiscal year beginning January 1, ~~2017,~~2019, the Group has applied for the first time certain new and/or amended standards and interpretations as issued by the IASB. ~~In general, these standards and interpretations require that the information in the consolidated financial statements be modified retrospectively.~~

A brief description of the new and/or amended standards and interpretations adopted by the Group and their impact on these consolidated financial statements, are presented below.

~~Amendments to IAS 7 statement of cash flow: Disclosure initiative~~

The amendments require entities to provide disclosure of changes in their liabilities arising from financing activities, including both changes arising from cash flows and non-cash changes (such as foreign exchange gains or losses). The Group has provided the information in note 14.5.

~~The Group has elected not to disclose this information on comparative basis.~~

~~F-28~~

~~CENTRAL PUERTO S.A.~~

~~Amendments to IAS 12 - Income tax: Recognition of Deferred Income Tax Assets for Unrealized Losses~~

The amendments clarify that an entity needs to consider whether tax law restricts the sources of taxable profits against which it may make deductions on the reversal of that deductible temporary difference related to unrealized losses from a debt instrument measured at fair value or other assets. Furthermore, the amendments provide guidance on how an entity should determine future taxable profits and explain the circumstances in which taxable profit may include the recovery of some assets for more than their carrying amount.

~~Entities are required to apply the amendments retrospectively. These amendments are effective for annual periods beginning on or after January 1, 2017.~~

~~As of December 31, 2017, these amendments had not impact on the Group’s consolidated financial statements.~~

~~Annual Improvements Cycle - 2014-2016 - Amendments to IFRS 12 Disclosure of Interests in Other Entities: Clarification of the scope of disclosure requirements in IFRS 12~~

The amendments clarify that the disclosure requirements in IFRS 12, other than those in paragraphs B10-B16, apply to an entity’s interest in a subsidiary, a joint venture or an associate (or a portion of its interest in a joint venture or an associate) that is classified as held for sale. During 2017 and 2016 the Group did not hold investments in subsidiaries, joint ventures or associates classified as held for sale, therefore these amendments did not affect the Group’s financial statements.

~~2.5.~~

~~IFRS issued but not yet effective~~

The following new and/or amended standards and interpretations have been issued but were not effective as of the date of issuance of these consolidated financial statements of the Group. In this sense, only the new and/or amended standards and interpretations that the Group expects to be applicable in the future are indicated. In general, the Group intends to adopt these standards, as applicable, when they become effective.

~~IFRS 15 - Revenue from contracts with customers~~

In May 2014, IASB issued IFRS 15 “Revenue from contracts with customers”, which establishes the new model for recognizing revenue from contracts with customers. Such standard revokes the current guidelines for revenue recognition included in IAS 18 “Revenue”, IAS 11 “Construction Contracts” and related interpretations when this standard becomes effective.

~~The fundamental principle of the model is to satisfy performance obligations. IFRS 15 structures this principle through the following five steps:~~

~~Step 1: Identify the contract with a customer.~~

~~Step 2: Identify the performance obligations in the contract.~~

~~Step 3: Determine the transaction price.~~

~~Step 4: Allocate the transaction price to each performance obligation.~~

~~Step 5: Recognize revenue when (or while) a performance obligation is satisfied.~~

The new revenue model applies to all contracts with customers, except those under the scope of other IFRSs, such as lease, insurance and financial instruments contracts. Interest recognition and dividend income are not covered by this standard.

Pursuant to IFRS 15, a system on the allocation of the transaction price to each performance obligation is established. According to such standard, the Group shall recognize revenue when a performance obligation is satisfied, i.e. every time “control” over those goods and services is transferred to the customer.

~~F-29~~

~~CENTRAL PUERTO S.A.~~

~~Note 5 includes the main sources of income from ordinary activities of the Group.~~

After carrying out their analysis, the management of the Group concluded that the current revenue recognition practices, which are governed by the current IFRS, are consistent with the requirements of IFRS 15.

In turn, the Group will apply IFRS 15 to all periods beginning on January 1, 2018. For such purpose, it will apply the modified retrospective approach. Therefore, should there be necessary, the accumulated effect of the initial application of this standard will be retrospectively recognized as an adjustment to the initial balance of accumulated retained income as at January 1, 2018 and the comparative information will not be adjusted.

It is important to highlight the fact that such standard requires greater estimates and professional judgments than the applied in the current accounting standards. Additionally, IFRS 15 requires greater disclosures in the financial statements.

~~Accordingly, IFRS 15 requires a separate presentation of assets and liabilities of contracts and trade receivables in the consolidated statement of financial position.~~

~~IFRS 9 Financial instruments~~

In July 2014, the IASB issued the final version of IFRS 9 Financial Instruments, which establishes new requirements for classification and measurement of financial instruments, impairment and hedge accounting. This version adds a new impairment model based on expected losses and some minor modifications to the classification and measurement of financial assets.

~~The new standard replaces previous versions and is effective for periods beginning on January 1, 2018.~~

The Group has analyzed financial assets and liabilities as of December 31, 2017 so as to determine the impact of the classification and measurement on their consolidated financial position and its results. Finally, management has assessed that the adoption of IFRS 9 will not have a material impact on the Group.

IFRS 16 Leases

In January 2016, the IASB issued the final version of IFRS 16 and it replaces IAS 17 Leases, IFRIC 4 Determining whether an arrangement contains a lease, SIC-15 Operating leases-incentives and SIC-27 Evaluating the substance of transactions involving the legal form of a lease. IFRS 16 sets out the principles for the recognition, measurement, presentation and disclosure of leases and requires lessees to account for all leases under a single on-balance sheet model similar to the accounting for finance leases under IAS 17. The standard includes two recognition exemptions leases of “low-value” assets (e.g., personal computers) and short-term leases (i.e., leases with a lease term of 12 months or less). At the commencement date of a lease, a lessee will recognize a liability to make lease payments (i.e., the lease liability) and an asset representing the right to use the underlying asset during the lease term (i.e., the right to-use asset). Lessees will be required to separately recognize the interest expense on the lease liability and the depreciation expense on the ~~right-of-use~~rightof - use asset.

Lessor accounting under IFRS 16 is substantially unchanged from today’s accounting under IAS 17. Lessors will continue to classify all leases using the same classification principle as in IAS 17 and distinguish between two types of leases: operating and finance leases. IFRS 16 also requires lessees and lessors to make more extensive disclosures than under IAS 17. IFRS 16 is effective for annual periods beginning on or after January 1, 2019. Early adoption is permitted, but not before the entity applies IFRS 15. A lessee can choose to apply the standard using either a full retrospective or modifies retrospective approach.

~~The Group has not yet determined what impact, if any, the adoption of the new standard will have on its consolidated financial statements.~~

~~F-30~~

~~CENTRAL PUERTO S.A.~~

~~IFRIC 22 - Foreign Currency Transactions and Advance Consideration~~

This interpretation clarifies the “transaction date” for the purpose of determining the exchange rate to use on initial recognition of a related asset, expense or income, when an entity has received or paid in advance in foreign currency. It applies to transactions in foreign currency when an entity recognizes a non-monetary assets or liability derived from the reception or payment in advance before initial recognition of a related asset, expense or income.

So as to determine the exchange rate to use on initial recognition of an asset, expense or income, the transaction date is the date on which a non-monetary asset or liability derived from reception or payment in advance is recognized.

It is effective for periods beginning on January 1, 2018. Application may be retroactive or prospective since i) the beginning of the application period or ii) the beginning of a previous comparative period.

As of December 31, 2019, these changes did not have significant impact on the ~~date of issuance of these~~ consolidated financial statements of the ~~Group estimates that the adoption of this standard will not have an impact on its consolidated financial position or in its results.~~Group.

IFRIC Interpretation 23 - Uncertainty over Income Tax Treatments

In June 2017, the IASB issued IFRIC Interpretation 23 - Uncertainty over Income Tax Treatments. The Interpretation clarifies application of recognition and measurement requirements in IAS 12 Income Taxes when there is uncertainty over income tax treatments. The Interpretation specifically addresses the following: (a) whether an entity considers uncertain tax treatments separately, (b) the assumptions an entity makes about the examination of tax treatments by taxation authorities, (c) how an entity determines taxable profit (tax loss), tax bases, unused tax losses, unused tax credits and tax rates and (d) how an entity considers changes in facts and circumstances. IFRIC 23 is effective for annual periods beginning on or after January 1, 2019. ~~Early adoption is permitted.~~

CENTRAL PUERTO S.A.

The Group ~~has not yet determined what impact, if any, the adoption~~determines whether each tax treatment should be considered independently or whether some tax treatments should be considered together, and uses an approach that provides better predictions of the ~~new interpretation will have~~resolution of the uncertainty.

The Group applies significant judgment when identifying uncertainties on the income tax treatment. The Group evaluated whether the Interpretation had an impact on its consolidated financial ~~statements.~~statements, especially within the framework of tax inflation adjustment in determining the tax income of mentioned periods:

Income tax return for fiscal year 2014

In February 2015 CPSA, for itself and as the successor company of Hidroeléctrica Piedra del Águila (HPDA) (the merged company) filed income tax returns for the nine-month period ended September 30, 2014, applying the adjustment for inflation mechanism established by the Argentine Income Tax Law. In addition, the Company filed its income tax return for the three-month period ended December 31, 2014, applying the same adjustment for inflation mechanism established by the Argentine Income Tax Law.

Action for recovery - Income tax refund for fiscal period 2010

In December 2014, the Company, as merging company and continuing company of HPDA, filed an action for recovery with the tax authorities regarding the income tax for the fiscal period 2010 that amounted to 67,383 at historical values (537,681 adjusted for inflation), which was incorrectly entered by HPDA. This recourse action seeks to recover the income tax entered by HPDA in accordance with the lack of application of the inflation - adjustment mechanism established by the Income Tax Law. In December 2015, the term stated by Law no. 11 683 elapsed, the Company brought a contentious-administrative claim before the National Court to ask for its right to recourse for an amount of 67,612 at historical values (539,508 adjusted for inflation).

In October 2018, the Company was served notice of the judgment issued by the Federal Contentious- Administrative Court No. 5, which granted the right to recourse. The judgment ordered tax authorities to return the amount of 67,612 (at historical values) to the Company plus the interest stated in the BCRA Communication 14290 and ordered that legal cost must be borne by the defendant. Such judgment was appealed by the National Tax Administration, and on September 9, 2019, Division I of the National Court of Appeals of the Federal Contentious- Administrative Court (“CNACAF”) confirmed the appealed judgment. On September 24, 2019, the National Tax Administration raised Federal Extraordinary Appeal (“REF”) against CNACAF judgment, which was replied by the Company. On October 29, 2019, CNACAF granted the REF and sent the file to the Argentine Supreme Court.

Action for recovery - income tax refund for fiscal years 2009, 2011 and 2012

In December 2015, the Company filed an action for recovery with the Argentine Tax Authorities in relation to income tax for the fiscal year 2009, in the amount of 20,395 at historical values (183,240 adjusted for inflation) which had been incorrectly paid by the Company in excess of our income tax liability. By filling such action, we seek to recover the excess income tax paid by CPSA due to the failure to apply the adjustment for inflation set forth in the Argentine Income Tax Law. On April 22, 2016, after the term required by Law No. 11,683 expired, the Company filed an action for recovery for the amount claimed with the Argentinean Tax Court. On September 27, 2019, the judge entered judgment rejecting the complaint filed by the Company. Such judgment was appealed by the Company last October 4, 2019.

In December 2018, the Company filed two administrative actions for recovery with AFIP: the first one was filed by the Company, as merging company and continuing company of HPDA, regarding the income tax for the fiscal period 2012 that amounted to 62,331 at historical values (389,131 adjusted for inflation),

CENTRAL PUERTO S.A.

which was entered in excess by HPDA. The second action for recovery was filed by the Company regarding the income tax for the same fiscal period that amounted to 33,265 at historical value (207,673 adjusted for inflation), which was entered in excess by the Company. These actions seek to recover the income tax entered by HPDA and the Company in accordance with the lack of application of the inflation-adjustment mechanism aforementioned. On September 12, 2019, the Company filed both actions with the Federal Contentious- Administrative Court against AFIP-DGI in accordance with Section 82, paragraph “c” of Law no. 11,683 (restated text 1998 as amended), as the term established in the second paragraph of Section 81 of such law had elapsed.

After adopting the Interpretation, the Group considered, based on the opinion of its legal advisors and considering the new guidelines introduced by IFRIC 23: 1) regarding the income tax 2014 determination stated in a), that it is probable that tax authorities will accept the Company’s position and, therefore, it is not required to record a liability under such item, and 2) regarding actions for recovery of income tax, except for the case of the action for recovery filed by HPDA for the fiscal period 2011, that it is also probable that tax authorities will accept the Company’s positions; therefore, an asset has been recognized for such actions.

Consequently, the Company has recognized an income for 756,526 regarding the adoption of IFRIC 23, with an impact on retained earnings at the beginning of this fiscal year, as it is established by the Interpretation, and an asset for 127,441 included in the item “Other non-financial assets” of Current Assets under “Income Tax Credits”.

2.5.

IFRS issued but not yet effective

Amendments to IFRS 3: Definition of a business

In October 2018, IASB issued amendments to the definition of a business through IFRS 3 “Business combinations” to make it easier for companies to decide whether activities and assets they acquire are a business or not. The standard clarifies the minimum requirements for the existence of a business, removes the test on whether market participants can replace the missing elements; it adds a guide to help companies evaluate if an acquired process is significant; it reduces the definitions of a business and results, and it introduces an optional concentration test of reasonable value. New examples were provided together with the amendments.

Since amendments are applied prospectively to the transactions or other events that occur on the date of the first application or later, the Group shall not be affected by these amendments on the transition date.

Amendments to IAS 1 and to IAS 8: Definition of material

In October 2018, IASB issued amendments to IAS 1 “Presentation of Financial Statements” and to IAS 8 “Accounting Policies, Changes in Accounting Estimates and Errors” to align the definition of “material” through the standards and to clarify certain aspects of the definition. The new definition establishes that: “Information is material if omitting, misstating or obscuring it could reasonably be expected to influence decisions that the primary users of general purpose financial statements make on the basis of those financial statements, which provide financial information about a specific reporting entity.”

CENTRAL PUERTO S.A.

The amendment to the definition of material is not expected to have a significant impact on the consolidated financial statements of the Group.

Investment in associates

12-31-2017

12-31-2016

ARS 000

ARS 000

Termoeléctrica José de San Martin S.A.
  25,671
  19,576
Termoeléctrica Manuel Belgrano S.A.
  28,744
  25,236
Inversora de Gas Cuyana S.A.
  217,380
  82,183
Inversora de Gas Centro S.A.
  254,813
  101,740
Distribuidora de Gas del Centro S.A.
  204,382
  70,130
Transportadora de Gas del Mercosur S.A.
  254,551
  6,884
Others
  105
  1,263

  985,646
  307,012
The book value of investment in associates as of December 31, 2019 and 2018 amounts to:

				12-31-2019	12-31-2018
	2017	2016	2015	ARS 000
	ARS 000
Termoeléctrica José de San Martin S.A.	22,218	15,897	11,958	64,947	85,365
Termoeléctrica Manuel Belgrano S.A.	23,557	20,953	14,494	69,836	75,590
Inversora de Gas Cuyana S.A.	135,197	33,868	8,083
Inversora de Gas Centro S.A.	153,073	40,726	10,539
Distribuidora de Gas del Centro S.A.	134,252	28,582	5,444
ECOGAS Group (Note 3.2)				3,219,803	2,810,346
Transportadora de Gas del Mercosur S.A.	247,667	-		95,879	102,574
Others	(963)	7,487	(7,128)	104	213
	715,001	147,513	43,390	3,450,569	3,074,088

The share of the profit of associates for the years ended December 31, 2019, 2018 and 2017 amounts to

~~F-31~~

~~CENTRAL PUERTO S.A.~~

	2019	2018	2017
	ARS 000	ARS 000	ARS 000

Termoeléctrica José de San Martin S.A.	45,936	55,244	50,463
Termoeléctrica Manuel Belgrano S.A.	44,762	44,958	53,506
ECOGAS Group (Note 3.2)	1,021,975	1,555,590	1,117,929
Transportadora de Gas del Mercosur S.A.	(6,695)	(4,040)	582,119
Others	7,319	693	443
	1,113,297	1,652,445	1,804,460

3.1.

TJSM and TMB

As of December 31, ~~2017 and 2016,~~2019, the Group has a 30.8752% interest in ~~TJSM~~TSM and 30.9464% interest in TMB, which are engaged in managing the purchase of equipment, and building, operating and maintaining the power plants.

~~TJSM~~ TSM and TMB are private, unlisted companies.

After termination of the supply agreements with TSM and TMB dated February 2, 2020 and January 7, 2020, respectively, as described in Note 1.2 a), trust agreements also terminated. As from those dates, a 90-workingday period commenced in which TSM and TMB and their shareholders had to perform all the company acts necessary to allow the Argentine Government to receive the corresponding shares in the capital of TSM and TMB that their contributions give them rights to.

On January 3, 2020, i.e. before the aforementioned 90-day period commenced, the Argentine Government (through the Ministry of Productive Development) served notice to the Company (together with TSM, TMB and their other shareholders and BICE, among others) stating that, according to the Final Agreement for the Re-adaptation of WEM, TSM and TMB shall perform the necessary acts to incorporate the Argentine Government as shareholder of both companies, acknowledging the same equity interest rights: 65.006% in TMB and 68.826% in TSM. On January 9, 2020, the Company, together with the other generation shareholders of TSM and TMB, rejected such act understanding that the equity interest the Government claims does not correspond with the contributions made for the construction of power stations and that gave it right to claim such equity interest. On March 4, 2020, we were notified on two notes sent by the Minister of Productive Development whereby they answered the one sent by the Company on January 9, 2020 - mentioned above -, ratifying the terms of the note notified to the Company on January 3, 2020. At the issue date of these financial statements, the Company is evaluating future steps.

CENTRAL PUERTO S.A.

On the other hand, the Company, together with the other shareholders of TSM and TMB (as guarantor within the framework and the limits stated by the Final Agreement for the Re-adaptation of WEM, Note SE no. 1368/05 and trust agreements), BICE, TSM, TMB and SE signed: a) on January 7, 2020 an amendment addenda of the Operation and Maintenance (“OMA”) of Thermal Manuel Belgrano and b) on January 9, 2020 an amendment addenda of the Operation and Maintenance Agreement (“OMA”) of Thermal San Martín, for which the validity of TMB and TSM OMA was extended until the effective transference of the trust’s liquidation equity.

The values recorded in these financial statements for the investments in TMB and TSM are detailed in Note 3.

During the years ended December 31, ~~2017, 2016~~2019 and ~~2015,~~2018, the Company received cash dividends from TMB and ~~TJSM~~TSM for ~~36,176, 25,798~~117,227 and ~~19,358,~~84,337, respectively.

~~The following table show summarized financial information of the Group’s investment in such companies:~~

~~Termoeléctrica José de San Martín SA~~

12-31-2017

12-31-2016

ARS 000

ARS 000

Current assets
  140,389
  118,198
Non-current assets
  7,679
  8,282
Current liabilities
  (58,631)
  (58,467)
Non-current liabilities
  (6,291)
  (4,609)
Net assets
  83,146
  63,404
Carrying amount of the investment
  25,671
  19,576

2017

2016

2015

ARS 000

ARS 000

ARS 000

Associate’s revenues and income

Revenues
  244,628
  182,796
  140,019
Net income for the year
  71,961
  51,488
  39,239
Share in the net income of associate
  22,218
  15,897
  11,958

~~Termoeléctrica Manuel Belgrano SA~~

12-31-2017

12-31-2016

ARS 000

ARS 000

Current assets
  142,969
  128,127
Non-current assets
  3,644
  2,398
Current liabilities
  (49,005)
  (45,791)
Non-current liabilities
  (4,725)
  (3,186)
Net assets
  92,883
  81,548
Carrying amount of the investment
  28,744
  25,236

2017

2016

2015

ARS 000

ARS 000

ARS 000

Associate’s revenues and income

Revenues
  257,407
  205,218
  148,945
Net income for the year
  76,122
  67,707
  47,561
Share in the net income of associate
  23,557
  20,953
  14,494

3.2.

Investments in gas distribution

The Group holds ownership interests of ~~44.10% (49% in 2015) in Inversora de Gas Cuyana S.A. (“IGCU”, the controlling company of Distribuidora de Gas Cuyana S.A. “DGCU”), of 44.10% (49% in 2015)~~42.31% in Inversora de Gas del Centro S.A. (“IGCE”, the controlling company of Distribuidora de Gas del Centro S.A. “DGCE” and Distribuidora de Gas Cuyana S.A. “DGCU”) and 17.20% ~~(19.11%~~ in ~~2015) in DGCE.~~DGCE (from now on, “ECOGAS Group”). Consequently, the Group holds, both directly and indirectly, a ~~22.49% interest (24.99% in 2015) in DGCU and 39.69% (44.10% in 2015)~~40.59% of the capital stock of DGCE, and, indirectly, a 21.58% interest in DGCU, both of which are engaged in the distribution of natural gas. The ~~Group~~Company does not control such companies.

~~F-32~~

~~CENTRAL PUERTO S.A.~~

~~Subsequent event~~

~~On February 23, 2018, our Board of Directors approved the sale process of up to 27,597,032 DGCE shares, which represent all of our directly stake in this company~~ ~~and 17.20% of the capital stock of DGCE, through a potential initial public offering of DGCE. On March 14, 2018, the Company authorized the offer of up to 10,075,952~~ ~~(6.28% of its capital stock)~~ ~~shares of DGCE, subject to market conditions. As of the date of these consolidated financial statements, the Company, and certain potential selling shareholders, continue to evaluate this strategy.~~

~~3.2.1.1.~~

~~Inversora de Gas del Centro SA~~

IGCE is a private, unlisted ~~company. Its only significant asset is~~company which holds a 51% equity interest in DGCE, a company engaged in the distribution of natural gas in the provinces of Cordoba, La Rioja and Catamarca, ~~Argentine.~~

~~During the year ended December 31, 2015, the Group received dividends of 17,003~~Argentine, and ~~15,288, respectively, from IGCE and DGCE.~~

~~The following table shows summarized financial information of the Group’s investment in IGCE with its subsidiary DGCE.~~

12-31-2017

12-31-2016

ARS 000

ARS 000

Current assets
  2,113,190
  1,450,839
Non-current assets
  911,271
  1,300,375
Current liabilities
  (1,692,212)
  (2,151,646)
Non-current liabilities
  (131,662)
  (168,178)
Net assets
  1,200,587
  431,390
Less: non-controlling interests
  (622,780)
  (200,686)

  577,807
  230,704
Carrying amount of the investment
  254,813
  101,740

2017

2016

2015

ARS 000

ARS 000

ARS 000

Associate’s income
  332,931
  70,744
  9,388
Net income for the year
  347,104
  92,349
  21,508
Share in net income of associate
  153,073
  40,726
  10,539

~~3.2.1.2.~~

~~Distribuidora de Gas del Centro SA~~

~~The following table shows summarized financial information of the Group’s investment in DGCE.~~

12-31-2017

12-31-2016

ARS 000

ARS 000

Current assets
  1,632,747
  1,375,072
Non-current assets
  873,411
  1,256,813
Current liabilities
  (1,193,139)
  (2,096,622)
Non-current liabilities
  (124,752)
  (127,530)
Net assets
  1,188,267
  407,733
Carrying amount of the investment
  204,382
  70,130

2017

2016

2015

ARS 000

ARS 000

ARS 000

Associate’s revenues and income

Revenues
  3,656,921
  2,239,906
  770,342
Net income for the year
  780,535
  166,174
  28,487
Share in net income of associate
  134,252
  28,582
  5,444

~~F-33~~

~~CENTRAL PUERTO S.A.~~

~~Subsequent event~~

~~On March 2, 2018 and on February 23, 2018 the Group received dividends of 143,122 (equivalent to USD 7,099,316) and 129,256 (equivalent to USD 6,482,009), respectively, from IGCE and DGCE.~~

~~3.2.2.~~

~~Inversora de Gas Cuyana SA~~

~~IGCU is a private unlisted company. Its only significant asset is~~ a 51% equity interest in DGCU, a company engaged in the distribution of natural gas in the provinces of Mendoza, San Juan and San Luis.

During ~~the year ended December 31, 2015,~~September 2019, the Group received dividends of ~~8,967~~278,868 from ~~IGCU.~~

~~The following table shows summarized financial information of the Group’s investment in IGCU with its subsidiary DGCU.~~

12-31-2017

12-31-2016

ARS 000

ARS 000

Current assets
  1,297,922
  1,094,417
Non-current assets
  719,515
  995,997
Current liabilities
  (884,304)
  (1,533,812)
Non-current liabilities
  (35,643)
  (44,982)
Net assets
  1,097,490
  511,620
Less: non-controlling interests
  (604,564)
  (325,265)

  492,926
  186,355
Carrying amount of the investment
  217,380
  82,183

2017

2016

2015

ARS 000

ARS 000

ARS 000

Associate’s revenues and income

Revenues
  2,813,506
  1,612,252
  569,294
Net income for the year
  306,569
  76,798
  6,349
Share in net income of associate
  135,197
  33,868
  8,083

~~Subsequent event~~

ECOGAS Group. On March 28, 2018, a preliminary merger agreement of IGCE, IGCU and the companies Magna Inversiones S.A. (“Magna”) and RPBC Gas S.A. (“RPBC”) was approved. IGCE will act as the acquiring company and IGCU, RPBC and Magna will act as absorbed companies. The merger is subject to authorization by the national gas regulatory entity (“ENARGAS”) and it is subject to the approval of the general meeting of shareholders of the companies participating in the merger, which will be held on May 28, 2018.

~~On April 16, 2018~~October 31, 2019 the Group received dividends of ~~121,809 (equivalent~~333,653 from ECOGAS Group.

On February 23, 2018, the Company´s Board of Directors approved the sale process of up to ~~USD 6,042,152) from IGCU.~~27,597,032 DGCE shares, which represent 17,20% of its capital stock, through a potential initial public offering of DGCE in the Argentine Republic. On March 14, 2018, the Company authorized the offer of up to 10,075,952 shares of DGCE, subject to market conditions. However, due to market reasons, DGCE shareholders decided to postpone the offer. On October 24, 2019, CNV notified DGCE on the resolution whereby it decided to cancel, as of that date, the authorization given to DGCE to make a public offer of its shares due to an absence of negotiable instruments placing.

3.3.

Transportadora de Gas del Mercosur S.A.

The Group has a 20% interest in Transportadora de Gas del Mercosur S.A. (“TGM”). ~~TGM is a private unlisted company.~~ This Company has a gas pipeline that covers the area from Aldea Brasilera (in the Province of Entre Ríos) to Paso de los Libres (in the Province of Corrientes). In 2009, TGM terminated its contract with YPF, which was its only client to date, on the grounds of consecutive non-compliances. On December 22, 2017, YPF agreed to pay TGM USD 114,000,000 as full and final settlement to cover all the complaints TGM claims against YPF. TGM is a private unlisted company.

~~The following table shows summarized financial information for TGM:~~

	~~2017~~
	~~ARS 000~~
~~Current assets~~	~~2,014,585~~
~~Non-current assets~~	~~150,681~~
~~Current liabilities~~	~~(892,510~~)
~~Net assets~~	~~1,272,756~~
~~Carrying amount of the investment~~	~~254,551~~

~~Associate´s revenues and income~~
~~Revenues~~	~~683~~
~~Net income for the year~~	~~1,238,335~~
~~Share in net income of the associate~~	~~247,667~~

~~F-34~~

CENTRAL PUERTO S.A.

~~Subsequent event~~

~~On April 16, 2018 the Group received dividends of 230,640 (equivalent to USD 11,406,528) from TGM.~~

Operating segments

The following provides summarized information of the operating segments for the years ended December 31, ~~2017, 2016~~2019, 2018 and ~~2015:~~2017:

2019						Electric Power Generation from conventional sources	Electric Power Generation from renewable sources	Natural Gas Transport and Distribution (1) (2)	Others (1)	Adjustmentsand Eliminations	Total
		Equity investees				ARS 000
2017	Electric Power Generation	Natural Gas Transport and Distribution	Others	Adjustmentsand Eliminations	Total
	ARS 000
Revenues	5,956,596	6,621,959	502,035	(7,123,994)	5,956,596	32,118,483	3,045,780	30,024,854	1,674,019	(30,902,352)	35,960,784
Cost of sales	(2,742,147)	(4,366,884)	(322,057)	4,688,941	(2,742,147)	(17,637,834)	(728,031)	(22,336,691)	(1,090,658)	22,836,540	(18,956,674)
Administrative and selling expenses	(651,168)	(1,188,068)	-	1,188,068	(651,168)	(2,363,535)	(269,870)	(3,925,748)	-	3,925,748	(2,633,405)
Other operating income	640,480	2,232,236	-	(2,232,236)	640,480	18,246,996	84,528	1,147,076	21,680	(1,147,076)	18,353,204
Other operating expenses	(92,497)	-			(92,497)	(13,676)	(253,440)	(37,761)	(3,638)	37,761	(270,754)
Impairment of property, plant and equipment and intangible assets						(4,404,442)	-				(4,404,442)

Operating income	3,111,264	3,299,243	179,978	(3,479,221)	3,111,264	25,945,992	1,878,967	4,871,730	601,403	(5,249,379)	28,048,713

Other (expenses) income	(817,307)	(708,732)	(35,162)	1,458,895	(102,306)	(17,701,140)	(2,756,412)	(1,938,960)	(161,921)	3,170,575	(19,387,858)

Net income for the segment	2,293,957	2,590,511	144,816	(2,020,326)	3,008,958	8,244,852	(877,445)	2,932,770	439,482	(2,078,804)	8,660,855
Share in the net income for the segment	2,293,957	670,189	44,812	-	3,008,958	8,244,852	(877,445)	1,047,213	246,235	-	8,660,855

2018	Electric Power Generation from conventional sources	Electric Power Generation from renewable sources	Natural Gas Transport and Distribution (1) (2)	Others (1)	Adjustmentsand Eliminations	Total
	ARS 000	ARS 000	ARS 000	ARS 000	ARS 000	ARS 000

Revenues	20,323,323	921,939	26,306,641	1,697,151	(27,304,293)	21,944,761
Cost of sales	(9,208,981)	(271,617)	(17,463,403)	(1,020,126)	17,985,484	(9,978,643)
Administrative and selling expenses	(1,981,869)	(155,380)	(3,113,691)	-	3,113,691	(2,137,249)
Other operating income	20,202,668	115,074	354,251	23,273	(354,251)	20,341,015
Other operating expenses	(92,676)	(109,556)	(86,149)	(2,182)	86,149	(204,414)
CVO receivables update	16,947,737	-	-	-	-	16,947,737

Operating income	46,190,202	500,460	5,997,649	698,116	(6,473,220)	46,913,207

Other (expenses) income	(18,591,109)	(2,680,494)	(1,766,571)	(223,892)	2,360,781	(20,901,285)

Net income for the segment	27,599,093	(2,180,034)	4,231,078	474,224	(4,112,439)	26,011,922
Share in the net income for the segment	27,599,093	(2,180,034)	392,480	200,383	-	26,011,922

Equity investees

2016

Electric Power Generation

Natural Gas Transport and Distribution

Others

Adjustmentsand Eliminations

Total

ARS 000

ARS 000

ARS 000

ARS 000

ARS 000

Revenues
  3,562,721
  3,852,158
  388,014
  (4,240,172)
  3,562,721
Cost of sales
  (2,069,752)
  (3,166,223)
  (243,796)
  3,410,019
  (2,069,752)
Administrative and selling expenses
  (445,412)
  (603,502)
  -
  603,502
  (445,412)
Other operating income
  1,137,736
  -
  -
  -
  1,137,736
Other operating expenses
  (84,845)
  125,878
  -
  (125,878)
  (84,845)






Operating income
  2,100,448
  208,311
  144,218
  (352,529)
  2,100,448






Other (expenses) income
  (917,099)
  (69,174)
  (24,249)
  240,936
  (769,586)






Net income for the segment
  1,183,349
  139,137
  119,969
  (111,593)
  1,330,862
Share in the net income for the segment
  1,183,349
  103,176
  44,337
  -
  1,330,862

2017						Electric Power Generation from conventional sources	Electric Power Generation from renewable sources	Natural Gas Transport and Distribution (1)	Others (1)	Adjustmentsand Eliminations	Total
		Equity investees				ARS 000
2015	Electric Power Generation	Natural Gas Transport and Distribution	Others	Adjustmentsand Eliminations	Total
	ARS 000
Revenues	2,654,180	1,339,636	338,303	(1,677,939)	2,654,180	14,827,241	-	16,276,782	1,140,257	(17,417,039)	14,827,241
Cost of sales	(1,397,365)	(1,064,934)	(208,935)	1,273,869	(1,397,365)	(7,997,976)	-	(11,477,562)	(731,478)	12,209,040	(7,997,976)
Administrative and selling expenses	(371,485)	(421,764)	(5,852)	427,616	(371,485)	(1,576,650)	(48,216)	(2,634,414)	-	2,634,414	(1,624,866)
Other operating income	735,517	17,510	-	(17,510)	735,517	1,415,872	14,865	5,289,224	-	(5,289,224)	1,430,737
Other operating expenses	(52,702)	-			(52,702)	(199,642)	(15,936)	(72,944)	-	72,944	(215,578)

Operating income	1,568,145	(129,552)	123,516	6,036	1,568,145	6,468,845	(49,287)	7,381,086	408,779	(7,789,865)	6,419,558

Other (expenses) income	(401,396)	148,659	587	(105,856)	(358,006)	(1,212,375)	(133,091)	(879,511)	(80,307)	2,763,834	458,550

Net income for the segment	1,166,749	19,107	124,103	(99,820)	1,210,139	5,256,470	(182,378)	6,501,575	328,472	(5,026,031)	6,878,108
Share in the net income for the segment	1,166,749	24,066	19,324	-	1,210,139	5,256,470	(182,378)	1,700,048	103,968	-	6,878,108


Title of each class	Trading Symbol	Name of each exchange on which registered
American Depositary Shares, each representing 10 common shares of Central Puerto S.A.*	CEPU	New York Stock Exchange*


Title of each class		Outstanding at December 31, ~~2017~~2019
Common shares, nominal value Ps.1.00 per share		1,514,022,256

Item 1.	Identity of Directors, Senior Management and Advisors	1
Item 2.	Offer Statistics and Expected Timetable	1
Item 3.	Key Information	1
Item 3.A.	Selected Financial Data	1
Item 3.B	Capitalization and indebtedness	5
Item 3.C	Reasons for the offer and use of proceeds	5
Item 3.D	Risk Factors	5
Item 4.	Information of the Company	3040
Item 4.A	History and development of the Company	3245
Item 4.B	Business overview	3650
Item 4.C	Organizational structure	~~117~~145
Item 4.D	Property, plants and equipment	~~118~~145
Item 5.	Operating and Financial Review and Prospects	~~119~~147
Item 5.A	Operating Results	~~119~~147
Item 5.B	Liquidity and Capital Resources	~~145~~173
Item 5.C	Research and Development, patents and licenses, etc.	~~151~~181
Item 5.D	Trend Information	~~151~~181
Item 5.E	Off-balance sheet arrangements	~~153~~184
Item 5.F	Contractual Obligations	~~153~~184
Item 5.G	Safe Harbor	~~155~~186
Item 6.	Directors, Senior Management and Employees	~~155~~186
Item 7.	Shareholders and Related Party Transactions	~~167~~198
Item 7.A.	Major Shareholders	~~167~~198
Item 7.B	Related Party Transactions	~~168~~199
Item 7.C	Interests of experts and counsel	~~170~~201
Item 8.	Financial Information	~~170~~201
Item 8.A.	Consolidated Statements and Other Financial Information.	~~170~~201
Item 8.B	Significant Changes	~~171~~203
Item 9.	The Offer and Listing	~~173~~204
Item 9.A.	Offer and listing details	~~173~~204
Item 9.B.	Plan of Distribution	~~174~~204
Item 9.C.	Markets	~~174~~204
Item 9.D.	Selling Shareholders	~~174~~204
Item 9.E.	Dilution	~~174~~204
Item 9.F.	Expenses of the issue	~~174~~204
Item 10.	Additional Information	~~175~~204
Item 10.A.	Share capital	~~175~~204

Item 10.C	Material contracts	~~180~~209
Item 10.D	Exchange Controls	~~180~~210
Item 10.E	Taxation	~~181~~215
Item 10.F	Dividends and paying agents	~~188~~223
Item 10.G	Statement by experts	~~188~~223
Item 10.H	Documents on display	~~188~~223
Item 10.I.	Subsidiary Information	~~188~~223
Item 11.	Quantitative and Qualitative Disclosures about Market Risk	~~188~~223
Item 12.	Description of Securities Other Than Equity Securities	~~191~~228
Item 12.A	Debt Securities	~~191~~228
Item 12.B	Warrants and Rights	~~191~~228
Item 12.C	Other Securities	~~191~~228
Item 12.D	American Depositary Shares	~~191~~228
Item 13.	Defaults, Dividend Arrearages and Delinquencies	~~192~~229
Item 14.	Material Modifications to the Rights of Security Holders and Use of Proceeds	~~192~~229
Item 15.	Controls and Procedures	~~193~~229
Item 16.A	Audit committee financial expert	~~193~~230
Item 16.B	Code of Ethics	~~193~~230
Item 16.C	Principal Accountant Fees and Services	~~193~~231
Item 16.D	Exemptions from the Listing Standards for Audit Committees	~~194~~231
Item 16.E	Purchases of Equity Securities by the Issuer and Affiliated Purchasers	~~194~~231
Item 16.F	Change in Registrant’s Certifying Accountant	~~194~~231
Item 16.G	Corporate Governance	~~194~~232
Item 16.H.	Mine Safety Disclosure	~~197~~234
Item 17.	Financial Statements	~~197~~234
Item 18.	Financial Statements	~~197~~235
Item 19.	Exhibits	~~198~~235

Power plant	Location	Installed capacity (MW)	Technology
Puerto Nuevo(1)	City of Buenos Aires	~~589~~ 589.00	Steam turbines
Nuevo Puerto(1)	City of Buenos Aires	~~360~~ 360.00	Steam turbines
Puerto combined cycle(1)	City of Buenos Aires	~~765~~ 765.00	Combined cycle
Luján de Cuyo plant	Province of Mendoza	~~509~~ 595.32	Steam turbines, gas turbines, two cycles and mini-hydro turbine generator, producing electric power and steam
Brigadier López plant	Province of Santa Fe	280.50	Gas turbine
Piedra del ~~Aguila~~Águila plant	Piedra del ~~Aguila~~Águila (Limay River, bordering provinces of Neuquén and Río Negro)	~~1,440~~ 1,440.00	Hydroelectric plant
~~Total continuing operations~~		~~3,663 MW~~
La ~~Plata plant~~Castellana I wind farm(2)	~~La Plata,~~ Province of Buenos Aires	~~128~~ 100.80	~~Co-generation plant producing electric power and steam~~Wind turbines
La Castellana II wind farm(2)	Province of Buenos Aires	14.40	Wind turbines
La Genoveva II wind farm	Province of Buenos Aires	41.80	Wind turbines
Achiras wind farm(2)	Province of Córdoba	48.00	Wind turbines
Manque wind farm	Province of Córdoba	38.00	Wind turbines
Total ~~discontinued operations~~		~~128~~ 4,272.82 MW

~~(1)~~		~~Part of the~~ “~~Puerto Complex~~” ~~as defined in~~ “~~Business.~~”
~~(2)~~	As of December 31, 2017, the La Plata plant was classified as a disposal group held for sale and its respective results as a discontinued operation in our audited consolidated financial statements. Effective as of January 5, 2018, we sold the La Plata plant to YPF EE. For further information, see “Item 4. Information of the Company—Recent Developments—La Plata Plant Sale”).

~~(1)~~	“~~Plants under construction~~” ~~refers to (a) the wind farms Achiras and La Castellana, both of which are under construction and are expected to be finished in the second and third quarter of 2018, respectively; (b) the Luj~~án de Cuyo co-generation unit, which is under construction and is expected to be finished in the fourth quarter of 2019; (c) the Terminal 6 Plant, which is under construction and is expected to be finished in the second quarter of 2020; and (d) the wind farm Genoveva I, which is expected to be finished in the second quarter of 2020. _____________ (1) “Assets under construction” refers to (a) Los Olivos wind farms which started operations in February, 2020, La Genoveva I, which is currently under construction, the increase of the installed capacity of the Manque wind farm, which as of December 31, 2019 had an installed capacity of 38 MW. As of January 23, 2020 its installed capacity increased to 53.2 MW, and as of March 3, 2020, to 57 MW, the total power of the project) and the output to the grid from the La Castellana II wind farm increase from 14.40 MW as of December 31, 2019 to 15.20 MW on February 22, 2020, the total installed capacity of the project; (b) the Terminal 6 Plant, which is under construction; (c) the Brigadier López plant expansion project has not commenced as of the date of this annual report (see Item 3D. Risk Factors—Risks Relating to our Business— Factors beyond our control may affect or delay the completion of the awarded projects, or alter our plans for the expansion of our existing plants). As of the date of this annual report, we have an aggregate installed capacity of 4,315 MW. (2) “FONINVEMEM Plants” refers to the plants José de San Martín, Manuel Belgrano and Vuelta de Obligado that we expect to be transferred from FONINVEMEM trusts to the operating companies, TJSM, TMB and CVOSA, respectively. For a description of when we expect this transfer to occur and other information, see “Item 4.B. Business Overview—FONINVEMEM and Similar Programs.” (3) Power capacity numbers have been rounded. The power capacity with respect to the assets under construction is the expected power capacity of the plant, which may differ from the awarded capacity.
~~(2)~~	“~~FONINVEMEM Plants~~” ~~refers to the plants Jos~~é de San Martín, Manuel Belgrano and Vuelta de Obligado that we expect to be transferred from FONINVEMEM trusts to the operating companies, TJSM, TMB and CVOSA, respectively, after the first ten years of operation as a result of the FONINVEMEM program and other similar programs. For a description of when we expect this transfer to occur and other information, see ~~“Item 4.B.~~ ~~Business Overview~~—~~FONINVEMEM and Similar Programs.~~”
~~(3)~~	The graphic excludes the La Plata plant which, as of December 31, 2017, was classified as a disposal group held for sale and its respective results as a discontinued operation in our audited consolidated financial statements. Effective as of January 5, 2018, we sold the La Plata plant to YPF EE. For further information, see “Item 4. Information of the Company—Recent Developments—La Plata Plant Sale.”

	La Castellana	Achiras
Location	Province of Buenos Aires	Province of Córdoba
Expected commercial operation date (1)	July 2018	June 2018
Estimated total capital expenditure (including VAT)	US$148 million	US$74 million
Awarded electric capacity	99MW	48 MW
Awarded price per MWh	US$61.50	US$59.38
Contract length	20 years, starting from commercial operation	20 years, starting from commercial operation
Power purchase agreement signing date	January 2017	May 2017
Number of generators	32	15
Capacity per unit	3.15 MW	3.2 MW
Wind turbine provider	Acciona Windpower—Nordex	Acciona Windpower—Nordex

	La Genoveva I
Location	Province of Buenos Aires
~~Expected~~Original commercial operation date ~~(2)~~	May 2020
~~Estimated PPA signing date~~	~~May 2018~~ (1)
Estimated total capital expenditure ~~(including~~(excluding VAT) (2)	US$~~105~~110 million
Expected electric capacity	88.20 MW
Awarded electric capacity	~~86.6~~86.60 MW
Regulatory Framework	RenovAr 2.0
Awarded ~~electric capacity~~ price per MWh ~~of installed capacity~~	US$40.90 ~~per MWh~~
~~Expected contract~~Contract length	20 years, starting from commercial operation
Power purchase agreement signing date	July 2018
Number of ~~generators~~units	2521 wind turbines
~~Capacity per unit~~Wind turbine provider	~~3.46 MW~~Vestas

~~Potential Project Name~~	~~Renewable Source~~	~~Location~~	~~Potential Power in MW~~
~~La Castellana II(1)~~	~~Wind~~	~~Bah~~’~~a Blanca, Buenos Aires Province~~	~~15.75~~
~~Achiras II(1)~~	~~Wind~~	~~Achiras, C~~ó~~rdoba Province~~	~~81.90~~
~~La Genoveva II(1)~~	~~Wind~~	~~Bah~~’~~a Blanca, Buenos Aires Province~~	~~97.02~~
~~Cerro Senillosa(2)~~	~~Wind~~	~~Senillosa, Neuqu~~é~~n Province~~	~~100.00~~
~~Pic~~ú~~n Leuf~~ú~~(2)~~	~~Wind~~	~~Pic~~ú~~n Leuf~~ú~~, Neuqu~~é~~n Province~~	~~100.00~~

	For the year ended December 31,
	2017	2016	2015
Generation—GWh/year
Puerto Complex	8,737	9,197	8,737
Luján de Cuyo plant	3,170	3,092	3,519
Piedra del Águila plant	3,719	2,351	4,742
Total	15,627	14,639	16,997
Sales under the Energía Base and electric power sales on the spot market—GWh/year
Puerto Complex	8,679	9,133	8,681
Luján de Cuyo plant	3,158	3,085	3,512
Piedra del Águila plant	3,719	2,351	4,720
Total	15,557	14,569	16,912
Sales under contract—GWh/year
Puerto Complex	61	63	59
Luján de Cuyo plant	101	63	86
Piedra del Águila plant	-	-	40
Total	162	126	184
Energy purchases—GWh/year
Puerto Complex	3	1	1
Luján de Cuyo plant	90	55	80
Piedra del Águila plant	-	-	17
Total	92	56	99
Steam production (metric tons/year)
Luján de Cuyo plant	1,177,661	1,114,908	1,069,967
Total	1,177,661	1,114,908	1,069,967
Natural gas consumption—MMm3/year
Puerto Complex	1,132	790	605
Luján de Cuyo plant	605	454	529
Piedra del Águila plant	-	-	-
Total	1,737	1,244	1,134
Gas oil consumption—thousands of m3/year
Puerto Complex	218	353	258
Luján de Cuyo plant	-	-	18
Piedra del Águila plant	-	-	-
Total	218	353	275
Fuel oil consumption—thousands of tons/year
Puerto Complex	643	939	1,133
Luján de Cuyo plant	41	162	207
Piedra del Águila plant	-	-	-
Total	684	1,102	1,340
Availability—% per year(1)
Puerto Complex	91%	75%	75%
Luján de Cuyo plant	93%	81%	89%
Piedra del Águila plant	100%	100%	100%
Weighted average for thermal units	91.70%	76.22%	78.61%
Weighted average for the Company(1)	94.97%	85.57%	87.02%

	For the year ended December 31,
	2019	2018 (1)	2017
Generation—GWh/year
La Plata plant	-	10	837
Total	-	10	837
Sales under the Energía Base and electric power sales on the spot market—GWh/year
La Plata plant	-	10	355
Total	-	10	355
Sales under contract—GWh/year
La Plata plant	-	-	533
Total	-	-	533
Energy purchases—GWh/year
La Plata plant	-	-	51
Total	-	-	51
Steam production (metric tons/year)
La Plata plant	-	19,392	1,599,476
Total	-	19,392	1,599,476
Natural gas consumption—MMm3/year	-
La Plata plant		4	199
Total	-	4	199
Gas oil consumption—thousands of m3/year
La Plata plant	-	-	-
Total	-	-	-
Fuel oil consumption—thousands of tons/year
La Plata plant	-	-	-
Total	-	-	-
Availability—% per year(1)
La Plata plant		100%	85%

1	~~Guaranteed by manufacturer.~~
2	~~Excluding agreed scheduled maintenance.~~
3		~~For average combined cycles.~~

Plant	Unit	Natural gas (thousands of m3/day)	Gas oil (m3/day)	Fuel oil (tons/day)
Puerto combined cycle	CEPUCC11	1,720	1,821	-
Puerto combined cycle	CEPUCC12	1,720	1,821	-
Nuevo Puerto	NPUETV05	794	-	710
Nuevo Puerto	NPUETV06	1,610	-	1,445
Puerto Nuevo	PNUETV07	980	-	867
Puerto Nuevo	PNUETV08	1,337	-	1,174
Puerto Nuevo	PNUETV09	1,601	-	1,432
Subtotal Puerto Complex		9,763	3,643	5,628
Luján de Cuyo	LDCUCC25	1,418	-	-
Luján de Cuyo	LDCUTV11	447	-	411
Luján de Cuyo	LDCUTV12	457	-	409
Luján de Cuyo	LDCUTG22	282	286	-
Luján de Cuyo	LDCUTG23	70	68	-
Luján de Cuyo	LDCUTG24	70	68	-
Luján de Cuyo	LDCUTG25	203	198	-
Luján de Cuyo	LDCUTG26	203	198	-
Subtotal Luján de Cuyo plant		3,150	818	820
Brigadier López		1,758	1,811	0
Subtotal Brigadier López		1,758	1,811	0
Total Central Puerto		14,671	6,272	6,449

Plant	Unit	Natural gas (thousands of m3/day)	Gas oil (m3/day)	Fuel oil (tons/day)
Puerto combined cycle	CEPUCC11	1,749	1,832
Puerto combined cycle	CEPUCC12	1,749	1,832
Nuevo Puerto	NPUETV05	830		715
Nuevo Puerto	NPUETV06	1,610		1,458
Puerto Nuevo	PNUETV07	1,100		888
Puerto Nuevo	PNUETV08	1,421		1,178
Puerto Nuevo	PNUETV09	1,629		1,393
Subtotal Puerto Complex		10,088	3,664	5,633
Luján de Cuyo	LDCUCC22	250	246
Luján de Cuyo	LDCUCC25	1,414
Luján de Cuyo	LDCUTV11	450		412
Luján de Cuyo	LDCUTV12	461		421
Luján de Cuyo	LDCUTG23	69	67
Luján de Cuyo	LDCUTG24	69	67
Subtotal Luján de Cuyo plant		2,713	380	833
Total Central Puerto		12,800	4,044	6,466

		For the year ended December 31,			For the year ended December 31,
Modality continuing operations	Main clients	2017		Main clients	2019
		(in thousands of Ps.)	percentage of revenues		(in thousands of Ps.)	percentage of revenues
Energía Base (Resolution SE No. 95/2013)(1) and electric power sold on the spot market(2)	CAMMESA (3)	5,648,272	94.82%
Energía Base(1) (Resolution SRRyME 1/19; Res. SE No. 19/2017, SGE 70 and 95/2013, as amended)(2) (3)				CAMMESA	27,378,909	76.14%
RenovAr Program sales under contracts				CAMMESA	2,653,942	7.38%
Term market sales under contracts	Compañía Mega S.A., ENARSA	34,077	0.57%	CAMMESA, Compañía Mega S.A., IEASA	4,115,104	11.44%
(MATER sales under contracts				Cervecería y Maltería Quilmes (subsidiary of AB Inbev); San Miguel A.G.I.C.I y F.; Banco de Galicia y Buenos Aires S.A.; Minera Alumbrera Limited (subsidiary of Glencore in Argentina); Banco Supervielle S.A.	391,839	1.09%
Energía Plus sales under contracts	Dow Chemical Argentina S.A., Pirelli Neumáticos S.A., Banco de Galicia y Buenos Aires S.A., PBBPolisur S.A. Sanatorio Otamendi y Miroli S.A.	133,047	2.23%	Pirelli Neumáticos S.A., Banco de Galicia y Buenos Aires S.A., PBBPolisur S.A., Metrive S.A., Pet Food Saladillo S.A., Banco Supervielle S.A.	189,821	0.53%
Steam sales	YPF	141,200	2.37%	YPF	434,648	1.21%
Other				YPF	286,282	0.80%
Revenues from CVO thermal plant management				Fideicomiso Central Vuelta de Obligado	510,239	1.42%

Company and subsidiaries	Power (MW)
Central Puerto	~~3,663~~4,273(1)(2)
The AES Corporation	~~3,403~~3,419~~((3)~~ (3)
Grupo Enel	~~3,941~~4,105(4)(2)
Pampa Energía S.A.	~~3,756~~4,463(5)
YPF EE	2,144 (6)

In MW	Energía Base	Term market	Res. 220/07	Energía Plus	Total
Central Puerto(1)	3,640	7	-	16	3,663
AES Argentina Group	2,989		-	305	3,294
ENEL Group	3,941	-	-	-	3,941
Pampa Energía S.A.(2)	3,340	-	135	281	3,756

~~(1)~~	For Central Puerto, excludes the La Plata Plant, which had a 55 MW and 73 MW installed capacity in Energía Base and the Term Market, respectively. Effective as of January 5, 2018, we sold the La Plata plant to YPF EE. See Item 4. Information of the Company—Recent Developments—La Plata Plant Sale.”
~~(2)~~	~~Includes Petrobras Argentina S.A., which was acquired by Pampa Energía S.A.~~

In MW	Energía Base	Energía Plus (Res. 1281/06)	Power Purchase Agreements Under Res. 220/07	Power Purchase Agreements Under Res. 21/16	Power Purchase Agreements Under Res. 287/16	Term market for renewable energy (MATER)	RenovAr	Total
Central Puerto(1)	3,098	321	-	-	-	-	-	4,273
AES Argentina Group	3,637	16	282	-	95	94	149	3,419
ENEL Group	4,105	-	-	-	-	-	-	4,105
Pampa Energía S.A.(2)	3,241	298	419	305		99	100	4,463
YPF EE	1,680	-	-	365	-	99	-	2,144

Tariff 3 - BT < 300 kW contracted capacity
Variable Fee “Pico”	2.311
Variable Fee “Resto”	2.206
Variable Fee “Valle”	2.103

Tariff 3 - MT < 300 kW contracted capacity
Variable Fee “Pico”	2.197
Variable Fee “Resto”	2.097
Variable Fee “Valle”	1.998

Tariff 3 - AT < 300 kW contracted capacity
Variable Fee “Pico”	2.106
Variable Fee “Resto”	2.011
Variable Fee “Valle”	1.916

Tariff 3 - BT >= 300 kW contracted capacity
Variable Fee “Pico”	3.346
Variable Fee “Resto”	3.198
Variable Fee “Valle”	3.049

Tariff 3 - MT >= 300 kW contracted capacity
Variable Fee “Pico”	3.18
Variable Fee “Resto”	3.039
Variable Fee “Valle”	2.898

Tariff 3 - AT >= 300 kW contracted capacity
Variable Fee “Pico”	3.049
Variable Fee “Resto”	2.914
Variable Fee “Valle”	2.779

	La Castellana I	Achiras	La Genoveva I
Location	Province of Buenos Aires	Province of Córdoba	Province of Buenos Aires
Status	In operation	In operation	Under construction
Commercial operation date / Expected commercial operation date	August 2018	September 2018	May 2020(1)
Awarded power capacity in the bidding process(2)	99 MW	48 MW	86.60MW
Current/Expected power capacity (2)	100.80 MW	48 MW	88.2 MW
Regulatory Framework	RenovAr 1.0	RenovAr 1.5	RenovAr 2.0
Awarded price per MWh	US$61.50	US$59.38	US$40.90
Contract length	20 years, starting from commercial operation	20 years, starting from commercial operation	20 years, starting from commercial operation
Power purchase agreement signing date	January 2017	May 2017	July 2018
Number of units	32 wind turbines	15 wind turbines	21 wind turbines
Wind turbine provider	Acciona Windpower—Nordex	Acciona Windpower—Nordex	Vestas

Technology / Scale	PrecBasePot (Ps./MW-month)
Combined-cycle Large > 150 MW	100,650
Combined-cycle Small <= 150 MW	112,200
Steam Turbine Large > 100 MW	143,550
Steam Turbine Small <= 100 MW	171,600
Gas Turbine Large > 50 MW	117,150
Gas Turbine Small <= 50 MW	151,800
Internal Combustion Engines<=42MW	171,600

Technology/Scale	PrecPotDIGO (Ps./MW-month)
Technology/Scale	Winter and Summer	Remaining periods
Combined-cycle Large > 150 MW	360,000	270,000
Combined-cycle Small <= 150 MW	360,000	270,000
Steam Turbine Large > 100 MW	360,000	270,000
Steam Turbine Small <= 100 MW	360,000	270,000
Gas Turbine Large > 50 MW	360,000	270,000
Gas Turbine Small <= 50 MW	360,000	270,000
Internal Combustion Engines<=42MW	420,000	330,000

	CostoOYMxComb
Technology/Scale	Natural Gas (Ps./MWh)	FuelOil/GasOil (Ps./MWh)	BioComb (Ps./MWh)	Mineral Coal (Ps./MWh)
Combined-cycle Large > 150 MW	240	420	600	–
Combined-cycle Small <= 150 MW	240	420	600	–
Steam Turbine Large > 100 MW	240	420	600	720
Steam Turbine Small <= 100 MW	240	420	600	720
Gas Turbine Large > 50 MW	240	420	600	–
Gas Turbine Small <= 50 MW	240	420	600	–
Internal Combustion Engines<=42MW	240	420	720	–

	FRPHMRT
HMRT	Summer	Autumn	Winter	Spring
HMRT-1	1.2	0.2	1.2	0.2
HMRT-2	0.6	–	0.6	–

Technology/Scale	Capacity Base Price (PrecBasePot) (Ps./MW-month)
Large HI Units with P > 300 MW	99,000
Medium size HI Units with P > 120 and < 300 MW	132,000
Small HI Units with P > 50 and < 120 MW	181,500
Renewable HI Units with P < 50 MW	297,000
Large HB pumping Units with P > 300 MW	99,000
Medium size HB pumping Units with P > 120 and < 300 MW	132,000

HMRT Remunaration
Technology/Scale	PrecPOHMRT
Technology/Scale	Ps./MW-HMRT
Hydro >300 MW	25.700
Hydro >120 and <= 300 MW	32.500
Hydro > 50 and <= 120 MW	32.500
Renewable Hydro < 50 MW	32.500
Pump > 300 MW	32.500
Pump > 120 and <= 300 MW	32.500

Technology / Scale	PrecBasePot (US$/MW-month)
CC big P > 150 MW	3,050
CC small P ≤ 150 MW	3,400
ST big P > 100 MW	4,350
ST small P >50 MW	5,200
GT big P> 50 MW	3,550
GT small P ≤ 50 MW	4,600
Internal Combustion Engines	5,200

Period	PrecPotDIGO (US$/MW-month)
Summer: December-January-February	7,000
Winter: June – July – August	7,000
Remaining periods	5,500