As filed with the Securities and Exchange Commission on April 24, 2024

UNITED STATES SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

Form 20-F

ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d) OF
THE SECURITIES EXCHANGE ACT OF 1934
For the fiscal year ended December 31, 2023 Commission File Number: 001-33422

Empresa Distribuidora y Comercializadora Norte S.A. (EDENOR S.A.)
(Exact name of Registrant as specified in its charter)

Distribution and Marketing Company of the North S.A.	Argentine Republic
(Translation of Registrant’s name into English)	(Jurisdiction of incorporation or organization)

Avenida Del Libertador 6363

Ciudad de Buenos Aires, C1428ARG

Buenos Aires, Argentina
(Address of principal executive offices)

German Ranftl

Tel.: +54 11 4346 5510 / Fax: +54 11 4346 5325 Avenida Del Libertador 6363

(C1428ARG)
Buenos Aires, Argentina

Chief Financial Officer

(Name, Telephone, E-mail and/or Facsimile number and Address of Company Contact Person)

Securities registered or to be registered pursuant to Section 12(b) of the Act:

Title of each class:	Trading Symbol	Name of each exchange on which registered
Class B Common Shares   American Depositary Shares, or ADSs, evidenced by American Depositary Receipts, each representing 20 Class B Common Shares	EDN EDN	New York Stock Exchange, Inc.* New York Stock Exchange, Inc.

* Not for trading, but only in connection with the registration of American Depositary Shares, pursuant to the requirements of the Securities and Exchange Commission.

___

Securities registered or to be registered pursuant to Section 12(g) of the Act: None

Securities for which there is a reporting obligation pursuant to Section 15(d) of the Act: N/A

Indicate the number of outstanding shares of each of the issuer’s classes of capital or common stock as of the close of the period covered by the annual report: 462,292,111 Class A Common Shares, 442,210,385 Class B Common Shares and 1,952,604 Class C Common Shares.

Indicate by check mark if the registrant is a well-known seasoned issuer, as defined in Rule 405 of the Securities Act.

Yes ☐   No ☒

If this report is an annual or transition report, indicate by check mark if the registrant is not required to file reports pursuant to Sections 13 or 15(d) of the Securities Exchange Act of 1934. Yes ☐   No ☒

Note: Checking the box above will not relieve any registrant required to file reports pursuant to Section 13 or 15(d) of the Securities Exchange Act of 1934 from their obligations under those Sections.

Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports) and (2) has been subject to such filing requirements for the past 90 days. Yes ☒   No ☐

Indicate by check mark whether the registrant has submitted electronically every Interactive Data File required to be submitted pursuant to Rule 405 of Regulation S-T (§232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit such files).. Yes ☒   No ☐

Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, or an emerging growth company. See the definitions of “large accelerated filer,” “accelerated filer,” and “emerging growth company” in Rule 12b-2 of the Exchange Act. (Check one):

Large Accelerated Filer	☐	Accelerated Filer	☒
Non-Accelerated Filer	☐	Emerging Growth Company	☐

If an emerging growth company that prepares its financial statements in accordance with U.S. GAAP, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards† provided pursuant to Section 13(a) of the Exchange Act. ☐

† The term “new or revised financial accounting standard” refers to any update issued by the Financial Accounting Standards Board to its Accounting Standards Codification after April 5, 2012.

Indicate by check mark whether the registrant has filed a report on and attestation to its management’s assessment of the effectiveness of its internal control over financial reporting under Section 404(b) of the Sarbanes-Oxley Act (§ 15 U.S.C. 7262(b)) by the registered public accounting firm that prepared or issued its audit report. ☒

If securities are registered pursuant to Section 12(b) of the Act, indicate by check mark whether the financial statements of the registrant included in the filing reflect the correction of an error to previously issued financial statements. ☐ 

Indicate by check mark whether any of those error corrections are restatements that required a recovery analysis of incentive based compensation received by any of the registrant’s executive officers during the relevant recovery period pursuant to §240.10D-1(b). ☐ 

Indicate by check mark which basis of accounting the registrant has used to prepare the financial statements included in this filing: U.S. GAAP ☐
International Financial Reporting Standards as issued by the International Accounting Standards Board ☒   Other ☐

If “Other” has been checked in response to the previous question, indicate by check mark which financial statement item the registrant has elected to follow: Item 17 ☐   Item 18 ☐

If this is an annual report, indicate by check mark whether the registrant is a shell company (as defined by Rule 12b-2 of the Exchange Act). Yes ☐   No ☒

PART I
Item 1.	Identity of Directors, Senior Management and Advisors	1
Item 2.	Offer Statistics and Expected Timetable	1
Item 3.	Key Information	1
Item 4.	Information on the Company	37
Item 4A.	Unresolved Staff Comments	93
Item 5.	Operating and Financial Review and Prospects	94
Item 6.	Directors, Senior Management and Employees	132
Item 7.	Major Shareholders and Related Party Transactions	145
Item 8.	Financial Information	149
Item 9.	The Offer and Listing	156
Item 10.	Additional Information	161
Item 11.	Quantitative and Qualitative Disclosures about Market Risk	199
Item 12.	Description of Securities Other than Equity Securities	200
PART II
Item 13.	Defaults, Dividend Arrearages and Delinquencies	202
Item 14.	Material Modifications to the Rights of Security Holders and Use of Proceeds	203
Item 15.	Controls and Procedures	203
Item 16A.	Audit Committee Financial Expert	204
Item 16B.	Code of Ethics	204
Item 16C.	Principal Accountant Fees and Services	204
Item 16D.	Exemptions from the Listing Standards for Audit Committees	205
Item 16E.	Purchases of Equity Securities by the Issuer and Affiliated Purchasers	205
Item 16F.	Change in Registrant’s Certifying Accountant	205
Item 16G.	Corporate Governance	205
Item 16H.	Mine Safety Disclosures	215
Item 16I.	Disclosure Regarding Foreign Jurisdictions that Prevent Inspections.	215
Item 16J.	Insider Trading Policies	215
Item 16K.	Cibersecurity	215
PART III
Item 17.	Financial Statements	218
Item 18.	Financial Statements	218
Item 19.	Exhibits	218

Index to Financial Statements F-1

PART I

Item 1. Identity of Directors, Senior Management and Advisors

Not applicable.

Item 2. Offer Statistics and Expected Timetable

Not applicable.

Item 3. Key Information

In this annual report, except as otherwise specified, references to “we”, “us”, “our” and the “Company” are references to Empresa Distribuidora y Comercializadora Norte S.A. (EDENOR S.A.), or “Edenor”. For more information, see “Item 4—Information on the Company—History and Development of the Company.”

FORWARD-LOOKING STATEMENTS

This annual report includes forward-looking statements, principally under the captions “Item 3. Key Information - Risk Factors”, “Item 4. Information on the Company” and “Item 5. Operating and Financial Review and Prospects”. We have based these forward-looking statements largely on our current beliefs, expectations and projections about future events and financial trends affecting our business. Forward-looking statements may also be identified by words such as “believes”, “expects”, “anticipates”, “projects”, “intends”, “should”, “seeks”, “estimates”, “future” or similar expressions. Many important factors, in addition to those discussed elsewhere in this annual report, could cause our actual results to differ materially from those expressed or implied in our forward-looking statements, including, among other things:

· the treatment of tariff updates according to the Tariff Review Process (“RT”), or the former Integral Tariff Revision process (Revisión Tarifaria Integral or “RTI”);

· uncertainties related to current or future Government interventions, proposed legislation or legal actions;

· general political, economic, social, demographic and business conditions in the Republic of Argentina, (“Argentina”) and, particularly, in the geographic market we serve;

· the impact of a new tariff segmentation applicable to our users;

· the evolution of energy losses and the impact of fines and penalties and uncollectible debt;

· the impact of regulatory reform and changes in the regulatory environment in which we operate;

· electricity shortages;

· the high temperatures and extreme climate registered over the last years which affects the provision of transport and distribution energy services;

· potential disruption or interruption of our service;

· the revocation or amendment of our concession by the granting authority;

· our ability to implement our capital expenditure plan, including our ability to arrange financing when required and on reasonable terms;

· high depreciation of the Peso;

· the impact of high rates of inflation on our costs;

· the role of the Federal Government in the RT and the recognition of the Company’s regulatory credits;

· Argentina’s renegotiation with the International Monetary Fund (“IMF”); and

· additional matters identified in “Risk factors”.

Forward-looking statements speak only as of the date they were made, and we undertake no obligation to update publicly or to revise any forward-looking statements after we file this annual report because of new information, future events or other factors. In light of these limitations, undue reliance should not be placed on forward-looking statements contained in this annual report.

PRESENTATION OF FINANCIAL INFORMATION

We are a stock corporation (sociedad anónima) incorporated under the laws of the Republic of Argentina. Unless otherwise stated, references to the financial results of “Edenor” are to the consolidated financial results of Edenor. We hold a concession to distribute electricity on an exclusive basis in the northwestern part of the greater Buenos Aires metropolitan area and in the northern part of the City of Buenos Aires, comprising an area of 4,637 square kilometres and a population of approximately 9 million people.

Our financial statements as of December 31, 2023 and 2022 and for the years ended December 31, 2023, 2022 and 2021, and the notes thereto (the “Financial Statements”) are set forth on pages F-1 through F-67 of this annual report.

The Financial Statements, which were prepared in accordance with International Financial Reporting Standards (“IFRS”) as issued by the International Accounting Standards Board (“IASB”), have been approved by resolution of the Board of Directors’ meeting held on March 8, 2024 and have been audited by an independent registered public accounting firm.

Argentina has been considered a high-inflation economy for accounting purposes according to the IAS 29 “Financial reporting in hyperinflationary economies” since July 1, 2018. Therefore, the financial information included in this annual report for all the periods reported are presented on the basis of constant Argentine Pesos as of December 31, 2023 (“current currency”). See “Item 3. Key Information— Risk Factors—The Peso currently qualifies as a currency of a hyperinflationary economy and we are required to restate our historical financial statements in accordance with IFRS, in terms of the measuring unit current at the end of the reporting year, which could adversely affect our results of operations and financial condition”, “Item 5. Operating and Financial Review and Prospects—Factors Affecting Our Results of Operations” and Note 3 to our Financial Statements.

We maintain our accounting records and prepare our financial statements in Argentine Pesos, which is our functional currency.

Certain amounts and ratios contained in this annual report (including percentage amounts) may have been rounded up or down to facilitate the summation of the tables in which they are presented. The effect of this rounding is not material. These rounded amounts and ratios may also be included within the text of this annual report.

EXCHANGE RATES

In 2023, the Argentine Peso continued to depreciate against major foreign currencies, particularly against the U.S. dollar. According to the exchange rate information published by the Banco de la Nación Argentina (“Banco Nación”), the Argentine Peso depreciated by 356.3% against the U.S. dollar during the year ended December 31, 2023 (compared to 72.5%, 22.1% and 40.5% in the years ended December 31, 2022, 2021 and 2020, respectively).

The following table sets forth the high, low, average and period-end exchange rates for the periods indicated, expressed in Pesos per U.S. Dollar and not adjusted for inflation. When preparing our financial statements, we utilize the selling exchange rates for U.S. Dollars quoted by the Banco Nación to translate our U.S. Dollar denominated assets and liabilities into Pesos. There can be no assurance that the Peso will not further depreciate or appreciate in the future. The Federal Reserve Bank of New York does not report a noon buying rate for Pesos. For more information regarding depreciation, see “Item 3. Key Information—Risk Factors—Factors Relating to Argentina—Fluctuations in the value of the Peso could adversely affect the Argentine economy and, which could, in turn adversely affect our results of operations.”

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In this annual report, except as otherwise specified, references to “U.S.$” and “Dollars” are to U.S. Dollars, and references to “Ps.”, “AR$” and “Pesos” are to Argentine Pesos. Solely for the convenience of the reader, we have converted certain amounts included in this annual report from Pesos into Dollars using, for the information provided as of December 31, 2023, the selling exchange rate reported by the Banco Nación, as of December 31, 2023, which was Ps.808.45 to U.S.$1.00 unless otherwise indicated. These conversions should not be considered representations that any such amounts have been, could have been or could be converted into U.S. Dollars at that or at any other exchange rate. On April 22, 2024, the exchange rate was Ps. 872.00, to U.S.$1.00. As a result of fluctuations in the Dollar Peso exchange rate, the exchange rate at such date may not be indicative of current or future exchange rates.

	Low	High	Average		Period End
	(Pesos per U.S. Dollar)
Year ended December 31,
2019	36.90	60.40	47.82	(1)	59.89
2020	59.82	84.15	70.87	(1)	84.15
2021	84.15	105.20	95.13	(1)	102.72
2022	102.72	177.16	131.08	(1)	177.16
2023	808.45	177.16	280.92	(1)	808.45
Month
November-23	349.95	360.50	353.64	(2)	360.50
December-23	361.10	808.45	645.59	(2)	808.45
January-24	808.45	826.40	817.88	(2)	826.40
February-24	826.90	842.20	834.15	(2)	842.20
March-24	842.50	858.00	850.76	(2)	858.00

(1)        Represents the average of the exchange rates on the last day of each month during the period.

(2)        Average of the lowest and highest daily rates in the month.

RISK FACTORS

The following summarizes some, but not all, of the risks provided below. Please carefully consider all of the information discussed in this Item 3.D. “Risk Factors” of this annual report for a more thorough description of these and other risks:

Risks Related to Argentina

· A global or regional financial crisis and unfavorable credit and market conditions may negatively affect our liquidity, users, business, and results of operations.

· The Argentine economy remains vulnerable and any significant decline may adversely affect our business, results of operations, and financial condition.

· Economic and political developments in Argentina, and future policies of the Argentine Government may affect the economy as well as the operations of the energy distribution industry, including Edenor.

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· If high levels of inflation continue, the Argentine economy and our results of operations could be adversely affected.

· The Peso currently qualifies as a currency of a hyperinflationary economy and we are required to restate our historical financial statements in accordance with IFRS, in terms of the measuring unit current at the end of the reporting year, which could adversely affect our results of operations and financial condition.

· Argentina’s ability to obtain financing from international markets could be limited, which may impair its ability to implement reforms and foster economic growth and, consequently, affect our business, results of our operations and growth prospects.

· Fluctuations in the value of the Peso could adversely affect the Argentine economy and could in turn adversely affect our results of operations.

· Intervention by the Argentine Government may adversely affect the Argentine economy and, as a result, our business and results of operations.

· Argentine public expenditures may adversely affect the Argentine economy.

· The Argentine economy remains vulnerable to external shocks that could be caused by significant economic difficulties facing Argentina’s major regional trading partners, or by more general “contagion” effects. Such external shocks and “contagion” effects could have a material adverse effect on Argentina’s economic growth and, therefore, on our results of operations and financial condition.

· The application of certain laws and regulations could adversely affect our results of operations and financial condition.

· The Argentine economy and finance may be adversely affected as a consequence of a decrease in the international prices of commodities that Argentina exports.

· Any downgrade in the credit rating or rating outlook of Argentina could adversely affect the rating and the market price of our ADS, our Class B common shares and our corporate debt, affecting also our liquidity.

Risks Relating to the Electricity Distribution Sector

· The Argentine Government has intervened in the electricity sector in the past and may continue to intervene.

· There is uncertainty as to what other measures the Argentine Government may adopt in connection with tariffs on public services and their impact on the Argentine economy.

· Electricity demand may be affected by tariff increases, which could lead distribution companies, such as us, to record lower revenues.

· Energy shortages may act as a brake on growing demand for electricity and disrupt distribution companies’ ability to deliver electricity to their customers, which could result in customer claims and material penalties imposed on these companies.

· If the demand for energy is increased suddenly, the difficulty in increasing the capacity of distribution companies in a short or medium term, could adversely affect the Company, which in turn could result in customer complaints and substantial fines for any interruptions.

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Risks Relating to Our Business

· We operate our business pursuant to our Concession Agreement granted by the Argentine Government, the revocation or termination of which would have a material adverse effect on our business.

· Downgrades in our credit ratings could have negative effects on our funding costs and business operations.

· Our business is subject to risks arising from natural disasters, catastrophic accidents and terrorist attacks. Additionally, our businesses are subject to the risk of mechanical or electrical failures and any resulting unavailability may affect our ability to fulfil our contractual commitments and thus adversely affect our business and financial performance.

· Our operations could cause environmental risks and any change in environmental laws, climate change legislation or regulations restricting emissions of greenhouse gases (“GHGs”) and legal frameworks promoting an increase in the participation of energies from renewable sources could significantly impact our business and result in increased operating costs.

· Changes in weather conditions or the occurrence of severe weather (whether or not caused by climate change or natural disasters), could adversely affect our operations and financial performance.

· Failure or delay to negotiate further improvements to our tariff structure, including increases in our distribution margin, and/or to have our tariffs adjusted to reflect increases in our distribution costs in a timely manner or at all, have affected and may continue to affect our capacity to perform our commercial obligations and could also have a material adverse effect on our ability to perform our financial obligations.

· Our distribution tariffs may be subject to challenges by Argentine consumer and other groups.

· We have been, and may continue to be, subject to fines and penalties that could have a material adverse effect on our financial condition and results of operations.

· The increase in the illegal neighborhoods within our Concession area may affect the Company’s ability to distribute energy to its customers, as well as produce an increase in public safety risks.

· If we are unable to control our energy losses, especially the theft of energy, our results of operations could be adversely affected.

· Under the Concession Agreement, the Argentine Government could foreclose on its pledge over our Class A common shares under certain circumstances, which could have a material adverse effect on our business and financial condition.

· Default by the Argentine Government could lead to termination of our concession, and have a material adverse effect on our business and financial condition.

· The expiration of the management period could result in the sale of the Company’s controlling interest.

· We may be unable to import certain equipment to meet growing demand for electricity, which could lead to a breach of our Concession Agreement and could have a material adverse effect on our operations and financial position.

· We employ a largely unionized labor force and could be subject to an organized labor action, including work stoppages that could have a material effect on our business.

· We could incur material labor liabilities in connection with our outsourcing that could have an adverse effect on our business and on our results of operations.

· We are subject to anti-corruption, anti-bribery, anti-money laundering and antitrust laws and regulations in Argentina. Any violation thereunder could have a material adverse effect on our reputation and the results of our operation.

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· We are involved in various legal proceedings which could result in unfavorable decisions for us, which could in turn have a material adverse effect on our financial position and results of operations.

· In the event of an accident or other event not covered by our insurance, we could face significant losses that could materially adversely affect our business and results of operations.

· We currently are not able to effectively hedge our currency risk in full and, as a result, a devaluation of the Peso may have a material adverse effect on our results of operations and financial condition.

· A substantial number of our assets are not subject to attachment or foreclosure and the enforcement of judgments obtained against us by our shareholders may be substantially limited.

· The exclusivity of electricity distribution in our service area may be adversely affected by technological or other changes in the energy distribution industry, which could have a material adverse effect on our business.

· We may not be able to raise the funds necessary to repay our commercial debt with CAMMESA, our major supplier.

· We may not have the ability to collect the amounts corresponding to the discounts of the Social Rate, the ceilings of the Social Rate and the bonuses for neighbourhood clubs, that must be financed by the Province of Buenos Aires and the Autonomous City of Buenos Aires.

· All of our outstanding financial indebtedness contains bankruptcy, reorganization proceedings and expropriation events of default, and we may be required to repay all of our outstanding debt upon occurrence of any such events.

· We may not have the ability to raise the funds necessary to finance a change of control offering as required by our Senior Notes.

· The New York Stock Exchange and/or ByMA may suspend trading and/or delist our ADSs and Class B common shares, upon the occurrence of certain events relating to our financial situation.

· Cybersecurity events, such as interruptions or failures in our information technology systems as well as cyber-attacks, could adversely affect our business, financial condition, results of operations and cash flows.

Risks relating to our ADSs and Class B common shares

· Restrictions on the movement of capital out of Argentina may impair the ability of holders of ADSs to receive dividends and distributions on, and the proceeds of any sale of, the Class B common shares underlying the ADSs, which could affect the market value of the ADSs.

· Our shareholders’ ability to receive cash dividends may be limited.

· Holders of ADSs may be unable to exercise voting rights with respect to the Class B common shares underlying the ADSs at our shareholders’ meetings.

· Our shareholders may be subject to liability for certain votes of their securities.

· A potential nationalization or expropriation of 51% of our capital stock, represented by Class A shares, may limit the ability of Class B shares to participate in the Board of Directors.

· If we fail to maintain an effective system of internal controls, we may be unable to accurately report our financial results or prevent fraud and investor confidence and the market price of our securities may be adversely impacted.

· Provisions of Argentine securities laws could deter takeover attempts and have an adverse impact on the price of our shares and ADSs.

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Risks Related to Argentina

Overview

We are a stock corporation (sociedad anónima) incorporated under the laws of the Republic of Argentina and all of our revenues are earned in Argentina and all of our operations, facilities, and users are located in Argentina. Accordingly, our financial condition and results of operations depend to a significant extent on macroeconomic, regulatory, political and financial conditions prevailing in Argentina, including growth rates, inflation rates, currency exchange rates, taxes, interest rates, and other local, regional and international events and conditions that may affect Argentina in any manner. For example, a slowdown in economic growth or economic recession could lead to a decreased demand for electricity in our concession area or a decline in the purchasing power of our users, which, in turn, could lead to a decrease in collection rates from our users or increased energy losses due to illegal use of our service. Several factors have impacted the Argentine economy in the recent past, and may continue to impact it in the future, including among others, inflation rates, exchange rates, commodity prices, public debt, availability of IMF assistance, amendments to the tax regime and policies on trade and fiscal balances.

Our activity is highly regulated and subject to uncertainties due to politic and economic factors, changes in legislation, termination and modification of contractual rights, control of prices and currency fluctuations, among others.

We cannot assure that the Argentine Government will not adopt policies that could adversely affect the Argentine economy or our business, financial condition or 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 Senior Notes, ADSs and Class B common shares to decline.

A global or regional financial crisis and unfavorable credit and market conditions may negatively affect our liquidity, users, business, and results of operations

The effects of a global or regional financial crisis and related turmoil in the global financial system may have a negative impact on our business, ability to access credit and the international capital markets, financial condition and results of operations, which is likely to be more severe on an emerging market economy, such as Argentina. See “Item 3. Key Information—Risk Factors—Factors Relating to Argentina—Argentina’s ability to obtain financing from international markets could be limited, which may impair its ability to implement reforms and foster economic growth and, consequently, affect our business, results of our operations and growth prospects”.

Global economic and financial crises negatively affect emerging economies like Argentina’s. Additionally, abrupt changes in monetary and fiscal policies or foreign exchange regimes could rapidly affect local economic output, while lack of appropriate levels of investment in certain economy sectors could reduce long-term growth. Access to the international financial markets could be limited. Consequently, an increase in public spending not correlated with an increase in public revenues could affect Argentina’s fiscal results and generate uncertainties that might affect the economy’s growth levels.

In recent years, several trading partners of Argentina (such as Brazil, Europe and China) have experienced significant slowdowns or recession periods in their economies. While the vast majority of economies recovered during 2021 and 2022 after the global COVID-19 pandemic, if such slowdowns or recessions were to recur, this may impact the demand for products coming from Argentina and hence affect its economy. Additionally, there is uncertainty as to how the trade relationship between the Mercosur member States will unfold, in particular between Argentina and Brazil. We cannot predict the effect on the Argentine economy and our operations of trade disputes that may arise between Argentina and Brazil, or in case either country decided to exit the Mercosur.

In addition, the global macroeconomic environment faces various challenges. There is considerable uncertainty over the long-term effects of the expansionary monetary and fiscal policies adopted by the central banks and financial authorities of some of the world’s leading economies in 2020 and 2021, including the United States and China. There have been concerns about unrest and terrorist threats in the Middle East, Europe and Africa and over the conflicts involving Israel, Iran, Ukraine, Syria and North Korea. There have also been concerns regarding the relationship among China and other Asian countries, which may result in or intensify potential conflicts in relation to territorial disputes, and the possibility of a trade war between the United States and China. In addition, the United Kingdom exited the European Union (“Brexit”) on January 31, 2020. The medium and long term implications of Brexit could adversely affect European and worldwide economic and market conditions and could contribute to instability in global financial and foreign exchange markets.

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In February 2022, Russian troops invaded Ukraine. Although the severity and duration of the ongoing military action are unpredictable, the conflict in Ukraine, Russia’s prior annexation of Crimea, the recognition of two separatist republics in the Donetsk and Luhansk regions of Ukraine and subsequent military interventions in Ukraine have led to sanctions being levied by the United States, the European Union and other countries against Russia. Russia’s military incursion and the market volatility that followed have adversely affected and may continue to affect the global economy and financial markets and thus could affect our business, financial condition or results of operations. The extent and duration of the military action, sanctions and resulting market disruptions are difficult to predict, but could be substantial. Any such disruption caused by Russian military action or resulting sanctions may magnify the impact of other risks described in this annual report and may result in compliance and operational challenges for the Company. Trade restrictions imposed on Russia have led to increasing oil process, fluctuation in commodities markets and foreign currency exchange volatility. Further escalation of such armed conflict could lead to supply disruptions and higher energy costs, among others, which could adversely affect our results of operations.

In addition, in October 2023, conflict broke out between Israel and Hamas in the Gaza Strip. The Palestinian movement Hamas, which has controlled the Gaza Strip for more than 15 years, infiltrated across the militarized border with Israel. The Hamas attacks prompted an immediate response from Israel, which declared a state of war and launched “Operation Iron Sword”. The Israeli army mobilized to reinforce the borders, encircle the Gaza Strip and search for Hamas terrorists left behind in Israeli territory. As of the date of this annual report, the conflict continues, and it is not possible to anticipate what the consequences will be should it escalate beyond the borders of the two countries. An escalation of the conflict could cause disruption, volatility and instability in the global markets, and in turn in the Argentine economy and, consequently, on our business, financial condition or results of operations.

The effects of an economic crisis on our users and on us cannot be predicted. Weak global and local economic conditions, together with increased international tension and oil & gas constraints, could lead to reduced demand or lower prices for energy, hydrocarbons and related oil products and petrochemicals, which could have a negative effect on our revenues. Economic factors such as unemployment, inflation and the unavailability of credit could also have a material adverse effect on the demand for energy and, therefore, on our business, financial condition and results of operations. The financial and economic situation in Argentina or in other countries in Latin America, such as Brazil, may also have a negative impact on us and third parties with whom we do, or may do, business.

The Argentine economy remains vulnerable and any significant decline may adversely affect our business, results of operations, and financial condition

The Argentine economy has experienced significant volatility in recent decades, characterized by periods of low or negative growth, high levels of inflation and currency depreciation. Sustainable economic growth in Argentina depends 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 and a stable rate of inflation, national employment levels and the circumstances of Argentina’s regional trade partners. The Argentine macroeconomic environment, in which we operate, remains vulnerable, as reflected by the following economic conditions:

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· according to the recent data published by the INDEC in 2024, for the year ended December 31, 2023, Argentina’s real GDP decreased by 1,4% compared to the same period in 2022;

· inflation remains high (11% in March 2024) and may continue at those levels in the future, while regulated tariffs may lag behind;

· continued increases in public expenditures have resulted and could continue to result in fiscal deficit and affect economic growth;

· investment as a percentage of GDP remains low to sustain the growth rate of the past decades;

· protests or strikes may adversely affect the stability of the political, social and economic environment and may negatively impact the global financial market’s confidence in the Argentine economy;

· energy or natural gas supply by generators may not be sufficient to supply increased industrial activity (thereby limiting industrial development) and consumption, mostly at peak demand such as in the winter season;

· unemployment and informal employment remain high, which could have a bearing on energy theft levels potentially impacting our results and operations; and

· the Argentine Government’s economic expectations may not be met and the process of restoring the confidence in the Argentine economy may take longer than anticipated.

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

The Peso has been subject to significant depreciation against the U.S. dollar in the past and may be subject to fluctuations in the future. We cannot predict whether and to what extent the value of the Peso could depreciate or appreciate against the U.S. Dollar and the way in which any such fluctuations could affect our business. The value of the Peso compared to other currencies is dependent, in addition to other factors listed above, on the level of international reserves maintained by the Central Bank of the Republic of Argentina (Banco Central de la República Argentina, the “Central Bank” or “BCRA”), which has also shown significant fluctuations in recent years. As of December 31, 2023, the international reserves of the BCRA totaled U.S.$23,073 million. According to the exchange rate information published by Banco Nación, the Peso depreciated by 356.3% against the U.S. dollar during the year ended December 31, 2023 (compared to 72.5% and 22.1% in the years ended December 31, 2022, and 2021, respectively).

In 2019, as a result of the economic instability, economic uncertainty, and rising inflation rates, the former Argentine administration and the BCRA adopted a series of measures reinstating foreign exchange controls, which applied 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, which has been simplified by the new administration since December 10, 2023.

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Nevertheless, there There can be no assurances regarding future modifications to the exchange controls regime. 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.

The success of these or other measures that the BCRA may implement in the future, is uncertain and any further depreciation of the Peso or our inability to acquire foreign currency could have a material adverse effect on our financial condition and results of operations. We cannot predict whether, and to what extent, the value of the Peso may depreciate or appreciate against the U.S. Dollar or other foreign currencies, and how these uncertainties will affect the demand for electricity. Furthermore, no assurance can be given that, in the future, no additional currency or foreign exchange restrictions or controls will be imposed. Existing and future measures may negatively affect Argentina’s international competitiveness, discouraging foreign investments and lending by foreign investors or increasing foreign capital outflow which could have an adverse effect on economic activity in Argentina, and which in turn could adversely affect our business and results of operations. We cannot predict how these conditions will affect the demand for services provided by Edenor or our ability to meet our liabilities denominated in currencies other than the Peso, including our Senior Notes Class 1, 2 and 3. Any restrictions on transferring funds abroad imposed by the Government could undermine our ability to pay dividends on our ADSs or make payments (of principal or interest) under our outstanding indebtedness in U.S. Dollars, as well as to comply with any other obligation denominated in foreign currency.

Economic and political developments in Argentina, and future policies of the Argentine Government may affect the economy as well as the operations of the energy distribution industry, including Edenor

The Argentine Government has historically exercised significant influence over the economy, and our Company has operated in a highly regulated environment. The Argentine Government may promulgate numerous, far-reaching regulations affecting the economy and electricity companies in particular.

In the event of any economic, social or political crisis, companies operating in Argentina may face the risk of strikes, expropriation, nationalization, mandatory reformation of existing contracts, and changes in taxation policies, including tax increases and retroactive tax claims. In addition, Argentine courts have ruled on modifications on rules related to labor matters, requiring companies to assume greater responsibility for costs and risks associated with subcontracted 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 legal reforms and/or 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 high levels of inflation continue, the Argentine economy and our results of operations could be adversely affected

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Historically, inflation has materially undermined the Argentine economy and the Argentine Government’s ability to create conditions that allow growth. In recent years, Argentina has confronted inflationary pressures, evidenced by significantly higher fuel, energy and food prices, among other factors.

During the first quarter of 2024, according to data published by INDEC, Consumers Price Index (“CPI”) rates were 11%, 13,2% and 20,6% for March, February and January 2024, while for 2023, 2022, and 2021 were 211.4%, 94.8% and 50.9%, respectively. The Argentine Government’s adjustments to electricity and gas tariffs, as well as the increase in the price of gasoline have affected prices, creating additional inflationary pressure. If the value of the Peso cannot be stabilized through fiscal and monetary policies, an increase in inflation rates could be expected.

A high inflation rate environment affects Argentina’s foreign competitiveness by diluting the effects of the Peso depreciation, negatively impacting employment and the level of economic activity and undermining confidence in Argentina’s banking system, which may further limit the availability of domestic and international credit to businesses. In turn, a portion of the Argentine debt continues to be adjusted by the Stabilization Coefficient (Coeficiente de Estabilización de Referencia, or “CER”), a currency index, that is strongly correlated with inflation. Therefore, any significant increase in inflation would cause an increase in the Argentine external debt and consequently in Argentina’s financial obligations, which could exacerbate the stress on the Argentine economy. The efforts undertaken by the Argentine Government to reduce inflation have not achieved the desired results so far. A continuing inflationary environment could undermine our results of operations, adversely affect our ability to finance the working capital needs of our businesses on favorable terms, and adversely affect our results of operations and cause the market value of our ADSs and our Class B common shares to decline.

There is uncertainty regarding the effectiveness of the policies implemented by the Argentine Government to reduce and control inflation and the potential impact of those policies. An increase in inflation may adversely affect the Argentine economy, which in turn may have a negative impact on our financial condition and own results of operations.

The Peso currently qualifies as a currency of a hyperinflationary economy and we are required to restate our historical financial statements in accordance with IFRS, in terms of the measuring unit current at the end of the reporting year, which could adversely affect our results of operations and financial condition

The Peso currently qualifies as a currency of a hyperinflationary economy and we are required to restate our historical financial statements by applying inflationary adjustments to our financial statements.

Pursuant to IAS 29 “Financial Reporting in Hyperinflationary Economies”, the financial statements of entities whose functional currency is that of a hyperinflationary economy must be restated for the effects of changes in a suitable general price index. IAS 29 does not prescribe when hyperinflation arises, but includes several characteristics of hyperinflation. The IASB does not identify specific hyperinflationary jurisdictions. However, in June 2018, the International Practices Task Force of the Centre for Quality (“IPTF”), which monitors “highly inflationary countries”, categorized Argentina as a country with projected three-year cumulative inflation rate greater than 100%. Additionally, some of the other qualitative factors of IAS 29 were present, providing prima facie evidence that the Argentine economy was hyperinflationary for the purposes of IAS 29. Therefore, Argentine companies using IFRS are required to apply IAS 29 to their financial statements for periods ending on and after July 1, 2018.

Any further inflation adjustments into our financial statements may have effects on our business, results of operations and financial condition.

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Argentina’s ability to obtain financing from international markets could be limited, which may impair its ability to implement reforms and foster economic growth and, consequently, affect our business, results of our operations and growth prospects

Argentina’s history of defaults on its external debt and related litigation may reoccur in the future and prevent Argentine companies such as us from accessing the international capital markets readily or may result in higher costs and more onerous terms for such financing, and may therefore negatively affect our business, results of operations, financial condition, the value of our securities, and our ability to meet our financial obligations.

Following the default on its external debt in 2001, Argentina sought to restructure its outstanding debt through exchange offers in 2005 and again in 2010. Holders of approximately 93% of Argentina’s defaulted debt participated in the exchanges. Nonetheless, a number of bondholders held out from the exchange offers and pursued legal actions against Argentina. In 2016, the Argentine Government settled several agreements with the defaulted bondholders, ending more than 15 years of litigation.

In 2020, the Argentine Government reached an agreement with private creditors to renegotiate certain debt conditions as maturity dates and interest rates applicable for the following years. On April 21, 2020, Argentina invited holders of approximately U.S.$66.5 billion aggregate principal amount of its foreign currency external bonds to exchange such bonds for new bonds. The invitation contemplated the use of collective action clauses included in the terms and conditions of such bonds, whereby the decision by certain majorities would bind holders that did not tender into the exchange offer. On August 31, 2020, Argentina announced that it had obtained the bondholder consents required to exchange and or modify 99.01% of the aggregate principal amount outstanding of all series of eligible bonds invited to participate in the exchange offer. The restructuring settled on September 4, 2020. As a result of the invitation, the average interest rate paid on Argentina’s foreign currency external bonds was lowered to 3.07%, with a maximum rate of 5.0%, compared to an average interest rate of 7.0% and maximum rate of 8.28% prior to the invitation. In addition, the aggregate amount outstanding of Argentina’s foreign currency external bonds was reduced by 1.9% and the average maturity of such bonds was extended.

On June 22, 2021, the Minister of Economy announced that the Argentine Government had obtained a “time bridge” within the framework of the Paris Club negotiations, consequently avoiding default. The understanding provides that the Argentine Government will have until March 31, 2022 to reach a restructuring agreement with the Paris Club members, which was further extended until July 31, 2022. On October 28, 2022, the Minister of Economy announced a new agreement with the Paris Club, which was an addendum to the Paris Club 2014 Settlement Agreement. This new agreement recognized a principal amount of U.S.$1.97 billion, extending the repayment period to thirteen semi-annual installments, starting in December 2022 to be repaid in full by September 2028. As part of the agreement, the interest rate applicable to the first three installments was reduced from 9% to 3.9%, with subsequent gradual increases to 4.5%. The payment profile implies semi-annual payments averaging U.S.$170 million (principal and interest included). After two years, Argentina will have repaid 40% of the principal amount outstanding.

On January 28, 2022, the IMF and the Argentine authorities reached an understanding on key policies as part of their ongoing discussions on an IMF-supported program for the refinancing of U.S.$44.1 billion debt which was set to mature in 2022 and 2023. On March 4, 2022, the Argentine Government reached a staff-level agreement with the IMF and a bill was sent to the Argentine Congress. On March 11, 2022, the lower house of the Argentine Congress passed and sent to the Senate the bill that supports the agreement between Argentina and the IMF. On March 17, 2022, the Senate approved the agreement “Program of Extended Facilities” between the Argentine Government and the IMF, following the Argentine Congress’ endorsement of the understanding with the IMF, and on March 25, the Program of Extended Facilities was approved by the Executive Board of the IMF.

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As a result, the Law No. 27,668 was sanctioned on March 18, 2022, and consequently the Program of Extended Facilities was approved, allowing the IMF to pay out U.S.$44.500 million. This agreement includes an obligation to develop an energetic plan, that focuses on improving energy efficiency, and researching for a cleaner and cheaper way to produce and distribute electricity among other goals to achieve. Furthermore, the law reinforces Argentina’s commitment to create a new subsidy segmentation scheme, concentrated on improving the energy distribution as well as protecting the low- and middle-income users.

In June 2022, the IMF’s staff published the first review of the Program of Extended Facilities, taking into the account the exceptional risk resulting from the war in Ukraine, a resurgence of the pandemic and a slowdown in key emerging economies. The IMF strongly supported the Decree No. 332/2022, which created a new subsidy segmentation scheme, eliminating the subsidies for the top 10 percent of residential consumers with the highest income level.

On September 19, 2022, the second review of the arrangement took place. Although it acknowledged the registered growth of real GDP and the decisive steps taken by the authorities to restore macroeconomic stability, the Staff reiterated the need to significantly reduce subsidies for residential users with greatest payment capacity and commercial users. In addition, the IMF encouraged the Argentine Government to continue reducing subsidies, while improving its performance in the following aspects: database improvement, allowing consumers to self- declare their income and assets and reduce the number of non-registered consumers; linkage of prices to cost, instead of wages; less generous consumption ceilings, together with the introduction of a ceiling for low–income consumers, focusing on energy efficiency; and enhanced targeting, composed of three groups and the chance of reconsideration.

On December 2, 2022, the IMF Staff published a third review, with positive feedback on macroeconomic aspects, but underlining the challenging global environment. Focusing on the energy aspect, the IMF reinforced the need to reduce subsidies for residential users with the greatest payment capacity and commercial users. In both cases, the remaining subsidies would be removed in February 2023, establishing a cap for electricity and gas prices during peak consumption months to ensure the fiscal targets. On the other side, middle and low-income residential users would cap the cost of energy at 40 percent and 80 percent of growth in the wage index, respectively. Furthermore, the tariff agreements with electricity distributors within the metropolitan region of Buenos Aires would be updated in February 2023 to improve CAMMESA’s income, including an arrangement to eliminate distributors’ arrears to or from CAMMESA and therefore alleviate the pressures on government finances.

In March 2023, the IMF concluded their fourth review. In August 2023, published the fifth and sixth review allowing the IMF to pay out U.S.$ 5,400 million and U.S.$ 7,500 million, respectively. Upon concluding their review, IMF emphasized that the key program target expected for 2023 had not been met due to several deviations in economic policy, requiring further approval of waivers for non-compliance.

Additionally, waivers were approved related to the adoption for temporary measures that led to the intensification of exchange restrictions and multiple exchange rate practices.

Program targets were modified based on ambitious plans adopted by to realign with the IMF Program and restore macroeconomic stability.

Currently, the Program of Extended Facilities has been extended until December 31, 2024 and a recalibration of planned disbursements under the current program was also approved.

We cannot assure that a new agreement with the IMF will not affect Argentina’s ability to implement reforms and public policies and boost economic growth, nor the impact that any renegotiation will have on Argentina’s ability to access the international capital markets (and indirectly on our ability to access those markets), on the Argentine economy and on our economic and financial situation or ability to extend the maturity dates of our debt obligations nor modify other conditions all of which could affect our results and operations or businesses.

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Fluctuations in the value of the Peso could adversely affect the Argentine economy and could in turn adversely affect our results of operations

The Peso suffered important fluctuations during the last years. We are unable to predict the future value of the Peso against the U.S. Dollar. If the Peso devaluates further, any negative effects on the Argentine economy could have adverse consequences on our business, our results of operations and the market value of our ADSs, including as measured in U.S. Dollars.

Fluctuations in the value of the Peso may adversely affect the Argentine economy, our financial condition and results of operations. The Peso has been subject to significant depreciation against the U.S. dollar in the past and may be subject to further fluctuation in the future. A depreciation of the Peso against major foreign currencies may also have an adverse impact on our capital expenditure program and increase the Peso amount of our trade liabilities and financial debt denominated in foreign currencies. The 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 high inflation, significantly reduce real wages, jeopardize the stability of businesses whose success depends on domestic market demand, including public utilities and the financial industry and adversely affect the Argentine Government’s and our ability to honor its foreign debt obligations.

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

In the recent past, the Argentine Government intervened in the economy, including through the implementation of expropriation and nationalization measures, price controls and exchange controls, among others.

Even though the current administration has announced that it plans to lift exchange controls in the near future, new exchange controls could be introduced in the future which, along with any other then existing transfer restrictions, could in turn, affect our ability to access the international capital markets. Such restrictions and measures may generate political and social tensions and deteriorate the Argentine Government´s public finances, as has occurred in the past, generating an adverse effect on economic activity and, in consequence, adversely affect our business and the result of our operations, and cause the market value of our ADSs and our Class B common shares to decline. See “Item 10. Additional Information— Exchange Controls.” Moreover, we cannot predict the measures that may be adopted by the current or any future government, such as expropriation, nationalization, forced renegotiation or modification of existing contracts, new taxation policies, changes in laws, regulations and policies affecting foreign trade and investments, restrictions to transfers to other countries or to capitals movement, or exclude that an important fluctuation of the Peso may have a material adverse effect on the Argentine economy and, as a consequence, adversely affect our financial condition, our results of operations or cause the market value of our ADSs and our Class B common shares to decline.

Argentine public expenditure may affect the Argentine economy

Public expenditure increased throughout the last decade in Argentina. The Argentine Government adopted several measures to finance its public expenditure.

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The new administration has announced the goal to reduce public spending, including energy and transportation subsidies, and a significant reduction in the transfer of federal funds to the provinces. However, high public expenditure levels could continue or reoccur in the future.

As of the date of this annual report, we cannot predict how the measures that the Argentine Government has applied and may continue to apply will impact the Argentine economy, and, in turn, our business, our financial condition and the results of our operations.

The Argentine economy remains vulnerable to external shocks that could be caused by significant economic difficulties facing Argentina’s major regional trading partners, or by more general “contagion” effects. Such external shocks and “contagion” effects could have a material adverse effect on Argentina’s economic growth and, therefore, on our results of operations and financial condition

Although economic conditions vary from country to country, investors’ perceptions of events occurring in certain countries have in the past substantially affected, and may continue to substantially affect, capital flows into and investments in securities of issuers from other countries, including Argentina. There can be no assurance that the Argentine financial system and securities markets will not be adversely affected by policies that may be adopted by foreign governments or the Argentine Government in the future. Argentina can also be adversely affected by negative economic or financial events that take place in other countries, subsequently affecting our operations and financial condition, including our ability to repay our debt at maturity.

Argentina’s economy is vulnerable to external shocks. For example, economic slowdowns, especially in Argentina’s major trading partners such as Brazil, have led to declines in Argentine exports in the past. Specifically, fluctuations in the price of commodities sold by Argentina and a significant fluctuation of the Peso against the U.S. dollar could harm Argentina’s competitiveness and affect its exports. In addition, international investors’ reactions to events occurring in one market may result in a “contagion” effect which could lead to an entire region or class of investment being disfavored by international investors. Additionally, financial and securities markets in Argentina are also influenced by economic and market conditions in other markets worldwide.

The situation of the U.S. economy and the economic measures taken by the federal administration could adversely affect the economy of developing countries, including Argentina. The U.S. economy has recently registered its highest inflation rates over the last decades, although inflation appears to be falling faster in the United States than in other economies. We cannot predict the decisions and policies that the U.S. administration will adopt in the future, which could generate uncertainty in the international markets and could have a negative effect on developing economies, such as Argentina.

In July 2019, the Southern Common Market (“MERCOSUR”) signed a strategic partnership agreement with the European Union (the “EU”), subject to the approval of the corresponding legislatures of each member country. Such approval is pending as of the date of this annual report, as some member countries are demanding amendments to the agreement (for example, the French government has demanded the inclusion of guarantees regarding the protection of the Amazon, compliance with European agri-food and phytosanitary standards and the fight against climate change). The objective of this agreement is to promote investment, regional integration, increase the competitiveness of the economy and achieve an increase in GDP. However, in January 2024 a European Commission spokesman reported that conditions are not in place to conclude the negotiations. The effect that this agreement could have on the Argentine economy and on the policies implemented by the Argentine Government is uncertain. Regarding other free trade agreement negotiations, the current Argentine Government announced its intention to engage in talks with other groups of countries, including the European Free Trade Area (EFTA), made up of Switzerland, Norway, Iceland and Liechtenstein.

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Moreover, the challenges faced by the EU in stabilizing some of its member economies have had and may continue to have international implications affecting the stability of global financial markets, which has hampered economies around the world.

In sum, international investors’ perceptions of events occurring in one market may generate a “contagion” effect by which an entire region or class of investment is disfavored by international investors. Argentina could be adversely affected by negative economic or financial developments in other emerging and developed countries, which in turn may have material adverse effects on the Argentine economy and, indirectly, on our business, financial condition and results of operations, and the market value of our ADSs and Class B common shares.

The application of certain laws and regulations could adversely affect our results of operations and financial condition

The Company’s operations and business could be affected by the adoption of restrictions on the import of products.

As of the date of this annual report, Edenor cannot guarantee that in the future, measures limiting or restricting the import of products will not be adopted which may have an impact on the goods used by the Company as inputs, causing the Company an adverse effect on its net worth, economic, financial or other situation, its results of operations, business operations and/or its ability to comply with its obligations in general.

On August 7, 2014, Law No. 26,944 on State Responsibility was enacted to regulate the liability of the Argentine Government and public officers, including state liability for unlawful and lawful actions. In particular, it states that the Argentine Government shall not be liable for the damages caused by public services concessionaires.

On September 18, 2014, the Argentine Congress enacted Law No. 26,991 amending Law No. 20,680 (the “Supply Law”), which became effective on September 28, 2014, to increase control over the supply of goods and provision of services. The Supply Law includes the ability of the Argentine Government to regulate consumer rights under Article 42 of the Constitution and permits the creation of an authority to maintain the prices of goods and services (the “Observer of Prices of Goods and Services”). The Observer of Prices of Goods and Services was created by Law No. 26,992.

However, by means of Executive Order No. 70/23 (the “DNU”), the new administration abrogated the Supply Law and Law No. 26,992. Additionally, the DNU included several measures to reduce the size of the public administration and public spending at the federal level, and to deregulate the economy. The DNU, which become effective on December 29, 2023, declared an economic, social security, tariff, health and social emergency until December 31, 2025 and promoted the deregulation of trade, services and industry throughout the national territory.

Most notably, the DNU amended the following bodies of law: Law No. 18,425 (Gondola Law), Law No. 27,221 (Real Estate Leasing Law), Law No. 20,680 (Supply Law), Law No. 27,437 (Buying Law (with the exception of criminal offences)), Law No. 20,705 (State-Owned Companies Law) and Law 13,653 (Regime for the Operation of State-owned Companies).

In energy matters, Decrees Nos. 1060/00 (Hydrocarbon Supply Contracts), 1491/2002 (electricity export contracts), 634/2003 (Extensions of High-voltage Electricity Transmission and Trunk Distribution) and 311/2006 (Refundable Loans from the National Treasury to the Unified Fund) were repealed, as well as Law No. 25822 (Federal Electricity Transmission Plan). In relation to the existing Regime for the Promotion of distributed generation of renewable energy integrated to the electricity grid, the trust fund for the development of distributed generation, the promotional benefits and the regime for the promotion of the national industry were also repealed.

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On December 16, 2023, by means of Decree No. 55/2023, the government declared an emergency in the energy sector and instructed the Secretariat of Energy to implement a course of actions in relation to each segment of electricity generation, transmission and distribution. It also determined the start of a comprehensive tariff review to be implemented before December 31, 2024, and provided for the continuity of ENRE's intervention. Likewise, the proposed Omnibus Act also includes the unification of the gas and electricity governmental bodies which would continue the agency’s intervention. The Omnibus Act proposes to liberalize in the electricity market, unify the control bodies and to establish legal framework for the development of infrastructure by the private sector in the areas of hydrocarbons and energy transport.

Regarding the unification of the bodies that regulate the sector, the Omnibus Act creates the National Regulatory Body for Gas and Electricity, which, once established, would replace and assume the functions of the ENRE and ENARGAS.

The Secretariat of Energy was also empowered to redetermine the structure of subsidies in force in order to ensure end users’ access to basic and essential provision of: (i) electricity under Laws Nos. 15.336 and 24.065, as supplemented, amended and regulated eligibility; and (ii) natural gas under Laws Nos. 17.319 and 24.076, as supplemented, amended and regulated. Eligibility for this benefit shall mainly consider a percentage of the income of the cohabiting group, individually or jointly for electricity and natural gas, to be established by the regulation. For the purpose of calculating the cost of basic consumption, the tariffs in force at each supply point shall be considered.

The Secretariat of Energy shall define the specific mechanisms for the allocation and effective collection of subsidies by users.

In addition to the review by Congress, the DNU may also be subject to judicial review as to its constitutionality, in cases arising from its enforcement or application. Some courts have already suspended the application of certain sections. It is not possible to predict whether the DNU will remain in force after its review by Congress, nor whether the new administration will issue new decrees that could affect our business.

Moreover, on December 27, 2023, the new administration sent to the Congress a bill entitled “Bases and Starting Points for the Freedom of Argentines” (the “Omnibus Act”). Such proposed Omnibus Act was amended and a new draft was sent to the Congress on April 9, 2024. The Omnibus Act declares a public emergency in economic, financial, fiscal, social security, defense, tariff, energy, health and social matters and delegates a series of legislative powers to the Argentine executive branch for the duration of the emergency. The Omnibus Act also includes a series of legal, institutional, tax and criminal law reforms affecting various sectors of the economy, which aim to promote economic freedom, the protection of property rights, production and development, together with the promotion of free play between supply and demand as a way of organizing the economy.

As of the date of this annual report, the Omnibus Act has not been passed by Congress. It is difficult to predict the final outcome of this bill, as well as the impact that other reform proposals may have on the Argentine economy, our business, financial condition and results of operations.

The implementation of the aforementioned laws and regulations has modified or could modify, as applicable, Argentina’s legal system. Future changes in applicable laws and regulations (including as a result of a change in government administration), administrative or judicial proceedings, including potential future claims by us against the Argentine Government, cannot be predicted and we cannot assure you that such changes will not adversely affect our business, financial condition and results of operations.

The Argentine economy and finance may be adversely affected as a consequence of a decrease in the international prices of commodities that Argentina exports

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The global commodities market is characterized by its volatility. Commodities exports have contributed significantly to the Argentine Government’s revenues. Accordingly, the Argentine economy has remained relatively dependent on the price of its exports (mainly soy).

A sustained decrease in the international price of the main commodities exported by Argentina, or any future climate event or condition may have an adverse effect on the agriculture, and therefore on the Argentine Government’s revenues and its capacity to comply with the payments on its public debt, eventually generating recessive or inflationary pressures, and in turn affecting our business, financial situation and the results of our operations.

Failure to adequately address actual and perceived risks of institutional deterioration and corruption may adversely affect Argentina’s economy and financial condition

A lack of a solid and transparent institutional framework for contracts with the Argentine Government and its agencies and corruption allegations have affected and continue to affect Argentina. Argentina ranked 98 of 180 in the Transparency International’s 2023 Corruption Perceptions Index.

In the past, various 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 (the “Notebooks Investigation”) have negatively impacted the Argentine economy and political environment.

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 Argentine Government announced several measures aimed at strengthening Argentina’s institutions and reducing corruption. These measures have included 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), submitting a bill for the issuance of a new public ethic law, among others. The Argentine Government’s ability to implement any of these initiatives is uncertain as it would be subject to independent review by the judicial branch, as well as legislative support from opposition parties.

We cannot estimate the impact that current or future anti-corruption initiatives and investigations may have on the Argentine economy. Similarly, it is not possible to predict the duration or how far-reaching the effects of any investigation might be, particularly in the energy sector, or if there will be any future investigation in this or other industry. In turn, the decrease in investor confidence resulting from any of these, among other issues, could have a significant adverse effect on the growth of the Argentine economy, which could, in turn, harm our business, our financial condition and operational results and affect the trading price of our Class B common shares and ADSs.

Any downgrade in the credit rating or rating outlook of Argentina could adversely affect the rating and the market price of our ADS, our Class B common shares and our corporate debt, affecting also our liquidity

On June 24, 2021, Morgan Stanley Capital International (“MSCI”) announced the reclassification of Argentina to the standalone or independent category with effect as of November 2021, thus being excluded from the MSCI indexes. In June 2019, Argentina had entered the emerging market category. According to MSCI, the main reason for this downgrade lied in the reinstatement of exchange controls, which have been in force since September 2019.

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There can be no assurance that Argentina’s credit rating or rating outlook will not be downgraded further in the future, which could have an adverse effect both on the rating and the market price of our ADS, our Class B common shares and our Senior Notes, affecting our own liquidity.

Risks Relating to the Electricity Distribution Sector

The Argentine Government has intervened in the electricity sector in the past, and may continue to intervene

Historically, the Argentine Government has exerted a significant influence on the economy, including the energy sector, and companies such as us that operate in such sector have done so in a highly regulated context that aims mainly at guaranteeing the supply of domestic demand.

To address the Argentine economic crisis in 2001 and 2002, the Argentine Government adopted the Public Emergency Law and other regulations, which made a number of material changes to the regulatory framework applicable to the electricity sector. These changes severely affected electricity generation, distribution and transmission companies and included the freezing of nominal distribution margins, the revocation of adjustment and inflation indexation mechanisms for tariffs, a limitation on the ability of electricity distribution companies to pass on to the user increases in costs due to regulatory charges and the introduction of a new price-setting mechanism in the Wholesale Electric Market (Mercado Eléctrico Mayorista or “WEM”) which had a significant impact on electricity generators and generated substantial price differences within the market. From time to time, the Argentine Government intervened in this sector by, for example, granting temporary nominal margin increases, proposing a new social tariff regime for residents of poverty-stricken areas, removing discretionary subsidies, creating specific charges to raise funds that were 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.

On December 17, 2015, the Argentine Government issued Decree No. 134/15 declaring the emergency of the national electricity sector which was in effect until December 31, 2017. On February 1, 2017, an RTI process was completed and a new tariff scheme for the following five-year period was enacted. However, on December 21, 2019, the Argentine Congress adopted the Law No. 27,541 on Social Solidarity and Productive Reactivation in the Framework of the Public Emergency, as amended and supplemented (the “Productive Reactivation Law”), which declared a public emergency in tariffs and energy matters until December 31, 2020, and delegated to the Federal Executive Power certain powers normally reserved to Congress or otherwise not within the purview of the Argentine Executive Power (including the ability to make determinations in the renegotiation of public tariffs). Additionally, on December 16, 2020, the Executive Branch issued Decree No. 1020/20 which extended the freeze on electricity rates prescribed by the Productive Reactivation Law or until the new transitional electricity rate schedules come into effect.

On December 16, 2023, by means of Decree No. 55/2023, the government declared an emergency in the energy sector and instructed the Secretariat of Energy to implement a course of actions in relation to each segment of electricity generation, transmission and distribution. It also determined the start of a comprehensive tariff review to be implemented before December 31, 2024, and provided for the continuity of ENRE’s intervention. Likewise, the proposed Omnibus Act also includes the unification of the gas and electricity governmental bodies which would continue the agency’s intervention.

The Secretariat of Energy of the Ministry of Economy is empowered to redetermine the structure of subsidies in force in order to ensure end users access to basic and essential consumption of: (i) electricity under Laws Nos. 15.336 and 24.065, as supplemented, amended and regulated; and (ii) natural gas under Laws Nos. 17.319 and 24.076, as supplemented, amended and regulated, respectively. This benefit shall mainly consider a percentage of the income of the cohabiting group, individually or jointly for electricity and natural gas, to be established by the regulations. For the purpose of calculating the cost of basic consumption, the tariffs in force at each supply point shall be considered.

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The aforementioned Secretariat of Energy shall be empowered to define the specific mechanisms for the allocation and effective collection of subsidies by users, determining the roles and tasks to be performed in a mandatory manner by the different public actors, concessionary companies, and other actors or agents that make up the systems of the public service in question, in their capacity as primary responsible parties.

In addition, within the framework of the emergency in the National Electricity Sector established by Decree No. 55/2023, the SE has been instructed to prepare, put into effect and implement a program of necessary and indispensable actions in relation to the segments included in the aforementioned emergency, in order to establish price sanction mechanisms under competitive and free access conditions, maintain income levels in real terms and cover investment needs, so as to guarantee the continuous provision of public electricity and natural gas transmission and distribution services under appropriate technical and economic conditions for providers and users of all categories. However, we cannot assure whether the implementation of the program would regularize the operating deficit of the WEM’s power and energy compensation funds and accounts. See “Item 4—Information on the Company—The Argentine Electricity Industry—The Wholesale Electricity Market (WEM)—Operation of the WEM”.

On February 16, 2024 ENRE issued Resolution No. 102/2024 notifying the new tariff table and the values per category of the of own distribution costs (“CPD”, also referred as value added for distribution (“VAD”). Low-income consumers (categorized as N2) will see an increase of around 70%. Meanwhile, middle-income consumers (known as N3) will see an increase of around 65%, although for the last universe if they exceed 600 KW/h the jump will be in the area of 130%. Lastly, high income consumers (N1) will see an increase of around 150%.

Since the new RT should become effective prior to December 31, 2024, Edenor is preparing all the necessary information and documentation to support the request of additional increases. Nevertheless, the Company has still not been able to resolve the income deficit or recover its credits against the Federal Government resulting from the freeze on electricity rates and, thus, if the RT does not contemplate such Edenor’s regulatory credits, our ability to cover any further increase of our costs could be affected and may have a direct negative impact on our results of operations.

There is uncertainty as to what other measures the Argentine Government may adopt in connection with tariffs on public services and their impact on the Argentine economy

As explained in other risk factors in this annual report, following the economic crisis of 2001-2002, the subsequent freeze on electricity rates in Pesos and the significant depreciation of the Argentine Peso against the U.S. dollar, there was a lack of acknowledgement by governmental authorities of the actual increasing cost of our operations. Since the RTI process was completed by 2017, all other transitional adjustment resulted in lower determinations based on a Net Replacement Value (“NVR”) methodology over a slightly lower base capital than the one we had submitted in our proposals.

The ENRE also established a non-automatic mechanism to adjust our tariffs, as it had done under the original Concession Agreement and the Adjustment Agreement (as defined below), in order to preserve the economic and financial sustainability of the concession in the event of price fluctuations in the economy. This mechanism has a biannual basis and includes a combined formula of wholesale and consumer price indexes (WPI, CPI and salaries increases) which trigger the adjustment of tariffs when the result is above 5%.

We filed an administrative appeal (“recurso de reconsideración”) against ENRE’s Resolution No. 63/17. On October 25, 2017, the ENRE, through Resolution No. 524/17, rejected the appeal filed by Edenor.

Since 2018, new adjustments to CPD were approved. Lastly, on February 16, 2024 ENRE issued Resolution No. 102/2024 notifying the new tariff table and the values per category of the CPD, As well as automatic mechanism to adjust our tariffs.

A full RT process has yet to be completed. Notwithstanding the measures recently adopted as provisory increase of electricity rates, there is uncertainty as to what measures the Argentine Government may adopt in connection with tariffs, whether tariffs will be updated in connection with the RT which is expected to take place by December 31, 2024, and from time to time to reflect our increase in operating costs, and their impact on demand. Likewise, no assurance can be given that any future reduction in subsidies will not increase our clients’ delinquency rates or a delay in our collections.

Electricity demand may be affected by tariff increases, which could lead distribution companies, such as us, to record lower revenues

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From 2013 through 2023, electricity demand in Argentina increased by 14,5%, which in part reflects the relative low cost, in real terms, of electricity to users due to the freezing of tariffs and therefore the distribution margins, the establishment of subsidies in the purchase price of energy and the elimination of the inflation adjustment provisions in distribution concessions.

In 2023, the Company’s electricity demand amounted to 27,676GWh, which represented a 2% increase compared to 2022, while the WEM demand amounted to 140,883GWh (+1.5% year-on-year). The variation in the Company’s demand was mainly due to temperature, elasticity, price and the level of economic activity.

We cannot make any assurance that any future increases in the cost of electricity will not have a material adverse effect on electricity demand or result in a decline in collections from users. In this respect, we cannot assure you that these measures or any future measure will not lead electricity companies, like us, to record lower revenues and results of operations, which may, in turn, have a material adverse effect on the market value of our ADSs and Class B common shares.

Energy shortages may act as a brake on growing demand for electricity and disrupt distribution companies’ ability to deliver electricity to their customers, which could result in customer claims and material penalties imposed on these companies

The recurring economic crises and the resulting emergency measures have had and continue to have a material adverse effect on other energy sectors, including oil and gas companies, which has led to a significant reduction in natural gas supplies to generation companies that use this commodity in their generation activities. In addition, Argentina needs to import energy or gas and their prices have recently risen. In addition, voltage breakdowns have occurred in several occasions during 2023 due to failure in the transportation system, lack of carrier’s investments and lack of contributions by the Federal Government to the stabilization fund which is required to maintain a minimum amount to cover payments to generators and carriers. See “Item 4—Information on the Company—The Argentine Electricity Industry—The Wholesale Electricity Market (WEM)—Stabilization Fund”.

As a result, the supply of energy to our company could be affected and any failures in the transportation system could also jeopardize our distribution network, which, in turn, could prevent us, from experiencing continued growth in our business and could lead to failures to provide electricity to customers. Under Argentine law, distribution companies are responsible to their customers for any disruption in the supply of electricity. As a result, distribution companies may face customer claims and fines and penalties for disruptions caused by energy shortages even when these are attributable to generators and transportation companies unless the relevant Argentine authorities determine that energy shortages constitute force majeure. To date, the Argentine authorities have not been called upon to decide under which conditions energy shortages may constitute force majeure. In the past, however, the Argentine authorities have recognized the existence of force majeure only in limited circumstances, such as internal malfunctions at the customer’s facilities, extraordinary meteorological events (such as major storms) and third-party work in public thoroughfares. We cannot make assurances that we will not experience a lack of energy supply that could adversely affect our business, financial condition and results of operations, as well as our ability to repay our debts.

If the demand for energy is increased suddenly, the difficulty in increasing the capacity of distribution companies in a short or medium term, could adversely affect the Company, which in turn could result in customer complaints and substantial fines for any interruptions

In recent years, the increase in electricity demand was greater than the structural increase in electricity distribution capacities, which led to power shortages and disruptions, in certain occasions. A sustained increase in electricity demand could generate future shortages. In addition, the condition of the Argentine electricity market has provided little incentive to generators and distributors to further invest in increasing their generation and distribution capacity, respectively, which would require material long-term financial commitments. In 2021, 2022, and 2023, the increase in the capacity of our own facilities resulting from the investment process was higher than the increase in demand, and the service quality indicators have continued improving. Regarding the coming years, there is uncertainty about the availability of resources to continue with this process. With respect to generation, depending on the availability of water and fuels, supply could be affected. For these cases, we are exempted from liability against users according to Resolution ENRE No. 63/2017.

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Additionally, according to Argentine law, distribution companies, such as us, are responsible to their users for any disruption in the supply of electricity. Consequently, customers can direct their claims to the distribution companies. Also, distribution companies are subject to fines and penalties for service disruptions caused by energy shortages, unless the respective Argentine authorities determine that energy shortages constitute force majeure events. As a result, we could face user claims and fines and penalties for service disruptions caused by energy shortages unless the relevant Argentine authorities determine that energy shortages constitute force majeure.

We cannot assure that we will not experience a lack in the supply of energy or that any claims, fines, penalties or government intervention will not have a materially adverse effect on our financial condition and results of operations and cause the market value of our Senior Notes, ADSs and Class B common shares to decline.

Risks Relating to Our Business

We operate our business pursuant to our Concession Agreement granted by the Argentine Government, the revocation or termination of which would have a material adverse effect on our business

We conduct our business pursuant to our concession agreement dated August 5, 1992 (“Concession Agreement”) granted by the Argentine Government. Such agreement contains several requirements regarding the operation of our business and compliance with laws and regulations. Compliance with our obligations under our Concession Agreement is secured by a pledge of our Class A common shares in favor of the Argentine Government. Accordingly, upon the occurrence of specified events of default under our Concession Agreement, the Argentine Government would be entitled to foreclose on its pledge on our Class A common shares, which would have a severe negative impact on our ability to operate a material portion of our business, and as a result, our results of operations would be materially adversely affected. Finally, our Concession Agreement also generally provides for termination in the case of our insolvency or bankruptcy. If our Concession Agreement is terminated or if the Argentine Government forecloses its pledge over Class A common shares, we may not be able to continue to operate as a going concern, and in turn our consolidated results of operations would be materially adversely affected and the market value of our Class B common shares and ADSs could decline.

Downgrades in our credit ratings could have negative effects on our funding costs and business operations

Credit ratings are assigned to the Company. The credit ratings are based on information furnished by us or obtained by the credit rating agencies from independent sources and are also influenced by the credit ratings of Argentine Government bonds and general views regarding the Argentine financial system as a whole. The credit ratings are subject to revision, suspension or withdrawal by the credit rating agencies at any time. A downgrade, suspension or withdrawal in our credit ratings could result in, among others, the following: (i) increased funding costs and other difficulties in raising funds; (ii) the need to provide additional collateral in connection with financial market transactions; and (iii) the termination or cancellation of existing agreements. As a result, our business, financial condition and results of operations could be materially and adversely affected.

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Our business is subject to risks arising from natural disasters, catastrophic accidents and terrorist attacks. Additionally, our businesses are subject to the risk of mechanical or electrical failures and any resulting unavailability may affect our ability to fulfil our demand and thus adversely affect our business and financial performance

The electric power distribution infrastructure that we rely on, may be damaged by flooding, hurricanes, strong windstorms, fires, earthquakes, extreme weather temperatures, heat waves 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 insurance policies. 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. 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.

During the month of March 2023, there were several factors that affected our activity: (i) a “heat wave” with temperatures above 38.9°C; (ii) an energy demand of 29,105MW (an increase of 40% nationally and 60% in our Concession, compared to the same period in 2022); and (iii) a large fire that affected the high voltage electrical transmission system, causing an extraordinary interruption and loss of generation (7,000MW) and demand (11,000MW), disconnecting Córdoba, Santa Fe, La Rioja, Tucumán, La Pampa, Río Negro, Neuquén, Mendoza, San Juan and the metropolitan area of Greater Buenos Aires. As part of our duties under the Concession Agreement, we implemented an emergency plan which had an impact on our operative costs.

Additionally, our assets are subject to the risk of mechanical or electrical failures and may experience periods of unavailability affecting our ability to fulfil our energy demand. Any unplanned unavailability of our energy demand, so we could be subject to fines and penalties. We cannot assure that any other event in the Argentine network will not affect our facilities and consequently their availability to fulfil our energy demand and our operational results.

Our operations could cause environmental risks and any change in environmental laws, climate change legislation or regulations restricting emissions of greenhouse gases (“GHGs”) and legal frameworks promoting an increase in the participation of energies from renewable sources could significantly impact our business and result in increased operating costs

In December 1993, Argentina approved the United Nations Framework Convention on Climate Change (“UNFCCC”) through Law No. 24,295. The UNFCCC, which entered into force on March 21, 1994, deals with the stabilization of the GHGs concentrations in the atmosphere at a level that would prevent dangerous anthropogenic interference with the climate system.

On June 20, 2001, Argentina approved the Kyoto Protocol to the UNFCCC (“Protocol”), which entered into force on February 16, 2005. This Protocol deals with the reduction of certain Greenhouse Gases (“GHGs”) (carbon dioxide, methane, nitrous oxide, hydrofluorocarbons, perfluorocarbons and sulphur hexafluoride) in the atmosphere.

On April 29, 2015, Argentina approved the Doha Amendment through Law No. 27,137, which entered into force in 2015.

Later, the 2015 United Nations Climate Change Conference adopted by consensus the Paris Agreement, which is known to be the successor of the Protocol. The agreement deals with GHG emission reduction measures, targets to limit global temperature increases and requires countries to review and “represent a progression” in their intended nationally determined contributions. Countries agreed they will aim to achieve the long term goal to limit global warming to well below 2°C above pre-industrial levels, and pursue efforts to further limit the temperature increase to 1.5°C. On October 5, 2016, the threshold for entry into force of the Paris Agreement was achieved. International treaties together with increased public awareness related to climate change may result in increased regulation to reduce or mitigate GHG emissions. Under Federal Law No. 27,270, dated September 1, 2016, Argentina approved the Paris Agreement.

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Furthermore, Argentine Law No. 26,190, as amended and complemented by Law No. 27,191 and its implementing decrees, established a legal framework which promotes an increase in the participation of energies from renewable sources in Argentina’s electricity market.

During 2023 the 28^th Conference of the Parties (COP 28), also known as the Climate Summit, took place. Under the umbrella of COP28, 198 countries have signed the Dubai Agreement. Said agreement recognizes the need for deep, rapid and sustained reductions in GHG, and states that said gases must be reduced by 43% by 2030 and 60% by 2035, from 2019 levels, and achieve net zero carbon dioxide emissions by 2050. It also sets the 2030 target of tripling global renewable energy capacity and doubling the global average annual rate of improvement in energy efficiency.

Compliance with legal and regulatory changes relating to climate change, including those resulting from the implementation of international treaties, may in the future increase our costs to operate and maintain our facilities, install new emission controls on our facilities and administer and manage any GHG emissions program. More stringent environmental regulations can result in the imposition of costs associated with GHG emissions, either through environmental agency requirements relating to mitigation initiatives or through other regulatory measures such as GHG emissions taxation and market creation of limitations on GHG emissions that have the potential to increase our operating costs.

Some of our operations are subject to environmental risks that could arise unexpectedly and cause material adverse effects on our results of operations and financial condition. In addition, the occurrence of any of these risks could lead to personal injury, loss of life, environmental damage, repair and expenses, equipment damage and liability in civil and administrative proceedings. We cannot assure you that we will not incur additional costs related to environmental issues in the future, which could adversely affect our results of operations and financial condition. In addition, we cannot ensure that our insurance coverage is sufficient to cover the losses that could potentially arise from these environmental risks.

In addition, we are subject to a broad range of environmental legislation in Argentina. Local, provincial and national authorities in Argentina may implement new environmental laws and regulations and may require us to incur higher costs to comply with new standards. The imposition of more stringent regulatory and permit requirements in relation to our operators in Argentina could significantly increase the costs of our activity.

We cannot predict the general effects of the implementation of any new environmental laws and regulations on our financial condition and results of operations.

Changes in weather conditions or the occurrence of severe weather (whether or not caused by climate change or natural disasters), could adversely affect our operations and financial performance

Weather conditions have influenced and in the future may influence the demand for electricity, our ability to provide it and the costs of providing it. In particular, severe weather may adversely affect our results of operations by causing significant demand increases, which we may be unable to meet without a significant increase in operating costs. This could strongly impact the continuity of our services and our quality indicators. For example, the exceptional heat wave that occurred in January 2022 and March 2023 and the thunderstorms occurred in December 2023 affected the continuity of our services, both in the low voltage and medium voltage networks. See “Item 4. Information on the Company—Business Overview—Quality Standards—Edenor Concession”. Furthermore, any such disruptions in the provision of our services could expose us to fines and orders to compensate those users affected by any such power cuts, as has occurred in the past (see “Item 4. Information on the Company—Business Overview—Quality Standards—Fines and Penalties”). Our financial condition, results of operations and cash flows could therefore be negatively affected by increased operating costs, litigation or decreases in revenue relating to changes in weather conditions and severe weather.

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Failure or delay to negotiate further improvements to our tariff structure, including increases in our distribution margin, and/or to have our tariffs adjusted to reflect increases in our distribution costs in a timely manner or at all, have affected and may continue to affect our capacity to perform our commercial obligations and could also have a material adverse effect on our ability to perform our financial obligations

Since the execution of the agreement entered into between us and the Argentine Government on February 13, 2006, relating to the adjustment and renegotiation of the terms of our Concession Agreement (“Acta Acuerdo sobre la Adecuación del Contrato de Concesión del Servicio Público de Distribución y Comercialización de Energía Eléctrica” or the “Adjustment Agreement”) and as required by the Argentine Government, we were engaged in an RTI with the ENRE through February 1, 2017.

The Adjustment Agreement contemplated a cost adjustment mechanism for the transitional period during which an RTI process was being conducted. However, no RTI was completed since then.

Furthermore, on December 16, 2023, by means of Decree No. 55/2023, the government determined the start of a comprehensive RT to be implemented before December 31, 2024, and provided for the continuity of ENRE's intervention.

Even we have had a recent provisory increase in our electricity rates, we may not be able to adjust our tariffs to reflect increases in our distribution costs in a timely manner, or at all, which may have a material adverse effect on our results of operations.

If we are not able to recover all future cost increases and have them reflected in our tariffs, and/or if there is a significant lag of time between when we incur the incremental costs and when we receive increased income we may be unable to comply with our financial obligations, we may suffer liquidity shortfalls and we may need to restructure our debt to ease our financial condition, any of which, individually or in the aggregate, could have a material adverse effect on our business and results of operations and may cause the value of our ADSs and Class B common shares to decline. For more information, see “Item 5. Operating and Financial Review and Prospects—Operating Results—Tariffs.”

Our distribution tariffs may be subject to challenges by Argentine consumer and other groups

In recent years, our tariffs have been challenged by Argentine consumer associations, such as three actions brought against us between 2009 and 2022 by Argentine consumer associations. See “Item 8. Financial Information—Legal and Administrative Proceedings—Legal Proceedings”.

If those or any future legal challenge were successful and prevented us from implementing any tariff adjustments granted by the Argentine Government, we could face delay or decline in collections from our users, and a decline in our results of operations, which could have a material adverse effect in our financial condition and the market value of our ADSs and Class B common shares.

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We have been, and may continue to be, subject to fines and penalties that could have a material adverse effect on our financial condition and results of operations

We operate in a highly regulated environment and have been, and in the future may continue to be, subject to significant fines and penalties imposed by regulatory authorities, including for reasons outside our control, such as service disruptions attributable to problems at generation facilities or in the transmission network that result in a lack of electricity supply. Since 2001, the amount of fines and penalties imposed on our Company has increased significantly. As of December 31, 2023, 2022 and 2021, our accrued fines and penalties totaled Ps. 62,880 million Ps.23,032 million, and Ps.25,183 million at nominal values, respectively (taking into account adjustments made to fines and penalties following the ratification of the Adjustment Agreement and recent regulation). See “Item 4. Information on the Company—Business Overview—Fines and Penalties.”

The increase in the illegal neighborhoods within our Concession area may affect the Company’s ability to distribute energy to its customers, as well as produce an increase in public safety risks.

Within the second and third regions of the greater Buenos Aires metropolitan area, the number of illegal settlements has increased over the years, and the existing ones have grown larger in terms of the number of people living in them as well as in terms of the size and complexity of the constructions built to foster its inhabitants. These phenomena is particularly present in the third ring of the Great Buenos Aires area, where energy theft represents the main cause of the company´s energy lost. Furthermore, such illegal connections to the electricity grid are performed in land over which Edenor has governmental permits to install high and medium voltage networks. The growth of such constructions on such land increases the risk of physical contact with such networks which may cause service interruption and even provoke accidents.

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Edenor continuously reports to the community, the governmental authorities, and the ENRE about these cases and also files criminal proceedings in connection therewith. However, Edenor does not have the legal authority to remove such illegal constructions, and Edenor cannot assure that those construction will continue to grow and affect the electric system in general.

If we are unable to control our energy losses, especially the theft of energy, our results of operations could be adversely affected

Our concession does not allow us to pass through to our users the cost of additional energy purchased to cover any energy losses that exceed the loss factor contemplated by our concession, which is, on average, 10%. As a result, if we experience energy losses in excess of those contemplated by our concession, we may record lower operating profits than we anticipate. Prior to the 2001 and 2002 economic crisis in Argentina, we were able to reduce the high level of energy losses experienced at the time of the privatization down to the levels contemplated (and reimbursed) under our concession. However, during the last years, our level of energy losses, particularly our non-technical losses, started to grow again, in part as a result of the increase in poverty levels and the number of delinquent accounts and fraud. Although we continue to make investments to reduce energy losses, these losses continue to exceed the average 10% loss factor contemplated by the concession and, based on the current tariff schedule and the economic turmoil, we do not expect these losses to decrease in the near term. Our energy losses amounted to 14.87% in 2023, 15.89% in 2022, and 17.6% in 2021. We cannot assure you that our energy losses will not continue to increase in future periods, in particular due to the change of governmental policy on subsidies which may lead to lower margins and could affect our results of operations.

Under the Concession Agreement, the Argentine Government could foreclose on its pledge over our Class A common shares under certain circumstances, which could have a material adverse effect on our business and financial condition

Pursuant to our Concession Agreement and the provisions of the Adjustment Agreement, the Argentine Government has the right to foreclose on its pledge over our Class A common shares and sell these shares to a third-party buyer if:

· the fines and penalties incurred in any given year exceed 20% of our gross energy sales, net of taxes, which corresponds to our energy sales;

· we repeatedly and materially breach the terms of our concession and do not remedy these breaches upon the request of the ENRE;

· our controlling shareholder creates any lien or encumbrance over our Class A common shares (other than the existing pledge in favor of the Argentine Government);

· we or our controlling shareholder obstructs the sale of Class A common shares at the end of any management period under our concession;

· our controlling shareholder fails to obtain the ENRE’s approval in connection with the disposition of our Class A common shares; or

· our shareholders amend our articles of incorporation or voting rights in a way that modifies the voting rights of the Class A common shares without the ENRE’s approval.

In 2023, our fines and penalties represented 2.7% of our net energy sales. See “Item 4. Information on the Company—Business overview—Edenor Concession—Fines and Penalties.”

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If the Argentine Government were to foreclose on its pledge of our Class A common shares, pending the sale of those shares, the Argentine Government would also have the right to exercise the voting rights associated with such shares. In addition, the potential foreclosure by the Argentine Government on its pledge over our Class A common shares could be deemed to constitute a change of control under the terms of our Senior Notes. If the Argentine Government forecloses on the pledge of our Class A common shares, our results of operations and financial condition could be significantly affected and the market value of our Class B common shares and ADSs could also be affected.

Default by the Argentine Government could lead to termination of our concession, and have a material adverse effect on our business and financial condition

If the Argentine Government breaches its obligations in such a way that we cannot comply with our obligations under our Concession Agreement or in such a way that our service is materially affected, we may request the termination of our concession, after giving the Argentine Government a 90 days’ prior notice, in writing. Upon termination of our concession, all our assets used to provide the electricity distribution service would be transferred to a new state-owned company to be created by the Argentine Government, whose shares would be sold in an international public bidding procedure. The amount obtained in such bidding would be paid to us, net of the payment of any debt owed by us to the Argentine Government, plus an additional compensation established as a percentage of the bidding price, ranging from 10% to 30%, depending on the management period in which the sale occurs. Any such default could have a material adverse effect on our business and financial condition.

The expiration of the management period could result in the sale of the Company’s controlling interest.

Our concession is currently set to expire on August 31, 2087, after a term of 95 years, and may be extended for one additional 10-year period if Edenor requests the extension at least 18 months before expiration. The term of the concession is divided into management periods. On February 25, 2021, through Resolution 65, the ENRE established that the first management period will be considered concluded at the end of the term established for the next RT, which has been postponed and is expected to take place by December 2024.

Six months before the end of each management period, the regulatory authority shall call an international public bidding on the Class “A” shares sale representing 51% of the share capital of Edenor, currently held by Empresa de Energía del Cono Sur S.A. (“Edelcos”). However, if Edelcos matches the highest bid or its bid represents the highest bid received, it will continue to hold the Class “A” shares, and no further disbursements will be necessary. On the contrary, if Edelcos’s offer is not the highest, the Class “A” shares shall be awarded to the bidder who made the highest bid and the proceeds from the sale shall be payable by Grantor Government to Edelcos, net of any payments owed to the Argentine Government. The before mentioned price shall be delivered within the term of 30 days once the Grantor Control received it. The first management period commenced on September 1, 1992.

We may be unable to import certain equipment to meet growing demand for electricity, which could lead to a breach of our Concession Agreement and could have a material adverse effect on our operations and financial position

Certain exchange controls established by the Argentine Government and future restrictions on imports that may be adopted in the future could limit or delay our ability to purchase capital goods that are necessary for our operations (including carrying out specific projects). Under our concession, we are obligated to satisfy all of the demand for electricity originated in our concession area, maintaining at all times certain service quality standards that have been established for our concession. If we are not able to purchase significant capital goods to satisfy all of the demand or suffer unexpected delays in the import process, we could face fines and penalties which may, in turn, adversely affect our activity, financial position, results of operations and/or the market value of our ADSs and Class B common shares. For more information on exchange controls, see “Item 10. Additional Information—Exchange Controls”.

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We employ a largely unionized labor force and could be subject to an organized labor action, including work stoppages that could have a material effect on our business

As of December 31, 2023, we had 4635 employees, of which 79% were union members. Although our relations with unions are currently stable and we have had an agreement in place with the two unions representing our employees since 1995, we cannot assure you that we will not experience work disruptions or stoppages in the future, which could have a material adverse effect on our business and revenues. We cannot assure you that we will be able to negotiate salary agreements or labor conditions on the same terms as those currently in effect, or that we will not be subject to strikes or work stoppages before or during the negotiation process. If we are unable to negotiate salary agreements or if we are subject to demonstrations or work stoppages, our results of operations, financial condition and the market value of our ADSs, Class B common shares could be materially adversely affected.

We could incur material labor liabilities in connection with our outsourcing that could have an adverse effect on our business and results of operations

We outsource a number of activities related to our business to third-party contractors in order to maintain a flexible cost base. As of December 31, 2023, we had approximately 6,647 third-party employees related to third party´s contracts. Although we have very strict policies regarding compliance with labor and social security obligations by contractors, we are not in a position to ensure that contractors will not initiate legal actions to seek indemnification from us based upon a number of judicial rulings issued by labor courts in Argentina which have recognized joint and several liability between the contractor and the entity to which it is supplying services under certain circumstances.

Our performance is largely dependent on recruiting and retaining key personnel

Our current and future performance and the operation of our business are dependent upon the contributions of our senior management and our skilled team of engineers and other employees. We depend on our ability to attract, train, motivate and retain key management and specialized personnel with the necessary skills and experience. There is no guarantee that we will be successful in retaining and attracting key personnel and the replacement of any key personnel who were to leave could be difficult and time consuming. The loss of the experience and services of key personnel or the inability to recruit suitable replacements and additional staff could have a material adverse effect on our business, financial condition and results of operations.

We are subject to anti-corruption, anti-bribery, anti-money laundering and antitrust laws and regulations in Argentina. Any violation thereunder could have a material adverse effect on our reputation and the results of our operation

We are subject to national and international anti-corruption, anti-bribery, anti-money laundering and antitrust laws and regulations. Likewise, we are subject to certain restrictions and our relationship with certain non-cooperative countries. Edenor has internal processes and an Ethic and Compliance Code that are mandatory for all its personnel and suppliers. However, no assurance can be given that such policies and processes are sufficient to prevent or detect fraud, violation of the law or inappropriate behavior from our employees, directors, officers, shareholders, agents and suppliers.

We are involved in various legal proceedings which could result in unfavorable decisions for us, which could in turn have a material adverse effect on our financial position and results of operations

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We are party to a number of legal proceedings, some of which have been pending for several years. We cannot be certain that these claims will be resolved in our favor and responding to the demands of litigation may divert our management’s time and attention and our financial resources and unfavorable decisions may have a material adverse effect on our financial position and results of operations. See “Item 8. Financial Information—Legal and Administrative Proceedings—Legal Proceedings.”

In the event of an accident or other event not covered by our insurance, we could face significant losses that could materially adversely affect our business and results of operations

As of December 31, 2023, our physical assets were insured for up to U.S.$1,816 million. However, we do not carry insurance coverage for losses caused by our network or business interruption, including for loss of our concession. See “Item 4. Information on the Company—Business Overview—Insurance.” Although we believe our insurance coverage is commensurate with standards for the distribution industry, no assurance can be given of the existence or sufficiency of risk coverage for any particular risk or loss. If an accident or other event occurs that is not covered by our current insurance policies, we may experience material losses or have to disburse significant amounts from our own funds, which may have a material adverse effect on our financial condition and results of operations and the market value of our Class B common shares and ADSs.

We currently are not able to effectively hedge our currency risk in full and, as a result, a devaluation of the Peso may have a material adverse effect on our results of operations and financial condition

Our revenues are collected in Pesos pursuant to tariffs that are not indexed to the U.S. dollar, while a significant portion of our existing financial indebtedness is denominated in U.S. dollars, which exposes us to the risk of loss from devaluation of the Peso. We currently seek to hedge this risk in part by converting a portion of our excess cash denominated in Pesos into local U.S. dollar-denominated instruments such as local government bonds, but we continue to have substantial exposure to the U.S. dollar. The Argentine Government does not allow companies, including us, to access the market to acquire U.S. dollars to hedge our financial position. If we continue to be unable to effectively hedge all or a significant portion of our currency risk exposure, a devaluation of the Peso may significantly increase our debt service burden, which, in turn, may have a material adverse effect on our financial condition and results of operations, as well as our ability to repay our debts.

A substantial number of our assets are not subject to attachment or foreclosure and the enforcement of judgments obtained against us by our shareholders may be substantially limited

A substantial number of our assets are essential to the public service we provide. Under Argentine law, as interpreted by the Argentine courts, assets which are essential to the provision of a public service are not subject to attachment or foreclosure, whether as a guarantee for an ongoing legal action or in aid of enforcement of a court judgment. Accordingly, the enforcement of judgments obtained against us by our shareholders may be substantially limited to the extent our shareholders seek to attach those assets to obtain payment on their judgment.

The exclusivity of electricity distribution in our service area may be adversely affected by technological or other changes in the energy distribution industry, which could have a material adverse effect on our business.

Although our concession grants us the exclusive right to distribute electric energy within our service area, this exclusivity may be revoked in whole or in part if technological developments make it possible for energy distribution to evolve from its current condition of natural monopoly to a competitive business. In no event does the total or partial revocation of our exclusive distribution rights entitle us to claim or obtain reimbursement or indemnification. Although, to our knowledge, there are no current projects to introduce new technologies in the medium or long term that could reasonably modify the composition of the electricity distribution business, we cannot assure you that future developments will not allow competition in our sector that would adversely affect the exclusivity right granted to us under our concession. Any total or partial loss of our exclusive right to distribute electricity within our service area would likely lead to increased competition and result in lower revenues, which could have a material adverse effect on our financial condition, our results of operations and the market value of our Class B shares and our ADSs.

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We may not be able to raise the funds necessary to repay our commercial debt with CAMMESA, our major supplier

Pending obligations with the WEM for electrical energy purchases through 2019 have been fully compensated. However, as a result of (i) the enactment of the Productive Reactivation Law (in the framework of the public emergency), (ii) the subsequent instruction to the Company to refrain from applying, as from January 1, 2020, the Electricity Rate Schedules Maintenance Agreement entered into between the Company and the Argentine Government on September 19, 2019 (the “Electricity Rate Schedules Maintenance Agreement”); and (iii) the lack of approval by ENRE of new tariff that are sufficient to cover our actual incremental cost, the Company partially postponed during 2023 payments to CAMMESA.

On December 29, 2022, we reached into an agreement with the Argentine Government to cover our debt with CAMMESA as of August 2002 (the “2022 Agreement”). Under the 2022 Agreement, the Company recognized an accumulated debt as of August 31, 2022, of Ps. 57,159 million and the Argentine Government also recognized a credit in favor of the Company of Ps. 24,174 million, reduced the outstanding debt to Ps.32,985 million, which will be paid in 96 installments; a six-month grace period (ending in August 2023), and accrue interest at a rate equivalent to 50% of the interest rate applicable by the WEM (i.e. as of December 2022, 41.47% on an annual basis). Under the 2022 Agreement, the Company acknowledged and accepted to pay 100% of its commercial debt with CAMMESA since March 2023.

In addition, on July 28, 2023, a debt regularization plan agreement was signed in accordance with Section No. 89 of Law No. 27,701 and Resolution SE No. 56/2023, whereby the Company acknowledged owing the WEM Ps.26,388 million for the period between September 2022 and February 2023, debt that was converted to megawatt hours and which the Company undertook to pay in 96 consecutive monthly installments, which may be paid by offsetting credits for electricity consumption in popular neighborhoods in the Province of Buenos Aires.

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As of December 31, 2023 and 2022, we accumulated a past due principal balance with CAMMESA of Ps.197,731 million and Ps.56,479 million, respectively. Likewise, under the 2022 Agreement we have a past due balance of Ps.121,224 million. 

We may not have the ability to collect the amounts corresponding to the discounts of the Social Rate, the ceilings of the Social Rate and the bonuses for neighbourhood clubs, that must be financed by the Province of Buenos Aires and the Autonomous City of Buenos Aires

If we are not able to recover the revenue corresponding to the discounts applied pursuant to the Social Rate regime, the ceilings of the Social Rate and the bonuses for neighborhood clubs (or any other similar benefits), and/or if there is a significant lag of time between the time we incur the incremental costs and when we receive the amounts related to these concepts, we may suffer liquidity shortfalls, any of which, individually or in the aggregate, could have a material adverse effect on our business and results of operations.

All of our outstanding financial indebtedness contains bankruptcy, reorganization proceedings and expropriation events of default, and we may be required to repay all of our outstanding debt upon occurrence of any such events

As of the date of this annual report, our outstanding financial debt includes the following: (i) U.S.$. 27.2 million Senior Notes Class No. 2 due 2024 (the “Senior Notes Class 2”); (ii) U.S.$55.2 million Senior Notes Class No. 1 due 2025 (the “Senior Notes Class 1”), (iii) U.S.$.95,7 million Senior Notes Class No. 3 due 2026 (the “Senior Notes Class 3”); all of which accrue interest at a fixed nominal annual interest rate of 9.75%; and (iv) Ps. 24,398 million Senior Notes Class No. 4 due 2025 which accrue interest at BADLAR (Buenos Aires Interbank Deposit Rate) plus 300 pbs (the “Senior Notes Class 4”) (collectively referred hereto as the “Senior Notes”). Under our Senior Notes, certain expropriation and condemnation events with respect to us may constitute an event of default, which, if declared, could trigger the acceleration of our obligations under the notes and require us to immediately repay all such accelerated debt. In addition, all of our outstanding financial indebtedness contains certain events of default related to bankruptcy and voluntary reorganization proceeding. If we are not able to comply with certain payment obligations as a result of our current financial situation and if the requirements set forth in the Argentine Bankruptcy Law No. 24,522 are met, any creditor, or even us, could file for our bankruptcy, or we could file for a voluntary reorganization proceeding. In addition, all of our outstanding financial indebtedness also contains cross-default provisions or cross-acceleration provisions that could cause all of our debt to be accelerated if the debt containing expropriation or bankruptcy and/or reorganization proceeding events of default goes into default or is accelerated. In such a case, we would expect to actively pursue formal waivers from the corresponding financial creditors to avoid such potential situation, but in case those waivers are not timely obtained and immediate repayment is required, we could face short-term liquidity problems, which could adversely affect our results of operations and cause the market value of our ADSs and Class B common shares to decline.

We may not have the ability to raise the funds necessary to finance a change of control offering as required by our Senior Notes

Under the terms of Senior Notes, in the event of a change of control, we must offer to repurchase any and all outstanding Notes at a purchase price equal to 100% of the aggregate principal amount of such Notes, plus accrued and unpaid interest thereon and additional amounts, if any, through the date of purchase. We may not have sufficient funds to make the required repurchases of our Senior Notes in the event of a change of control. If we fail to make the change of control offer, that could constitute an event of default under the terms and conditions of issuance, which in turn could trigger cross-default provisions under the terms of issuance of other debt instruments from time to time outstanding, whereby the results of operations could be adversely affected and the market value of our ADSs and Class B common stock could decline.

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The New York Stock Exchange and/or ByMA may suspend trading and/or delist our ADSs and Class B common shares, upon the occurrence of certain events relating to our financial situation

The New York Stock Exchange (“NYSE”) and/or the Argentine stock exchange and markets (Bolsas y Mercados Argentinos S.A. or “BYMA”) may suspend and/or cancel the listing of our ADSs and Class B common shares, respectively, in certain circumstances, including upon the occurrence of certain events relating to our financial situation. For example, the NYSE may decide such suspension or cancellation if our shareholders’ equity becomes negative.

The NYSE may in its sole discretion determine on an individual basis the suitability for continued listing of an issue in the light of all pertinent facts. Some of the factors mentioned in the NYSE Listed Company Manual, which may subject a company to suspension and delisting procedures, include: “unsatisfactory financial conditions and/or operating results”, “inability to meet current debt obligations or to adequately finance operations,” and “any other event or condition which may exist or occur that makes further dealings or listing of the securities on the NYSE inadvisable or unwarranted in the opinion of NYSE.”

The BYMA may cancel the listing of our Class B common shares if it determines that our shareholders’ equity and our financial and economic situation do not justify our access to the stock market or if the NYSE cancels the listing of our ADSs.

We cannot assure you that the NYSE and/or the BYMA will not commence any suspension or delisting procedures in light of our financial situation, including if our shareholders’ equity becomes negative. A delisting or suspension of trading of our ADSs or Class B common shares by the NYSE and/or the BYMA, respectively, could adversely affect our results of operations and financial conditions and cause the market value of our ADSs and Class B common shares to decline.

Cybersecurity events, such as interruptions or failures in our information technology systems as well as cyber-attacks, could adversely affect our business, financial condition, results of operations and cash flows

We depend on the efficient and uninterrupted operation of internet-based data processing communication and information exchange platforms and networks, including administrative and business-related systems (such as Supervisory Control and Data Acquisition (“SCADA”) and DCS Software, Inc. (“DCS”). Cybersecurity risks have generally increased in recent years as a result of the proliferation of new technologies and the increased sophistication and activities of cyber-attacks. Through part of our grid and other initiatives, we have increasingly connected equipment and systems to the internet. Due to the critical nature of our infrastructure and the increased accessibility enabled through connection to the internet, we may face a heightened risk of cybersecurity incidents 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 failure of any of our information technology systems or a cyber-attack, we could have our business operations disrupted, property damaged, and user information stolen; experience substantial loss of revenues, response costs and other financial loss; and be subject to increased regulation, litigation and damage to our reputation. It should be mentioned that contingency plans in place may not be sufficient to cover liabilities associated with any such events and therefore, applicable insurance coverage may be deemed inadequate, preventing us from receiving full compensation for the losses sustained as a result of such a disruption. Although we intend to continue to implement security technology devices and establish operational procedures (such as, our Disaster Recovery Plan, which aims to respond and recover business’ core applications in the event of serious incidents) to prevent disruption resulting from, and counteract the negative effects of cybersecurity incidents within the next three years, 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.

As of the date of this annual report, we have not identified any cybersecurity threats that have materially affected or are reasonably likely to materially affect our business strategy, operations results, or financial condition. However, we cannot eliminate all cybersecurity risks or provide assurances that we have not experienced an undetected cybersecurity incident in the past or that we will not experience one in the future. Any significant disruption to our service or access to our systems could result in revenue loss, legal actions, regulatory penalties, reputational harm, among other consequences. Accordingly, cybersecurity is an important risk for us and a cyber-attack could adversely affect our business, results of operations and financial condition. For more information see “Item 16 K. Cybersecurity”.

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Risks relating to our ADSs and Class B common shares

Restrictions on the movement of capital out of Argentina may impair the ability of holders of ADSs to receive dividends and distributions on, and the proceeds of any sale of, the Class B common shares underlying the ADSs, which could affect the market value of the ADSs

The Argentine Government has adopted restrictions on the conversion of Argentine currency into foreign currencies and on the remittance to foreign investors of proceeds from their investments in Argentina. Conversion of dividends, distributions, or the proceeds from any sale of shares from Pesos into U.S. dollars, as well as the transfer of those funds abroad is limited. See “Item 10. Additional Information—Exchange Controls”. Future restrictions on foreign exchange market access, other than those already imposed, may affect even more the conversion of dividends, distributions, or the proceeds from any sale of shares, as the case may be, from Pesos into U.S. dollars and the remittance of such U.S. dollars abroad. Also, certain of our indebtedness includes covenants limiting the payment of dividends. We cannot assure you that the Argentine Government will not take new measures or deepen those already established in the future. The depositary for the ADSs may hold the Pesos it cannot otherwise convert for the account of the ADS holders who have not been paid. Any future adoption by the Argentine Government of constraints on the movement of capital out of Argentina may deepen the restrictions on 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 Class B common shares and ADSs.

Our shareholders’ ability to receive cash dividends may be limited

According to current regulations, transfer of funds abroad in order to pay dividends does not require Central Bank approval, to the extent such dividend payments are made in compliance with the requirements set forth under Central Bank (see “Item 10—Additional Information—Exchange Controls”). Our shareholders’ ability to receive cash dividends may be limited by the ability of the depositary to convert cash dividends paid in Pesos into U.S. dollars. Under the terms of our deposit agreement with the depositary for the ADSs, the depositary will convert any cash dividend or other cash distribution we pay on the common shares underlying the ADSs into U.S. dollars, if it can do so on a reasonable basis and can transfer the U.S. dollars to the United States. If this conversion is not possible or if any government approval is needed and cannot be obtained, the deposit agreement allows the 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 depositary cannot convert the foreign currency, shareholders may lose some or all of the value of the dividend distribution. Additionally, any payment of dividends may need to be approved by ENRE. We cannot assure you that your ability to receive dividends, as an ADSs holder, will not be affected due to current or future regulations, and that the Argentine Government will not adopt new measures or deepen those already implemented, which could result in more restrictions on the access to the foreign exchange market.

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Holders of ADSs may be unable to exercise voting rights with respect to the Class B common shares underlying the ADSs at our shareholders’ meetings

Shares underlying the ADSs are held by the depositary in the name of the holder of the ADS. As such, we will not treat holders of ADSs as one of our shareholders and, therefore, holders of ADSs will not have shareholder rights. The depositary will be the holder of the Class B common shares underlying the ADSs and holders may exercise voting rights with respect to the Class B common shares represented by the ADSs only in accordance with the deposit agreement relating to the ADSs. There are no provisions under Argentine law or under our by-laws that limit the exercise by ADS holders of their voting rights through the depositary with respect to the underlying Class B common shares. However, there are practical limitations on the ability of ADS holders to exercise their voting rights due to the additional procedural steps involved in communicating with these holders. For example, holders of our Class B common shares will receive notice of shareholders’ meetings through publication of a notice in an official gazette in Argentina, an Argentine newspaper of general circulation and the daily bulletin of the Buenos Aires Stock Exchange (“BASE”), and will be able to exercise their voting rights by either attending the meeting in person or voting by proxy. ADS holders, by comparison, do not receive notice directly from us. Instead, in accordance with the deposit agreement, we provide the notice to the depositary. If we ask it to do so, the depositary will mail to holders of ADSs the notice of the meeting and a statement as to the manner in which instructions may be given by holders. To exercise their voting rights, ADS holders must then instruct the depositary as to voting the Class B common shares represented by their ADSs. Due to these procedural steps involving the depositary, the process for exercising voting rights may take longer for ADS holders than for holders of Class B common shares and Class B common shares represented by ADSs may not be voted as the holders of ADSs desire. Class B common shares represented by ADSs for which the depositary fails to receive timely voting instructions may, if requested by us, be voted at the corresponding meeting either in favor of the proposal of the Board of Directors or, in the absence of such a proposal, in accordance with the majority.

Our shareholders may be subject to liability for certain votes of their securities

Because we are a limited liability corporation, our shareholders are not liable for our obligations. Shareholders are generally liable only for the payment of the shares they subscribe. However, shareholders who have a conflict of interest with us and who do not abstain from voting at the respective shareholders’ meeting may be liable for damages to us, but only if the transaction would not have been approved without such shareholders’ votes. Furthermore, shareholders who willfully or negligently vote in favor of a resolution that is subsequently declared void by a court as contrary to the law or our by-laws may be held jointly and severally liable for damages to us or to other third parties, including other shareholders.

A potential nationalization or expropriation of 51% of our capital stock, represented by Class A shares, may limit the ability of Class B shares to participate in the Board of Directors.

As of the date of this annual report, ANSES owned shares representing 26.8% of our capital stock and jointly appointed five Class B and five Class C directors at our last shareholders’ meeting. The remaining directors were appointed by Class A shares.

If the Argentine Government was to expropriate 51% of our capital stock, represented by our Class A shares, the Argentine Government would be the sole holder of the Class A shares and ANSES would hold the majority of the Class B shares. Certain strategic transactions require the approval of the holders of the Class A shares. Accordingly, the Argentine Government and ANSES could determine substantially all matters requiring the approval of a majority of our stockholders, including the election of a majority of our directors, and could direct our operations.

If the Argentine Government nationalizes or expropriates 51% of our capital stock, as represented by the Class A shares, our results and financial condition could be adversely affected and this could cause the market value of our ADSs and Class B shares to decline.

If we fail to maintain an effective system of internal controls, we may be unable to accurately report our financial results or prevent fraud and investor confidence and the market price of our shares and ADSs may be adversely impacted.

Effective internal controls over financial reporting are necessary for us to provide reliable financial reports and, together with adequate disclosure controls and procedures, are designed to provide reasonable assurance of achieving the control objectives. Any failure to implement required new or improved controls, or difficulties encountered in their implementation could cause us to fail to meet our reporting obligations.. If in the future we identify any material weaknesses in our internal control over financial reporting, if we are unable to comply with the requirements of Section 404 in a timely manner or assert that our internal control over financial reporting is effective, or, if and when applicable, our independent registered public accounting firm is unable to express an opinion as to the effectiveness of our internal control over financial reporting, investors may lose confidence in the accuracy and completeness of our financial reports and the market price of our ordinary shares could be negatively affected, and we could become subject to investigations by the stock exchange on which our securities are then listed, the SEC, or other regulatory authorities, which could require additional financial and management resources. Ineffective internal controls could also cause investors to lose confidence in our reported financial information, which could have a negative effect on the market price of our shares and ADSs.

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Provisions of Argentine securities laws could deter takeover attempts and have an adverse impact on the price of our shares and ADSs

Argentine securities Law No. 26,831 contains provisions that may discourage, delay or make more difficult a change in control of our Company, such as the requirement, upon the acquisition of a controlling interest in of our capital stock, to launch a mandatory tender offer to acquire all our voting stock and any securities convertible into, or entitling the holder thereof to subscribe for or acquire, any voting shares in our capital stock. These provisions may affect the market value of our shares and ADSs.

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Item 4. Information on the Company

History and Development of the Company

Empresa Distribuidora y Comercializadora Norte S.A. (EDENOR S.A.) (Distribution and Marketing Company of the North S.A.), or Edenor, is a public service company incorporated as a sociedad anónima (stock corporation) under the laws of Argentina. Our principal executive offices are located at Avenida del Libertador 6363, 11° floor, City of Buenos Aires, C1428ARG, Argentina, and our general telephone number at this location is +54 11 4346 5000.

We were incorporated on July 21, 1992, under the name Empresa Distribuidora Norte Sociedad Anónima, as part of the privatization of the Argentine state-owned electricity utility, Servicios Eléctricos del Gran Buenos Aires S.A. (SEGBA). The Company’s term of duration is 95 years. In anticipation of its privatization, SEGBA was divided into three electricity distribution companies, including our company, and four electricity generation companies, and on May 14, 1992, the Argentine Ministry of Economy and Public Works and Utilities approved the public sale of all of our company’s Class A common shares, representing 51% of the capital stock of our company. As of June 30, 2021, Edelcos became the controlling shareholder of Edenor, through the approval by ENRE of the acquisition of 100% of Edenor´s Class A shares.

Please see below our share equity composition as of December 31, 2023:

Shareholders	Class A	Class B	Class C	% of capital stock	% of the Class
Edelcos	462,292,111	-	-	51.00%	100.00%
Treasury shares	-	30,852,251	-	3.40%	6.97%
FGS ANSES	-	242,999,553	-	26.81%	54.91%
Floating	-	168,714,526	-	18.61%	38.12%
PPP	-	-	1,596,659	0.18%	100.00%
Total per class	462,292,111	442,566,330	1,596,659	100.00%
Total capital stock			906,455,100

Business Overview

We believe we were the largest electricity distribution company in Argentina and one of the largest in Latin America in terms of number of users and electricity sold (both in GWh and in Pesos) in 2023. We hold a concession to distribute electricity on an exclusive basis to the northwestern part of the greater Buenos Aires metropolitan area and in the northern part of the City of Buenos Aires, comprising an area of 4,637 square kilometres and a population of approximately 9 million people. As of December 31, 2023, Edenor increased its sales by 3.1%, serving approximately 3.3 million users.

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The following table shows the percentage of the electricity produced and sold by generating companies that was purchased by us in the periods indicated:

	Electricity demand in Gwh(1)	Edenor demand in Gwh(2)	Edenor’s demand as % of total demand
2013	125,239	24,902	19.9%
2014	126,467	24,860	19.7%
2015	132,110	26,322	19.9%
2016	133,111	26,838	20.2%
2017	132,530	25,950	19.6%
2018	133,010	25,906	19.5%
2019	128,946	24,960	19.4%
2020	127,307	25,124	19.7%
2021	133,877	26,373	19.7%
2022	138,775	27,158	19.6%
2023	140,883	27,676	19.6%

Source: CAMMESA

⁽¹⁾ Demand in the Mercado Eléctrico Mayorista Sistema Patagónico (Patagonia wholesale electricity market, or MEMSP).

⁽²⁾ Calculated as electricity purchased by us and our wheeling system users.

Edenor Concession

Edenor’s concession is currently set to expire on August 31, 2087, after a term of 95 years, and may be extended for one additional 10-year period if Edenor requests such extension at least 18 months before expiration. The term of the concession is divided into management periods: a first period of 15 years and subsequent periods of 10 years each.

Six months before the end of each management period, the regulatory authority shall launch an international public bidding procedure in respect of the Class “A” shares representing 51% of the share capital of Edenor, currently held by Edelcos. If Edelcos matches the highest bidor its bid represents the highest bid received, it will continue to hold the Class “A” shares, and no further disbursements will be necessary. On the contrary, if Edelcos’s offer is not the highest, the Class “A” shares shall be awarded to the bidder who made the highest bid and the proceeds from the sale shall be payable by Grantor Government to Edelcos, net of any payments owed to the Argentine Government. The beforementioned price shall be delivered within the term of 30 days once the Grantor Control received it. The first management period commenced on September 1, 1992. On February 25, 2021, through Resolution 65, the ENRE established that the first management period will be considered concluded at the end of the term established for the next RT, which has been postponed and is expected to take place by December 2024.

No specific fee must be paid by the Company under the Concession Agreement during the term of the concession.

The Company is subject to the terms of its Concession Agreement and the provisions of the regulatory framework comprised by Laws No. 14,772, 15,336 and 24,065, resolutions and regulatory and supplementary standards issued by certain authorities. Thus, the Company is responsible for the distribution and sale of electricity as a public service with a satisfactory quality level pursuant to the requirements set forth in the aforementioned Concession Agreement and regulatory framework.

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Geographic Exclusivity

Our concession gives us the exclusive right to distribute electricity within our concession area during the term of our concession. Under our concession, neither the national nor the provincial or local Governments may grant further concessions to operate electricity distribution services within our concession area. In that respect, we are obligated to satisfy all of the demand for electricity originated in our concession area, maintaining at all times a service quality standard that has been established in our Concession Agreement. This geographic exclusivity may be terminated in whole or in part by the Argentine Government if technological changes make it possible for the energy distribution industry to evolve from its present condition as a natural monopoly into a competitive business. However, the Argentine or the Provincial Government may only exercise their right to alter or terminate our geographical exclusivity at the end of each management period under our concession, by prior written notice at least six months before the expiration of the corresponding management period.

There Omnibus Act includes the ability of the government to establish a New Energy Regulatory Framework by December 31, 2025, which would allow generators and other private companies to sell energy requested by users, promoting the sale of energy as a competitive business. However, no assurance can be given that such Omnibus Act can be enacted during 2024 or at all and, if enacted, it is not clear how it would affect the energy price payable by Edenor to the WEM.

The electricity distribution and sale service is provided exclusively to all the users connected to the network within the area comprised of the following:

Region I City of Buenos Aires: the area encompassing Dock “D”, “unnamed street”, path of the Autopista Costera (coastline highway), extension of Pueyrredón Ave., Córdoba Ave., Ferrocarril San Martín railway tracks, General San Martín Ave., Zamudio, Tinogasta, General Paz Ave. and Río de La Plata River, and Province of Buenos Aires: the districts of San Martín, Tres de Febrero, San Isidro and Vicente López.

Region II Province of Buenos Aires: the districts of Morón, Ituzaingó, Hurlingham, Merlo, Marcos Paz, Las Heras and La Matanza.

Region III Province of Buenos Aires: the districts of San Fernando, Tigre, Escobar, Malvinas Argentinas, San Miguel, José C. Paz, Pilar, Moreno and General Rodríguez.

Our Obligations

We are obligated to supply electricity upon demand by the owner or occupant of any property in our concession area. We are entitled to charge for the electricity supplied rates that are established by tariffs set with the prior approval of the ENRE under applicable regulations. Pursuant to our concession, we must also meet specified service quality standards relating to:

· the time required to connect new users;

· voltage fluctuations;

· interruptions or reductions in service; and

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· the supply of electricity for public lighting and to certain municipalities.

Our concession requires us to make the necessary investments to establish and maintain the applicable service quality standards to file our investment plan with the ENRE on an annual basis for its review, and to comply with the stringent minimum public safety standards as specified for our concession. We are also required to furnish the ENRE all information requested by it and must obtain the ENRE’s prior consent for the disposition of assets that are assigned to the provision of our electricity distribution services. The ENRE also requires us to compile and submit various types of reports regarding the quality of our service and other technical and commercial data, which we must periodically report to the ENRE.

We are obligated to allow certain third parties (namely, other agents and large users) to access any available transportation capacity within our distribution system upon payment of a wheeling fee. Consequently, we must render the distribution service on an uninterrupted basis to satisfy any reasonable demand. We are prohibited from engaging in practices that limit competition or result in monopolistic abuses.

Under our concession, we may also be required to continue rendering services after the termination of the Concession Agreement’s term upon the request of the Argentine Government, but for a period not to exceed 12 months.

In accordance with our concession, our controlling shareholder, Edelcos, has pledged its 51% stake in the Company to the Argentine Government to secure obligations under our concession. The Adjustment Agreement required that the pledge be extended to secure our obligations under such agreement. The Argentine Government may foreclose on its pledge over the Class A shares and sell them in an international public bidding procedure if certain situations occur. See “Item 4. Information on the Company—Business Overview—Foreclosure on the Pledge of Our Class A common shares or Revocation of Our Concession”.

Quality Standards

Service quality

Pursuant to our concession, we are required to meet certain levels of technical quality of the product delivered (voltage level and waveform) and the service provided (frequency and duration of interruptions). With the adoption of the new Sub-Annex IV which has been in force since March 2017 and the start of the RTI’s five-year period (2017-2022) (the “RTI Five-Year Period”), the admissible disruptions gaps in the voltage level may not exceed the following percentages:

High voltage	-5.0% to +5.0%
Overhead network (medium or low voltage)	-8.0% to +8.0%
Buried network (medium or low voltage)	-8.0% to +8.0%
Rural	-8.0% to +8.0%

The concession granted to Edenor stipulates that fines will be applied when registered stress sets exceed the preceding limits for more than 3% of the total measurement time (5% for the case of measurements of perturbations to the waveform). The penalty rate for each KWh delivered in poor conditions depends on the magnitude of the setback with respect to the rated voltage and follows a quality path that increases that rate over the RTI Five-Year Period. For the particular case of voltage set-offs in selected points, regulation provides for an increase in the bonuses to be credited to the customer in case the set-off outside the tension limits persists over time. Fines are credited to the invoice of the affected user.

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The technical service quality levels set out in Edenor’s concession refer to the frequency and duration of interruptions. It will be sufficient for one of the limits to be exceeded for the penalized time of said interruption and the rest computable interruptions to be included in the calculation of the bonuses. During the RTI Five-Year Period, the quality requirement is also increased by the percentage of the cost of unsupplied energy corresponding to the customer’s tariff based on the semester of the five-year period and the penalized duration of the interruption. In the event of an extraordinary impact on the provision of the service (i.e., 70,000 or more affected customers for five or more days in a row), a special compensation is provided to the T1R customers affected during those periods for more than the time limit applicable to the corresponding semester of the five-year period.

The last six-month period of the 2017-2022 five-year period, ended in February 2022. Consequently, through ENRE Resolution No. 65 dated February 25, 2022, semesters 11 and 12 were added, which are known as transition periods, comprised of semesters 52 (March - August 2022) and 53 (September 2022 - February 2023) and through Resolution No. 252/2023 dated March 3, 2023, semesters 13 and 14 were added to the transition periods, comprised of semesters 54 (March - August 2023) and 55 (September 2023 - February 2024).

In addition to incorporating district and commune-based service quality controls, a quality improvement path with increasing requirements was implemented, regarding not only interruption frequency limits and admissible interruption duration but also the cost of non-delivered energy. Additionally, an automatic penalty mechanism was implemented so that the discounts applied on account of deviations from the established limits may be credited to customers within a term of 60 days as from the end of the controlled six-month period. As for the values of the definitive penalties, the decision of the ENRE concerning the information submitted for each six-month period is required.

Additionally, through Resolution No. 198/2018, the ENRE established additional penalties of 300 or 600 KWh per user depending on the Feeder Six-Month Track Factor (Factor de Sendero Semestral del Alimentador, or “FSSA”) and the Consumer Six-Month Track Factor (Factor de Sendero Semestral de Usuario, or “FSSU”) as from the fourth six-month period of the RTI Five-Year Period, which commenced in September 2018. The penalties that may eventually be applied must be calculated and reported to the ENRE within 120 calendar days from the end of the six-month control period and deposited in an escrow account. Edenor appealed Resolution No. 198/2018, requesting the declaration of nullity thereof and arguing that the ENRE, with such act, altered the “Quality of Service and Penalties Regime” in force -approved by Resolution ENRE No. 63/2017 and its complements, as sub-annex 4 of the Concession Agreement, resulting from the RTI-, with the subsequent unilateral alteration of the technical, operational, economic and financial agreements agreed in the last contractual renegotiation. The Argentine Supreme Court of Justice will resolve the appeal.

The following table indicates the stipulated levels for the frequency and duration of interruptions per customer (individual indicators) during the first semester of the RTI Five-Year Period:

Category of user	Frequency of interruptions (maximum number of interruptions per six month period)	Duration of interruption (maximum amount of time per interruption) (1)
High voltage	6	4 hours
Medium voltage	8	6 hours
Low voltage: (small and medium demand)	12	20 hours
Large demand	12	12 hours

_______________________

⁽¹⁾ Interruptions of less than three minutes are not recorded.

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The values for the final semester of the RTI Five-Year Period, which were in force for the year 2023, are as follows:

User category	Frequency of interruptions (maximum number of interruptions per semester)	Interrupt duration (maximum amount of Time per interruption)(1)
High Voltage	3	2 hours
Medium Voltage	4	3 hours
Low Voltage: (Small and Medium Demands)	6	10 hours
Big Demands	6	6 hours

(1) Interruptions of less than or equal to three minutes are not recorded

The 2022/2023 transition period began in March 2022. With regard to interruption frequency and duration limits per district and commune, the limits of the last six-month period according to Sub-Appendix IV to the Concession Agreement established by the RTI were maintained for the first six-month period of the aforementioned transition period. For the second six-month period of the transition period, the ENRE set new values with a decrease less pronounced than that established for the last six-month periods of the RTI’s five-year period.

The following table sets forth the average of frequency and duration (SAIDI and SAIFI – Global Indicators) of interruptions to our service in the periods indicated, registering historic demand in 2023:

	Year ended December 31,
Per customers	2023	2022	2021	2020
Average frequency of interruptions (times)	3.40	3.60	4.12	4.64
Average duration of interruption (hours)	8.22	8.61	10.67	12.23

The trend towards improvement of the interruption frequency indicator as compared to the previous year continued, which was reflected in a similar proportion in the total interruption duration indicator, with a slight improvement in average interruption duration. Investment actions in distribution networks, and their ripening over time, often lead in the first place to a decrease in the frequency indicator.

Product quality

With regard to product quality, the regulations established a quality path for the RTI Five-Year Period (2017-2022), which are still effective as of the date of this annual report. Such regulation set voltage deviation limits for MV and LV supplies at a unified value of 8%, 5% exclusively for HV, and the cost of energy delivered in poor condition at incremental values throughout the path for both voltage levels and disturbances.

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The regulations applicable to the last six-month period of the RTI’s five-year period (2017-2021) were maintained for the 2022/2024 transition period, with voltage deviation limits for MV and LV supplies having been set at a unified value of 8%, 5% exclusively for HV, and the cost of energy delivered in poor condition for both voltage levels and disturbances.

Others

In addition, to meet required quality levels, we must comply with certain operational requirements related to the quality of our commercial services, safety in public streets, data gathering and processing (including through reports that must be submitted to the ENRE for supervision and control) and other contractual requirements related to our environmental management plan and the claims filed with the ENRE by users which have been resolved after the established period.

Fines and Penalties

Under the terms of our concession, the ENRE may impose fines and penalties if we fail to comply with our obligations.

Fines relating to our failure to meet any of the quality and delivery standards described above are payable by granting credits or bonuses to our users to offset a portion of their electricity charges. Since 1996, we have operated a central information system that allows us to directly credit users who are affected by these quality or delivery deficiencies in the amount of the applicable fines.

Fines and penalties that are not directly related to services rendered to our users are owed to the ENRE, including fines imposed on us by the ENRE for any network installations found to create a safety or security hazard in a public space, such as streets and sidewalks. In addition, the ENRE may fine us for furnishing it inconsistent required technical information. Fines paid to the ENRE are deposited in the Third-Party Reserve Fund of the ENRE (Reserva de Fondos de Terceros del ENRE) in an account held with Banco Nación.

The following table shows the adjustments to Edenor’s standalone accruals for ENRE fines and penalties, including current fines and penalties and adjustments to past fines due to increases in our tariffs pursuant to the Adjustment Agreement, for the periods specified:

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	Year ended December 31,
	(in millions of Pesos)
	2023	2022	2021
Accruals at beginning of year	71,726	78,423	82,838
ENRE Fines and Penalties	72,552	49,530	33,763
Quality of Technical Service	3,654	3,949	5,440
Quality of Technical Product	324	414	262
Quality of Commercial Service	9,670	5,845	3,955
Public Safety	2,600	2,469	2,420
Reporting Violations	2,782	2,308	1,451
Others	418	430	134
Agreement on the Regularization of obligations	53,104	34,115	20,102
Payments of the year	(6,043)	(8,274)	(5,260)
Quality of Technical Service	(1,918)	(1,859)	(2,803)
Quality of Technical Product	(263)	(399)	(121)
Quality of Commercial Service	(2,550)	(2,099)	(480)
Public Safety	(1,106)	(1,258)	(1,669)
Others	(206)	(747)	(187)
Agreement on the Regularization of obligations	-	(1,912)	-
Result from exposure to inflation for the year	(75,355)	(47,952)	(32,919)
Accruals at year-end	62,880	71,726	78,423

Note: The facts or events that generated the amounts charged in each period may have occurred in prior periods and not necessarily in the period in which the charge is made.

Fines and penalties imposed on us by the ENRE amounted to Ps.72,552 million and Ps.49,530 million as of December 31, 2023 and 2022 respectively.

As of December 31, 2023, total accrued fines and penalties amounted to Ps.62,880 million, of which Ps.61,669 million (including accrued interest) corresponded to penalties accrued but not yet imposed on us and Ps.1,211 million (including accrued interest) correspond to penalties imposed on us but not yet paid.

Additionally, pursuant to Note No. 125,248 dated March 29, 2017, the ENRE set the applicable penalty determination and adjustment mechanisms in relation to the control procedures, the service quality assessment methodologies, and the penalty system applicable as from February 1, 2017 for the 2017 – 2023 period established by ENRE Resolution No. 63/17.

In accordance with the provisions of Sub-Appendix XVI to such Resolution, the Company is required to submit within a term of 60 calendar days, the calculation of global indicators, interruptions for which force majeure has been alleged, the calculation of individual indicators, and shall determine the related discounts, crediting the amounts thereof within 10 business days. In turn, the ENRE will examine the information submitted by the Company, and in the event that the crediting of such discounts is not verified, it will impose a fine, payable to the Federal Government, for an amount equivalent to twice the value of the original amount that should have been recorded.

In this regard, the ENRE has implemented an automatic penalty mechanism so that the discounts on account of deviations may be credited to customers within a term of 60 days as from the end of the relevant six-month period.

The penalty system provides that penalties are updated in accordance with the variation of distributor’s CPD or by the energy tariff average price as the case may be. Subsequently, through different resolutions concerning penalties relating to the commercial service and the safety on streets and public spaces, the ENRE provided for the application of increases and adjustments, applying for such purpose a criterion different from the one applied by the Company.

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Additionally, and following the completion of a RTI process, the ENRE issued the currently applicable penalty procedures, including:

· ENRE Resolution No. 118/18: Regulating the compensation for extraordinary service provision interruptions.

· ENRE Resolution No. 170/18: Regulating the Penalty System for Deviations from the investment plan, whereby real investments are compared to the annual investment plan submitted by the Company, and the investment plan carried out for the five-year period is assessed against the five-year plan proposed in the RTI.

· ENRE Resolution No. 198/18: Adopting a new Supplementary Penalty Procedure of Technical Service Quality, which penalizes deviations from quality parameters at feeder level.

· ENRE Resolution No. 91/18: Establishing that, through the filing of charges, the ENRE informs Edenor about the penalty procedure to be applied for failure to comply with meter-reading and billing time periods.

· ENRE Resolution No. 5/19: Establishing that, through the filing of charges, the ENRE notifies Edenor about the penalty system to be applied for failure to comply with customer service timing requirements in commercial offices (Intelligent Routing and Customer Service System – Sistema Inteligente de Direccionamiento y Atención de Usuarios (SIDyAA)).

· ENRE Resolution No. 42/2020: Approving the new plan for crediting and distributing the penalties payable to all of active users and the methodology for crediting the penalties payable to Edenor’s non-active users, as well as the manner in which distribution companies must produce certain information and submit it to the ENRE.

· ENRE Resolution No. 15/2021: Approving a new methodology for crediting and distributing the penalties payable to all active users and the methodology for crediting penalties to the Solidarity Account for Users in Vulnerable Situations, as well as the manner in which Edenor must produce certain information and submit it to the ENRE.

· ENRE Resolution No 547/2022: Approving a new methodology for supervising and processing the information concerning interruptions.

· ENRE Resolution No. 452/2023: Modified the Procedure for the Treatment and Determination of the Sanction of Claims of Users entered in the ENRE for Problems Related to Repeated Supply Cuts.

· ENRE Resolution No. 622/2023: Modified the Methodology for validating readings and estimating consumption.

· ENRE Resolution No. 696/2023: Approved the Procedure for disseminating scheduled power outages.

The effects of the resolutions detailed above have been applied by the Company and recognized in our Financial Statements as of December 31, 2023, 2022, and 2021, which does not imply the Company consents to the criteria established.

On May 10, 2019, the Company and the SE, on behalf of the Federal Government, entered into the Agreement on the Regularization of Obligations. By virtue of this agreement, the Company (i) undertook to pay users certain penalty and compensation amounts relating to the 2006-2016 period; and (ii) agreed to make investments, in addition to those agreed upon in the RTI, to contribute to improve the reliability and safety of the service. In return, the Federal Government partially recognized the claim duly made by the Company, by fully offsetting pending obligations and cancelling penalties payable to the National Treasury. Furthermore, the Company waived any rights to which it may be entitled and abandoned any actions against the Federal Government. As of the date of this annual report, such obligations have been fulfilled by both parties.

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On September 21, 2021, the Argentine Ministry of Economy had issued ME Resolution No. 590/2021 declaring such agreement contrary to the public interest, thus paving the way for the filing of a legal action to declare it null and void. It also provided for the suspension of the administrative procedures relating to the fulfilment of the obligations arising from such agreement. However, on October 19, 2021, the Argentine Ministry of Economy issued ME Resolution No. 656/2021 confirmed that the Agreement on the Regularization of Obligations is valid and not suspended.

Nevertheless, based on the terms of the second clause of the aforementioned agreement, the Company recorded, as of December 31, 2023, an update to the amounts related to “penalties to be used for investments” for a total of Ps.34,204 million, amounting to a total liability (pending of application) of Ps. 51,390 million at nominal values, which was allocated as financial interest.

Foreclosure on the Pledge of Our Class A common shares or Revocation of Our Concession

Under the terms of our concession, the Argentine Government has the right to revoke our concession if we enter into bankruptcy and the Argentine Government decides that we may not continue rendering services, in which case all of our assets will be transferred to a new state-owned company that will be sold in an international public bidding procedure. At the conclusion of such bidding process, the purchase price would be delivered to the bankruptcy court in favor of our creditors, net of any debt owed by us to the Argentine Government. Any residual proceeds would be distributed among our shareholders.

Periodic bidding for control of Edenor

Before the end of each management period under our concession, the regulatory authority shall launch an international public bidding procedure in respect of the Class “A” common shares representing 51% of the share capital of Edenor, currently held by Edelcos. If Edelcos matches the highest bid or its bid represents the highest bid received, it will continue to hold the Class “A” shares, and no further disbursements will be necessary. On the contrary, if Edelcos’s offer is not the highest, the Class “A” shares shall be awarded to the bidder who made the highest bid and the proceeds from the sale shall be payable by Grantor Government to Edelcos, net of any payments owed to the Argentine Government. The beforementioned price shall be delivered within the term of 30 days once the Grantor Control received it. The first management period commenced on September 1, 1992. On February 25, 2021, through Resolution 65, the ENRE established that the first management period will be considered concluded at the end of the term established for the next RT, which has been postponed and is expected to take place by December 2024.

Default of the Argentine Government

If the Argentine Government breaches its obligations in such a way that we cannot comply with our obligations under our concession or in such a way that our distribution service is materially affected, we may request the termination of our concession, after giving the Argentine Government a 90-day prior notice. Upon termination of our concession, all our assets used to provide electricity distribution service will be transferred to a new state-owned company to be created by the Argentine Government, which shares will be sold in an international public bidding procedure. The amount obtained in such bidding will be paid to us, net of any payment owed by us to the Argentine Government, plus certain compensation established as a percentage of the bidding price, ranging from 10% to 30% depending on the management period in which the sale occurs.

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Edenor Network

As of December 31, 2023, the system through which the Company supplies electricity comprises 83 HV/HV, HV/HV/MV and HV/MV transformer substations, which represents 29,778 MVA of installed power and 1,563 kilometers of 220 kV, 132 kV and 27.5 kV high-voltage networks. The MV/LV and MV/MV distribution system comprises 19,316 MV/LV transformers, which represents 9,679 MVA of installed power, 12,173 kilometers of 33 and 13.2 kV medium-voltage lines, and 28,160 kilometers of 380/220 V low-voltage lines.

The table below shows the most significant data related to the transmission and distribution system for the last four years:

 

Electricity is conveyed from points of interconnection with the Argentine Interconnection System (“SADI”), 500 kV-220 kV Rodríguez Substation, 220 kV Ezeiza Substation, and from the local power plants, mainly Puerto Nuevo and Costanera. In turn, the transmission network links these nodes with Casanova, Colegiales, Malaver, Matheu, Morón, Rodríguez, Talar, Zappalorto, and Trujui 220 kV head substations, and with Matanza, Ramos Mejía, Agronomía, Puerto Nuevo, Edison, Pilar, Malvinas, and Garin 132 kV head substations.

Additionally, other local thermal-generation power plants are linked to Pilar, Zappalorto and Matheu Substations.

The transmission and distribution system, together with Edesur’s and Edelap S.A. (“Edelap”)’s systems, form the Greater Buenos Aires system that is operated by SACME, a company jointly controlled by the Company and Edesur S.A. SACME is responsible for the management of the high-voltage regional distribution network in the Buenos Aires metropolitan area, coordinating, controlling and supervising the operation of the generation, transmission and distribution network in the City of Buenos Aires and the Buenos Aires metropolitan area, including coordination with the SADI in the Company’s and Edesur’s concession areas.

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The Company distributes energy from the high/medium voltage substations through the primary 13.2kV and 33kV system to a secondary 380/220 V low-voltage system, distributing the electricity to final users with varied voltage levels depending on their requirements. In exceptional cases, certain users are supplied with power at higher voltages.

Investments

Investments made in 2023 amounted to Ps.123,628 million in constant currency, which represents a 17% increase compared to 2022. The execution of investment projects was given priority over any other disbursements as a way to maintaining the provision of the public service, in particular to expand and renovate substation, and create new projects in line with our energy efficiency goals, to improve the quality of the service and reduce non-technical losses. Such investment projects include installation of remote control equipment in the medium-voltage network, connection of new electricity supplies, and installation of self-administered energy meters. All the investments were made prioritizing environmental protection and public safety under reliable conditions.

 

Transmission structure:

Our HV transmission network takes energy mainly from the Argentine Interconnected System through the Rodríguez and Ezeiza Substations, and the Puerto Nuevo, Nuevo Puerto, Costanera, Parque Pilar and Matheu III local thermal power plants; additionally, it exchanges energy with other companies at transmission, distribution and distributed generation levels.

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With the aim of improving the quality of the service and meeting the growth in demand, in 2023, we made significant investments in the HV network, among which the following are worth mentioning:

· New 220/132 - 1x300 MVA transformer in Pantanosa Substation;

· Replacement of a 2.37 km-long section of a 132 kV oil-paper cable with a 2.44 km-long section of an XLPE-type dry cable in the power line that links Puerto Nuevo and Colegiales Substations;

· Carrying out of the works for the sectioning of the 132 kV power lines that link Talar and Matheu Substations, at Benavidez Substation;

· Replacement of a 132/13.2 kV transformer of 40 MVA with 80 MVA in Merlo Substation in the framework of the 132 kV underground power line project between Zappalorto and Merlo Substations. The works to improve Merlo Substation by 2x80 MVA and execute the aforementioned power line continue;

· Continuation of the works to replace a 4.3 km-long section of a 220 kV oil-paper cable with a 4.3 km-long section of an XLPE-type dry cable in the power lines that link Malaver Substation and Malaver Interconnection Post;

· Continuation of works on two new 132 kV power lines between Pantanosa and Aeroclub Substations; and

· Commencement of works for the expansion of 132 kV busbars in Zappalorto Substation in the framework of the project for its expansion to 3x300 MVA.

Subtransmission Structure

Our subtransmission network is the link between HV (HV/HV) head substations and the substations where voltage is transformed from high to medium (HV/MV), adopting generally the 132 kV voltage level. The overhead network (double radial deviation or double loop deviation) and the underground network (in “simple circuit” loops or double loop deviation) are considered as the basic structure of the subtransmission network.

In 2023, some of the main works performed were:

· Authorization to operate the new 220/13.2 kV - 2x80 MVA Trujui Substation with its underground 220 kV (2x0.1 km) linking power lines. The works on the Medium-Voltage Switchboards continue.

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· Authorization to operate a 40 MVA transformer in the new 132/13.2 kV - 2x40 MVA Garín Substation with its underground 132 kV (2x2.9 km) linking power lines. The works on both the second 40 MVA transformer and the Medium-Voltage Switchboard continue.

· Replacement of a 132/13.2 kV transformer of 40 MVA with 80 MVA in Morón Substation in the framework of the Tesei Substation and its linking power lines project.

·                  Continuation of construction works of the new 132/13.2 kV - 2x80 MVA Martínez Substation.Distribution Structure:

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The distribution network comprises all the equipment, medium voltage (13.2 and 33 kV) lines and cables that link subtransmission substations with medium and medium/low-voltage transformer centers. The network’s basic structure consists of open normal operation feeders forming rings with other feeders of another busbar of the same substation or with neighboring substations.

In 2023, the following works were performed, among others:

· 32 new MV feeders were authorized to operate in new and existing Substations, increasing the length of the medium-voltage network in 70 km.

· 407 new MV/LV transformer centers were installed and another 560 were extended, increasing installed capacity in 310 MVA.

· 217 new remote control points and 203 new remote supervision points were incorporated in the medium-voltage network, which make it possible to reduce restoration times. As of December 31, 2023, 3,330 remote control points and 2,719 remote supervision points were authorized to operate, covering more than 91% of the network.

Network improvement

The improvements made to the networks in 2023 comprised all voltage levels. The most significant improvements were:

· HV network: replacement of bushings in 220/132 kV and 132/13.2 kV transformers and replacement of 132/13.2 kV - 40 MVA transformers. Continuation of the replacement plan of metering transformers. Replacement of 132 kV and 220 kV circuit breakers/disconnectors, and of 132 and 220 kV transformer and line protection switchboards.

· MV network: completion of replacement works of 13.2 kV switchboards in Bancalari and Colegiales Substations, commencement of replacement works of the 13.2 kV switchboard in El Pino Substation, and replacement of disconnectors in San Isidro, Agronomía, Vicente López and Caseros Substations. Replacement of a 12 km-long section of old technology underground network, replacement of MV/LV transformers, and replacement of switchgear equipment in transformer centers.

· LV network: replacement of underground and overhead network.

Investments in information systems

Throughout 2023, we have continued to improve and develop our systems. The most significant improvements were:

· Updating and implementation of new functionalities of the “edenordigital” application.

ü Investments in developing solutions to automate business processes, such us: digitization of the government client management process, technical product quality, technological evolution of reading devices, and contract management.

· Implementation of the Distribution Monitoring System (SMD).

· Implementation of new functionalities of the Nexus Platform.

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· Implementation of the ROSA platform (Red Hat Openshift) on AWS (Amazon Web Service).

· Improvements in telecommunications networks:

ü Incorporation of 184 concentrators to expand the “Remote Management Control” of 20,768 dual-body meters.

ü Increase of 37 km in the fiber optic network in the concession area.

ü Replaced 100 next-generation routers to the backbone network infrastructure.

ü Implementation of 12 teleprotection equipment on high voltage lines.

ü Installation of 350 network outlets in the Guzman building.

ü Implementation of a WiFi system with 7 access points.

ü Incorporation of 24 IP cameras for electronic security.

ü Installation of uninterruptible power supply equipment called 60 kVA UPS.

· Inclusion of 202 new telecontrolled centers and 235 MIDE meter concentrators.

Distribution Technical Management

In 2023, we were able to improve the quality of the service while continuing with the plans and projects implemented in prior years. The results obtained represented a significant improvement in SAIFI and SAIDI service quality indicators.

Among the main operation and maintenance-related activities carried out throughout the year, the following are worth mentioning:

Distribution

Special Maintenance plans: change and adjustments of line poles

§ 3,942 MV line poles, 26% of which were replaced by reinforced concrete columns.

§ 62,418 LV line poles

Pruning plan in MV network

§ The procedure consisting of three inspections per year continued to be carried out with its related adjustments, comprising an intensive period between March and August and two subsequent corrective periods, which resulted in a reduction of faults caused by vegetation contact on power lines.

§ In the year, 170,000 trees were pruned or trimmed.

Inspections in distribution networks

§ 4,365 Km of MV networks.

§ 28,979 Km of LV networks.

§ 5,071 inspections of Transformer Centers.

§ 1,896 thermographic inspections.

§ Complete census of “Not Metered” equipment installations (Public lighting, traffic lights, cable television equipment, etc.) (2023-> 100%).

Leveraging MV planned installation procedures

§ When a facility is put out of service on a scheduled basis, a complete examination of pending adjustments is made so as to take advantage of the power cut to make them. Through this procedure, more than 3,467 tasks, which include 736 replacements of MV line poles, were carried out in the year.

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Tasks performed by distribution mobile teams:

§ 75,110 grouped LV interruptions.

§ 412,944 responses to individual LV claims.

§ 57,576 installations of new electricity supplies.

§ 332,941 energy recovery-related inspections in T1 customers.

§ 17,957 energy recovery-related inspections in T2 customers.

§ 419,566 switching operations in the MV network during planned works.

§ 82,758 switching operations in the MV network during forced events.

§ 3,564 LV underground splices.

§ 3,619 MV underground splices.

Diagnosis center

§ Progress was made with the installation of AMI Meters for medically dependent on electricity users, with the number of meters installed in medically dependent on electricity active customers surpassing 750.

§ Carrying out of 4 Projects and Works aimed at adapting internal facilities for the installation of alternative energy sources (AES) in vulnerable medically dependent on electricity users, totaling 44 Projects and Works in the last 30 months.

§ Installation of 72 AES, reaching a total of 173 active AES as of 12/31/23.

§ Installation of 896 power generator sets that had been requested by medically dependent on electricity customers due to planned or forced power cuts of our Network.

Remote control and remote supervision

In 2023, the remote control plan continued to be carried out and the substations’ remote control equipment was improved.

§ 217 new remote control operational points in the MV distribution network, achieving a total of 3,330 over the existing 1,731 MV feeders.

§ Incorporation of 191 remote supervision points in the MV network, achieving a total of 2,724 points. Remote supervision of the physical quantities of 8 power generation groups, thus avoiding the presence of permanent staff to control their functioning.

§ Inspection of protections in 87 Large Customers distributed in the MV network, adjusting those with inadequate calibration or those that did not work, thus reducing the possibility of internal failure without affecting adjacent customers.

§ Thanks to the remote control implementation achieved in both substations and the MV distribution network, it was possible to normalize 64% of the customers affected by MV planned and forced power cuts in less than 15 minutes and 43% of them in less than three minutes, thereby improving (SAIDI and SAIFI) service quality indicators

§ Extension of the application of IT Security concepts to the remote control networks of three HV/HV, HV/MV and MV/MV substations. Technology improvements that boost the current protection system against cyber-attacks were made in at least 52 remote control pieces of equipment in place in several substations.

§ Technology renewal of the remote control equipment in seven substations.

Transmission

§ Compliance with the Preventive Maintenance Plan of HV facilities and substations in accordance with regulations.

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§ Compliance with the Preventive Maintenance Plan of MV overhead lines.

§ LLW (Live Line Working) capacity continued to be extended, developing procedures that make it possible to enhance the tasks to be carried out with light equipment.

§ The LLW Insulation Testing Laboratory maintained the IRAM-ISO/IEC 17025 accreditation by the Argentine Accreditation Agency.

§ Completion of the development of the application for the monitoring of protections, avoiding the periodical maintenance of 3,600 protections and taking action only when an anomaly is detected.

§ Replacement of 41 HV metering transformers in accordance with the improvement plan.

§ Implementation of PIVisión and Cromo in the programing of termography tasks in HV systems.

Management of Information Technology and Telecommunications

Throughout 2023, we remained committed to excellence and sustainable growth. Taking into consideration the profound changes demanded by Edenor, with regards to innovative models and advanced technologies to improve service quality and efficiency, progress was made in our transformation and development strategy.

In this context, digital capabilities were strengthened and progress was made towards the consolidation of a flexible and robust technology architecture to optimize the efficiency of the business’ processes.

Digital architecture, data analytics and data governance

In the 2023, data management and governance practices, which allow us to standardize, document, and ensure data traceability and quality throughout their life cycle, continued to be implemented in the organization’s different processes that support decision-making at all levels.

Among these practices, the Asset and Regulatory Capital Base project was implemented to allow for a validated and reliable data source for use with the Company’s Asset Inventory, which is the source used for the tariff structure review.

Additionally, and following our data governance strategy, we continued with the analysis, documentation and design of consolidated data models that allow us to produce descriptive, prescriptive, and advanced analytics for the daily management.

The use of Big Data & Analytics architecture was consolidated, which allows us to meet the different data processing and consumption needs. Certain activities were conducted to implement several data solutions.

In 2023, the data, intermediate processes and the “Oracle Customer Care and Billing” (“CC&B”) commercial system for billing models began to be migrated from the Qlik analytical platform to the new Big Data platform. This change should favor the generation of information in due time and manner and allows us to take advantage of the benefits of advanced analytics, self-service of information and data democratization.

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In addition, new use cases were implemented for the different divisions, such as JIRA proprietary Board and Procurement (Transformers), while KPI (Key Performance Indicators) for Remote Management and FSM (Field Service Management), which is the system that allows for the organization, coordination and optimization of both operational material and human resources, continued to be implemented.

We continue strengthening the role of a multidisciplinary team capable of raising business questions and finding solutions by working with different use cases, applying new data discovery as well as predictive and prescriptive analytics methodologies.

Furthermore, the servers’ different operating systems and database versions were surveyed in order to keep the health status of IT&T’s applications up to date, so as to be able to annually control the updatings of the resources existing in our platforms and have improved visibility into obsolescence risks.

In 2023, 30 new integrations were documented and inventoried, and 21 previous cases were remedied, thus strengthening our capacity to meet information requirements in both internal and external audits.

Technology solutions

In 2023, the management and follow-up process of new electricity supplies continued to be improved, particularly in the stages supported in CC&B. The objective of the improvements identified and implemented was to streamline management and automate the process, in particular for T2/T3 customer categories.

In order to ensure billing quality, we implemented the first phase of a new control mechanism that seeks to identify at an earlystage deviations in electrical and non-electrical charges and estimation and frequency fines associated with regulations and penalties imposed by the regulatory authority. This new control mechanism is expected to be continuously adapted and updated.

In 2023, we complied with the regulatory requirements that impacted our commercial systems, among which the implementation of ENRE Resolution No. 622 is worth mentioning as it required that we adapt the commercial system (CC&B) and the printing systems so that our bills to customers include information on consumption variations and costs related to changes in consumption habits, housing situation, seasonality, change of activity, and change of registered user name, thereby improving on our communications.

At the same time, we launched an update of our application “edenordigital”, with new functions to improve user experience. The most relevant improvements include the revamping of the log-in functions, advanced consumption simulation tools and self-service of payment plans, among other. In addition, the development of the unified transactions/procedures section simplified the search for users with multiple accounts, consolidating the app as an integral tool for our customers’ needs.

Another milestone achieved in 2023 was the implementation of the Distribution Monitoring System (DMS), which, based on a robust platform and already in use in other solutions of Edenor, enables the management of the adjustments performed in the distribution network’s electrical protections and provides metrics of both the number of implementations over time and change requests. The DMS helps improve the operational management of the Normalization and Distribution Engineering sector.

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Furthermore, the export of data from Nexus to SINCAL was automated. This simplified the MV and LV network electrical calculation process, necessary for the planning of works, necessary to meet customer demand for electricity. Among the advantages of the new tool, it provides for: time optimization, greater availability of data, elimination of manual tasks, and alignment with the industry’s more modern practices.

In 2023, the Technical Product Quality implementation project was launched. The project will automate the Technical Product Quality process, centralize the information and cover business flows by means of a single solution that will allow for increased regulations governance, traceability, auditing and compliance.

The Nexus Platform Upgrading project has also set out, which will allow for product modernization and the improvement of functional as well as stability and availability related aspects and response time.

Furthermore, several initiatives were implemented to attend to the Company’s technology optimization and support processes. Additionally, the standardization of processes continued to be carried out and was completed, replacing SAP custom transactions.

Another major milestone was the implementation of a platform for managing the entire procurement contract process in Edenor. The platform integrates with DocuSign, an electronic signature platform, and, at a later stage, it will integrate with SAP.

A new advanced version of the “Networks” recognition program, which makes it possible to recognize and grant benefits to all the personnel of the Company, was also implemented.

A new supplier portal, which will replace the current portal on SUS (Supplier Self-Services), began to be developed. This new implementation is expected to improve supplier interaction, both with the system and among the different areas of Edenor.

The automation of application testing continued to be developed, with a view to ensuring software quality and contributing to optimizing implementation times, providing support with agile initiatives and reaching 2,337 test cases. In 2023, efforts focused on the automation of CC&B and the “Field Service Management” (“FSM") technical system testing.

Additionally, the implementation of bots to streamline business processes (Robotic Process Automation -RPA) continued to consolidate. In 2023, 11 new bots were developed and more than 45 already existing bots were subjected to maintenance tasks due to changes in processes and other technical changes, such as browser and licensing model changes of the tool used.

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Technical and operational support solutions

In 2023, we continued strengthening the Digital Transformation process with the installation of more smart meters both for different segment customers and in different points of the distribution network.

In 2023, we added 2,431 new smart meters, thus achieving a total of 12,500 remotely-managed meters and 1,500 meters that can be read remotely.

With regard to MIDE meters, the incorporation of 184 concentrators allowed us to extend the remote management of 20,768 split meters. By the end of 2023, there were 858 concentrators and nearly 88,000 remotely-managed MIDE meters.

Metering Laboratory

In 2023, the Metering Laboratory continued to carry out metering equipment programing, assessment and failure analysis tasks. 

More than 1,500 pieces of metering equipment (meters, concentrators, recorders) were programed. Technical assessments of 14 new metering equipment models were made. 

Infrastructure and operations

A milestone of 2023 was the strengthening of our infrastructure with the aim of improving and ensuring the capacity, efficiency, and resilience of the systems and assets. 

The storage infrastructure and the (Hyper-V and Red Hat) virtualization environments, which allows us to run multiple operating systems in one single physical hardware, underwent stabilization and optimization processes. In line with increased storage needs and to improve performance, a new PMAX (Power Max storage) equipment was incorporated, both to expand storage capacity and provide exclusive storage for SCADA, in the new Cirion datacenter facilities. Additionally, we centralized file servers (servers for shared directories), which provide centralized and shared access to files and folders in a network. We extended and segmented the Storage Area Network (SAN), a specialized network that connects storage systems and servers, and extended computing power by means of 12 new blades that permit us to manage multiple servers in a reduced space.

In 2023, we informed several migrations, including of the Nexus Database to the corporate network, of Oracle Base Database releases that reached end-of-life support, and of the PowerCenter and KTA (Image Digitization) version migration. Another important development was the implementation of CMDB (Hardware and software assets or configuration items base), a tool that allows us to keep an inventory of technology components, applications and equipment in place, as well as to classify all IT events and associate them with the assets.

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In the area of services, the internal service channels (Chat and WEB Forms) were modernized, all of the printers were optimized, and all of the telephones for FSM as well as the pieces of equipment for the contractors in charge of the new meter-reading system were upgraded. 

The cloud infrastructure sector, which is responsible for the management of cloud services and resources, was created, thereby providing greater flexibility and agility to cloud adoption. In addition, the institutional websites infrastructure was optimized, the ROSA platform, which is an open-code containers platform running on AWS for the integration of applications, was implemented, a new connection channel with loud environments (new high availability VPN) was defined, and several clean-up actions regarding costs and account management were performed on the AWS platform. 

With regard to sustainability, we continued partnering with tech companies such as Atos, which provides us with personalized customer service in CDS, CPDO and CIM help desks. Also, our partner AWS in our management and analysis activities, continued providing us with the reports on carbon footprint reduction since we adopted the strategy of having workloads available on its cloud. 

Cybersecurity 

With regard to information security, and giving consideration to the increase in cybercrime worldwide, we worked on several fronts to strengthen the Company’s cybersecurity. 

Worthy of mention is the implementation of a Security Information and Event Management system (SIEM), to access data-based information and combat threats, protecting the business and mitigating risks at scale with Machine Learning-based analysis. 

Security standards, based on CIS Control (Center for Internet security) best cybersecurity practices, were developed for and implemented in servers, operating systems and switches and routers. 

The user authentication process, whereby the identity of a user attempting to gain access to the system is verified, was improved for the operating system by secure authentication, which provides a hierarchical and centralized security structure of users, groups and other objects of the network. 

The Zero Trust-based security posture was strengthened. The Zero Trust approach is based on the premise that organizations should trust nothing automatically, even when it comes from internal sources. 

The Operational Technology (“OT”) network security was also strengthened by defining new and more secure architectures for substations’ connectivity and incorporating electric protection networks to the OT cybersecurity model, increasing network security and segregation.

We continued to implement programs to raise staff awareness of cybersecurity and information safeguarding, through phishing drills, newsletters and interactive modules.

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We also implemented solutions to manage and optimize security regulations and policies for the management of firewall policy, which is a network security component that works as a barrier between the network and possible external threats, allowing us to improve compliance requirements as well as reduce exposure risk. 

A new continuous Vulnerability Management process, which allows us to identify, assess and treat security vulnerabilities in systems and the software that runs on them, was defined and implemented. 

A cybersecurity insurance was hired to protect the Company against residual risks and the costs associated with cybersecurity events (see “Item 4. Information on the Company – Insurance”).

The KPIs of our cybersecurity process were developed and implemented, which allows us to measure the Company’s position as well as the efficiency of our protection measures. 

A digital risk protection platform was also implemented, focused on early incident detection and fraud prevention, using artificial intelligence and automated processes to monitor an organization’s digital assets. 

See “Item 16 K. Cybersecurity” 

Telecommunications

In 2023, the Company’s data network was strengthened and extended by renewing technology and equipment. This effort included the increase by 37 km of the optical fiber network, totaling 2,837 km deployed on the entire concession area. New links to buildings, offices and substations were implemented by means of optical fibers and state-of-the-art radio links.   

One hundred routers were replaced, which add up to the ten backbone pieces of equipment, forming a new MPLS network to improve network performance and efficiency, especially in data transmission, which allows for the virtualization of IT and OT networks, increased WAN connections (used for facilitating communication between devices located at considerable distance from each other), and the improvement of performance and security. Additionally, our telecommunications rooms were adapted for this deployment. Also, twelve remote protection pieces of equipment were implemented in high-voltage lines. Due to the need for expansion of remote protection services, we validated new forms of communication through the MPLS network (SAR8 Nokia equipment network).  

We continued deploying state-of-the-art MPLS equipment for low-speed TDM services used in traditional telephone networks (Nokia SAR8 and HC) for the replacement of equipment, such as dial-up modems. The Local Area Network (LAN) (system of interconnecting electronic devices within a limited geographic area) of our buildings was equipped with PoE switches to provide power to cameras / IP telephony; and we deployed new industrial software designed for substations. 

Additionally, we implemented the new Wi-Fi 6 technology to optimize the wireless network performance and capacity, with it being already in use in Tronador, Estomba, Austria, Tigre, San Justo and Rolón buildings. Progress was also made with the migration and expansion of the Contact Center platform, with the installation of new servers for migration to R10 (Release 10), which is an evolution of mobile telephone technology.

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Assistance was also provided in the implementation of interaction campaigns, such as With / Without Electric Power, POM – MAIL Messenger Facebook, and new transactions/procedures were introduced on WhatsApp. 

In line with the Company’s expansion, the Guzmán operational building is being modified. 350 network ports were installed for the 240 workstations, and a Wi-Fi system with 7 access points was set up. Moreover, the building’s new data center was equipped and connected to the telecommunications rooms by optical fiber and Unshielded Twisted Pair (UTP) cable. 

With regard to electronic security, 24 IP cameras were incorporated, replacing the existing ones and adding new ones. In order for mission-critical workstations to be provided with uninterrupted power supply, we installed a 60 kVA Uninterruptible Power Supply (UPS) that provides power to the telecommunications rooms and strategic job positions. 

The plan for the Remote Control of Transformer Centers continued to be developed with the addition of 202 new centers, thus totaling 3,343 Remotely-Controlled Centers in the entire MV Network. A total of 129 connections were migrated to the optical fiber network, expanding the infrastructure even further. 

Direct connectivity was provided to 2,620 new smart meters, comprising a total of 12,717 of different electricity rate segments. 235 MIDE meter concentrators were added, extending remote management to 88,596 meters. As part of the migration process to smart meters, all the necessary infrastructure to put into operation new Ethernet meters was completed in 18 substations.  

Users

The following graph shows the evolution of our user base over the last four years:

 

As of December 31, 2023, Edenor served 3,299,278 users. We define a “user” as one meter.

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Edenor Tariff Categories

Edenor classifies its users pursuant to the following tariff categories:

· Residential (T1-R1 to T1-R6): residential users whose peak capacity demand is less than 10kW. In 2023, this category accounted for approximately 46% of our electricity sales and increased by 4.5% in terms of energy sales value (Gwh) compared to 2022.

· Small commercial (T1-G1 to T1-G3): commercial users whose peak capacity demand is less than 10kW. In 2023, this category accounted for approximately 8% of our electricity sales and increased by 4.7% in terms of energy sales value (Gwh) compared to 2022.

· Medium commercial (T2): commercial users whose peak capacity demand is equal to or greater than 10kW but less than 50kW. In 2023, this category accounted for approximately 7% of our electricity sales and increased by 1.5% in terms of energy sales value (Gwh) compared to 2022.

· Industrial (T3): industrial users whose peak capacity demand is equal to or greater than 50kW. This category is applied to high-demand users according to the voltage at which each user is connected. The voltage ranges included in this category are the following: (i) Low Voltage (LV): voltage less than or equal to 1 kV; (ii) Medium Voltage (MV): voltage greater than 1kV but less than 66 kV; and (iii) High Voltage (HV): voltage equal to or greater than 66kV. In 2023, this category accounted for approximately 16% of our electricity sales. This category does not include users who purchase their electricity directly through the WEM under the wheeling system and decreased by 0.9% in terms of energy sales value (Gwh) compared to 2022.

· Wheeling System: large users who purchase their electricity directly from generation or broker companies through the WEM. These tariffs follow the same structure as those applied under the Industrial category described above. As of December 31, 2023, the total number of such large users was 686, and this category represented approximately 17% of our electricity sales and increased by 4.1% in terms of energy sales value (Gwh) compared to 2022.

· Others: public lighting (T1-PL) and shantytown users whose peak capacity demand is less than 10kW. In 2023 this category accounted for approximately 6% of our electricity sales and decreased by 0.1% in terms of energy sales value (Gwh) compared to 2022. See “Item 4. Information on the Company—Business Overview—Framework Agreement (Shantytowns)”.

We aim to maintain an accurate categorization of our users to charge the appropriate tariff to each user. In particular, we focus on our residential tariff categorizations to both minimize the number of commercial and industrial users who are classified as residential users and identify residential users whose peak capacity demand exceeds 10 kW and therefore do not qualify as residential users.

We rely on the following measures to detect incorrectly categorized users:

· reporting carried out by our employees tasked with reading meter information to identify observed commercial activities which are being performed by residential users,

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· conducting internet surveys to identify advertisements for commercial services (such as medical or other professional services) that are linked to a residential user’s address, and

· analyzing user demand to determine whether we should further evaluate the peak capacity demand of a given user whose use might exceed 10kW.

Reclassification

On June 16, 2022, Decree No. 332/2022 set forth a mandatory reclassification of users. Upon the registration of each user at a National Registry of Users (RASE), residential users have the option to maintain a percentage of subsidies on their invoices by declaring certain personal and economic information, where the category N1 has lost 100% of subsidies and N2 and N3 have partially lost their subsidies over time.

On December 21, 2023, Decree No. 70/2023 empowered the SE to redetermine the structure of the subsidies to ensure end users access to basic and essential consumption of electric energy. The benefit must mainly consider a percentage of the income of the cohabiting group.

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Please see the implementation funnel for those reclassified users:

[26]

Reading, Billing and Collecting

The Company bills its users based on their tariff categories and the applicable (i) energy purchases, (ii) taxes, and (iii) VAD. Residential users and small business users are billed a fixed monthly charge and a variable charge based on each unit of energy consumed.

Monthly billing is measured every two months, dividing for such purpose the bimonthly consumption into two similar monthly periods with a view to providing T1 (small demand) users with more timely information regarding their consumption and facilitating payment.

Technology adaptations, such as remote meter readings, changes made in procedures, and the opening of new contact channels to coordinate meter readings notably reduced the number of cases that could not be billed in first instance, avoiding estimated consumption. Therefore, the subsequent processes of the commercial cycle have a regular flow; bill distribution tasks are more organized, due dates become more predictable and cash flows predictability is improved.

To those customers that require a MIDE, we have delivered 7,858 in 2023, totalizing 237,333. However, MIDE installation ceased in July 2022, after Resolution No. 217/2022 was issued whereby the ENRE prohibited MIDEs unless its prior consent is obtained. All the projected installations submitted by the Company have not been approved as of the date of this annual report.

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In 2023, approximately 18 million readings of electricity meters were conducted. The indicators showed that, despite the difficulties affecting the process, only 0.1% of such readings were estimated.

The remotely-managed customer base is around 12,000 users, on whom a total of 125,000 remote meterings were managed.

With the continued aim of pursuing operational efficiency, in March 2023, the tender for the selection of meter-reading service contractors was awarded.

As for technology innovation in the management of readings, in 2023, we deployed the online readings management model, which is the result of the joint efforts of customer service and IT in the development of software and hardware, which comprises:

§ Mobile application: allows for real-time transmission of information to our field management system.

§ Online Management Portal: Centralized tool to manage tasks and visualize management activities.

§ Bluetooth Universal Data Logger: For electronic-meter readings, compatible with all of Edenor’s meters (99%) of this type. Reading of electronic meters surpassed 98% effectiveness by using the universal data logger.

§ Increased Accuracy: Reduction of reading inconsistencies according to the quality of the data obtained by the universal data logger.

§ Improved Portability: Deploying the application on handheld/lighter and more maneuverable devices.

In 2023, more than 36.5 million bills were managed and distributed, with a high level of quality, in accordance with customer perception, as to both their timely receipt and billing quality. This results from the implementation of a control process focused on specific exception rules, which in turn allow for a thorough review and, eventually, the early correction of any deviation detected in billing (the rate for the year was of 5 out of 100,000 documents), thereby ensuring that more than 99.99% of the documents are timely and correctly calculated and issued.

In line with our sustainability plan, we continued the campaign to invite our customers to sign up for the digital bill, which resulted in more than 885 thousand subscribed customers, who receive their bills by e-mail on a monthly basis.

These advances have transformed the management of readings in Edenor, improving service quality and efficiency. Our residential and small commercial users are divided into subcategories based on their consumption, as follows:

Residential (Tariff 1-R or T1-R):

· Tariff 1-R1: monthly energy consumption less than or equal to 150 KWh;

· Tariff 1-R2: monthly energy consumption greater than 151 KWh and less than or equal to 400 KWh;

· Tariff 1-R3: monthly energy consumption greater than 401 KWh and less than or equal to 500 KWh;

· Tariff 1-R4: monthly energy consumption greater than 501 KWh and less than or equal to 600 KWh;

· Tariff 1-R5: monthly energy consumption greater than 601 KWh and less than or equal to 700 KWh;

· Tariff 1-R6: monthly energy consumption greater than 701 KWh. Social Tariff

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The social tariff applies to the same subcategories of residential rates, for which there was no variable charge for the first 150 KWh of monthly consumption and the second 150 KWh are billed at 50% of its value. In addition, the total invoice after discounts cannot exceed the average invoice for each rate tranche.

To qualify for the social tariff, users must comply with one of the following:

·       retirees or pensioners who receive two gross minimum wages or less;

·       workers in employment relationships that earn two gross minimum wages or less;

· self-employed individuals falling in categories that correspond to annual income which monthly break out reaches two minimum gross wages or less;

·       grantees of social programs;

·       registered in the self-employed (monotributista) social category;

· grantees of non-contributory pensions with gross income equal to or less than two minimum wages;

·       grantees of unemployment insurance;

·       domestic service incorporated into the relevant special social security scheme;

·       holders of the Lifetime Pension for Veterans of the South Atlantic War;

·       persons with a disability certificate issued by a competent authority; and

· persons suffering or living with another person suffering from an illness whose treatment involves electrodependence (in this case, the variable charge for the first 600 KWh monthly consumption is free).

The Province of Buenos Aires and the City of Buenos Aires assumed the social tariffs discounts and the ceilings (scheme of maximum percentages that the beneficiary would pay, with respect to what residential users of the same consumption before taxes pay), and the bonuses for neighborhood clubs.

The amounts paid by the Province of Buenos Aires and the City of Buenos Aires in 2023 amounts to Ps.10,610 million and Ps.241 million, respectively.

Small commercial (Tariff 1-G):

·      Tariff 1-G1: bimonthly energy demand less than or equal to 1600 KWh;

· Tariff 1-G2: bimonthly energy demand greater than 1600 KWh but less than or equal to 4000 KWh; and

· Tariff 1-G3: bimonthly energy demand greater than 4000 KWh.

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Medium Commercial (Tariff 2):

Medium commercial users (demand greater than 10 kW but less than 50 kW - Tariff T2) are billed on a monthly basis, as follows: (1) a fixed charge per invoiced issued; (2) a fixed charge per each “scope of supply” of kW capacity agreed; (3) a fixed charge based on a maximum kW capacity (applicable to the maximum capacity registered during the billing period); (4) a variable charge based on each unit of energy consumed, without hour discrimination; and, (5) if applicable, a cos phi surcharge.

Industrial (Tariff 3):

Industrial users (demand equal or greater than 50 kW - Tariff T3) are billed on a monthly basis, as follows: (1) a fixed charge per invoice issued; (2) a fixed charge per each “scope of supply” of kW capacity agreed for low, medium or high voltage, with or without electricity consumption; (3) a fixed charge based on a maximum kW capacity registered, in low, medium or high voltage, applicable to the maximum capacity registered during the billing period; (4) a charge resulting from the electricity supplied in the voltage corresponding to the provision, in accordance with the consumption registered in each of the tariff timetables: “peak”, “night-time” and “remaining hours”; (5) if the supply is carried out in continuous current, a surcharge equivalent to a percentage of the price of the rectified electricity; and (6), if it is applicable, a cos phi surcharge.

Public Lighting (AP):

Public lighting users are billed a monthly variable energy charge based on each unit of energy consumed.

The table below shows the number of our users per tariff category as of December 31, for the years 2023, 2022 and 2021, respectively:

	As of December 31,
	2023	2022	2021
T1R	2,919,537	2,885,678	2,852,029
T1G	339,605	339,567	338,832
T2	31,301	30,813	30,837
T3	7,265	7,076	6,924
Wheeling system	724	688	686
Other*	846	1,007	567
Total	3,299,278	3,264,829	3,229,875

* Represents public lighting and shantytown users. 

All of the meters are read with portable meter-reading terminals, either with manual access or optical reading (in the case of electronic meters for T2, T3 and certain T1 users). The systems validate the readings, and any inconsistent reading is checked and/or corrected before billing. Estimates of user usage were significantly reduced as a result of this billing system. Once the invoices are printed, independent contractors in each operating area, that are subject to strict controls, distribute them.

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Slow-Paying Accounts and Past Due Receivables

Pursuant to the Concession Agreement, certain procedures were established to reduce delinquency and enhance collection, which are followed with strict observance by the Commercial Department.

Municipal accounts make up a significant number of our accounts in arrears. The methods of collection on such arrears vary in each municipality. One method of collection is to withhold from the municipalities certain taxes collected from the public by us on behalf of the municipalities and using such taxes to offset any past due amounts owed to us by such municipalities. Another method of collection is to enter into refinancing agreements with the municipalities. Such methods significantly reduce the number of accounts in arrears.

Our past due receivables decreased to Ps.10,777 million as of December 31, 2023 from Ps.30,892.6 million (adjusted for inflation) as of December 31, 2022. Past due receivables were measured as an equivalent of billing days and according to this measure, a decrease from 18.51 to 8.09 days were observed, in which 5.49 days related to the offsetting of delinquent balances related to debts incurred during the pandemic, as instructed by the ENRE in the framework of the agreement with CAMMESA, and 4.93 days were the result of the different actions performed within the delinquent payment process.

Throughout 2023, 100,500 service suspension, verification, and cutoff actions were carried out, improving the efficiency of management activities compared to 2022.

In addition to the carrying out of delinquent payment-related electric actions, 600,000 collection procedures were performed with collection agencies, and, through them, constant communication was maintained with delinquent customers through the different stabilized channels. .

The collection campaigns addressed to customers with early delinquent payments were reinforced by means of emails, SMS and IVR calls, reaching a total of 2.9 million management activities with in-company tools.

Taking into account the economic and social context, we offered our customers more flexible methods of payment and extended debt financing possibilities.

The following graph shows Edenor’s delinquent balances as of December 31, of each year:

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We also supply energy to low-income areas pursuant to the framework agreement with the Argentine Government and the Province of Buenos Aires, for which certain payments are still owed to us. See “Item 4. Information on the Company—Business Overview—Framework Agreement (Shantytowns).”

Energy Losses

Energy losses are equivalent to the difference between energy purchased and energy sold, and may be classified as technical and non-technical losses. Technical losses represent the energy that is lost during transmission and network distribution as a consequence of natural heating of the transformers and conductors that transmit the electricity from the generating plants to the users. The non-technical energy losses represent the remainder of our energy losses mainly due to the illegal use of its services and administrative and technical errors.

Energy losses require us to purchase additional energy to satisfy apparent demand, thereby increasing costs. Furthermore, illegally tied-in users typically consume more electricity than the average level of consumption for their category. We are unable to recover from users the cost of electricity purchased beyond the average loss factor set at 10% pursuant to our concession. Therefore, the reduction of energy losses reduces the amount of energy we have to purchase to satisfy apparent demand but cannot invoice and increases the amount of electricity actually sold.

From time to time, the Company has experienced an increase in non-technical losses as economic crises have impaired the ability of its users to pay their bills, and technical losses also increased relative to the increase in the volume of energy that the Company supplied during such periods.

Our goal is to maintain our energy losses at an optimal level, while also considering the cost of reducing such losses and the level at which we are reimbursed for the cost of these losses under our concession. Our procedures for maintaining an optimal level of losses are focused on (i) accurate increment of energy consumption, (ii) energy savings campaign to educate our users, (iii) reduction of illegal connections, and (iv) improving collections.

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We aimed at normalizing clandestine consumers, inactive customers and chronic delinquent customers. In 2023, 7,858 MIDEs were installed. As of December 31, 2023, 237,333 meters were enabled. However, MIDE installation ceased in July 2022, after Resolution No. 217/2022 was issued whereby the ENRE prohibited MIDEs unless its prior consent is obtained. All the projected installations submitted by the Company have not been approved as of the date of this annual report. MIDE installation aims at increasing electricity access by regularizing the situation of clandestine consumers, inactive customers and chronic delinquent customers, in order to allow for the safe and efficient use of the network. At the same time, through the installation of the new network type of MULCON, the invulnerability of MIDE meters, and further development of analytical and artificial intelligence tools, make it possible to improve effectiveness of inspections and thereby reduce energy theft. The volume of GWh sold in the MIDE customers segment amounted to 736 GWh, which represents an increase of 7% (+48 GWh compared to 2022).

In 2023, a total of 350,000 electricity recovery actions were performed. These actions include those carried out in the form of control operations, which seek to identify a high concentration of potential customers with fraud and delinquent customers, in order to make the mobile teams’ work more efficiently with the aim of regularizing the largest number of cases.

In Regions II and III, new shantytowns were formed while existing shantytowns continued to grow. In the third region of Greater Buenos Aires, energy theft represents the main factor in the increase in total losses.

Progress made within the remote management plan, made it possible to achieve the following:

·        Tariff 2 (medium-demand) customers: 2,725 remotely-managed meterings.

·        Tariff 3 (large-demand) customers: 4,674 remotely-managed meterings (80% of these customers’ demand for electricity) and 623 meters under the framework agreement (reaching 100% of them).

The following table illustrates our estimates of the approximate disruption between technical and non-technical energy losses experienced in our concession area for the periods indicated:

	Year ended December 31,
	2023	2022	2021
Technical losses	9.0%	9.3%	9.4%
Non technical losses	5.8%	6.6%	8.2%
Total losses	14.9%	15.9%	17.6%

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Framework Agreement (Shantytowns)

On January 10, 1994, the Company, Edesur, the Argentine Government and the Government of the Province of Buenos Aires entered into a Framework Agreement, whose purpose was to establish the guidelines under which the Company was to supply electricity to low-income areas and shantytowns (the “Framework Agreement”).

In accordance with the terms of our concession and given the nature of public service that the law grants for the distribution of electricity, the Company is required to supply electricity to all users within the concession area, including low-income areas and shantytowns located within our concession area. In October 2003, the Company had the right to receive compensation for the services provided to shantytowns from funds collected from residents of each relevant shantytown, the Municipality in which it is located and, if there is a shortfall, by a special fund supported by the Argentine Government and the Government of the Province of Buenos Aires. The Argentine Government and the Province of Buenos Aires initially contributed an amount equal to 21% and 15.5% of such compensation, respectively, net of taxes, paid on behalf of those users with payment problems and meter irregularities, which were transferred to distributors such as Edenor as compensation.

Such Framework Agreement has been extended from time to time on several occasions.

On May 10, 2019, the Company and the Federal Government entered into an additional addenda to the Framework Agreement, extending the term thereof until May 31, 2019.

As a consequence of such agreement, as of December 31, 2019, the Company recognized revenue from the sale of electricity under the Framework Agreement until December 31, 2018 and for the first five months of 2019, both related to the Federal Government’s participation in the Framework Agreement.

On December 16, 2020, the “Agreement on the Development of the Preventive and Corrective Maintenance Work Plan for the Electricity Distribution Network of the Buenos Aires Metropolitan Area” (the “Work Plan”) was signed with the Federal Government and the Province of Buenos Aires, to guarantee the electricity supply to vulnerable neighborhoods of the Buenos Aires Metropolitan Area.

Under this agreement, the debt for the electricity supplied in the October 2017 – July 2020 period to low-income areas and shantytowns in Edenor’s concession, was applied to the Work Plan so that the necessary investment and preventive and corrective maintenance works can be carried out in the networks in charge of distribution companies and related to vulnerable neighborhoods and other areas of the concession area, with the aim of improving the service therein provided and meeting the contingencies and any peak demand that often occurs in the summer season. The Company could use the funds only after the ENRE has certified compliance with both the degree of completion of the works included in the referred plan and the related financial milestones.

On August 30, 2022, the Company, the Federal Government and the Province of Buenos Aires, entered into an Agreement to Renew the Agreement on the Recognition of Electricity Consumption in Vulnerable Neighborhoods.

· Electricity consumption from August through December 2020: the ENRE validated receivables for Ps. 1,115 million, which the Company recognized as the ENRE certified compliance with the degree of completion of the works of the Preventive and Corrective Maintenance Work Plan for the Electricity Distribution Network, as stipulated in the agreement described before

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· Electricity consumption from January through December 2021: the Company opted to offset it against the debts incurred for the purchase of energy from CAMMESA for a total amount of Ps. 1,253 million-

· Electricity consumption from January through December 2022: the Federal Government must make a contribution of Ps. 1,436 million, and the Province of Buenos Aires a contribution of Ps. 553 million, which total a receivable in favor of the Company of Ps. 1,989 million that has been recognized along with the receivable mentioned in the preceding paragraph. In this regard, the Province of Buenos Aires’ contribution will be made in six monthly instalments, the first of which has been already collected by the Company.

· Electricity consumption from January through September 2023: on October 19, 2023, the ENRE validated receivables for Ps.1,431 million and Ps. 1,056 million, which must be contributed by the Federal Government and the Province of Buenos Aires, respectively. The Province of Buenos Aires’s contribution is pending collection.

The Company requested the Federal Government the formalization of the agreement corresponding to the cost of energy consumption in the popular neighborhoods of the Province of Buenos Aires for the period January 2024 to December 2025. However, as of the date of this annual report, it has not been formalized.

Insurance

As of December 31, 2023, the Company was insured for partial and total property loss and damage, including those due to floods, fires and acts of nature, up to approximately U.S.$1,548 million, with the following deductibles:

§ transformers, between U.S.$175,000 and U.S.$850,000 (depending on their power level);

§ equipment of sub-stations (not including transformers), U.S.$75,000;

§ commercial offices, U.S.$1,500 for each office;

§ deposits and other properties, U.S.$25,000; and

§ terrorism risk, U.S.$50,000, being the maximum insured amount of U.S.$7,000,000.

We are also insured against theft of safe-deposit boxes, and cash/valuables in commercial offices and cash/valuables-in-transit for a maximum amount of U.S.$250,000 and U.S.$5,000, respectively, with a deductible of U.S.$250.

In addition, we maintain the following insurance policies, subject to customary deductibles and the conditions established for each coverage:

§ Directors and Officers Liability (D&O);

§ General Liability;

§ Vehicles;

§ Environmental insurance (requested by governmental authorities);

§ Surety insurance (requested by governmental authorities);

§ Electronic equipment insurance;

§ Mandatory life insurance for all our employees which is maintained in accordance with Argentine law; and

§ Optional life insurances for all our employees.

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Following a bidding process, the Company has hired a cybersecurity insurance policy for a maximum amount of U.S.$10,000,000 with a deductible of U.S.$500,000.

The coverage applies to the following risks arising from a cybersecurity incidents:

§ Remediation of cyber attacks and incidents;

§ Loss of digital assets;

§ Cyber extortion;

§ Business interruption and contingent business interruption;

§ Responsibility for data privacy and security; and

§ Defense, awards and fines in a regulatory process

The physical damage to property or equipment caused by cybersecurity incidents will be covered by the Property Damage Program.

Environmental Management

In Argentina, the Argentine Government, the provincial Governments and the Government of the City of Buenos Aires are empowered to legislate on natural resources and environmental protection issues. The 1994 Constitution reaffirms this principle, assigning to the Argentine Government the establishment of broad environmental guidelines and to the provincial Governments and the Government of the City of Buenos Aires the duty to implement the necessary legislation to attain national environmental goals. The environmental policy for the electricity market was formulated by the former SE and implemented by the ENRE. Areas regulated by the ENRE include the tolerance level for electromagnetic fields, radio interference, voltage of contact and pass, liquid spills, disposal and handling of solid wastes, noise and vibration admissible levels and use, and the transport and storage of hazardous waste, including polychlorinated biphenyl (PCB), a viscous substance which was historically used to lubricate electrical transformers. The Argentine Environmental Law required that we eliminate the use of PCB in our transformers before January 1, 2011.

Over the course of 2009, we completed the removal of PCBs from all our transformers with contaminated coolant oils exceeding 50 ppm (parts per million), the limit established by National Law No. 25,670.

As part of our investment plan, we made important improvements to our network and implemented technological innovations which reduced the impact of these improvements on the environment. We are required to apply for licenses from the ENRE for all our business activities, which include certain requirements related to environmental protection. To the best of our knowledge, we are in compliance in all material respects with all applicable environmental standards, rules and regulations established by the ENRE, the former SE and other federal, provincial and municipal authorities. We have implemented environmental management programs to evaluate environmental impact and to take corrective actions when necessary. In addition, we have in place an environmental emergency plan designed to reduce potential adverse consequences should an environment contingency occur. Finally, as part of our environmental actions, we improved and deepened the program of rational uses of energy in our buildings and in our user equipment.

Regarding the addition of new installations and related construction works, all of the studies corresponding to the environmental impact evaluation required by law are being performed. These analyses are presented to local environmental authorities and submitted to consideration of the local communities in public audiences held as required by applicable regulations for the issuance of an environmental aptitude certificate.

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On October 19, 1999, the Argentine Institute of Normalization (Instituto Argentino de Normalización) certified that we have an environmental management system that is in accordance with the requirements of the standards set by the International Standardization Organization (ISO) as specified in its release, ISO 14001/15, which relates specifically to environmental management systems. This certification is reaffirmed on an annual basis, most recently in October 2023.

Section 22 of Law No. 25,675 requires that all persons whose activities maintain an Environmental Complexity Level (ECL) that implies a risk of damage to the environment, such as any activity of the Company, obtain environmental insurance for a certain minimum coverage. The Company has taken out insurance on environmental risk or damage in favor of the Ministry of Environment and Sustainable Development Protection Agency, for a total amount of Ps. 107 million.

Seasonality

Demand for our services fluctuates on a seasonal basis. Climate change, and in particular, high extreme temperatures, imposes a double challenge for Edenor. On the one hand, we are required to satisfy the higher energy demand that the situation generates and, on the other hand, we seek to contribute to the fight against climate change by promoting the development, promotion and diffusion of new technologies, environmental awareness, energy efficiency and waste management. For a discussion of this seasonality of demand, see “Item 5. Operating and Financial Review and Prospects—Operating Results—Demand—Seasonality of Demand”.

Sustainability

In 2023, the Company continued with the goal of being a modern company, with an emphasis on technology, innovation, and user service quality, as well as portray the Company as a model public utility company, with a focus on two pillars: efficiency and proximity.

Key sustainability issues

As signatories to the United Nations Global Compact for 9 years, our sustainable management guides our organizational performance in addressing the Company’s triple impact: economic, social and environmental, which include 15 key sustainability issues that comprise Edenor’s 2023 materiality matrix:

Corporate Governance:

- Profitability and economic performance;

- Corporate Governance and Business Ethics;

- Services, Quality and Investment;

- Communication and multistakeholder dialogue;

- Social Management;

- Employability and Leadership;

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- Career Plan, Education and Training;

- Diversity, Equity and Inclusion and Human Rights;

- Occupational health and safety;

- Sustainable Communities and Energy;

- Electricity access;

Environmental Management;

- Operational Efficiency;

- Energy Efficiency and Climate Change;

- Waste Management and Responsible Use Of Resources; and

- Environmental Management.

Sustainability report

The Company issued the tenth Sustainability Report, for 2023, both in Spanish and English, which was subject to the external review of Price Waterhouse Co. (PwC Argentina) and approved by the board of directors on March 8, 2024. It can be found on Edenor’s website. The report has been prepared based on the Comapany commitment to both sustainable development and transparency in management, following the international guidelines of the Global Reporting Initiative (GRI) and the standards of the Sustainability Accounting Standards Board (SASB), supplementing it with progress made toward meeting the 10 Principles of the United Nations Global Compact and the Sustainable Development Goals (SDG) to whose concepts and fundamentals Edenor adheres.

Industrial safety

With regard to the occupational health and safety management programs, in the month of October 2023 we unanimously satisfactorily passed the ISO 45001:2018 standard external recertification audit conducted by the IRAM, reaffirming the Company’s commitment to Occupational Risk Prevention

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In order to comply with these guidelines related to Occupational Health and Safety, the Company performed several activities, resulting in improved accident indicators from 2016 to 2023. Work accidents decreased by 6.2%, whereas third-party assaults tripled as compared to the previous year, impacting accident rates. We began working with the safeguarding of assets area on analyzing and taking actions to protect the teams that work on the streets against third-party violence.

Public safety

In 2023, the annual audit conducted by the IRAM on the Public Safety System was successfully completed, thus maintaining the related certification.

With regard to third-party accidents, 32% of them occurred in third-party facilities, such as inside houses or street lighting columns. In accordance with the Regulatory Authority’s requirements, the accidents occurred in these facilities, even though they are not under the responsibility of Edenor, must be recorded and reported.

According to the analysis of the accidents recorded in 2023, 66% of them were the result of vandalism and third-party negligence.

Furthermore, we continued to hold periodic meetings with contractors to discuss public safety-related issues. At such meetings, the results of the inspections performed, the goals achieved, the analysis of deviations found, and the street accidents suffered by their staff were presented to the contractors, who were also provided with guidelines for the training to be given to their workers.

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Quality

As a core pillar of the Company Integrated Management System (IMS), we implemented and obtained certification of all the processes under the ISO 9001:2015 Quality Management Systems international standard. This implementation began in 1999, initially covering the meter-reading, billing, collection, procurement and logistics processes, and, as from 2005, was extended to all the Company’s processes.

In October 2023, the Company successfully passed the external recertification audit of its IMS, which includes ISO 9001:2015 Quality Management, ISO 14001:2015 Environmental Management and ISO 45001:2018 Workplace Health and Safety standards, thus maintaining ISO certification for all the Company’s processes.

Environmental management

Edenor is ISO 14001:2015 certified since 1999. In 2023, the Company received the Environmental Clearance Certificate, which was granted by the Province of Buenos Aires, for the following project:

- Linking pipeline : Aeroclub substation – Pantanosa substation;

- Linking pipeline : Interconexion point Malaver – Malaver substation;

- Linking pipeline : Tesei substation – Castelar substation;

- Linking pipeline : General Rodriguez substation – José C. Paz substation;

- Transclor delivery station and linking busway; and

- Substattion expansion Zappalorto.

Additionally, with the guiding principle of contributing to the quality of life of our customers, the Special Authorization Certificates were obtained for each of the Company’s warehouses, ensuring proper management in the handling and final disposal of hazardous waste.

The aforementioned certificates were granted by the Ministry of the Province of Buenos Aires and the National Environment and Sustainable Development Ministry.

In 2023, noise levels and electromagnetic field measurements were taken in 13 substations; electromagnetic field measurements were also taken in 13 High-voltage lines/cables and in 58 transformer centers. The results obtained complied with the limits required by the regulations in effect for this type of facilities.

Furthermore, electromagnetic field measurements were taken in order to be granted the administrative easement of the Company’s transformer centers; with the results of each of such measurements being in compliance with the regulation. Not only was compliance with regulations in accordance with the SE’s requirements but the use given to the premises adjacent to the centers were also taken into account in order to determine the possibility of current or future incidence of the electrical equipment’s electromagnetic emissions.

Community actions

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In 2023, the Company continued with the programs that we have implemented for the last few years, including: electricity access and smart consumption, that seeks to ensure access to affordable, reliable, sustainable and modern energy; quality education, which promotes equality of opportunities for young people and their employability by means of professionalizing practices and workshops on first employment, in addition to scholarships and tutoring in technical schools and universities; Gender Equality; Responsible Production and Consumption and Alliances to achieve the goals set.

Sustainable energy:

Investments were made in projects aimed at expanding access to both the electricity grid and the smart and efficient consumption programs for the community, with an emphasis on low-income sectors, including those users who meet the requirements to access the social electricity rate. As examples, we can mention the following:

§ Infrastructure development for the MIDE: installation and development of infrastructure related to smart meters, so as to allow new and already existing users to register as MIDE users.

§ In those cases in which it is not possible to include them in the MIDEs project due to the layout of the neighborhood, shantytown or community: making of adjustments to the network and the infrastructure to allow for the installation of meters at the entrance of vulnerable neighborhoods in order to provide a safe, reliable and affordable service.

Social Initiatives:

With regard to education, the Company continued with the following: 

§ Scholarship and Mentoring Programs: they were developed in both technical schools and universities.  62% of those who participated in the programs were men, with women participation reaching to 38%. One of the goals of 2023 was to increase women participation, and efforts will continue to be made in order to achieve gender parity in program participation. For this reason, the “Women with Energy” initiative is included in scholarship and mentoring programs with the aim of encouraging women inclusion in technical majors and STEM (Science, Technology, Engineering and Mathematics) majors.

Edenorchicos: it is a space aimed at the youngest, with playful and educational content that addresses issues of electricity and safe and efficient energy use. In addition, it contains a glossary with special terms to refer to electrical phenomena, games, picture coloring, and a section on the environment. www.edenorchicos.com 

§ In 2023, training projects aimed at promoting electricity access and responsible consumption continued to be carried out jointly with the group of neighbors, called neighborhood developers, who voluntarily cooperate with the projects of ProVivienda Social Foundation, totaling 3,098 training activities.

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The Argentine Electricity Industry

Historical Background

Electricity was first made available in Argentina in 1887 with the first public street lighting in Buenos Aires. The Argentine Government’s involvement in the electricity sector began in 1946 with the creation of the Dirección General de Centrales Eléctricas del Estado (General Directorate of Electric Power Plants of the State) to construct and operate electricity generation plants. In 1947, the Argentine Government created Agua y Energía Eléctrica S.A. (Water and Electricity, or AyEE) to develop a system of hydroelectric generation, transmission and distribution for Argentina.

In 1961, the Argentine Government granted a concession to the Compañía Italo Argentina de Electricidad (Italian-Argentine Electricity Company, or CIADE) for the distribution of electricity in a part of the City of Buenos Aires. In 1962, the Argentine Government granted a concession formerly held by the Compañía Argentina de Electricidad (Argentine Electricity Company, or CADE) to Servicios Eléctricos del Gran Buenos Aires (Electricity Services of Greater Buenos Aires, or SEGBA), our predecessor, for the generation and distribution of electricity to parts of Buenos Aires. In 1967, the Argentine Government granted a concession to Hidroeléctrica Norpatagónica S.A. (Hidronor) to build and operate a series of hydroelectric generation facilities. In 1978, CIADE transferred all of its assets to the Argentine Government, following which CIADE’s business became Government-owned and operated.

By 1990, virtually all of the electricity supply in Argentina was controlled by the public sector (97% of total generation). The Argentine Government had assumed responsibility for the regulation of the industry at the national level and controlled all of the national electricity companies, AyEE, SEGBA and Hidronor. The Argentine Government also represented Argentine interests in generation facilities developed or operated jointly with Uruguay, Paraguay and Brazil. In addition, several of the Argentine provinces operated their own electricity companies. Inefficient management and inadequate capital spending, which prevailed under national and provincial Government control, were in large measure responsible for the deterioration of physical equipment, decline in quality of service and proliferation of financial losses that occurred during this period.

In 1991, as part of the economic plan adopted by former President Carlos Menem, the Argentine Government undertook an extensive privatization program of all major state-owned industries, including within the electricity generation, transmission and distribution sectors. In January 1992, the Argentine Congress adopted Law No. 24,065 (the “Regulatory Framework Law”), which established guidelines for the restructuring and privatization of the electricity sector. The Regulatory Framework Law, which continues to provide the framework for regulation of the electricity sector since the privatization of this sector, divided generation, transmission and distribution of electricity into separate businesses and subjected each to appropriate regulation.

The ultimate objective of the privatization process was to achieve a reduction in tariffs paid by users and improve quality of service through competition. The privatization process commenced in February 1992 with the sale of several large thermal generation facilities formerly operated by SEGBA, and continued with the sale of transmission and distribution facilities (including those currently operated by our company) and additional thermoelectric and hydroelectric generation facilities.

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Regulatory and Legal Framework

Role of the Government

The Argentine Government has restricted its participation in the electricity market to regulatory oversight and policy-making activities. These activities were assigned to agencies that have a close working relationship with one another and occasionally even overlap in their responsibilities. The Argentine Government has limited its holding in the commercial sector to the operation of international hydropower projects and nuclear power plants. Provincial authorities followed the Argentine Government by divesting themselves of commercial interests and creating separate policy-making and regulatory entities for the provincial electricity sector.

Limits and Restrictions

To preserve competition in the electricity market, participants in the electricity sector are subject to vertical and horizontal restrictions, depending on the market segment in which they operate.

Vertical Restrictions

The vertical restrictions apply to companies that intend to participate simultaneously in different sub-sectors of the electricity market. These vertical restrictions were imposed by Law No. 24,065, and apply differently depending on each sub-sector as follows:

Generators

· Under Section 31 of Law No. 24,065, neither a generation company, nor any of its controlled companies or its controlling company, can be the owner or a majority shareholder of a transmitter company or the controlling entity of a transmitter company; and

· Under Section 9 of Decree No. 1398/92, since a distribution company cannot own generation units, a holder of generation units cannot own distribution concessions. However, the shareholders of the electricity generator may own an entity that holds distribution units, either as shareholders of the generator or through any other entity created with the purpose of owning or controlling distribution units.

Transmitters

· Under Section 31 of Law No. 24,065, neither a transmission company nor any of its controlled companies or its controlling entity can be the owner or majority shareholder or the controlling company of a generation company;

· Under Section 31 of Law No. 24,065, neither a transmission company, any company controlled by a transmission company nor any company controlling a transmission company can own or be the majority shareholder or the controlling company of a distribution company; and

· Under Section 30 of Law No. 24,065, transmission companies cannot buy or sell electricity.

Distributors

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· Under Section 31 of Law No. 24,065, neither a distribution company, nor any of its controlled companies or its controlling company, can be the owner or majority shareholder or the controlling company of a transmission company; and

· Under Section 9 of Decree No. 1398/92, a distribution company cannot own generation units. However, the shareholders of the electricity distributor may own generation units, either directly or through any other entity created with the purpose of owning or controlling generation units.

Definition of Control

The term “control” referred to in Section 31 of the Regulatory Framework Law (which establishes vertical restrictions) is not defined in such law. Section 33 of the Argentine Corporations Law states that “companies are considered as controlled by others when the holding company, either directly or through another company: (1) holds an interest, under any circumstance, that grants the necessary votes to control the corporate will in board meetings or ordinary shareholders meetings; or (2) exercises a dominant influence as a consequence of holding shares, quotas or equity interest or due to special linkage between the companies.” We cannot assure you, however, that the electricity regulators will apply this standard of control in implementing the restrictions described above.

Horizontal Restrictions

In addition to the vertical restrictions described above, distribution and transmission companies are subject to horizontal restrictions, as described below.

Transmitters

· According to Section 32 of Law No. 24,065, two or more transmission companies can merge or be part of the same economic group only if they obtain an express approval from the ENRE. Such approval is also necessary when a transmission company intends to acquire shares of another electricity transmission company;

· Pursuant to the concession agreements that govern the services rendered by private companies operating transmission lines above 132 kW and below 140 kW, the service is rendered by the concessionaire on an exclusive basis over certain areas indicated in the concession agreement; and

· Pursuant to the concession agreements that govern the services rendered by the private company operating the high-tension transmission services equal to or higher than 220 KW, the Company must render the service on an exclusive basis and is entitled to render the service throughout Argentina, without territorial limitations.

Distributors

· Two or more distribution companies can merge or be part of the same economic group only if they obtain an express approval from the ENRE. Such approval is necessary when a distribution company intends to acquire shares of another electricity transmission or distribution company; and

· Pursuant to the concession agreements that govern the services rendered by private companies operating distribution networks, the service is rendered by the concessionaire on an exclusive basis over certain areas indicated in the concession agreement.

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Regulatory Authorities

The principal regulatory authorities responsible for the Argentine electricity industry are:

(1) the Ministry of Economy, through the Secretaría de Energía (the “SE” or the “Secretary of Energy”);

(2) the ENRE; and

(3) CAMMESA.

The Ministry of Economy is the main governmental authority responsible for the Argentine electricity sector at the federal level. The role of the Ministry of Economy is mainly defined in the Law of Ministries No. 22,520 (as amended, and in particular, those included by Decree No. 706/2020).

The Ministry of Economy is in charge, among other matters, of preparing, proposing and executing the national energy policy, and its powers include the following:

· execution of plans, programs and projects in the area of its competence prepared in accordance with the directives issued by the Argentine Executive Power;

· participation in preparation, application and supervision of the tax and customs regime;

· participation in negotiations and modifications of contracts for public works and services, within the scope of its competence;

· participation in the administration of majority or minority shareholdings held by the Argentine Government in companies or enterprises within its scope;

· participation in the development of government-owned companies, autarkic entities, decentralized or deconcentrated agencies, and special accounts and funds, whatever their denomination or legal nature, corresponding to its orbit, both with respect to action plans and budgets and with respect to their intervention, closure, liquidation, privatization, merger, dissolution or centralization, and to intervene in those that do not belong to its jurisdiction, according to the guidelines decided by the Argentine Chief of Cabinet of Ministers with the supervision of the Argentine Executive Power;

· participation in the preparation and supervision of the fuel regime and supervion of fuel prices, when appropriate, in accordance with the respective guidelines;

· supervision of the authority of application of the laws that regulate the activities in energy matters;

· participation in (i) the elaboration of policies and standards for the regulation of public services in the area of its competence, (ii) the supervision of the agencies and entities that control the concessionaires of public works or services within the jurisdiction, and (iii) the elaboration of standards for the regulation of public service licenses under federal regimes; and

· supervision of energy production markets, intervening through the areas of its competence, in order to promote and encourage the normal development of the economy in accordance with the objectives of national development with equity.

The SE advises the Argentine Government on matters related to the electricity sector and is responsible for the application of the policies concerning the Argentine electricity industry. See “Item 3. Key Information—Risk Factors—Risks Relating to Our Business—Failure or delay to negotiate further improvements to our tariff structure, including increases in our distribution margin, and/or to have our tariff adjusted to reflect increases in our distribution costs in a timely manner or at all, has affected our capacity to perform our commercial obligations and could also have a material adverse effect on our capacity to perform our financial obligations.”

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The SE was first established under the purview of the Ministry of Productive Development, and subsequently transferred to the Ministry of Economy, through Decree No.732/2020, published in the Official Gazette on September 7, 2020.

The ENRE is an autonomous agency created by the Regulatory Framework Law. The ENRE has a variety of regulatory and jurisdictional powers, including, among others:

· enforcement of the Regulatory Framework Law and related regulations;

· control of the delivery of electric services and enforcement of the terms of concessions;

· adoption of rules applicable to generators, transmitters, distributors, electricity users and other related parties concerning safety, technical procedures, measurement and billing of electricity consumption, interruption and reconnection of supplies, third-party access to real estate used in the electricity industry and quality of services offered;

· prevention of anticompetitive, monopolistic and discriminatory conduct between participants in the electricity industry;

· imposition of penalties for violations of concessions or other related regulations; and

· arbitration of conflicts between electricity sector participants.

Under Law No. 24,065, the ENRE is managed by a five-member Board of Directors appointed by the Argentine Executive Power of the Argentine Government. Two of these five members are nominated by the Consejo Federal de la Energía Eléctrica (Federal Council on Electricity, or “CFEE”). The CFEE is funded with a percentage of revenues collected by CAMMESA for each MWh sold in the market. Sixty percent of the funds received by the CFEE are reserved for the Fondo Subsidiario para Compensaciones Regionales de Tarifas a Usuarios Finales (Regional Tariff Subsidy Fund for End Users), from which the CFEE makes distributions to provinces that have met certain specified tariff provisions. The remaining forty percent is used for investments related to the development of electrical services in the Argentine provinces.

By means of the Productive Reactivation Law, the Argentine Executive Power was entitled to assume the administrative control of the ENRE and the ENARGAS until December 31, 2020, which effectively occurred on March 16, 2020, according to Decree No. 277/2020. Said intervention was extended on December 17, 2020 by means of Decree No. 1020/20, until December 31, 2021, or until the tariff review process concluded, whichever occurred first. Through Decree No. 871/2021, the intervention of the ENRE was extended until December 31, 2022. By means Decree No. 55/2023, the intervention was extended until the appointment of the members of the Board of Directors of ENRE, currently in process pursuant to the provisions of SE Resolution No. 607/23. Within 180 days, the SE must review, redirect, confirm and/or cancel the selection process of the members of the Board of Directors of ENRE.

On December 22, 2015, through Decree No 231/15, the WEM was created with the objective of elaborating, proposing and executing the national energy policy. On March 5, 2018, through Decree No 174/18, the structure of the ME&M was modified, amongst other offices of the Argentine Government. The former structure of the ME&M comprised four secretaries and fourteen undersecretaries, whilst the new structure was reduced to three secretaries and ten undersecretaries. However, on September 6, 2018, through Decree No. 801/18, the Argentine Government strategically reorganized the ministries, dissolving the ME&M and transforming it into the SE, which remains within the orbit of control of the Ministry of Finance. On December 19, 2019, the Argentine Executive Power issued Decree No. 50/19 by means of which it approved the new organizational chart of the national government. On October 2020, the Executive Branch issued Decree No. 804/20, modifying the organizational chart of the national government. According to this Decree, the SE, which is in charge of elaborating, proposing and executing the national energy policy, is currently part of the Ministry of Economy.

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Furthermore, on December 16, 2023, the Federal Government, through Executive Order No. 55/2023, declared the emergency of the National Energy Sector -including the electricity distribution segment- until December 31, 2024, and provided for the intervention of the ENRE from January 1, 2024 until the appointment of the members of the Board of Directors of ENRE. 

Although CAMMESA is not a state-owned company, it usually receives funds from the Argentine Government, has a public purpose and makes decisions pursuant to SE instructions.

CAMMESA is responsible for managing the SADI to the Regulatory Framework Law and related regulations, which includes:

· determining technical and economic dispatch of electricity (i.e., schedule of production for all generating units on a power system to match production with demand) in the SADI;

· maximizing the system’s security and the quality of electricity supplied;

· minimizing wholesale prices in the spot market;

· planning energy capacity needs and optimizing energy use pursuant to the rules from time to time established by the SE;

· monitoring the operation of the term market and administering the technical dispatch of electricity pursuant to any agreements entered into in such market;

· acting as agent of the various WEM participants;

· purchasing or selling electricity from or to other countries by performing the relevant import/export operations;

· providing consulting and other services related to these activities;

· supplying fuel pursuant to Resolution No. 95/13 of the former SE, which includes the management, acquisition, nationalization, control, reception, storage and distribution of liquid fuels to Generation Centrals through marine, river and land transportation;

· administrating the expansion of gas pipelines associated to natural gas supply to the new thermal centrals under construction;

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· managing the availability of the generation system, formalizing, controlling and supervising the works involved with supply commitment contracts. Implementation of the maintenance plans for the thermal system;

· implementing the increase in capacity of the central storage;

· incorporating biodiesel to the electricity generation matrix; and

· developing related activities pursuant to the execution of new generation infrastructure and transport, managing the trust contracts for the new thermal and nuclear centrals, especially for non-conventional sources of energy or those works within the National Hydraulic Works Program.

The operating costs of CAMMESA are covered by mandatory contributions made by WEM participants. CAMMESA’s annual budget is subject to a mandatory cap equivalent to 0.85% of the aggregate amount of transactions in the WEM projected for that year.

Pursuant to Law No. 27,467, which enacted the 2019 Federal Budget of Expenditures and Resources Law, the Argentine Executive Power was instructed to promote such actions as may be necessary in order for the electricity distribution companies Edenor and Edesur to become subject to the joint jurisdiction of the Province of Buenos Aires and the City of Buenos Aires on January 1, 2019.

However, on January 19, 2021, the Federal Government, the Province of Buenos Aires and the City of Buenos Aires entered into a new agreement according to which the Federal Government retained the role of grantor of the concession in connection with the concession agreements (Executive Order No. 292/2021 and SE Resolution No. 16/2021).

After assumption of the new administration, it intends to adapt the regulatory framework for electricity described in the Omnibus Act, with the aim of guaranteeing the following bases:

i. Free international trade in electricity, delegating to the exporting agent the necessary mechanisms to avoid a lack of supply to the domestic market and under conditions of security and reliability of the system, with the government being able to object for reasons based on technical or economic grounds of “security of supply”;

ii. Free commercialisation, competition and expansion of electricity markets, especially the free choice of electricity supplier for end users;

iii. The different items to be paid by the end user, with the express obligation of the distributor to act as collection or withholding agents for the amounts to be collected for energy, transport and taxes corresponding to the WEM and the Treasury, as applicable;

iv. The development of electricity transmission infrastructure through open, transparent, efficient and competitive mechanisms; and

v. Review of the administrative structures of the electricity sector. In the case of the CFEE, the reorganisation should consider its operation exclusively as a non-binding advisory body for the application authority for the development of electricity infrastructure.

In terms of environmental policy, the Omnibus Act’s sections dealing with the energy industry refer to the application of best environmental management practices in exploration, exploitation and transport of hydrocarbons. A comprehensive agenda is envisaged within the framework of the Paris Agreement in order to meet the targets for absolute net emissions of greenhouse gases (GHG), with the creation of a market for GHG emission rights, with broad and decisive participation of private companies, the public sector and other bodies for the effective achievement of the targets set and access to climate finance.

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The Wholesale Electricity Market (WEM)

Overview

The former SE established the WEM in August 1991 to allow electricity generators, distributors and other agents to buy and sell electricity in spot transactions or under long-term supply contracts at prices determined by the forces of supply and demand.

The WEM consists of:

· a term market in which generators, distributors and large users enter into long-term agreements on quantities, prices and conditions. Since March 2013, pursuant to Resolution No. 95/13 of the former SE, all large users have to buy their backup energy from CAMMESA seasonally;

· a spot market, in which prices are established on an hourly basis as a function of economic production costs, represented by the short-term marginal cost of production and demand; and

· a stabilization fund, managed by CAMMESA, which absorbs the differences between purchases by distributors at seasonal prices and payments to generators for energy sales at the spot price.

Operation of the WEM

The operation of the WEM is administered by CAMMESA, which was created in July 1992 by the Argentine Government who currently owns 20% of CAMMESA’s capital stock. The remaining 80% is owned by various associations that represent WEM participants, including generators, transmitters, distributors and large users.

CAMMESA is a non-profit corporation that is responsible, since its creation, for the technical operation of the electricity system and the management of WEM transactions, in accordance with the electricity regulatory framework and related regulations, which include, among other responsibilities, the following:

§ determining the technical and economic dispatch of electricity in the national interconnection system (production schedule of all power generation plants of the power system to meet the demand);

§ planning energy capacity needs and optimizing energy use pursuant to the regulations periodically issued by the SE;

§ acting as agent of the different WEM participants;

§ purchasing from or selling electricity to other countries by performing the respective import/export operations;

§ managing the availability of the generation system;

§ supervising the operation of the term market and managing the technical dispatch of electricity in conformity with the agreements entered into in that market; and

§ managing the supply and trust agreements for the new thermal and nuclear power plants, especially for non-conventional sources of energy or those works within the National Hydroelectric Works Program.

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The WEM’s costs managed by CAMMESA are covered by mandatory contributions made by all WEM participants. In the last few years, due to the imbalance between production costs disbursed and the amount collected from the agents for their demand through prices that do not cover said costs, the WEM lost its economic self-sustainability, as stated by CAMMESA y means of Note No. 172626-1 dated 15 March 2024. The operating deficit of the WEM’s power and energy compensation funds and accounts has been financed by the Argentine Government through non-refundable contributions from the Unified Fund managed by the SE to the Sustainability Fund managed by CAMMESA, but those contributions have been suspended. All of the above has been happening within the framework of the emergency in the National Electricity Sector, established by Decree No. 55/2023 dated 16 December 16, 2023, regarding the segments of generation, transmission and distribution of electricity under federal jurisdiction and the transmission and distribution of natural gas. The Executive Branch has instructed to SE to prepare, put into effect and implement a program of necessary and indispensable actions in relation to the segments included in the aforementioned emergency, in order to establish price sanction mechanisms under competitive and free access conditions, maintain income levels in real terms and cover investment needs, so as to guarantee the continuous provision of public electricity and natural gas transmission and distribution services under appropriate technical and economic conditions for providers and users of all categories. We cannot assure whether the implementation of the program would regularize the WEM. 

The following chart shows the relationships among the various actors in the WEM:

WEM Participants

The main participants in the WEM are generation, transmission and distribution companies. Large users and traders also participate in the WEM, to a lesser extent.

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Generators

According to a recent report issued by CAMMESA, as of December 31, 2023, Argentina’s installed power capacity was 43,774 MW, 58% of which derived from thermal generation, 25% from hydraulic generation, 4% from nuclear generation and 13% from non-conventional sources of energy. Private generators participate in CAMMESA through the Asociación de Generadores de Energía Eléctrica de la República Argentina (Argentine Association of Electric Power Generators, or AGEERA), which is entitled to appoint two acting and two alternate directors of CAMMESA.

Transmitters

Electricity is transmitted from power generation plants to distribution companies through the high-voltage electricity transmission system. Transmission companies do not engage in purchases or sales of electricity, their service is governed by the Electricity Regulatory Framework and related regulations issued by the competent authority. The majority of the system is owned by Transener. Regional transmission companies own the remaining portion of the sub-transmission.

In Argentina, transmission is carried out at 500 kV, 300 kV, 220 kV and 132 kV through the SADI. The SADI consists mainly of overhead lines and transformer stations (i.e., equipment through which electricity distributed by transmission circuits passes and is converted to voltage for use by end users) covering approximately 90% of the country. Most of the SADI, including practically all the 500 kV transmission lines, was privatized and is owned by Transener. The regional transmission companies, most of which were privatized, own the remaining part of the SADI. The supply points connect the SADI with the distribution systems, and there are also interconnections between the transmission systems of Argentina, Brazil, Uruguay and Paraguay that allow the import and export of electricity from one system to another.

The electric power transmission companies also participate in CAMMESA by appointing two directors and two alternate directors through the Argentine Association of Electric Energy Transporters (Asociación de Transportistas de Energía Eléctrica de la República Argentina or “ATEERA”).

Distributors

Each distribution company supplies electricity to customers and operates the related distribution network in a specific geographic area pursuant to a concession agreement, which provides, among other things, for the concession area, the quality of service required, the electricity rates to be paid by customers for the distribution service and the obligation to satisfy the demand. The ENRE monitors compliance by distribution companies, Edenor and Edesur S.A. with the provisions of the respective concession agreements and with the Regulatory Framework Law No. 24,065. In addition, the provincial regulatory agencies supervise the compliance of local distributors with their respective concessions and local regulatory frameworks.

The distributors participate in CAMMESA by appointing two directors and two alternate directors through the Argentine Association of Electric Energy Distributors (Asociación de Distribuidoras de Energía Eléctrica de la República Argentina or “ADEERA”). As of the date of this annual report, Edgardo Alberto Volosin (our Executive Director) is the President of ADEERA, and Dr. María Jose Van Morlegan (our Legal and Regulatory Affairs Director) is a member of the Supervisory Committee of ADEERA and CAMMESA.

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The Company and Edesur are the main distribution companies and, together with Edelap, originally formed SEGBA, which was divided into three distribution companies at the time of its privatization in 1992.

Large Users

The WEM classifies Large Users of energy into three categories: Major Large Users (GUMA), Minor Large Users (GUME) and Particular Large Users (GUPA). At present, each of these customer categories purchases its energy demand directly from CAMMESA. Agreements between parties (Generator and Large User) are only limited to the Energy Plus segment with respect to the demand exceeding the base demand, i.e. the amount of energy the customer consumed back in 2005.

Each of these categories of users is subject to different requirements with respect to the purchase of their respective energy demands. For example, GUMAs must purchase 50% of their demand through supply contracts and the rest in the spot market, while GUMEs and GUPAs must purchase all of their demand through supply contracts.

In 2017, by means of Resolution No. 281-E/17, the former Ministry of Energy and Mining laid down the Regulations for the Renewable Energy Term Market, which establish the commercialization and administration charges payable by Large Users who opt for the joint purchase of renewable energy managed by CAMMESA. The Large Users who choose to meet their renewable energy consumption quota directly through a generator, are allowed to enter into a supply contract without having to incur the expenses of the joint purchases system.

Large users participate in CAMMESA by appointing two directors and two alternate directors through the Argentine Association of Large Electric Energy Users (Asociación de Grandes Usuarios de Energía Eléctrica de la República Argentina or “AGUEERA”).

Spot Market

Spot Prices

The emergency regulations enacted after the Argentine crisis in 2001 and 2002 had a significant impact on energy prices. Among the measures implemented pursuant to the emergency regulations were the pesification of prices in the WEM, and the requirement that all spot prices be calculated based on the price of natural gas, even in circumstances where alternative fuel such as diesel is purchased to meet demand due to the lack of supply of natural gas.

Prior to the crisis, energy prices in the spot market were set by CAMMESA, which determined the price charged by generators for energy sold in the spot market of the WEM on an hourly basis. The spot price reflected supply and demand in the WEM at any given time, which CAMMESA determined using different supply and demand scenarios that dispatched the optimum amount of available supply, taking into account the restrictions of the transmission grid, in such a way as to meet demand requirements while seeking to minimize the production cost and the cost associated with reducing risk of system failure.

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The spot price set by CAMMESA compensated generators according to the cost of the last unit to be dispatched for the next unit as measured at the Ezeiza 500 kV substation, which is the system’s load center and is in close proximity of the City of Buenos Aires. Dispatch order was determined by plant efficiency and the marginal cost of providing energy. In determining the spot price, CAMMESA also would consider the different costs incurred by generators not in the vicinity of Buenos Aires.

In addition to energy payments for actual output at the prevailing spot market prices, generators would receive compensation for capacity placed at the disposal of the spot market, including stand-by capacity, additional stand-by capacity (for system capacity shortages) and ancillary services (such as frequency regulation and voltage control). Capacity payments were originally established and set in U.S. Dollars to allow generators to cover their foreign-denominated costs that were not covered by the spot price. However, in 2002, the Argentine Government set capacity payments in reference to the Peso thereby limiting the purpose for which capacity payments were established.

Seasonal Prices

The emergency regulations also made significant changes to the seasonal prices charged to distributors in the WEM, including the implementation of a pricing ladder organized by level of user consumption (which varies depending on the category of users) charged by CAMMESA to distributors at a price significantly below the spot price charged by generators.

Prior to the implementation of the emergency regulations, seasonal prices were determined by CAMMESA based on an estimate of the weighted average spot price that would be paid by the next generator that would come on-line to satisfy a theoretical increase in demand (marginal cost), as well as the costs associated with the failure of the system and several other factors. CAMMESA would use a seasonal database and optimization models in determining the seasonal prices and would consider both anticipated energy supplies and demand, including, expected availability of generating capacity, committed imports and exports of electricity and the requirements of distributors and large users.

On April 29, 2023, pursuant to SE Resolution No. 323/2023, the Winter Seasonal Programming for the WEM submitted by CAMMESA, relating to the May 1, 2023-October 31, 2023 period, was approved. Accordingly, on May 4, 2023, by means of ENRE Resolution No. 399/2023, the values of the Company’s electricity rate schedule effective from the billing as of May 1, 2023 were approved.

Subsequently, on May 31, 2023, pursuant to ENRE Resolution No. 423/2023, the values of the Company’s electricity rate schedule effective from the billing as of June 1, 2023 were approved.

On July 25, 2023, pursuant to SE Resolution No. 612/2023, the winter quarterly reprogramming for the WEM for the August 1, 2023 October 31, 2023 period was approved.

Furthermore, on December 16, 2023, the Federal Government, through Executive Order No. 55/2023, declared the emergency of the National Energy Sector -including the electricity distribution segment- until December 31, 2024, and provided for the following: the implementation by the SE of a program of necessary and indispensable measures in order to establish the mechanisms for setting prices under conditions of competition and free access, maintain, in real terms, income levels and cover investment needs to ensure the continuous provision of the public services of electricity transmission and distribution under appropriate technical and economic conditions, both for the providers and all user categories. Also, the commencement of the RT for the providers of the public services of electricity transmission and distribution under federal jurisdiction and the resulting electricity rate schedules shall come into effect not later than December 31, 2024. The Executive Order No. 55/2023 also provided for the implementation of mechanisms allowing for citizen participation in the transitional rate adjustment process.

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On February 2, 2024, through SE Resolution No. 7/2024, the quarterly summer rescheduling for the WEM was approved, for the period between February 1, 2024 and April 30, 2024.

On February 15, 2024, through Resolution No. 102/2024, the ENRE approved the values of the Company’s electricity rate schedule effective from the billing as of February 16, 2024, which implied a CPD increase of 319.2%. On the other hand, it modifies the users’ categories for residential tariff, going from 9 to 4 categories according to their consumption.

In view of the National Energy Sector emergency declared by Executive Order No. 55/2023 and the Public Hearing held on January 26, 2024, the approval of ENRE Resolution No. 102/2024 implied the readjustment of the Company’s electricity rate through the granting of a 319.2% increase in the CPD, with the aim of reducing the Federal Government’s transfers to the electricity sector and promoting a sustainable economic balance. The “correction” of electricity rates is essential for restoring relative prices in the economy, ensuring the economic self-sufficiency of the electricity system and laying the foundations to promote private investment.

With regard to the foregoing, it is provided that the electricity rate set in the aforementioned resolution will be temporarily in effect for a term of one year and will be adjusted on a monthly basis as from May 2024, so as to maintain its real value, by means of an adjustment mechanism of the CPD that will take into consideration the Consumer Price Index (CPI), the Wholesale Price Index (WPI), and the Salary Variation Index prepared by the INDEC.

On March 11, 2024, the ENRE instructed the Company to use the prices of Resolution SE No. 7/2024 in its electricity rate schedules from zero hours on February 1, 2024 and until the entry into force of ENRE Resolution No. 102/2024, also considering the CPD approved by ENRE Resolution No. 241/2023.

On March 26, 2024, through ENRE Resolution No. 198/2024, the values of the Company's tariff schedule are approved with effect from the billing corresponding to the reading of meters after zero hours on the 1st. April 2024, changing again the users’ categories for residential tariff, going from 4 to 6 categories according to their consumption.

On April 9, 2024, the ENRE through Resolution No. 213/2024, modified the applicable electricity rate schedule approved Resolution No. 198/2024, for subcategories G1, G2 and G3.

The following resolutions were issued by the SE and the ENRE, in connection with the Company’s electricity rate schedules and the seasonal reference prices (Stabilized Price of Energy and Power Reference Price):

Resolution	Date	What it approves	Effective as from
SE No. 323/2023	April 29, 2023	Seasonal reference prices (1)	May-01
ENRE No. 399/2023	May 4, 2023	Electricity rate schedules	May-01
ENRE No. 423/2023	May 31, 2023	Electricity rate schedules	June 1
SE No. 612/2023	July 25, 2023	Seasonal reference prices	August 1
ENRE No. 574/2023	August 1, 2023	Electricity rate schedules	August 1
SE No. 884/2023	October 31, 2023	Seasonal reference prices (2)	November 1
ENRE No. 784/2023	November 2, 2023	Electricity rate schedules	November 1
SE No. 7/2024	February 2, 2024	Seasonal reference prices	February 1
ENRE No. 102/2024	February 15, 2024	Electricity rate schedules	February 16
ENRE No. 198/2024	March 26, 2024	Electricity rate schedules	February 1
ENRE No. 213/2024	April 9, 2024	Electricity rate schedules	February 1

(1) It approves the Winter Seasonal Programming for the WEM submitted by CAMMESA, relating to the May 1, 2023 October 31, 2023 period.

(2) It approves the Summer Seasonal Programming for the WEM submitted by CAMMESA, relating to the November 1, 2023 April 30, 2024 period.

Stabilization Fund

The stabilization fund, managed by CAMMESA, absorbs the difference between purchases by distributors at seasonal prices and payments to generators for energy sales at the spot price. When the spot price is lower than the seasonal price, the stabilization fund increases, and when the spot price is higher than the seasonal price, the stabilization fund decreases. The outstanding balance of this fund at any given time reflects the accumulation of differences between the seasonal price and the hourly energy price in the spot market. The stabilization fund is required to maintain a minimum amount to cover payments to generators if prices in the spot market during any relevant quarter exceed the seasonal price.

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Billing of all WEM transactions is performed monthly through CAMMESA, which acts as the clearing agent for all purchases between participants in the market. Payments are made approximately 40 days after the end of each month.

The stabilization fund was adversely affected as a result of the modifications to the spot price and the seasonal price made by the emergency regulations, pursuant to which seasonal prices were set below spot prices resulting in large deficits in the stabilization fund. As of December 31, 2023, the stabilization fund balance was approximately Ps.401 billion, resulting from the stabilization fund plus the over expenses of dispatch net of the Argentine treasury contributions. However, if all the funds and accounts of energy and power are considered (including the additional energy, fuel over expenses, quality supply, surplus demand pursuant to Resolution No. 1,281/06 of the SE, WEM, over expense contracts, etc.), this balance decreased to a deficit of approximately Ps. 2,620 billion. In this regard, the deficit of the WEM was financed by the Federal Government through non-refundable contributions from the Fondo Unificado (Unified Fund) administered by the SE to the stabilization fund administered by CAMMESA.

Term Market

Generators are able to enter into agreements in the term market to supply energy and capacity to distributors and large users. Distributors are able to purchase energy through agreements in the term market instead of purchasing energy in the spot market. Term agreements typically stipulate a price based on the spot price plus a margin. Prices in the term market have at times been lower than the seasonal price that distributors are required to pay in the spot market. However, as a result of the emergency regulations, spot prices in the term market are currently higher than seasonal prices, particularly with respect to residential tariffs, making it unattractive for distributors to purchase energy under term contracts while prices remain at their current levels.

As from March 2013, pursuant to the SE Resolution No. 95/13, all large users are required to purchase their backup energy from CAMMESA at any relevant contractual maturity date.

According to Law No. 27,191, users whose average demand in the previous year of each transaction, is less than or equal to 300 kW, must meet the applicable percentages of renewable energy participation imposed by such law through either of the following two mechanisms: joint purchases or supply contracts.

During 2017, pursuant to Resolution No 281-E/17 (amended by Disposition 1-E/18 issued by the Susbsecretaría de Energías Renovables) the ME&M created the Term Market Regime for Electric Power from Renewable Sources, which established the percentages of renewable energy that large users are obliged to consume within their demand of energy. The resolution also determined the commercialization and administration charges for large users that opt for the joint purchase of renewable energy that CAMMESA commercializes. Additionally, large users can agree to supply contracts directly with the generators, without incurring charges for joint purchases.

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Plus Energy

In September 2006, the former SE issued Resolution No. 1,281/06 in an effort to respond to the sustained increase in energy demand following Argentina’s economic recovery after the crisis. This resolution seeks to create incentives for energy generation plants in order to meet increasing energy needs. The resolution’s principal objective is to ensure that energy available in the market is used primarily to service residential users and industrial and commercial users whose energy demand is at or below 300 kW and who do not have access to other viable energy alternatives. To achieve this, the resolution provides that:

· large users in the WEM and large users of distribution companies (in both cases whose energy demand is above 300 kilowatts), will be authorized to secure energy supply up to their “base demand” (equal to their demand in 2005) by entering into term contracts; and

· large users in the WEM and large users of distribution companies (in both cases whose energy demand is above 300 kilowatts) must satisfy any consumption in excess of their base demand with energy from the Plus Energy system at unregulated market prices. The Plus Energy system consists in the supply of additional energy generation from new generation and/or generating agents, co-generators or auto-generators that are not agents of the electricity market or who as of the date of the resolution were not part of the WEM. Large users in the WEM and large users of distribution companies can also enter into contracts directly with these new generators or purchase energy at unregulated market prices through CAMMESA.

Only the new generation facilities (which include generators that were not connected to the SADI as of September 5, 2006) and new generation capacity expansions in respect of existing capacity as of such date are entitled to sell electricity under the Plus Energy system.

These prices have been updated as follows:

· after August 2011, the median incremental charge for excess demand was set at Ps./MWh for GUMAs and GUMEs and 455 Ps./MWh for GUDIs;

· after December 2011, the median incremental charge for excess demand for those who are not subsidized was set at 360 Ps./MWh;

· pursuant to the former SE Resolution No. 95/13 from March 22, 2013, as opposed to the backup contracts where a unique energy supplier is authorized by CAMMESA, the Plus Energy contracts are available to the large users and generators previously authorized by the Argentine National Planning, Public Investment and Services Ministry. The users under the GUDI category, whose Energy Plus contracts mature, have the option of rehiring Energy Plus, reclassifying themselves under the GUME category; or continue buying the total amount of their energy from the distributors, paying in case needed. Base Surplus Demand pursuant to Resolution SE No. 1,281/06;

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· as of March 13, 2015, the median incremental charge for excess demand was set at Ps./MWh for GUMAs and GUMEs and 550 Ps./MWh for GUDIs;

· based on the guidelines set forth in Resolution No. 6 of the ME&M, the median incremental charge for excess demand was set at 650 Ps./MWh for GUMAs and GUMES, while GUDIs stopped paying this charge; and

· as of June 14, 2018, the median incremental charge for excess demand was set at 1,200 Ps./MWh for GUMAs and GUMEs and 0 Ps./MWh for GUDIs.

ORGANIZATIONAL STRUCTURE

As of the date of this annual report, Edenor is a subsidiary of Empresa de Energía del Cono Sur S.A (“Edelcos”).

Edelcos is owned by South American Energy LLP, a UK-based company. Edelcos acquired 51% of the capital stock and votes of Edenor on June 30, 2021, following the ENRE’s approval of the change in control of Edenor on June 24, 2021. Additionally, the CNDC issued a favorable opinion on April 22, 2022, which was confirmed by resolution of the Minister of Commerce dated May 12, 2022.

Edelcos’s strategy is to develop opportunities in the power generation, electricity distribution, new energy sources, electrification of the economy and transport, with an emphasis on energy transition and ESG matters.

Edelcos believes that recent events such as the pandemic have changed the lives of people whose households have become the center of their daily activities, including work, education and entertainment. Cities will also experiment changes in the near future, redesigning neighbourhoods and city centers with a smarter view, gaining more awareness about important issues such as climate change and social responsibility. Electricity is expected to be key to all these developments and a unique opportunity for the future, where universal energy access for the globalized world is one of the goals for 2030.

Edelcos is providing technical advisory services to the Company in order to help detect new business opportunities and achieve the goal of converting Edenor in a key factor of the future Argentine economy.

For more information, see “Item 7. Major Shareholders and Related Party Transactions.”

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The following chart presents our corporate structure as of the date of this annual report: 

Shareholders	Class A	Class B	Class C	% of capital stock	% of the Class
Edelcos	462,292,111	-	-	51.00%	100.00%
Treasury shares	-	30,852,251	-	3.40%	6.97%
FGS ANSES	-	242,999,553	-	26.81%	54.91%
Floating	-	168,714,526	-	18.61%	38.12%
PPP	-	-	1,596,659	0.18%	100.00%
Total per class	462,292,111	442,566,330	1,596,659	100.00%
Total capital stock			906,455,100

Property, plant and equipment

Our main properties are transmission lines, substations and distribution networks, all of which are located in the northwestern part of the greater Buenos Aires metropolitan area and in the northern part of the City of Buenos Aires. Substantially all of our properties are held in concession to provide the electricity distribution service, which, by its nature, is considered to be an essential public service. In accordance with Argentine law and court precedents, assets which are necessary for the rendering of an essential public service are not subject to attachment or attachment in aid of execution.

The net book value of our property, plant and equipment as recorded on our financial statements was Ps.1,272,989 million, Ps.1,233,003 million and Ps.1,185,172 million as of December 31, 2023, 2022 and 2021, respectively. For a description of our capital expenditures plan, see “Item 5. Operating and Financial Review and Prospects—Liquidity and Capital Resources—Edenor’s Capital Expenditures.”

The total value of property, plant and equipment transferred by SEGBA on September 1, 1992 was allocated to individual assets accounts on the basis of engineering studies conducted by the Company. The value of property, plant and equipment was determined based on the price effectively paid for the acquisition of 51% of the Company’s capital stock from SEGBA. SEGBA neither prepared separate financial statements nor maintained financial information or records with respect to its distribution operations or the operations in which the assets transferred to Edenor were used. Accordingly, it was not possible to determine the historical cost of transferred assets. Additions subsequent to such date have been valued at acquisition cost, net of the related accumulated depreciation. Depreciation has been calculated by applying the straight-line method over the remaining useful life of the assets, which was determined on the basis of the above-mentioned engineering studies. Furthermore, in order to improve the disclosure of the account, the Company made certain changes in the classification of property, plant and equipment based on each technical process. In accordance with the provisions of IAS 23, borrowing costs in relation to any given asset are to be capitalized when such asset is in the process of production, construction, assembly or completion, and such processes, due to their nature, take long periods of time; those processes are not interrupted; the period of production, construction, assembly or completion does not exceed the technically required period; the necessary activities to put the asset in condition to be used or sold are not substantially complete; and the asset is not in condition so as to be used in the production or startup of other assets, depending on the purpose pursued with its production, construction, assembly or completion. Subsequent costs (major maintenance and reconstruction costs) are either included in the value of the assets or recognized as a separate asset, only if it is probable that the future benefits associated with the assets will flow to the Company, being it possible as well that the costs of the assets may be measured reliably and the investment will improve the condition of the asset beyond its original state. The other maintenance and repair expenses are recognized in profit or loss in the year in which they are incurred.

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The Company analyses the recoverability of its long-lived assets on a periodical basis or when events or changes in circumstances indicate that the recoverable amount of the long-lived assets may be impaired.

The value in use is determined on the basis of projected and discounted cash flows, using discount rates that reflect the time value of money and the specific risks of the assets under consideration. Cash flows are prepared based on estimates concerning the future performance of certain variables that are sensitive to the determination of the recoverable amount, among which the following can be noted: (i) nature, timing, and modality of the electricity rate increases; (ii) demand for electricity projections; (iii) development of the costs to be incurred; (iv) investment needs in line with the service quality levels required by the regulatory authority, and (v) macroeconomic variables, such as growth rates, inflation rates and foreign currency exchange rates, among others. Other variables have low impact on the calculation and have been estimated by the Company using the best available information. The Company has made its projections under the assumption that in the next few years it will obtain the long-overdue electricity rate adjustments to which it is entitled in accordance with the applicable regulations, using as a basis a discount rate (WACC) in dollars of 16.24%, (translating values into Pesos for the discount in each of the scenarios presented).

However, the Company is not in a position to ensure that the future performance of the assumptions used for making its projections will be in line with that which the control authorities will define, therefore, they could differ significantly from the estimates and assessments made at the date of preparation of these financial statements.

After having carried out the analysis of recoverability of long-lived assets, as of the date of these annual report, the Company has recorded no impairment of property, plant and equipment for the year 2023. As of December 31, 2020, the Company recorded an impairment of property, plant and equipment for Ps.17,396 million (Ps. 159,221 at the purchasing power of the currency at December 31, 2023).

The total value of property, plant and equipment suffered the effects of the application of IAS 29, as discussed in our audited financial statements, included in Item 18 of this annual report. The non-monetary items carried at historical cost were restated using coefficients that reflect the variation recorded in the general level of prices from the date of acquisition or revaluation to the closing date of the reporting period. Depreciation charges of property, plant and equipment and amortization charges of intangible assets recognized in profit or loss for the period, as well as any other consumption of non-monetary assets were determined on the basis of the new restated amounts. See “Item 5. Operating and Financial Review and Prospects—Operating Results—Factors Affecting Our Results of Operations—Tariffs—Distribution Margin or Value-Added for Distribution (VAD)” and “Item 5. Operating and Financial Review and Prospects—Operating Results—Factors Affecting Our Results of Operations—Tariffs—Integral Tariff Revision.”

Item 4A. Unresolved Staff Comments

None.

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Item 5. Operating and Financial Review and Prospects

As of December 31, 2023, the Company shows a notable improvement in its economic performance, as a consequence of the positive trend towards the sector’s normalization -closely related to the electricity rate increases of the first six-month period-, the Agreements on the Regularization of Payment Obligations entered into with CAMMESA, and the prospect that the electricity rates will be periodically adjusted and subsidies will be reduced in the short term.

In particular, the recent electricity rate adjustments of February 2023 implied an increase in the CPD of 107.8% for the month of April 2023 and 73.7% for the month of June 2023, which resulted in an improvement in the Company’s gross profit for the current fiscal year. Despite the fact that this trend did not continue until the end of the fiscal year, and that the subsequent changes made to the values of the Company’s electricity rate schedules implied only the passing through of the seasonal prices, the investments necessary, both for the operation of the network and for maintaining and even improving the quality of the service, have been made, complying with the investment targets for fiscal year 2023.

Furthermore, by means of Executive Order No. 55/2023, the new Administration provided for the emergency of the National Energy Sector until December 31, 2024. In line with that, ENRE Resolution No. 102/2024 approved the values of the Company’s electricity rate schedule as from February 16, 2024, which implied the granting of a 319.2% increase in the CPD and monthly adjustments from May 2024, making it possible to restore the Company’s electricity rate situation and its economic and financial equation, ensuring the economic self-sufficiency of the electricity system for a foreseeable future.

In this regard, the Company has begun to regularize the debt with CAMMESA for energy purchased in the WEM, as from the maturities taking place from March 2020 until February 2023, by means of the implementation of two payment plans of 96 monthly installments, pursuant to the Agreements on the Regularization of Payment Obligations signed by and between the Company and CAMMESA. It is worth mentioning that the Company postponed once again the payments for energy purchased as from the maturity taking place in September 2023, a situation that, by virtue of the aforementioned ENRE Resolution No. 102/2024, the Company expects to regularize in the near future.

Additionally, the government issued Executive Order No. 70/2023, which provided for the economic, financial, fiscal, pension, tariff, healthcare, social and administrative emergency until December 31, 2025, together with other measures of a deregulatory nature for the economy as a whole, with the aim, as stated, of achieving fiscal balance. Furthermore, supplementing the aforementioned Executive Order, the bill entitled “Law of bases and starting points for the freedom of the Argentine people”, which included a comprehensive package of measures and provided, among other issues, for changes in energy-related regulations and the creation of a new regulatory entity, was introduced to Congress. Due to the fact that the aforementioned bill was rejected by a majority of lawmakers, the Executive Power decided that the bill, as it had been introduced to Congress to be dealt with in the extraordinary legislative sessions, would not be discussed again.

The context of volatility and uncertainty continued as of the date of issuance of the Financial Statements. The reforms proposed by the new administration have begun, as mentioned in the preceding paragraph, to be discussed in the legislature. At the date of issuance of this annual report, it is not possible to predict the outcome of such discussions or whether new measures will be announced. The Company’s Management permanently monitors the development of the variables that affect its business, in order to define its course of action and identify potential impacts on its financial and cash position.

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Our Financial Statements must be read in light of these circumstances.

Notwithstanding the above-described situation, it is worth pointing out that even though in the last few fiscal years the Company recorded negative working capital, as a consequence of the insufficient adjustments to the electricity rate over the last few years, in general terms, the quality of the electricity distribution service has been improved, both in duration and frequency of power cuts. In this regard, the Company is optimistic and expects that the new electricity rates will result in the Company’s operating once again under a regulatory framework with clear and precise rules, which will make it possible to meet the costs associated with the provision of the service, as well as the need for additional investments to satisfy demand, in order to maintain the provision of the public service, object of the concession, in a satisfactory manner in terms of quality and reliability. Therefore, the Financial Statements have been prepared using the ongoing concern basis of accounting.

Overview of IAS 29

Pursuant to IAS 29, the financial statements of an entity whose functional currency is that of a highly inflationary economy should be measured in terms of the measuring unit current as of the date of the financial statements. All the amounts included in the statement of financial position which are not stated in terms of the measuring unit current as of the date of the financial statements should be adjusted applying the general price index. All items in the statement of income should be stated in terms of the measuring unit current as of the date of the financial statements, applying the changes in the general price index from the date on which the revenues and expenses were originally recognized in the financial statements.

Adjustment for inflation has been calculated considering the indexes reported by the FACPCE based on the price indexes published by the INDEC.

The principal inflation adjustment procedures are the following:

· Monetary assets and liabilities that are recorded in the current currency as of the statement of financial position’s closing date are not restated because they are already stated in terms of the currency unit current as of the date of the financial statements.

· Non-monetary items carried at historical cost or at the current value of a date prior to the end of the reporting year are restated using coefficients that reflect the variation recorded in the general level of prices from the date of acquisition or revaluation to the closing date of the reporting year. Depreciation charges of property, plant and equipment and amortization charges of intangible assets recognized in profit or loss for the year, as well as any other consumption of non-monetary assets will be determined on the basis of the new restated amounts.

· The restatement of non-monetary assets in terms of the measuring unit current at the end of the reporting year without an equivalent adjustment for tax purposes, gives rise to a taxable temporary difference and to the recognition of a deferred tax liability, whose contra-account is recognized.

· Income and expenses are restated from the date when they were recorded, except for those profit or loss items that reflect or include in their determination the consumption of assets carried at the purchasing power of the currency as of a date prior to the recording of the consumption, which are restated based on the date when the asset to which the item is related originated (for example, depreciation, impairment and other consumption of assets valued at historical cost).

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· The net gain from the maintenance of monetary assets and liabilities is presented in a line item separately from the profit or loss for the year, called RECPAM.

· Comparative figures have been adjusted for inflation following the procedure explained in the previous paragraphs, as established in IAS 29.

· The components of equity, except for reserved earnings and unappropriated retained earnings, have been restated from the dates on which they were contributed, or on which they were otherwise set up.

· The restated unappropriated retained earnings were determined by the difference between net assets restated at the date of transition and the other components of opening equity expressed as indicated in the preceding headings.

· After the restatement at the date indicated above, all components of equity are restated by applying the general price index from the beginning of the year, and each variation of those components is restated from the date of contribution or the date on which it otherwise arose.

· IAS 29 requires all the items of this Statement to be restated in terms of the measuring unit current at the closing date of the reporting year.

· The monetary gain or loss generated by cash and cash equivalents is presented in the statement of cash flows separately from cash flows from operating, investing and financing activities, as a specific item of the reconciliation between cash and cash equivalents at the beginning and end of the year.

Operating Results

We distribute electricity on an exclusive basis to the northwestern part of the greater Buenos Aires metropolitan area and the northern part of the City of Buenos Aires, comprising an area of 4,637 square kilometres, with an aggregate population of approximately nine million people. As of December 31, 2023, we had 3,299,278 users.

We serve two markets: the regulated market, which comprises users who are unable to purchase their electricity requirements directly through the WEM, and the unregulated market, which comprises large users that purchase their electricity requirements directly from generators in the WEM. The ENRE regulates the terms and conditions of our services and the tariffs we charge users in both the regulated and unregulated markets.

Factors Affecting Our Results of Operations

Our net sales consist mainly of net energy sales to users in our concession area. Our net energy sales reflect the tariffs we charge our users (which include our energy purchase costs). In addition, our net sales include connection and reconnection charges and leases of poles and other network equipment.

Regulatory changes impact our results of operations as we are paid tariffs for our services. The following ENRE resolutions, among others, have a direct impact on the tariffs we charge:

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· On June 16, 2022, by means of Executive Order No. 332/2022, the PEN established the rate segmentation system. Subsequently, by means of Resolution No. 467 dated June 27, 2022, the SE, as the regulatory authority, instructed the Undersecretariat of Energy Planning to implement the aforementioned segmentation, which was carried out by means of Directive No. 1 dated June 28, 2022.

· On February 17, 2023, the SE instructed the ENRE to apply to the electricity rates an increase in the VAD, stating that the transitional electricity rate adjustment was to take place on or prior to March 1, 2023. Accordingly, on February 28, 2023, by means of Resolution No. 241/2023, the ENRE approved the new electricity rate schedules, applicable as from April 1 and June 1, 2023, with the aim of implementing the increase in the value of the consumers’ bills in two tranches, which represented an increase in CPD of 107.8% and 73,7%, respectively.

· On April 25, 2023, pursuant to of Resolution No. 363/2023, the ENRE resolved to commence as of June 1, 2023, the RTI Process for electricity distribution companies under federal jurisdiction, in accordance with the provisions of Law No. 24,065 and Law No. 27,541 on Social Solidarity and Productive Reactivation in the Framework of the Public Emergency, as amended and supplemented. In this regard, through ENRE Resolution No. 422/2023, the Tariff Structure Review program for 2023 and the first quarter of 2024 was approved.

· On April 29, 2023, pursuant to SE Resolution No. 323/2023, the Winter Seasonal Programming for the WEM submitted by CAMMESA, relating to the May 1, 2023-October 31, 2023 period, was approved. Accordingly, on May 4, 2023, by means of ENRE Resolution No. 399/2023, the values of the Company’s electricity rate schedule effective from the billing as of May 1, 2023 were approved.

· On May 31, 2023, pursuant to ENRE Resolution No. 423/2023, the values of the Company’s electricity rate schedule effective from the billing as of June 1, 2023 were approved.

· On July 25, 2023, pursuant to SE Resolution No. 612/2023, the winter quarterly reprogramming for the WEM for the August 1, 2023-October 31, 2023 period is approved.

· On December 16, 2023, the Federal Government, through Executive Order No. 55/2023, declared the emergency of the National Energy Sector -including the electricity distribution segment- until December 31, 2024, and provided for the following:

- The implementation by the SE of a program of necessary and indispensable measures in order to establish the mechanisms for setting prices under conditions of competition and free access, maintain, in real terms, income levels and cover investment needs to ensure the continuous provision of the public services of electricity transmission and distribution under appropriate technical and economic conditions, both for the providers and all user categories.

- The commencement of the RT for the providers of the public services of electricity transmission and distribution under federal jurisdiction and the resulting electricity rate schedules shall come into effect not later than December 31, 2024.

- The intervention of the ENRE from January 1, 2024 until the appointment of the members comprising the Board of Directors.

- The implementation of mechanisms allowing for citizen participation in the transitional rate adjustment process.

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· On January 2, 2024, by means of Resolution No. 2/2024, the ENRE called a Public Hearing for January 26, 2024, to inform and hear opinions on the transitional electricity rate system of the distribution companies in charge of the public service of electricity.

In the above-mentioned hearing, the Company’s presentation focused on the following:

- The importance of its customer service role, as it provides the service to users, while subsidies are only paid to the generation sector.

- The fact that it only receives 29% of the bill it “collects”, with the remaining percentage going to the other WEM participants and to the Federal Government through taxes.

- The insufficient adjustment of the electricity rate, which had once again led to the Company’s not having the necessary funds to pay its debts for energy purchased. ^[47]

- The fact that the main generation companies of the country have historically recorded positive results and distributed dividends, whereas the Company has not distributed dividends since 2002.

- The substantial increase in the amount of investments earmarked for 2024, should the annual revenue requirement and the request for the automatic monthly adjustment of the transitional electricity rate be approved.

- The commencement of a process for the offsetting of the regulatory assets, the liabilities, and the debt with CAMMESA.

On February 2, 2024, through SE Resolution No. 7/2024, the quarterly summer rescheduling for the WEM was approved, for the period between February 1, 2024 and April 30, 2024.

On February 15, 2024, through Resolution No. 102/2024, the ENRE approved the values of the Company’s electricity rate schedule effective from the billing as of February 16, 2024, which implied a CPD increase of 319.2%. On the other hand, it modifies the users’ categories for residential tariff, going from 9 to 4 categories according to their consumption.

In view of the National Energy Sector emergency declared by Executive Order No. 55/2023 and the Public Hearing held on January 26, 2024, the approval of ENRE Resolution No. 102/2024 implied the readjustment of the Company’s electricity rate through the granting of a 319.2% increase in the CPD, with the aim of reducing the Federal Government’s transfers to the electricity sector and promoting a sustainable economic balance. The “correction” of electricity rates is essential for restoring relative prices in the economy, ensuring the economic self-sufficiency of the electricity system and laying the foundations to promote private investment.

With regard to the foregoing, it is provided that the electricity rate set in the aforementioned resolution will be temporarily in effect for a term of one year and will be adjusted on a monthly basis as from May 2024, so as to maintain its real value, by means of an adjustment mechanism of the CPD that will take into consideration the Consumer Price Index (CPI), the Wholesale Price Index (WPI), and the Salary Variation Index prepared by the INDEC.

On March 11, 2024, the ENRE instructed the Company to use the prices of Resolution SE No. 7/2024 in its electricity rate schedules from zero hours on February 1, 2024 and until the entry into force of ENRE Resolution No. 102/2024, also considering the CPD approved by ENRE Resolution No. 241/2023.

On March 26, 2024, through ENRE Resolution No. 198/2024, the values of the Company’s tariff schedule were approved with effect from the billing corresponding to the reading of meters after zero hours on May 1, 2024, changing again the users’ categories for residential tariff, going from 4 to 6 categories according to their consumption.

On April 9, 2024, the ENRE through Resolution No. 213/2024, modified the applicable electricity rate schedule approved Resolution No. 198/2024, for subcategories G1, G2 and G3.

The following resolutions were issued by the SE and the ENRE, in connection with the Company’s electricity rate schedules and the seasonal reference prices (Stabilized Price of Energy and Power Reference Price):

Resolution	Date	What it approves	Effective as from
SE No. 323/2023	April 29, 2023	Seasonal reference prices (1)	May-01
ENRE No. 399/2023	May 4, 2023	Electricity rate schedules	May-01
ENRE No. 423/2023	May 31, 2023	Electricity rate schedules	June 1
SE No. 612/2023	July 25, 2023	Seasonal reference prices	August 1
ENRE No. 574/2023	August 1, 2023	Electricity rate schedules	August 1
SE No. 884/2023	October 31, 2023	Seasonal reference prices (2)	November 1
ENRE No. 784/2023	November 2, 2023	Electricity rate schedules	November 1
SE No. 7/2024	February 2, 2024	Seasonal reference prices	February 1
ENRE No. 102/2024	February 15, 2024	Electricity rate schedules	February 16
ENRE No. 198/2024	March 26, 2024	Electricity rate schedules	February 1
ENRE No. 213/2024	April 9, 2024	Electricity rate schedules	February 1

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(3) It approves the Winter Seasonal Programming for the WEM submitted by CAMMESA, relating to the May 1, 2023-October 31, 2023 period.

(4) It approves the Summer Seasonal Programming for the WEM submitted by CAMMESA, relating to the November 1, 2023-April 30, 2024 period.

The following table sets forth the composition of our net sales (stated in millions of Pesos in constant currency) for the periods indicated:

	Year ended  December 31
	2023	2022	2021
	(Figures in millions)
Sales of Electricity	697,746	637,145	683,800
Right of use of poles	2,934	3,472	4,257
Connection Charges and reconnection charges	418	377	445
Net sales	701,098	640,994	688,502

The following tables show Edenor’s energy sales by category of user (in GWh) for the periods indicated: 

	Year ended December 31,
	2023		2022		2021
Residential	10,833	46%	10,362	45%	9,868	45.0%
Small Commercial	2,153	8%	2,056	9%	1,839	8.0%
Medium Commercial	1,552	7%	1,529	7%	1,448	7.0%
Industrial	3,680	16%	3,714	16%	3,492	16.0%
Wheeling System(1)	3,933	17%	3,776	17%	3,703	17.0%
Public Lighting	599	3%	634	3%	665	3.0%
Shantytowns	788	3%	755	3%	695	3.0%
Total	23,538	100%	22,826	100%	21,710	100%

(1) Wheeling charges represent our tariffs for generators and large users, which consist of a fixed charge for recognized technical losses and a charge for our distribution margins but exclude charges for electric power purchases, which are undertaken directly between generators and large users.

Our revenues and results of operations are principally affected by economic conditions in Argentina, changes in our regulated tariffs and fluctuations in demand for electricity within our service area. To a lesser extent, our revenues and results of operations are also affected by service interruptions or reductions in excess of those general standards set forth under ENRE´s regulations.

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Argentine Economic Conditions and Inflation

Because all of our operations, facilities and users are located in Argentina, we are affected by general economic conditions in the country. In particular, the general performance of the Argentine economy affects the demand for electricity, and inflation and fluctuations in currency exchange rates which, in turn, affect our costs and our margins. Inflation primarily affects our business by increasing operating costs, while reducing our revenues in real terms.

In December 2001, Argentina experienced an unprecedented crisis that virtually paralyzed the country’s economy through most of 2002 and led to radical changes in the Argentine Government’s policies. The crisis and the Argentine Government’s policies during this period severely affected the electricity sector, as described below. Although the Argentine economy recovered significantly from the crisis over the following years, and the business and political environment was largely stabilized, the Argentine Government has only recently begun to address the difficulties experienced by the Argentine electricity sector as a result of the crisis and its aftermath.

Economic Performance and Outlook

Economic Activity

In accordance with the latest available data, as of December 31, 2023, the economic activity recorded a negative variation of 4.5% as compared to the same period of the previous year, with the accumulated variation registering a decrease of 1.6% annually compared to 2022.

Price Trends

In terms of inflation, Argentina has experienced and continues facing significant inflationary pressures, which were accentuated in the last months of 2023. The CPI prepared by INDEC had a cumulative year on year-increase of 211.4% as of December 2023 (compared to the same period in 2022), while the Internal Wholesale Price Index ("IPIM"), presented an accumulated increase of 276.4% for the same period.

Trade Balance

In terms of trade balance, according to the latest data published by INDEC in the Argentine Commercial Exchange report, exports reached U.S.$61,464 million while imports represented U.S.$69,464 million. The trade balance registered an accumulated deficit of U.S.$8,000 million, while in the same period of 2022 a surplus of U.S.$5,822 million had been registered, which was explained by a 25.3% decrease in exports partially offset by a 9.2% drop in imports. Consequently, trade (exports plus imports) decreased 17.6% compared to the same period of the previous year, reaching U.S.$ 130,928 million in 2023.

Fiscal Situation

During 2023, the fiscal deficit reached 2.9% of GDP, exceeding the agreement reached with the IMF for up to 1.9%. In addition, the BCRA’s reserves reached U.S.$9,064 billion. In December, the average balance of the monetary base was Ps.9.2 trillion, which implied a monthly expansion of 18.1% ($1,412 billion). These fluctuations, added to the depreciation of the Peso against the US dollar, have had a significant impact on our costs and on obtaining the imported inputs that Edenor's activity requires on time. Regarding the conditions of the local foreign exchange market in accordance with Communication “A” 3500 of the BCRA, the Peso/dollar exchange rate reached a value of 808.45 pesos per dollar as of December 31, 2023, having increased by 356.3% compared with December 2022.

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Tariffs

Our revenues and margins are substantially dependent on the composition of our tariffs and on the tariff setting and adjustment process contemplated by our concession.

The following chart shows the variation in Edenor’s average tariffs, including taxes, in Pesos per MWh for the periods indicated:

Under the terms of our concession, our tariffs for all of our users (other than users in the wheeling system) are composed of:

§ the cost of electric power purchases, which we pass on to our users, and a fixed charge (which varies depending on the category and level of consumption of each user and their energy purchase prices) to cover a portion of our energy losses in our distribution activities (determined by reference to a fixed percentage of energy and power capacity for each respective voltage level set forth in our concession);

§ our regulated distribution margin, which is known as VAD or CPD; and

§ any taxes imposed by the Province of Buenos Aires or the City of Buenos Aires, which may differ in each jurisdiction.

Certain of our large users (which we refer to as wheeling system users) are eligible to purchase their energy needs directly from generators in the WEM and only acquire from us the service of electricity delivery. Therefore, our tariffs for these large users (known as wheeling charges) do not include charges for energy purchases. Accordingly, wheeling charges consist of the fixed charge for recognized losses (determined by reference to a fixed percentage of energy and power capacity for each respective voltage level set forth in our concession) and our distribution margin. As a result, although the amounts billed to wheeling system users are relatively lower than those billed to other large users, namely industrial users, the distribution margin on sales to wheeling system users is similar to that of other large users because we do not incur the corresponding cost of electric power purchases related to those sales.

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Recognition of Cost of Electric Power Purchases

As part of our tariffs, we bill our users for the costs of our electric power purchases, which include energy and capacity charges. In general, we purchase electric power at a seasonal price, which is approved by the ENRE every six months and reviewed quarterly. Our electric power purchase price reflects transportation costs and certain other regulatory charges (such as the charges imposed by the Fondo Nacional de Energía Eléctrica or the National Electricity Energy Fund).

In 2023, the SE and the ENRE issued several resolutions in connection with the Company’s electricity rate schedules and the seasonal reference prices (Stabilized Price of Energy and Power Reference Price). See “Item 5. Operating and Financial Review and Prospects - Operating Results- Factors Affecting Our Results of Operations”. 

During 2023 and 2022, Edenor purchased all of the energy in the market at an average monomic price of Ps.9,514.81 / MWh and Ps.4,420.46 / MWh at nominal values, respectively.

We purchased a total of 27,676 GWh in 2023, 27,158 GWh in 2022 and 26,373 GWh in 2021. Following the adoption of certain amendments to the pricing rules applicable to the WEM pursuant to the Public Emergency Law, we have purchased all of our energy supply in the WEM at the monomic price. We have not purchased any energy under long-term supply contracts since 2004.

Recognition of cost of energy losses

Energy losses are equivalent to the difference between energy purchased (including wheeling system demand) and energy sold. These losses may be classified as technical and non-technical losses. Technical losses represent the energy that is lost during transmission and distribution within the network as a consequence of natural heating of the conductors and transformers that transmit electricity from the generating plants to the users. Non-technical losses represent the remainder of our energy losses and are primarily due to illegal use of our services. Energy losses require us to purchase additional electricity to satisfy demand and our concession allows us to recover from our users the cost of these purchases up to a loss factor specified in our concession for each tariff category. Our loss factor under our concession is, on average, 10%. Our management is focused on taking the necessary measures to ensure that our energy losses do not increase above current levels because of their direct impact on our gross margins. However, due to the inefficiencies associated with reducing our energy losses below the level at which we are reimbursed pursuant to our concession (i.e., 10%), we currently do not intend to significantly lower our level of losses.

At the time of our privatization, our total energy losses represented approximately 26.59% of our energy purchases, of which more than two thirds were non-technical losses attributable to fraud and illegal use of our service. Beginning in 1992, we implemented a loss reduction plan (plan de disciplina del mercado, or market discipline plan) that allowed us to gradually reduce our total energy losses to 10% by 2000, with non-technical losses of 2.7%. However, beginning in mid-2001 and up until 2004, we experienced an increase in our non-technical losses, as the economic crisis eroded the ability of our users to pay their bills, and in our technical losses in proportion to the increased volume of energy we supplied during those periods.

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The following table sets forth our estimated disruption between technical and non-technical energy losses experienced in our concession area for the periods indicated.

	Year ended December 31,
	2023	2022	2021
Technical losses	9.0%	9.3%	9.4%
Non technical losses	5.8%	6.6%	8.2%
Total losses	14.9%	15.9%	17.6%

The rolling annual rate of total losses for 2023 decreased to 14.9%, compared to 15.9% in the previous year. In Regions II and III, new shantytowns were formed while existing shantytowns continued to grow. The theft of energy in these areas continues to be the main factor in the increase in total losses in the last five years.

In 2023, the plan launched in previous years, whose objective is the installation of 250,000 MIDE self-managed meters, continued to be implemented. The plan aims to increase electricity access by normalizing clandestine consumers, inactive customers and chronic delinquent customers, in order to allow for the safe and efficient use of the network. Throughout the year, 7,858 of these meters were installed, with the number of installed MIDEs thus totalling 237,333.

At the same time, through the installation of the new network type of MULCON, the invulnerability of MIDE meters, and further development of analytical and artificial intelligence tools, make it possible to improve effectiveness of inspections and thereby reduce energy theft. The amount of GWh sold in the MIDE customer segment reached 736 GWh, an increase of 7% (+48 GWh compared to 2022).

Distribution margin or value-added for distribution (VAD)

Our concession authorizes us to charge a distribution margin for our services to seek to cover our operating expenses, taxes and amortization expenses and to provide us with an adequate return on our asset base.

Historical Overview of VAD.

Our concession originally contemplated a fixed distribution margin for each tariff parameter with semi-annual adjustments based on variations in the U.S. wholesale price index (67% of the distribution margin) and the U.S. consumer price index (the remaining 33% of the distribution margin). However, pursuant to the Public Emergency Law, all adjustment clauses in U.S. Dollars or other foreign currencies and indexation clauses based on foreign indexes or other indexation mechanisms included in contracts to be performed by the Argentine Government were revoked. As a result, the adjustment provisions contained in our concession are no longer in force and, from January 2002 through January 2007, we were required to charge the same fixed distribution margin in Pesos established in 2002, without any type of currency or inflation adjustment. These measures, coupled with the effect of accumulated inflation since 2002 and the depreciation of the Peso, have had a material adverse effect on our financial condition, results of operation and cash flows, leading us to record net losses.

Adjustment Agreement.

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On September 21, 2005, we entered into the Acta Acuerdo sobre la Adecuación del Contrato de Concesión del Servicio Público de Distribución y Comercialización de Energía Eléctrica (Adjustment Agreement), an agreement with the Argentine Government relating to the adjustment and renegotiation of the terms of our concession. Because a new Minister of Economy took office thereafter, we formally re-executed the Adjustment Agreement with the Argentine Government on February 13, 2006 under the same terms and conditions originally agreed. The ratification of the Adjustment Agreement by the Argentine Government was completed in January 2007. Pursuant to the Adjustment Agreement, the Argentine Government granted us an increase of 28% in our distribution margin, which includes a 5% increase to fund specified capital expenditures we are required to make under the Adjustment Agreement. See “Item 5. Operating and Financial Review and Prospects—Liquidity and Capital Resources—Edenor’s Capital expenditures.” The increase was effective retroactively from November 1, 2005 and remained in effect until the approval of the new tariff scheme under the RTI, in February 2017.

The Adjustment Agreement also contemplated a cost adjustment mechanism for the transitional period during which a RTI process was being conducted. This mechanism, known as the Cost Monitoring Mechanism, or CMM, took into consideration, among other factors, the wholesale and consumer price indexes, exchange rates, the price of diesel and construction costs and salaries, all of which are weighted based on their relative importance to operating costs and capital expenditures.

On January 30, 2007, the ENRE formally approved our tariff schedule reflecting the 28% increase in the distribution margins charged to our non-residential users contemplated by the Adjustment Agreement. In addition, because the Adjustment Agreement is effective retroactively from November 1, 2005, the ENRE applied the CMM retroactively in each of May and November 2006, the dates in each year on which the ENRE is required to apply the CMM.

Between 2007 and 2016, we requested several CMM adjustments, which were recognized by the ENRE through different resolutions and notes (Resolution No. 1,037/07, Note No. 81,399, Resolution No. 250/13 and Resolution No. 32/15). Only two adjustments were recognized in a timely manner and were incorporated into the tariff structure, while the rest of them were recognized belatedly and not incorporated into our tariff structure.

On November 23, 2012, the ENRE issued Resolution No. 347/12, pursuant to which it established a fixed and variable charge differentiated by category of users, which the distribution companies will collect on account of the CMM adjustments stipulated in clause 4.2 of the Adjustment Agreement, and will use exclusively to finance infrastructure and corrective maintenance of their facilities. Such charges, which were clearly identified in the bills sent to users, were deposited in a special account to be managed by a Trustee. Such amounts were used exclusively to finance infrastructure and corrective maintenance of the facilities.

Pursuant to the SE’s Resolution No. 250/13 and Notes No. 6,852/13, No. 4,012/14, No. 486/14 and No. 1,136/14 of the SE, the Company was authorized to compensate its debt registered under the PUREE against CMM recognitions for the period from May 2008 through December 2014.

In addition, CAMMESA was instructed to issue sale settlements with maturity dates to be determined for the surplus generated after compensation between the credits of the CMM and the PUREE debts, to partially compensate the debt with the WEM. We were also entitled to deposit the remaining sale settlements with maturity dates to be determined in the trust created pursuant to ENRE’s Resolution No. 347/12. As of the date of this annual report, all the sale settlements with maturity dates to be determined issued by CAMMESA were compensated with PUREE debts or with Commercial debt with CAMMESA.

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As from February 1, 2015, pursuant to Resolution No. 32/15 of the SE, PUREE funds were considered as part of Edenor’s income on account of the future RTI. We compensated up to January 31, 2015, the debts for PUREE, with claims arising from the calculation of CMM up to January 31, 2016, including the application of interest that could correspond to both concepts.

In January 2016, the ME&M issued Resolution No. 7/16, pursuant to which the ENRE implemented a VAD adjustment to the tariff schedule on account of the future RTI in effect as of February 1, 2016, and took all the necessary actions to conclude a RTI process by February 2017.

In addition, such resolution: (i) abrogated the PUREE; (ii) repealed SE Resolution No. 32/15 as from the date the ENRE resolution implementing the new tariff schedule that became effective; (iii) discontinued the application of mechanisms that imply the transfer of funds from CAMMESA in the form of loan agreements with CAMMESA; and (iv) ordered the implementation of the actions required to terminate the trusts created pursuant to ENRE Resolution No. 347/12. Resolution No. 2/16 of the ENRE partially repealed Resolution No. 347/12, discontinuing the FOCEDE and ordered the Company to open a special bank account with a Central Bank authorized entity where the funds received pursuant to Resolution No. 347/12 were deposited. Pursuant to ME&M Resolution No. 7/16, the ENRE issued Resolution No. 1/16 establishing a new tariff structure.

Regularization of Obligations Agreement

Pursuant to Law No. 27,467, which enacted the Expenses and Resources Budget Law 2019, the Argentine Executive Branch was instructed to promote the transfer of Edenor’s jurisdiction to the jurisdiction of the Province of Buenos Aires and the City of Buenos Aires as from January 1, 2019 and the creation of a new oversight body. On February 28, 2019, the Federal Government, the Province of Buenos Aires and the City of Buenos Aires entered into an agreement for the transfer of the public electric power distribution service duly awarded to Edenor under the Concession Agreement entered into by the Federal Government, to the joint jurisdiction of the Province of Buenos Aires and the City of Buenos Aires. Pursuant to such agreement, the Province of Buenos Aires and the City of Buenos Aires would create a new entity in place of ENRE, in charge of controlling and regulating the distribution service. It was also agreed that the Federal Government would be solely responsible for all debts and credits related to the distribution service awarded to Edenor whose cause was prior to February 28, 2019.

As a result of such agreement, on May 10, 2019, the Company entered into the “Agreement for the Regularization of Obligations for the Transfer of the Concessionaires to the Local Jurisdictions” (the “Agreement on the Regularization of Obligations”) with the SE, on behalf of the Federal Government, pursuant to which, prior to the transfer of the respective concessions to the jurisdiction of the Province of Buenos Aires and the City of Buenos Aires, the parties agreed to terminate the outstanding reciprocal claims originated during the 2006-2016 transition period.

On January 19, 2021, the Federal Government entered into a new agreement with the Province of Buenos Aires and the City of Buenos Aires, by virtue of which the Federal Government remained the grantor of the concession contracts (Decree No. 292/2021 and SE Resolution No. 16/2021).

On September 21, 2021, the Ministry of Economy issued Resolution No. 590/2021, whereby it declared the Agreement on the Regularization of Obligations, registered on May 10, 2019, harmful to the general interest. It also ordered the suspension of the administrative proceedings related to the execution of obligations originated in such Agreement on the Regularization of Obligations. Edenor filed a hierarchical appeal against Regulation No. 590/2021 in order to annul it.

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Notwithstanding the foregoing, as of the date of this annual report, the Company has not been notified of the commencement of any legal action aimed at the judicial declaration of nullity of the Agreement on the Regularization of Obligations or of the acts issued as a consequence thereof. The administrative act in question has not provided for the suspension of the legal effects of said Agreement on the Regularization of Obligations, and therefore it is in full and complete force and effect. The Company filed a hierarchical appeal against this resolution before the Office of the Chief of Cabinet of Ministers and an appeal for clarification before the Ministry of Economy, which was granted and resolved by Resolution No. 656/2021, notified on October 20, 2021, whereby said Ministry confirms that the aforementioned Agreement on the Regularization of Obligations is not suspended.

On August 22, 2022, through of ENRE Resolution No. 292/2022, all proceedings were provisionally terminated because the docket showed no activity as a result of ME Resolutions Nos. 590 and 656/2021, and the provisions of such resolutions remained in effect until notice of the final judgements on the related proceedings is given to the ENRE by any reliable means, situation which remains unchanged as the date of this annual report.

Memorandum of Agreement on Regularization of Payment Obligations – Debt for the purchase of energy in the WEM

On December 29, 2022, and following the guidelines set forth in both the Federal Government’s budget for fiscal year 2021 and 2022, Section 87 of Law No. 27,591, Resolution SE No. 40/2021 and Decree No. 88/2022 concerning the “Special system for the settlement of debts”, the Company, the Federal Government, the ENRE and CAMMESA signed the 2022 Agreement pursuant to which the Company recognizes to owe CAMMESA a sum of Ps. 57,159, for the periods from September 2020 to August 2022. Furthermore, the SE recognized a credit in favor of the Company in the amount of Ps. 24,174.

Consequently, once the aforementioned credits have been deducted, the Company agrees to pay a debt of Ps.32,985 million (Ps. 52,276 million in constant currency) to be paid under a payment plan in 96 progressively increasing installments, with a six-month grace period and at the rate in effect in the WEM, reduced by 50%. The relevant adjustments, as agreed-upon in the agreement, will be added to such amount.

Pursuant to Article Six of the Memorandum of Agreement, the payment of all the obligations when due is conditioned on the ENRE granting an increase in the VAD, which also implies the approval of the payment schedule, independently of the readjustment of the electricity rate.

As regards the credits recognized by the SE, the Company considers them to be vested rights inasmuch as they are not subject to any condition, therefore, the Company recognizes the effects in 2022 fiscal year.

The above-mentioned credits relate to the following concepts :

Concept	Amount (in million)
a) Implementation of policies to benefit the demand (2 bills)	Ps. 9,670
b) Maintenance of electricity rates (1 bill)	Ps. 4,835
c) Investment Plan (0.37 bills)	Ps. 1,802
d) Section 2 Res. 642/22 (1.63 bills)	Ps. 7,867
5 bills	Ps. 24,174

107

Furthermore, on July 28, 2023, the Company and CAMMESA entered into an Agreement on the Regularization of Payment Obligations for the periods between September 1, 2022 and February 28, 2023 (SE Resolutions Nos. 56 and 555/2023), pursuant to which the Company recognizes that it owes CAMMESA a sum of Ps. 26,388 million, which adjusted in accordance with the procedure set forth in SE Resolution No. 56/2023 amounts to Ps. 42,391 million, for the past due periods from September 2022 through February 2023. The Company agrees to pay the aforementioned debt through a new payment plan in 96 installments, with the value of each monthly installment to be adjusted in accordance with the development of the MWh value in effect at each time.

As of December 31, 2023 and 2022, the impact of the aforementioned agreements -those signed on December 29, 2022 and on July 28, 2023, and the one signed on December 29, 2022 (the part relating to the credits recognized by CAMMESA)-, amounts to Ps.197,731 million and Ps.56,479 million, respectively, and is disclosed in the Agreement on the Regularization of Payment Obligations line item of the Statement of Comprehensive Income (Loss). The Payment plan liability, including both financial components accrued, and payments made, amounts to Ps.121,224 million, and is disclosed in the Other payables account of the Statement of Financial Position.

Integral Tariff Revision.

An integral tariff proposal includes, among other factors, a recalculation of the compensation we receive for our distribution services, including taxes that are not currently passed onto our users (such as taxes on financial transactions), a revised analysis of our distribution costs, modifications to our quality of service standards and penalty scheme and, finally, a revision of our asset base and rate of return.

During the year 2016, the Company, guided by the ENRE, complied with all the procedural obligations required to complete a RTI process set forth in the Adjustment Agreement. A RTI process was completed on February 1, 2017, on which date the ENRE issued Resolution No. 63/17 which established a new tariff schedule.

In December 2019, the Executive Power enacted, in the context of the Economic Emergency, Law No. 27,541 on Social Solidarity and Production Reactivation, pursuant to which is authorized to initiate either a renegotiation process of the tariff structure in effect or an extraordinary review. In this context, on December 27, 2019, the ENRE instructed the Company not to apply the electricity rate schedules from January 1, 2020, resulting from the provisions of the Electricity Rate Schedules Maintenance Agreement entered into by and between the Company and the Federal Government on September 19, 2019, as such agreement had lost its applicability due to the electricity rate emergency provided for in the aforementioned law, and the electricity rate schedule that had been approved by ENRE Resolution No. 104/19 dated April 30, 2019 remained in effect.

Additionally, on December 16, 2020, the Executive Branch issued Decree No. 1020/2020 which extended the freeze on electricity rates prescribed by (i) the Productive Reactivation Law (which authorized the Executive Power to maintain electricity tariffs under federal jurisdiction freezed) until March 31, 2021, or until the new transitional electricity rate schedules come into effect, whichever occurs first; and (ii) the Federal Government’s budget for fiscal year 2023 extended until March 2023 the period to complete a new RTI process and through Decree No. 815/2022, it was extended again until December 2023.

108

Within the framework of the transition tariff regime, the Company obtained two transitional tariff adjustments: (i) , through Resolution No. 76/2022, applied the new tariff schedules effective as of March 1, 2022, with an increase in CPD of 8% for Edenor; and (ii) on February 28, 2023, by means of Resolution No. 241/2023, which incorporated a new electricity rate schedule, applicable as from April 1 and June 1, 2023, with the aim of implementing the increase in the value of the consumers’ bills in two tranches.

Decree No. 55/2023 determined the beginning of a new RT process and established that the adoption of a new tariff schedule may not exceed December 31, 2024.

On January 2, 2024, by means of Resolution No. 2/2024, the ENRE called a Public Hearing for January 26, 2024, to make known and hear opinions on the transitional electricity rate system of the distribution companies in charge of the public service of electricity.

In the above-mentioned hearing, the Company’s presentation focused on the following:

- The importance of its customer service role, as it is the link that attends and provides the service to users, while subsidies are only paid to the generation sector.

- The fact that it only receives 29% of the bill it “collects”, with the remaining percentage going to the other WEM participants and to the Federal Government through taxes.

- The insufficient adjustment of the electricity rate, which had once again led to the Company’s not having the necessary funds to pay its debts for energy purchased.

- The fact that the main generation companies of the country have historically recorded positive results and distributed dividends, whereas the Company has not distributed dividends since 2002.

- The substantial increase in the amount of investments earmarked for 2024, should the annual revenue requirement and the request for the automatic monthly adjustment of the transitional electricity rate be approved.

- The commencement of a process for the offsetting of the regulatory assets, the liabilities, and the debt with CAMMESA.

The following table sets forth the relative weight of our distribution margin in our average tariffs per category of user (other than wheeling system, public lighting and shantytown users) in our concession area at the dates indicated. Although the VAD and electric power purchases per category of user are the same, we are subject to different taxes in the Province of Buenos Aires and the City of Buenos Aires.

109

	VAD
Tariff(1)	Nov-01	Jan-05	Feb-07	Oct-08	RES. 1301/12 (2)	RES. 1/16	RES. 92/17 Feb	RES. 92/17 Mar	RES. 603/17 Dec	RES. 33/18 Feb	RES. 208/18 Feb	RES. 25/19 Feb	RES. 27/19 Mar	RES. 104/19 May	RES. 262/21 Aug	RES. 554/22 Nov	RES. 784/23 Nov	RES. 102/24 16Feb	RES. 198/24 Abr
Residential
T1R1 (0-300)	49.40%	44.50%	44.50%	44.58%	11.26%	30.63%	26.60%	19.07%	18.10%	19.99%	16.71%	12.62%	15.86%	15.86%	21.41%	11.38%	16.36%	22.73%	22.73%
T1R2 (301-650)	36.20%	33.00%	33.00%	30.70%	4.80%	15.40%	23.49%	16.54%	15.20%	16.91%	14.01%	10.47%	13.34%	13.34%	19.41%	10.56%	16.12%	23.32%	23.32%
T1R3 (651-800)				31.94%	4.55%	14.48%	26.66%	19.15%	17.74%	19.58%	16.36%	12.34%	15.55%	15.55%	21.55%	11.92%	18.31%	22.49%	22.49%
T1R4 (801-900)				31.51%	4.32%	13.91%	29.46%	21.55%	20.08%	22.07%	18.57%	14.13%	17.69%	17.69%	23.60%	13.23%	20.18%	34.63%	34.63%
T1R5 (901-1000)				32.63%	4.35%	14.04%	33.25%	24.91%	23.42%	25.63%	21.78%	16.79%	20.82%	20.82%	26.29%	15.00%	22.58%	33.81%	33.81%
T1R6 (1001-1200)				26.20%	4.19%	15.98%	37.51%	28.95%	27.52%	29.93%	25.75%	20.18%	24.75%	24.75%	29.59%	17.21%	25.53%	32.81%	37.30%
T1R7 (1201-1400)				27.10%	3.98%	15.25%	41.21%	32.64%	32.80%	38.44%	33.90%	27.52%	34.28%	34.28%	37.70%	23.35%	32.93%	47.69%	45.27%
T1R8 (1401-2800)				25.87%	4.81%	17.83%	45.69%	37.36%	40.50%	46.79%	42.30%	35.64%	40.55%	40.55%	44.28%	28.39%	38.00%	48.90%	48.83%
T1R9 (> 2800)				22.48%	3.84%	14.81%	46.83%	38.62%	39.94%	45.06%	40.52%	33.86%	39.02%	39.02%	43.59%	25.71%	32.62%	39.42%	39.48%
Commercial - small demands
T1G1	55.10%	40.00%	47.80%	48.66%	21.91%	53.18%	53.79%	45.89%	48.82%	49.63%	45.38%	39.58%	45.32%	44.17%	46.11%	24.56%	45.21%	41.92%	41.92%
T1G2	53.60%	31.10%	43.60%	42.47%	15.97%	41.52%	52.94%	44.89%	47.86%	48.54%	44.23%	38.40%	44.08%	42.92%	45.34%	23.88%	44.44%	40.82%	40.82%
T1G3				37.40%	9.13%	26.24%	52.74%	44.65%	47.54%	48.27%	43.94%	38.11%	43.61%	42.45%	44.99%	23.58%	44.09%	40.56%	40.56%
Commercial - medium demand (T2):	43.30%	27.90%	35.50%	37.81%	16.03%	44.80%	74.18%	74.07%	43.55%	43.75%	39.34%	32.08%	37.59%	36.58%	38.90%	20.08%	29.46%	34.51%	34.51%
Industrial:
T3 low voltage below 300kw	44.20%	26.50%	34.30%	37.70%	15.37%	43.74%	46.90%	37.97%	39.76%	39.92%	35.43%	28.19%	33.60%	32.61%	35.18%	17.35%	26.06%	30.49%	30.49%
T3 low voltage over 300kw	42.60%	24.50%	32.10%	27.01%	11.99%	22.80%	23.80%	23.52%	27.24%	29.62%	22.67%	18.43%	23.00%	22.30%	13.90%	9.36%	17.31%	25.85%	25.85%
T3 medium voltage below 300kw	29.30%	14.10%	19.70%	25.12%	8.46%	30.72%	30.38%	22.08%	23.59%	23.63%	19.93%	14.71%	18.53%	17.79%	21.91%	9.23%	14.92%	16.33%	16.33%
T3 medium volgate over 300kw	27.30%	12.30%	17.50%	17.64%	7.09%	14.50%	13.19%	13.00%	15.44%	17.28%	12.42%	9.67%	12.54%	12.09%	8.03%	5.20%	10.26%	14.40%	14.40%
Average Tariff	41.20%	28.50%	33.90%	33.04%	9.57%	28.33%	39.07%	32.45%	32.18%	34.02%	29.12%	23.23%	28.49%	27.48%	28.08%	15.70%	25.07%	31.66%	31.67%

	VAD
Tariff(1)	Nov-01	Jan-05	Feb-07	Oct-08	RES. 1301/12 (2)	RES. 1/16	RES. 92/17 Feb	RES. 92/17 Mar	RES. 603/17 Dec	RES. 33/18 Feb	RES. 208/18 Feb	RES. 25/19 Feb	RES. 27/19 Mar	RES. 104/19 May	RES. 262/21 Aug	RES. 554/22 Nov	RES. 784/23 Nov	RES. 102/24 16Feb	RES. 198/24 Abr
Residential
T1R1 (0-300)	49.40%	44.50%	44.50%	44.58%	11.26%	30.63%	26.60%	19.07%	18.10%	19.99%	16.71%	12.62%	15.86%	15.86%	21.41%	11.38%	16.36%	22.73%	22.73%
T1R2 (301-650)	36.20%	33.00%	33.00%	30.70%	4.80%	15.40%	23.49%	16.54%	15.20%	16.91%	14.01%	10.47%	13.34%	13.34%	19.41%	10.56%	16.12%	23.32%	23.32%
T1R3 (651-800)				31.94%	4.55%	14.48%	26.66%	19.15%	17.74%	19.58%	16.36%	12.34%	15.55%	15.55%	21.55%	11.92%	18.31%	22.49%	22.49%
T1R4 (801-900)				31.51%	4.32%	13.91%	29.46%	21.55%	20.08%	22.07%	18.57%	14.13%	17.69%	17.69%	23.60%	13.23%	20.18%	34.63%	34.63%
T1R5 (901-1000)				32.63%	4.35%	14.04%	33.25%	24.91%	23.42%	25.63%	21.78%	16.79%	20.82%	20.82%	26.29%	15.00%	22.58%	33.81%	33.81%
T1R6 (1001-1200)				26.20%	4.19%	15.98%	37.51%	28.95%	27.52%	29.93%	25.75%	20.18%	24.75%	24.75%	29.59%	17.21%	25.53%	32.81%	37.30%
T1R7 (1201-1400)				27.10%	3.98%	15.25%	41.21%	32.64%	32.80%	38.44%	33.90%	27.52%	34.28%	34.28%	37.70%	23.35%	32.93%	47.69%	45.27%
T1R8 (1401-2800)				25.87%	4.81%	17.83%	45.69%	37.36%	40.50%	46.79%	42.30%	35.64%	40.55%	40.55%	44.28%	28.39%	38.00%	48.90%	48.83%
T1R9 (> 2800)				22.48%	3.84%	14.81%	46.83%	38.62%	39.94%	45.06%	40.52%	33.86%	39.02%	39.02%	43.59%	25.71%	32.62%	39.42%	39.48%
Commercial - small demands
T1G1	55.10%	40.00%	47.80%	48.66%	21.91%	53.18%	53.79%	45.89%	48.82%	49.63%	45.38%	39.58%	45.32%	44.17%	46.11%	24.56%	45.21%	41.92%	41.92%
T1G2	53.60%	31.10%	43.60%	42.47%	15.97%	41.52%	52.94%	44.89%	47.86%	48.54%	44.23%	38.40%	44.08%	42.92%	45.34%	23.88%	44.44%	40.82%	40.82%
T1G3				37.40%	9.13%	26.24%	52.74%	44.65%	47.54%	48.27%	43.94%	38.11%	43.61%	42.45%	44.99%	23.58%	44.09%	40.56%	40.56%
Commercial - medium demand (T2):	43.30%	27.90%	35.50%	37.81%	16.03%	44.80%	74.18%	74.07%	43.55%	43.75%	39.34%	32.08%	37.59%	36.58%	38.90%	20.08%	29.46%	34.51%	34.51%
Industrial:
T3 low voltage below 300kw	44.20%	26.50%	34.30%	37.70%	15.37%	43.74%	46.90%	37.97%	39.76%	39.92%	35.43%	28.19%	33.60%	32.61%	35.18%	17.35%	26.06%	30.49%	30.49%
T3 low voltage over 300kw	42.60%	24.50%	32.10%	27.01%	11.99%	22.80%	23.80%	23.52%	27.24%	29.62%	22.67%	18.43%	23.00%	22.30%	13.90%	9.36%	17.31%	25.85%	25.85%
T3 medium voltage below 300kw	29.30%	14.10%	19.70%	25.12%	8.46%	30.72%	30.38%	22.08%	23.59%	23.63%	19.93%	14.71%	18.53%	17.79%	21.91%	9.23%	14.92%	16.33%	16.33%
T3 medium volgate over 300kw	27.30%	12.30%	17.50%	17.64%	7.09%	14.50%	13.19%	13.00%	15.44%	17.28%	12.42%	9.67%	12.54%	12.09%	8.03%	5.20%	10.26%	14.40%	14.40%
Average Tariff	41.20%	28.50%	33.90%	33.04%	9.57%	28.33%	39.07%	32.45%	32.18%	34.02%	29.12%	23.23%	28.49%	27.48%	28.08%	15.70%	25.07%	31.66%	31.67%

	Average Taxes
Tariff(1)	Nov-01	Jan-05	Feb-07	Oct-08	RES. 1301/12 (2)	RES. 1/16	RES. 92/17 Feb	RES. 92/17 Mar	RES. 603/17 Dec	RES. 33/18 Feb	RES. 208/18 Feb	RES. 25/19 Feb	RES. 27/19 Mar	RES. 104/19 May	RES. 262/21 Aug	RES. 554/22 Nov	RES. 784/23 Nov	RES. 102/24 16Feb	RES. 198/24 Abr
Residential
T1R1 (0-300)	28.70%	28.70%	28.70%	28.70%	28.70%	28.70%	28.70%	28.70%	28.70%	21.83%	21.83%	21.52%	21.52%	21.52%	21.52%	21.52%	21.52%	23.44%	23.44%
T1R2 (301-650)	29.20%	29.20%	29.20%	29.23%	29.23%	29.23%	29.23%	29.23%	29.23%	21.83%	21.83%	21.52%	21.52%	21.52%	21.52%	21.52%	21.52%	23.44%	23.44%
T1R3 (651-800)				29.23%	29.23%	29.23%	29.23%	29.23%	29.23%	21.83%	21.83%	21.52%	21.52%	21.52%	21.52%	21.52%	21.52%	23.44%	23.44%
T1R4 (801-900)				29.23%	29.23%	29.23%	29.23%	29.23%	29.23%	21.83%	21.83%	21.52%	21.52%	21.52%	21.52%	21.52%	21.52%	23.44%	23.44%
T1R5 (901-1000)				29.23%	29.23%	29.23%	29.23%	29.23%	29.23%	21.83%	21.83%	21.52%	21.52%	21.52%	21.52%	21.52%	21.52%	23.44%	23.44%
T1R6 (1001-1200)				29.23%	29.23%	29.23%	29.23%	29.23%	29.23%	21.83%	21.83%	21.52%	21.52%	21.52%	21.52%	21.52%	21.52%	23.44%	23.44%
T1R7 (1201-1400)				29.23%	29.23%	29.23%	29.23%	29.23%	29.23%	21.83%	21.83%	21.52%	21.52%	21.52%	21.52%	21.52%	21.52%	23.44%	23.44%
T1R8 (1401-2800)				29.23%	29.23%	29.23%	29.23%	29.23%	29.23%	21.83%	21.83%	21.52%	21.52%	21.52%	21.52%	21.52%	21.52%	23.44%	23.44%
T1R9 (> 2800)				29.23%	29.23%	29.23%	29.23%	29.23%	29.23%	21.83%	21.83%	21.52%	21.52%	21.52%	21.52%	21.52%	21.52%	23.44%	23.44%
Commercial - small demands
T1G1	25.70%	25.70%	25.70%	25.68%	25.68%	25.68%	25.68%	25.68%	25.68%	21.83%	21.83%	21.52%	21.52%	21.52%	21.52%	21.52%	21.52%	23.44%	23.44%
T1G2	25.60%	25.60%	25.60%	25.64%	25.64%	25.64%	25.64%	25.64%	25.64%	21.83%	21.83%	21.52%	21.52%	21.52%	21.52%	21.52%	21.52%	23.44%	23.44%
T1G3				25.63%	25.63%	25.63%	25.63%	25.63%	25.63%	21.83%	21.83%	21.52%	21.52%	21.52%	21.52%	21.52%	21.52%	23.44%	23.44%
Commercial - medium demand (T2):	25.60%	25.60%	25.60%	25.63%	25.63%	25.63%	25.63%	25.63%	25.63%	25.05%	25.05%	25.05%	25.05%	25.05%	25.05%	25.05%	25.05%	25.49%	25.49%
Industrial:
T3 low voltage below 300kw	25.70%	25.70%	25.70%	25.66%	25.66%	25.66%	25.66%	25.66%	25.66%	25.05%	25.05%	25.05%	25.05%	25.05%	25.05%	25.05%	25.05%	25.49%	25.49%
T3 low voltage over 300kw	25.60%	25.60%	25.60%	25.62%	25.62%	25.62%	25.62%	25.62%	25.62%	25.05%	25.05%	25.05%	25.05%	25.05%	25.05%	25.05%	25.05%	25.49%	25.49%
T3 medium voltage below 300kw	25.70%	25.70%	25.70%	25.68%	25.68%	25.68%	25.68%	25.68%	25.68%	25.05%	25.05%	25.05%	25.05%	25.05%	25.05%	25.05%	25.05%	25.49%	25.49%
T3 medium volgate over 300kw	25.70%	25.70%	25.70%	25.69%	25.69%	25.69%	25.69%	25.69%	25.69%	25.05%	25.05%	25.05%	25.05%	25.05%	25.05%	25.05%	25.05%	25.49%	25.49%
Average Tariff	27.20%	27.20%	27.20%	27.24%	27.24%	27.24%	27.24%	27.24%	27.24%	23.63%	23.64%	23.47%	22.75%	24.14%	23.72%	23.72%	23.72%	24.70%	24.70%

110

	Electric Power Purchases
Tariff(1)	Nov-01	Jan-05	Feb-07	Oct-08	RES. 1301/12 (2)	RES. 1/16	RES. 92/17 Feb	RES. 92/17 Mar	RES. 603/17 Dec	RES. 33/18 Feb	RES. 208/18 Feb	RES. 25/19 Feb	RES. 27/19 Mar	RES. 104/19 May	RES. 262/21 Aug	RES. 554/22 Nov	RES. 784/23 Nov	RES. 102/24 16Feb	RES. 198/24 Abr
Residential
T1R1 (0-300)	21.90%	26.80%	26.80%	26.55%	60.00%	40.65%	44.71%	52.23%	53.20%	58.18%	61.46%	65.86%	62.62%	62.62%	57.07%	67.11%	62.12%	53.83%	53.83%
T1R2 (301-650)	34.60%	37.80%	37.80%	39.81%	65.91%	55.33%	47.28%	54.23%	55.57%	61.25%	64.15%	68.01%	65.15%	65.15%	59.07%	67.92%	62.36%	53.24%	53.24%
T1R3 (651-800)				38.51%	66.15%	56.23%	44.11%	51.61%	53.02%	58.59%	61.81%	66.15%	62.93%	62.93%	56.93%	66.57%	60.17%	54.07%	54.07%
T1R4 (801-900)				38.98%	66.39%	56.81%	41.30%	49.22%	50.68%	56.09%	59.60%	64.35%	60.79%	60.79%	54.88%	65.26%	58.30%	41.93%	41.93%
T1R5 (901-1000)				37.88%	66.37%	56.69%	37.51%	45.86%	47.34%	52.54%	56.39%	61.69%	57.66%	57.66%	52.19%	63.49%	55.91%	42.75%	42.75%
T1R6 (1001-1200)				44.32%	66.51%	54.73%	33.26%	41.81%	43.25%	48.24%	52.42%	58.30%	53.74%	53.74%	48.89%	61.27%	52.95%	43.75%	39.26%
T1R7 (1201-1400)				43.46%	66.73%	55.47%	29.55%	38.13%	37.96%	39.73%	44.27%	50.96%	44.21%	44.21%	40.78%	55.13%	45.55%	28.87%	31.29%
T1R8 (1401-2800)				44.70%	65.89%	52.88%	25.08%	33.40%	30.27%	31.38%	35.86%	42.85%	37.93%	37.93%	34.20%	50.10%	40.48%	27.66%	27.73%
T1R9 (> 2800)				48.20%	66.88%	55.92%	23.93%	32.15%	30.83%	33.11%	37.64%	44.62%	39.47%	39.47%	34.89%	52.77%	45.87%	37.14%	37.08%
Commercial - small demands
T1G1	19.20%	34.30%	26.50%	25.50%	52.34%	21.11%	20.53%	28.43%	25.50%	28.54%	32.79%	38.90%	33.16%	34.31%	32.37%	53.92%	33.27%	34.64%	34.64%
T1G2	20.70%	43.20%	30.70%	32.04%	58.29%	32.79%	21.42%	29.47%	26.50%	29.63%	33.93%	40.09%	34.40%	35.56%	33.14%	54.60%	34.05%	35.74%	35.74%
T1G3				37.57%	65.12%	48.04%	21.63%	29.71%	26.82%	29.90%	34.22%	40.37%	34.88%	36.03%	33.49%	54.90%	34.39%	36.00%	36.00%
Commercial - medium demand (T2):	31.00%	46.40%	38.90%	36.12%	58.15%	29.47%	0.18%	0.29%	30.81%	31.20%	35.62%	42.87%	37.36%	38.38%	36.06%	54.87%	45.50%	40.00%	40.00%
Industrial:
T3 low voltage below 300kw	30.10%	47.80%	40.10%	36.32%	58.84%	30.53%	27.44%	36.36%	34.58%	35.04%	39.53%	46.76%	41.35%	42.34%	39.77%	57.60%	48.89%	44.01%	44.01%
T3 low voltage over 300kw	31.80%	49.90%	42.30%	47.14%	62.29%	51.55%	50.58%	50.86%	47.14%	45.33%	52.28%	56.53%	51.96%	52.66%	61.05%	65.59%	57.65%	48.66%	48.66%
T3 medium voltage below 300kw	45.00%	60.30%	54.60%	48.81%	65.73%	43.51%	43.94%	52.24%	50.73%	51.32%	55.02%	60.25%	56.42%	57.16%	53.05%	65.73%	60.04%	58.18%	58.18%
T3 medium volgate over 300kw	47.00%	62.00%	56.80%	56.40%	67.11%	59.77%	61.11%	61.31%	58.87%	57.68%	62.53%	65.28%	62.41%	62.86%	66.93%	69.75%	64.69%	60.10%	60.10%
Average Tariff	31.50%	44.20%	38.90%	39.47%	63.10%	44.38%	33.70%	40.31%	40.58%	42.35%	47.24%	53.30%	48.76%	48.38%	48.20%	60.58%	51.21%	43.65%	43.63%

(1) T1R1 refers to residential users whose peak capacity demand is less than 10 kW and whose bimonthly energy demand is less than or equal to 300 KWh. T1R2 refers to residential users whose peak capacity demand is less than 10 kW and whose bimonthly energy demand is greater than 300 KWh but less than 800 KWh. TIR3 refers to residential users whose peak capacity demand is less than 10 kW and whose bimonthly energy demand is greater than 800 KWh but less than 1000 KWh. TIR4 refers to residential users whose peak capacity demand is less than 10 kW and whose bimonthly energy demand is greater than 1000 KWh but less than 1200 KWh. TIR5 refers to residential users whose peak capacity demand is less than 10 kW and whose bimonthly energy demand is greater than 1200KWh but less than 1,400 KWh TIR6 refers to residential users whose peak capacity demand is less than 10 kW and whose bimonthly energy demand is greater than 1,400 KWh. T1G1 refers to commercial users whose peak capacity demand is less than 10kW and whose bimonthly energy demand is less than or equal to 1600 KWh. T1G2 refers to commercial users whose peak capacity demand is less than 10 kW and whose bimonthly energy demand is greater than 1600 KWh but less than 4,000 KWh. T1G3 refers to commercial users whose peak capacity demand is greater than 4,000 KWh. T2 refers to commercial users whose peak capacity demand is greater than 10 kW but less than 50 KW. T3 refers to users whose peak capacity demand is equal to or greater than 50 kW. The T3 category is applied to high-demand users according to the voltage (tension) at which each user is connected. Low tension is defined as voltage less than or equal to 1 kV and medium tension is defined as voltage greater than 1kV but less than 66 kV.

(2) On November 7, 2011, the SE issued Resolution No. 1,301/11, which established the summer scheduling, eliminating the Argentine Government grants to certain economic activities, which, in accordance with the provisions of the Resolution, are in conditions to pay the actual cost that needs to be incurred for being supplied with their demand of electricity. The removal of the Argentine Government grants has been extended to residential users, who were classified by geographical areas and type of residence. The modification related only to electricity purchase prices in the Wholesale Electricity Market, for which reason the Company’s VAD (value added for distribution) remained almost unchanged.

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Social Tariff Regime.

According to the Adjustment Agreement, we are required to apply a social tariff regime as part of our revised tariff structure resulting from the RTI. This regime is a system of subsidized tariffs for the sectors of the community to be approved by the ENRE in the context of the RTI. The social tariff regime provides sectors of the community with the same service and quality of service as other users. The beneficiaries under this regime must register with the Argentine Government and meet certain criteria, including not owning more than one home and having a level of electricity consumption that is not higher than the limit established by the Argentine Government.

In January 2016, pursuant to ME&M’s Resolution No. 6/16, the Argentine Government introduced a social tariff for residential users who comply with certain consumption requirements, which includes a full exemption for monthly consumptions below or equal to 150 KWh and preferential tariffs for users who exceed such consumption level but achieve a monthly consumption lower than that of the same period in the immediately preceding year.

Pursuant to Resolution No. 63/17, the ENRE ratified this measure, maintaining the zero cost modality for monthly consumptions below or equal to 150 KWh and preferential tariffs for consumption that exceeds such level, updating the values in accordance with the new tariff scheme.

Resolution No 603/17 determined a new methodology for social tariff. It established: (1) a 100% discount in the stabilized price of energy for monthly consumptions below or equal to 150 KWh (base consumption); for the monthly consumption above the base consumption, (2) a 50% discount in the stabilized price of energy for the monthly consumptions below or equal 150 KWh; and (3) non-discount for the rest of the surplus consumption. Moreover, a scheme of maximum percentages was established in social tariff user’s invoices with respect to what would be paid, before taxes, by residential users of equal consumption.

On December 27, 2018, SE Resolution 1091/17 was repealed, thus eliminating the energy-savings discount for the residential tariff charged to customers framed or not under the social tariff as from January 1, 2019. The social tariff discounts were assumed by the Governments of the Province of Buenos Aires and the City of Buenos Aires in accordance with the provisions of the 2019 Federal Budget of Expenditures and Resources Law.

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Demand

Energy demand depends to a significant extent on economic and political conditions prevailing from time to time in Argentina, as well as seasonal factors. In general, the demand for electricity varies depending on the performance of the Argentine economy, as businesses and individuals generally consume more energy and are better able to pay their bills during periods of economic stability or growth. As a result, energy demand is affected by Argentine Governmental actions concerning the economy, including with respect to inflation, interest rates, price controls, foreign exchange controls, taxes and energy tariffs.

In addition, energy demand fluctuates on a seasonal basis. Climate change and, in particular, high extreme temperatures generate higher demand. We seek to contribute to the fight against climate change by promoting the development, promotion and diffusion of new technologies, environmental awareness, and energy efficiency.

The following table sets forth the amount of electricity generated in Argentina and our electricity purchases in each of the periods indicated.

	Electricity demand in Gwh(1)	Edenor demand in Gwh(2)	Edenor’s demand as % of total demand
2013	125,239	24,902	19.9%
2014	126,467	24,860	19.7%
2015	132,110	26,322	19.9%
2016	133,111	26,838	20.2%
2017	132,530	25,950	19.6%
2018	133,010	25,906	19.5%
2019	128,946	24,960	19.4%
2020	127,307	25,124	19.7%
2021	133,877	26,373	19.7%
2022	138,775	27,158	19.6%
2023	140,883	27,676	19.6%

Source: CAMMESA

(1) Includes demand in the Mercado Eléctrico Mayorista Sistema Patagónico (Patagonia Wholesale Electricity Market, or WEMSP).

(2) Calculated as electricity purchased by us and our wheeling system users.

In 2023, the demand of electricity amounted to 27,676 GWh, which represented a 2% increase as compared to 2022, whereas the WEM’s demand amounted to 140,883 GWh (+1.5% interannual). The variation in Edenor’s demand was mainly due to temperature, elasticity, and the level of the economic activity.

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Capacity demand

As of December 31, 2023, the electricity demand was covered as follows: 49% (thermal), 27% (hydro); 4% (imports); 6% (nuclear) and 14% (renewable).

Furthermore, the dispatch of nuclear-generated power decreased slightly as compared to its historical values due to extended maintenance activities at Atucha II Nuclear Power Generation Plant.

As compared to the previous year, the consumption of fuel oil increased 16.9%, whereas that of diesel fuel and mineral coal decreased by 72.3% and 33%, respectively. Furthermore, the consumption of natural gas for electric power generation recorded a slight decrease (1.8% as compared to 2022). It is worth pointing out that after the coming into service, as from September 2023, of the GPNK (Gasoducto Presidente Néstor Kirchner) gas pipeline, almost all the natural gas for electric power generation (99.5%) is of national origin, with daily shortages being supplied with LNG and without the need to purchase gas from Bolivia (as in prior years); a situation which is expected to continue over the next year.

Seasonality of Demand

Seasonality has a significant impact on the demand for electricity in our concession area, with electricity consumption peaks in summer and winter. The impact of seasonal changes in demand is registered primarily in our residential and small commercial user categories. The seasonal changes in demand are attributable to the impact of various climatological factors, including weather and the amount of daylight time, on the usage of lights, heating systems and air conditioners.

The impact of seasonality on industrial demand for electricity is less pronounced than on the residential and commercial sectors, primarily because different types of industrial activity by their nature have different seasonal peaks, such that the climatic effect is more varied.

The chart below shows seasonality of demand in Edenor’s residential user category for the periods indicated.

The chart below shows seasonality of demand in Edenor’s small commercial user category for the periods indicated.

 

The chart below shows seasonality of demand in Edenor’s medium commercial user category for the periods indicated.

 

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The chart below shows seasonality of demand in Edenor’s industrial user category for the periods indicated.

 

Taxes on Electricity Tariffs

Sales of electricity within our service area are subject to certain taxes, levies and charges at the federal, provincial and municipal levels. These taxes vary according to location and type of user. In general, residential and governmental users are subject to a lower tax rate than commercial and industrial users. Similarly, taxes are typically higher in the Province of Buenos Aires than in the City of Buenos Aires. All of these taxes are billed to our users along with electricity charges.

Framework Agreement (Shantytowns)

Since 1994, we have supplied electricity to low-income areas and shantytowns within our concession area under a special regime established pursuant to a series of framework agreements. For a discussion of these agreements and our ongoing negotiations to extend the most recent framework agreement, see “Item 4. Information on the Company—Operating Results— Edenor’s Capital expenditures (Shantytowns).”

Operating Expenses

Our most significant operating expenses are transmission and distribution expenses, which include depreciation charges, salaries and social security taxes, outsourcing, fines and penalties, and purchases of materials and supplies, among others.

We seek to maintain a flexible cost base by achieving an optimal level of outsourcing, which allows us to respond more quickly to changes in our market. We had 4,635 employees and contracts with third-party services companies that count with 6,647 employees as of December 31, 2023. See “Item 6. Directors, Senior Management and Employees—Employees.”

Our principal material and supply expenses consist of purchases of wire and transformers (i.e., electromagnetic devices used to change the voltage level of alternating-current electricity), which we use to maintain our network.

Summary of Historical Results of Operations

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On May 10, 2019, Edenor and the SE, on behalf of the Federal Government, entered into the Agreement on the Regularization of Obligations, putting end to the mutual pending claims originated in the 2006-2016 transition period, pursuant to which the Company (i) waived any rights to which it could be entitled and abandoned any actions against the Federal Government, including the complaint filed by Edenor in 2013 for failure to comply with the obligations resulting from the Adjustment Agreement entered into on February 13, 2006; (ii) bound itself to settle debts for works and loans for consumption (“mutuums”) originated in the transition period; (iii) undertook to pay users certain penalty and compensation amounts related to that period; and (iv) agreed to make investments, in addition to those agreed upon in the RTI, aimed at contributing to improving the reliability and safety of the service. In return, the Federal Government partially recognized the claim duly made by the Company -referred to in (i) above-, by fully offsetting pending obligations with the WEM for electric power purchases made during the transition period, partially cancelling the mutuums for investments granted by CAMMESA also during that period and cancelling penalties payable to the National Treasury.

On September 19, 2019 Edenor and Edesur entered into the Electricity Rate Schedules Maintenance Agreement with the Federal Government, pursuant to which the Federal Government instructed the ENRE to maintain, during the six-month period commenced on August 1, 2019, the electricity rate schedule that was in effect prior to the commencement of such period for all electricity rate categories. The distribution companies accepted that the CPD adjustment, effective as from August 1, 2019, would be applied up to a maximum amount equivalent to that collected by the holders of the concession during the previous six-month period as recovery of the previous six-month period deferral, plus the adjustments that could arise. The CPD value, with the half-yearly adjustment due as of July 31, 2019, would become effective as from January 1, 2020. The generated difference of the CPD would be recovered in seven monthly installments as from January 1, 2020. Furthermore, the distribution companies accepted that the update of the electricity rate schedule in relation to the seasonal prices of energy would take place as from January 1, 2020, and that the difference generated between seasonal prices would be recovered in 7 installments as from January 1, 2020. In the framework of the agreement, the parties also agreed to postpone the payment of any penalty until March 1, 2020.

On December 27, 2019, the ENRE instructed Edenor not to apply the electricity rate schedules resulting from the provisions of the Electricity Rate Schedules Maintenance Agreement, as such agreement lost its applicability due to the electricity rate emergency provided for in Productive Reactivation Law; therefore, the electricity rate schedule that had been applied since May 1, 2019 came back into effect.

By means of the Productive Reactivation Law, regulated by Decrees No. 58 and 99/19, the Federal Executive Power declared the state of emergency in economic, financial, fiscal, administrative, pension, tariff, energy, sanitary, and social matters. Additionally, the Federal Executive Power was authorized both to maintain the electricity and natural gas rates under federal jurisdiction and to initiate either a renegotiation process of the RTI in effect or an extraordinary review, in a maximum term of 180 days, until December 31, 2020, with the aim of reducing the real burden on households, shops and industries for 2020. The provinces were invited to adhere to these policies on the maintenance of rate schedules and renegotiation or extraordinary review of rates in their jurisdictions. Said intervention was extended on December 17, 2020 by means of Decree No. 1020/20, until December 31, 2021, or until the tariff review process is concluded, whichever occurs first.

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In 2020, the Company made different presentations to the ENRE with the estimates of the electricity rate schedules that were to be applied during 2020, according to the terms of the Electricity Rate Schedules Maintenance Agreement entered between the Company and the Federal Government. However, the ENRE has instructed the Company not to apply them, in accordance with Productive Reactivation Law.

On December 16, 2020, by means of Decree No. 1020/20, the Argentine Executive Power provided for the commencement of the RTI renegotiation process, which may not exceed two years, suspending until then the agreements relating to the respective RTI in effect, with the scope to be determined in each case by the regulatory authorities. It is provided that interim renegotiation agreements may be entered into, which modify to a limited extent the particular conditions of the tariff review imposing a Transitional Tariff System until a definitive renegotiation agreement is reached.

On March 5, 2021, by means of Resolution No. 53/2021, the ENRE called a Public Hearing to make known and listen to opinions on the distribution companies’ Transitional Tariff System, with such Public Hearing being held in the framework of the RTI Process and prior to defining the electricity rates to be applied by the referred to concession holders. On March 30, Edenor made a presentation at the Public Hearing to discuss the transitional tariff adjustment of the Distribution, including revenue requirements and a new tariff structure proposal to cover the public service expenses and investment needs. 

Moreover, on April 30, 2021, by means of Resolution No. 107/2021, and in the context of the transitional tariff system, the ENRE authorized the application of a new electricity rate schedule, effective as from May 1, 2021, representing a 9% increase. In view of the fact that such increase did not cover the increase requested by Edenor, on June 15, 2021, an administrative appeal was filed against such resolution.

On August 10, 2021, by means of Resolutions Nos. 262 and 265/2021, the ENRE approved an increase for large users whose power consumption is equal to or greater than 300 kW, effective as from the billing relating to the reading of meters subsequent to 12:00 AM on August 1, 2021. Both resolutions were appealed to the SE by Edenor because the values of the electricity rate schedule in effect provided by the ENRE did not take into consideration ex-post adjustments, the recognition of taxes and fees, the pass-through differences arising from non-transferred increases in the seasonal price, or the pending adjustments of the Company’s CPD. Moreover, neither the transitional system to supplement the required revenue, as provided for by Executive Order No. 1020/2021, nor the differences resulting from a lower than expected demand, requested by Edenor, had been established. Both appeals are in process at the closing date of these annual report.

Finally, by means of Resolution No. 25/2022, the ENRE called for a public hearing to be held on February 17, 2022 to hear opinions on the following:

· the treatment for the determination of power PRP and SPE in the WEM; and

· the distribution companies’ proposals aimed at obtaining a transitional adjustment of rates, with such public hearing to be held within the RTI renegotiation process and prior to defining the electricity rates to be applied by concession holders.

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In the context of the transitional tariff regime, on February 25, 2022, the ENRE, through Resolution No. 76/2022 applied the new tariff schedules effective as of March 1, 2022, incorporating the new seasonal prices set forth by Resolution SE No. 105 of the SE, which established an average increase for carriers of 20% and an increase in CPD of 8% for Edenor.

In line with the foregoing, on June 16, 2022, by means of Executive Order No. 332/2022, the PEN established the rate segmentation system. Subsequently, by means of Resolution No. 467 dated June 27, 2022, the SE, as the regulatory authority, instructed the Undersecretariat of Energy Planning to implement the aforementioned segmentation, which was carried out by means of Directive No. 1 dated June 28, 2022.

Furthermore, on November 14, 2022, by means of Resolution No. 576/2022, the ENRE called a public hearing for January 23, 2023, to make known and hear opinions on the proposals aimed at obtaining a transitional adjustment of the electricity rate, with such public hearing being held in the framework of the RTI renegotiation process and prior to defining the electricity rates to be applied by the concession holders.

In the above-mentioned hearing, the Company stated its position on the imbalances of the electricity rate as compared to that of other concession holders outside the greater Buenos Aires metropolitan area and as compared to other essential services, putting an emphasis on the opportunity to correct these imbalances and committing itself to maintain the level of investments necessary to maintain the operation of the network.

On February 17, 2023, the SE instructed the ENRE to apply to the electricity rates increase in the VAD, stating that the transitional electricity rate adjustment was to take place on or prior to March 1, 2023. Accordingly, on February 28, 2023, by means of Resolution No. 241/2023, the ENRE approved the new electricity rate schedules, applicable as from April 1 and June 1, 2023, with the aim of implementing the increase in the value of the consumers’ bills in two tranches, which represented an increase in CPD of 107.8% and 73,7%, respectively.

On April 25, 2023, pursuant to Resolution No. 363/2023, the ENRE resolved to commence as of June 1, 2023 the Tariff Structure Review (RTI) Process for electricity distribution companies under national jurisdiction, in accordance with the provisions of Law No. 24,065 and Law No. 27,541 on Social Solidarity and Productive Reactivation in the Framework of the Public Emergency, as amended and supplemented. In this regard, through ENRE Resolution No. 422/2023, the Tariff Structure Review program for 2023 and the first quarter of 2024 was approved.

Furthermore, on December 16, 2023, the Federal Government, through Executive Order No. 55/2023, declared the emergency of the National Energy Sector -including the electricity distribution segment- until December 31, 2024, and provided for the following:

- The implementation by the SE of a program of necessary and indispensable measures in order to establish the mechanisms for setting prices under conditions of competition and free access, maintain, in real terms, income levels and cover investment needs to ensure the continuous provision of the public services of electricity transmission and distribution under appropriate technical and economic conditions, both for the providers and all user categories.

- The commencement of the RT for the providers of the public services of electricity transmission and distribution under federal jurisdiction and the resulting electricity rate schedules shall come into effect not later than December 31, 2024.

- The intervention of the ENRE from January 1, 2024 until the appointment of the members comprising the Board of Directors.

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- The implementation of mechanisms allowing for citizen participation in the transitional rate adjustment process.

On January 2, 2024, through Resolution No. 2/2024, the ENRE called a Public Hearing for January 26, 2024, to make known and listen to opinions on the transitional electricity rate system of the distribution companies in charge of the public service of electricity.

On February 15, 2024, through Resolution No. 102/2024, the ENRE approved the values of the Company’s electricity rate schedule effective from the billing was as of February 16, 2024.

In view of the National Energy Sector emergency declared by Executive Order No. 55/2023 and the Public Hearing held on January 26, 2024, the approval of ENRE Resolution No. 102/2024 implied the readjustment of the Company’s electricity rate through the granting of a 319.2% increase in the CPD, with the aim of reducing the Federal Government’s transfers to the electricity sector and promoting a sustainable economic balance. The “correction” of electricity rates is essential for restoring relative prices in the economy, ensuring the economic self-sufficiency of the electricity system and laying the foundations to promote private investment.

With regard to the foregoing, it is provided that the electricity rate set in the aforementioned resolution will be temporarily in effect for a term of one year and will be adjusted on a monthly basis as from May 2024, so as to maintain its real value, by means of an adjustment mechanism of the CPD that will take into consideration the Consumer Price Index (CPI), the Wholesale Price Index (WPI), and the Salary Variation Index prepared by the INDEC.

The main consequence of the lack of recognition of additional revenue to face increasing costs as described in the preceding sections has been Edenor’s inability to comply, in due time and in proper form, with payments to CAMMESA for energy purchases in the WEM. Argentina’s National Congress, recognizing this situation, approved within the Federal Government’s budget for fiscal year 2021 the offsetting of such debts through “Special system for the settlement of debts” with CAMMESA as set forth in Section 87 of Law 27,591.

In this regard, by means of Executive Order No. 990/20, the 2021 Budget Law was partially approved. In its Section 87, the law provides for a system for the settlement of debts with CAMMESA and/or the WEM accumulated by electricity distribution companies as of September 30, 2020, whether on account of the consumption of energy, power, interest and/or penalties, in accordance with the conditions to be set out by the regulatory authority, which may provide for credits equivalent to up to five times the monthly average bill or to 66% of the existing debt, whereas the remaining debt is to be paid in up to sixty monthly installments, with a grace period of up to six months, and at the rate in effect in the WEM, reduced by 50%.

On December 29, 2022, and following the guidelines set forth in both the Federal Government’s budget for fiscal year 2021 and 2022, section 87 of Law No. 27,591, Resolution SE No. 40/2021 and Decree No. 88/2022 concerning the “Special system for the settlement of debts”, the Company, the Federal Government, the ENRE and CAMMESA signed the 2022 Agreement pursuant to which the Company recognizes to owe CAMMESA a sum of Ps. 57,159 million, for the periods from September 2020 to August 2022. Furthermore, the SE recognized a credit in favor of the Company in the amount of Ps. 24,174 million (at nominal values).

Consequently, once the aforementioned credits have been deducted, the Company agrees to pay a debt of Ps.32,985 million to be paid under a payment plan in 96 progressively increasing installments, with a six-month grace period and at the rate in effect in the WEM, reduced by 50%. The relevant adjustments, as agreed-upon in the agreement, will be added to such amount.

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Pursuant to Section 6 of the 2022 Agreement, the granting by the ENRE of an increase in the VAD was a condition precedent to the payment of all the obligations when due. On March 1, 2023, Resolution ENRE N° 241/2023 authorized an increase of 107,8% and 73,7% of VAD as from April and June, respectively.

On July 27, 2023, the SE instructed CAMMESA to define the payment plan in accordance with the methodologies set forth therein. In this regard, on July 31, 2023, CAMMESA agreed to the payment plan by means of Note B-168538-1. The Company has recognized that it owes a sum of Ps.32,985 million, which adjusted in accordance with the established procedures amounts to Ps.52,276 million.

Furthermore, on July 28, 2023, the Company and CAMMESA entered into an Agreement on the Regularization of Payment Obligations for the periods between September 1, 2022 and February 28, 2023 (SE Resolutions Nos. 56 and 555/2023), pursuant to which the Company recognizes that it owes CAMMESA a sum of Ps. 26,388 million, which adjusted in accordance with the procedure set forth in SE Resolution No. 56/2023 amounts to Ps.42,391 million, for the past due periods from September 2022 through February 2023. The Company agrees to pay the aforementioned debt through a new payment plan in 96 installments, with the value of each monthly installment to be adjusted in accordance with the development of the MWh value in effect at each time.

As of December 31, 2023 and 2022, the impact of the aforementioned agreements -those signed on December 29, 2022 and on July 28, 2023, and the one signed on December 29, 2022 (the part relating to the credits recognized by CAMMESA)-, amounts to Ps.197,731 million and Ps.56,479 million, respectively, and is disclosed in the Agreement on the Regularization of Payment Obligations line item of the Statement of Comprehensive Income (Loss).

At the date of issuance of this annual report, the Company has delivered post-dated checks for Ps.5,022 million to pay the first ten installments with maturities from August 2023 through January 2024.

The following table provides a summary of our operations for the years ended December 31, 2023 and 2022.

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Statement of comprehensive income (loss)
	2023	2022
	Ps.	Ps.
Revenue   (1)	701,098	640,994
Electric power purchases	(458,944)	(446,030)
Subtotal	242,154	194,964
Transmission and distribution expenses	(214,428)	(171,625)
Gross margin	27,726	23,339
Selling expenses	(82,764)	(73,717)
Administrative expenses	(69,122)	(55,598)
Other operating income	25,335	32,412
Other operating expense	(20,951)	(23,730)
(Loss) Income from interest in joint ventures	(10)	(17)
Operating result	(119,786)	(97,311)
Agreement on the Regularization of Obligations	197,731	56,479
Financial income	367	203
Finance costs	(319,435)	(273,335)
Other financial results	(31,286)	(4,452)
Net finance costs	(350,354)	(277,584)
Monetary gain (RECPAM)	454,589	310,205
Gain (Loss) before taxes	182,180	(8,211)
Income tax	(133,809)	(46,187)
Gain (Loss) for the year	48,371	(54,398)
Gain (Loss) for the year attributable to:
Owners of the parent	48,371	(54,398)
Gain (Loss) for the year	48,371	(54,398)
Other comprehensive  (loss) income
Items that will not be reclassified to profit or loss
Results related to benefit plans	(1,447)	(2,037)
Tax effect of actuarial results on benefit plans	507	713
Total other comprehensive results	(940)	(1,324)
Comprehensive income (loss)  for the year attributable to:
Owners of the parent	47,431	(55,722)
Comprehensive (loss) profit for the year	47,431	(55,722)
Basic and diluted gain (loss) per share:
Gain (Loss) per share (argentine pesos per share)	55.28	(62.2)
Basic and diluted profit (loss)  per ADS (2):
earnings (Loss)  per ADS (argentine pesos per ADS)	1,105.6	(1,243.4)

(1) Revenue from operations is recognized on an accrual basis and derives mainly from electricity distribution. Such revenue includes electricity supplied, whether billed or unbilled, at the end of each year.

(2) Each ADS represents 20 Class B common shares.

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Year Ended December 31, 2023 compared with Year Ended December 31, 2022.

Revenue from sales

Revenue from sales increased by 9%, to Ps.701,098 million for the year ended December 31, 2023, from Ps.640,994 million for the year ended December 31, 2022. This increase was mainly due to tariff updates, which implied a CPD increase of 107.8% in April 2023, and 73.7% in June 2023, in addition to the increases in seasonal purchase prices.

​Electric Power Purchases

The amount of electric power purchases increased by 3%, to Ps.458,994 million for the year ended December 31, 2023, from Ps.446,030 million for the year ended December 31, 2022. This increase was mainly due to the effect of the changes in the seasonal prices. The energy demand had an increase of 2% in GWh and energy losses a decrease of around 6%, as compared to 2022.

Our volume of electric power purchases for the year ended December 31, 2023 amounted to 27,676 GWh, which represented a 2% increase in demand as compared to 2022.

Energy losses slightly decreased to 14.9% for the year ended December 31, 2023, compared to 15.9% for the year ended December 31, 2022 due to the energy recovery actions carried out by the Company. For more information, see “Item 5. Operating and Financial Review and Prospects—Operating Results—Tariffs—Recognition of Cost of Energy Losses”.

Transmission and Distribution Expenses

Transmission and distribution expenses increased by 24.9% to Ps.214,428 million for the year ended December 31, 2023, compared to Ps.171,625 million for the year ended December 31, 2022. This increase was mainly due to an increase in fees and remuneration for services and a depreciation of property, plant and equipment due to an increase in costs because of the inflationary context and the investments made, respectively.

As a percentage of revenue from sales, transmission and distribution expenses increased to 30.6% for the year ended December 31, 2023, from 26.9% for the year ended December 31, 2022, due to the increase in costs because of inflation, as well as the insufficient tariffs increase.

The following table sets forth the principal components of our transmission and distribution expenses for the years indicated.

	Year ended December 31,
	2023		% of 2023	2022		% of 2022
			net sales			net sales
Salaries and social security taxes	76,213	35.5%	10.9%	70,230	40.9%	11.0%
Supplies consumption	10,316	4.8%	1.5%	10,145	5.9%	1.6%
Fees and remuneration for services	49,005	22.9%	7.0%	31,903	18.6%	5.0%
Depreciation of property, plant and equipment	65,094	30.4%	9.3%	44,566	26.0%	7.0%
ENRE penalties	5,898	2.8%	0.8%	6,432	3.7%	1.0%
Others	7,902	3.6%	1.1%	8,349	4.8%	1.3%
Total	214,428	100%	30.6%	171,625	100%	26.9%

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Gross profit

Our gross profit, including transmission and distribution expenses, increased to Ps.27,726 million for the year ended December 31, 2023, from Ps.23,339 million for the year ended December 31, 2022. This decrease was mainly due to the CPD increase, as mentioned above.

Selling Expenses

Our selling expenses are related to user services provided at our commercial offices, billing, invoice mailing, collection and collection procedures, as well as allowances for doubtful accounts.

Selling expenses increased by 12.3% to Ps.82,764 million for the year ended December 31, 2023, from Ps.73,717 million for the year ended December 31, 2022. This increase was mainly due to an increase in ENRE penalties, and depreciation of property, plant and equipment.

Selling expenses represented 11.8% and 11.5% of net sales in the years ended December 31, 2023 and 2022, respectively, due to the increase in selling expenses in 2023, as described in the previous paragraph.

The following table sets forth the principal components of our selling expenses for the years indicated.

	Year ended December 31,
	2023		% of 2023	2022		% of 2022
			net sales			net sales
Salaries and social security taxes	10,521	12.7%	1.5%	10,509	14.3%	1.6%
Allowance for the impairment of trade and other receivables	6,662	8.0%	1.0%	6,847	9.3%	1.1%
Depreciation of property, plant and equipment	9,700	11.7%	1.4%	6,641	9.0%	1.0%
Fees and remuneration for services	18,882	22.8%	2.7%	17,875	24.2%	2.8%
ENRE penalties	12,749	15.4%	1.8%	8,728	11.8%	1.4%
Taxes and charges	10,729	13.0%	1.5%	10,051	13.6%	1.6%
Public relations and marketing	6,646	8.0%	0.9%	5,905	8.0%	0.9%
Others	6,875	8.3%	1.0%	7,161	9.7%	1.1%
Total	82,764	100%	11.8%	73,717	100%	11.5%

Administrative Expenses

Our administrative expenses include, among others, expenses associated with accounting, payroll administration, personnel training, systems operation third-party services and taxes.

Administrative expenses increased by 24.3%, to Ps.69,122 million for the year ended December 31, 2023, from Ps.55,598 million for the year ended December 31, 2022. This increase was mainly due to an increase in fees and remuneration for services and salaries and social security taxes, due to the increase in costs because of the inflationary context.

As a percentage of revenue from sales, administrative expenses increased to 9.8% for the year ended December 31, 2023, from 8.8% for the year ended December 31, 2022, due to the increase in administrative expenses in 2023, as described in the previous paragraph.

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The following are the principal components of our administrative expenses for the years indicated.

	Year ended December 31,
	2023		% of 2023	2022		% of 2022
			net sales			net sales
Salaries and social security taxes	24,024	34.8%	3.4%	21,192	38.1%	3.3%
Leases and insurance	1,861	2.7%	0.3%	2,885	5.2%	0.5%
Fees and remuneration for services	29,640	42.9%	4.2%	20,679	37.2%	3.2%
Depreciation of right-of-use asset	1,980	2.9%	0.3%	2,251	4.0%	0.4%
Depreciation of property, plants and equipments	7,959	11.5%	1.1%	5,449	9.8%	0.9%
Supplies consumption	745	1.1%	0.1%	1,025	1.8%	0.2%
Others	2,913	4.1%	0.4%	2,117	3.8%	0.3%
Total	69,122	100%	9.8%	55,598	100%	8.8%

Other operating income (expenses)

Other operating (expenses) income include provision for contingencies and debit and credit tax. Other operating income (expenses), decreased from a net income of Ps.8,682 million for the year ended December 31, 2022 to a net income of Ps.4,384 million for the year ended December 31, 2023. The decrease was mainly due to the recognition of the recovery of allowance for the impairment of trade receivables - Agreement on the Regularization of Obligations, related to the compensation of account receivables whose debt had been originated by default or non-payment during the ASPO or DISPO in 2022.

Operating Loss

Our operating loss increased from Ps.97,311 million for the year ended December 31, 2022 to Ps.119,786 million for the year ended December 31, 2023, mainly due to the increase in operating costs because of the inflationary context.

Net Finance Costs

Net finance costs totaled Ps.350,354 million for the year ended December 31, 2023, compared to Ps.277,584 million for the year ended December 31, 2022. This increase in the net loss is mainly due to the increase of Ps. 52,931 million in exchange differences due to the devaluation of the peso as of December 2023, the increase in interests related to the update of the amounts of “penalties to be used for investments” and also due to the increase in commercial interest applicable to the debt that Edenor maintains with CAMMESA as a result of financial difficulties to meet operating costs.

Income Tax

Our income tax showed a loss of Ps.133,809 million in the year ended December 31, 2023, compared to a loss of Ps.46,187 million for the year ended December 31, 2022. This increase was mainly due to the loss generated by the inflationary impact on the accumulated tax loss carryforward and the increase in the deferred tax liability of property, plant and equipment.

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Gain (Loss) for the year

We recorded a gain of Ps.48,371 million for the year ended December 31, 2023, compared to a loss of Ps.54,398 million for the year ended December 31, 2022. This is mainly due to the impact of the result from exposure to inflation of the Company's monetary liabilities and to the recognition of the gain generated as a result of the Agreement on Regularization of Payment Obligations with CAMMESA.

Certain information called for by this Item 5, including a discussion of the year ended December 31, 2022 specifically as well as the year-over-year comparison of our 2022 financial performance to 2021 has been reported previously in our Annual Report on Form 20-F for the year ended December 31, 2022 filed on April 19, 2023 under “Item 5. Operating and Financial Review and Prospects.”

Liquidity and capital resources

Sources and Uses of Funds

As of December 31, 2023, the Company shows a notable improvement in its economic performance, as a consequence of the positive trend towards the sector’s normalization -closely related to the electricity rate increases of the first six-month period-, the Agreements on the Regularization of Payment Obligations entered into with CAMMESA, and the prospect that the electricity rates will be periodically adjusted and subsidies will be reduced in the short term.

In particular, the recent electricity rate adjustments of February 2023 implied an increase in the CPD of 107.8% for the month of April and 73.7% for the month of June, which resulted in an improvement in the Company’s gross margin for the current fiscal year. Despite the fact that this trend did not continue until the end of the fiscal year, and that the subsequent changes made to the values of the Company’s electricity rate schedules implied only the passing through of the seasonal prices, we made investments necessary, both for the operation of the network and for maintaining and even improving the quality of the service, have been made, complying with the investment targets for fiscal year 2023.

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Furthermore, by means of Executive Order No. 55/2023, the new Administration provided for the emergency of the National Energy Sector until December 31, 2024. In line with that, ENRE Resolution No. 102/2024 approved the values of the Company’s electricity rate schedule as from February 16, 2024, which implied the granting of a 319.2% increase in the CPD and monthly adjustments from May 2024, making it possible to restore the Company’s electricity rate situation and its economic and financial equation, ensuring the economic self-sufficiency of the electricity system for a foreseeable future.

Additionally, the government issued Executive Order No. 70/2023, which provided for the economic, financial, fiscal, pension, tariff, healthcare, social and administrative emergency until December 31, 2025, together with other measures of a deregulatory nature for the economy as a whole, with the aim, as stated, of achieving fiscal balance. Furthermore, supplementing the aforementioned Executive Order, the bill entitled “Law of bases and starting points for the freedom of the Argentine people”, which included a comprehensive package of measures and provided, among other issues, for changes in energy-related regulations and the creation of a new regulatory entity, was introduced to Congress. Due to the fact that the aforementioned bill was rejected by a majority of lawmakers, the Executive Power decided that the bill, as it had been introduced to Congress to be dealt with in the extraordinary legislative sessions, would not be discussed again.

The context of volatility and uncertainty continued at the date of issuance of the Financial Statements. The reforms proposed by the new administration have begun, as mentioned in the preceding paragraph, to be discussed in the legislature. At the date of issuance of this annual report, it is not possible to predict the outcome of such discussions or whether new measures will be announced. The Company’s Management permanently monitors the development of the variables that affect its business, in order to define its course of action and identify the potential impacts on its financial and cash position.

Our Financial Statements must be read in the light of these circumstances.

Notwithstanding the above-described situation, it is worth pointing out that even though in the last few fiscal years the Company recorded negative working capital, as a consequence of the insufficient adjustments of the electricity rate over the last few years, in general terms, the quality of the electricity distribution service has been improved, both in duration and frequency of power cuts. In this regard, the Company is optimistic and expects that the new electricity rates will result in the Company’s operating once again under a regulatory framework with clear and precise rules, which will make it possible to meet the costs associated with the provision of the service, as well as the need for additional investments to satisfy demand, in order to maintain the provision of the public service, object of the concession, in a satisfactory manner in terms of quality and reliability. Therefore, the Financial Statements have been prepared using the ongoing concern basis of accounting.

Our principal uses of cash are expected to be operating costs, the servicing of our financial debt and our investment plan. We are subject to limitations on our ability to incur new debt under the terms of our debt instruments so we cannot assure that we will be able to obtain additional financing on acceptable terms (see “Item 5. Operating and Financial Review and Prospects—Liquidity and Capital Resources—Debt”). As of December 31, 2023 and 2022, our cash and cash equivalents amounted to Ps.9,128 million and Ps.5,076 million, respectively. We generally invest our cash in a range of instruments, including sovereign debt, corporate debt securities and other securities. The table below reflects our cash and cash equivalents position at the dates indicated and the net cash provided by (used in) operating, investing and financing activities during the years indicated:

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	Year ended  December 31
	2023	2022
Cash and cash equivalents at beginning of year	5,076	19,242
Net cash flows generated by operating activities	71,472	110,321
Net cash flows used in investing activities	(79,061)	(116,343)
Net cash flows generated by (used in) financing activities	7,338	(14,830)
Result from exposure to inflation	(207)	(81)
Financial results in cash and cash equivalents	4,510	6,767
Cash and cash equivalents at the end of year	9,128	5,076

Net Cash flows generated by operating activities

Net cash flows generated by operating activities decreased by 35%, to Ps.71,472 million in the year ended December 31, 2023, from Ps.110,321 million in the year ended December 31, 2022. Changes in net cash flows generated by operating activities were primarily due to a decrease in trade payables of Ps.82,213 million due to a decrease in the commercial debt with CAMMESA as a result of the Agreement on Regularization of Payment Obligations with CAMMESA, partially offset by a decrease in other receivables of Ps.33,435 million mainly due to the decrease in VAT in 2023 as a result of the aforementioned Agreement.

Net Cash flows used in investing activities

Net cash flows used in investing activities decreased by 32%, to Ps.79,061 million in the year ended December 31, 2023, compared to Ps.116,343 million in the year ended December 31, 2022. Changes in net cash flows used in investing activities in 2023 were primarily due to an increase in purchases of mutual funds and government bonds of Ps. 57,777 million partially offset by an increase in payments of property, plant and equipment of Ps.20,984 million.

Net Cash flows generated by (used in) financing activities

Net cash flows generated by financing activities increased to Ps.7,338 million in the year ended December 31, 2023, compared to Ps.14,830 million (use of funds) in the year ended December 31, 2022, mainly due to a decrease in the repayment of debt.

Edenor’s Capital Expenditures

Edenor’s concession does not require us to make mandatory capital expenditures. Edenor’s concession does, however, set forth specific quality standards that become progressively more stringent over time, which require us to make additional capital expenditures. Financial penalties are imposed on us for non-compliance with the terms of our concession, including quality standards.

Prior to our privatization, a low level of capital expenditures and poor maintenance programs adversely affected the condition of our assets. After our privatization in 1992, we developed an aggressive capital expenditure plan to update the technology of our productive assets, renew our facilities and expand energy distribution services,automate the control of the distribution network and improve user service. Following the crisis, however, the freeze of our distribution margins and the pesification of our tariffs and our inability to obtain financing, coupled with increasing energy losses, forced us to curtail our capital expenditure program and make only those investments that were necessary to permit us to comply with quality of service and safety and environmental requirements, despite increases in demand in recent years.

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We are not subject to any limitations on the amount of capital expenditures we are required to make pursuant to our concession and applicable laws or regulations.

Our capital expenditures consist of net cash used in investing activities during a specified period plus supplies purchased in prior periods and used in such specified period. The following table sets forth our actual capital expenditures:

	Year ended December 31,
	2023	2022
HV Network structure	25,554	21,985
MV Network structure	11,312	11,722
LV Network structure	26,167	19,831
Network improvements	43,570	39,919
Buildings, software, furniture, tools and equipment	17,025	12,114
Total	123,628	105,571

Investments made in 2023 amounted to Ps. 123,628 million in constant currency. The execution of investment projects was given priority over any other disbursements as a way to maintaining the provision of the public service, object of the concession, under reliable conditions.

In order to meet the demand, improve the quality of the service, and reduce non-technical losses, the majority of the investments were earmarked for the increase of capacity, the installation of remote control equipment in the medium-voltage network, the connection of new electricity supplies, and the installation of self-administered energy meters. All the investments are made prioritizing environment protection and public safety.

Debt

On October 25, 2010, we issued Senior Notes due 2022 with a face value of U.S.$230.3 million, of which U.S.$140 million were subscribed under a cash offer and U.S.$90.3 million were exchanged, as a result of an exchange offer, for Senior Notes due 2017, paying in cash U.S.$9.5 million plus accrued unpaid interest on those Senior Notes due 2017.

The Senior Notes due 2022 had a 12-year maturity and were issued at par, with interest accruing from the date of issuance at a fixed rate of 9.75% and payable semi-annually on October 25 and April 25 of each year, with the first interest payment on April 25, 2011.

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On July 16, 2021, we launched a consent solicitation from holders of the 2022 Notes to waive compliance with Section 10.3 of the Indenture (requiring us to offer to repurchase any and all of the 2022 Notes) in connection with the Acquisition. The consent solicitation was successfully consummated on June 30, 2021

- Issuance of New Class No. 1 Senior Notes due in 2025 in exchange for Class No. 9 Corporate Notes due in 2022

On April 6, 2022, the Annual General Meeting approved the updating of the Global Simple Corporate Notes Issuance Program for a maximum amount outstanding at any time of up to U.S.$750,000,000 (or its equivalent in any other currency).

In this regard, the Company’s Board of Directors, at its meeting held on April 6, 2022, approved the launching of an offer to restructure the financial debt by exchanging the Company’s Class No. 9 Corporate Notes due October 25, 2022 for Senior Notes 2025.

Consequently, on April 12, 2022, the Company launched its offer to exchange the Class No. 9 Corporate Notes issued by the Company maturing on October 25, 2022 at a fixed nominal annual interest rate of 9.75% for a nominal value outstanding of U.S.$ 98,057,000 for New Class N 1 Senior Notes, denominated and payable in United States dollars, at a fixed nominal annual interest rate of 9.75%, due in 2025 (the “Exchange Offer”).

The Senior Notes 2025 comply with the “Guidelines for the issuance of social, green and sustainable securities in Argentina” included in Appendix III to Chapter I, Title VI of the CNV’s Regulations and in the BYMA’s Guide to Social, Green and Sustainable Bonds for the purpose of having them listed on BYMA’s Social, Green and Sustainable Bonds Panel.

Principal on the Senior Notes 2025 shall be repaid in a lump sum on August 5, 2025. Furthermore, they accrue interest at a fixed nominal annual rate of 9.75%, payable semi-annually in arrears on August 5 and November 12 of each year, commencing on November 12, 2022.

The Senior Notes 2025 were issued in accordance with the Indenture, which contains a number of negative covenants that limit Edenor’s ability to, among other things:

- create or permit liens on its property or assets;

- incur indebtedness;

- sell its assets;

- carry out transactions with affiliates or shareholders;

- make certain payments (including, but not limited to, dividends, purchases of Edenor’s common shares or payments on subordinated debt); and

- enter into merger transactions, unless they meet certain criteria.

On May 12, 2022 the Company approved the issuance and placement of Senior Notes 2025 pursuant to the Exchange Offer, as set forth in the Supplement to the Exchange Offer Memorandum dated April 12, 2022. The Corporate Notes will be subscribed in accordance with the Tender Orders received, based on the following options:

The Exchange Offer resulted in 73.25% acceptance, equivalent to U.S.$71,826,000 (with the above-mentioned due date remaining in effect for 26.75%, i.e. U.S.$26,231,000); accordingly, a total of U.S.$52,706,268, relating to: (i) Tender Orders submitted under Option A for U.S.$ 41,699,000 plus a recognized additional for U.S.$2,084,950, i.e. U.S.$43,783,950, and (ii) Tender Orders submitted under Option B for U.S.$ 30,127,000 plus a recognized additional for U.S.$ 343,118, i.e. U.S.$ 30,470,118, after deducting the Pro-rata Cash Consideration of Option B received by each Eligible Holder of said option for U.S.$ 21,547,800, has been restructured.

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Additionally, interest paid in cash from the last payment date up to and including the Settlement Date amounted to a total of U.S.$ 329,573.

- Issuance of New Class No. 2 Corporate Notes due in 2024

On August 5, 2022, the Company’s Board of Directors approved the terms of issue of New Class No. 2 Corporate Notes at a fixed nominal annual interest rate of 9.75%, due in 2024, to be issued for a nominal value of up to U.S.$ 30,000,000, in the framework of the Global Simple Corporate Notes Issuance Program.

The principal on the New Corporate Notes will be repaid in a lump sum on November 22, 2024. Furthermore, they will accrue interest at a fixed nominal annual rate of 9.75%, payable semi-annually in arrears on May 22 and November 22 of each year, commencing on November 22, 2022.

On September 22, 2022, upon the expiration of the Tender Period of Class No. 2 Corporate Notes, the Company approved the issuance and placement of the New Corporate Notes for U.S.$ 30,000,000, as set forth in the Prospectus Supplement dated September 14, 2022.

- Reopening of the exchange offer

On September 23, 2022, the Company approved the reopening of the Exchange Offer for a nominal value outstanding of U.S.$ 24,645,000 (as a consequence of both the first results of the exchange offer and the settlement of the Corporate Notes held by the Company mentioned above) for Additional Senior Notes 2025.

On October 24, 2022, the Company approved the issuance and placement under the Exchange Offer, as set forth in the Supplement to the Exchange Offer Memorandum dated September 23, 2022. The Additional Senior Notes 2025 were subscribed in accordance with the Tender Orders received.

The Eligible Holders who validly submitted a Tender Order were eligible to receive, for each U.S.$ 1,000 principal amount of Class No. 9 Notes, the Additional Senior Notes 2025 Consideration consisting of U.S.$630 principal amount of Additional Senior Notes 2025, plus a Cash Consideration of U.S.$400.

The reopening of the Exchange Offer resulted in 16.35% acceptance, equivalent to U.S.$4,029,000 (with the above-mentioned due date remaining in effect for 83.65%, i.e. U.S.$20,616,000). Accordingly, a total of U.S.$2,538,270, relating to Tender Orders submitted for U.S.$2,417,000 plus a recognized additional for U.S.$120,870. Furthermore, Eligible Holders received the Cash Consideration for U.S.$1,611,600.

Additionally, interest paid in cash from the last payment date up to and including the Settlement Date amounted to a total of U.S.$83,956.

On October 25, 2022, the Company made payment to the Holders of Class No. 9 Corporate Notes who did not participate in the exchange offers made by the Company, for an amount of U.S.$20,616,000, along with the final scheduled interest payment.

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- Additional issuance of Class No. 2 Corporate Notes due in 2024

On March 7, 2023, upon the expiration of the Tender Period of Class No. 2 Additional Corporate Notes, the Company approved the issuance and placement of the Additional Corporate Notes for a nominal value of U.S.$30,000,000, as set forth in the Prospectus Supplement dated February 28, 2023. The issuance was above par, with the issuance total value thus amounting to U.S.$30,945,000.

- Issuance of Class No. 3 and 4 Corporate Notes due in 2026 and 2025

On January 30, 2024, the Company approved the terms and conditions of the issuance and placement of Class No. 3 and Class No. 4 Corporate Notes for an aggregate nominal value of U.S.$60,000,000, which may be extended to U.S.$100,000,000, in the framework of the Global Simple Corporate Notes Issuance Program, in accordance with the provisions of the Prospectus Supplement dated February 22, 2024.

On March 7, 2024, the Company issued Class No. 3 and Class No. 4 Corporate Notes for a nominal value of U.S.$95,762,688 and Ps. 3,577 million, respectively. On March 27, 2024, Edenor issued additional Class 4 Corporate Notes maturing on March 7, 2025 for a nominal value of Ps. 20,821 million.

The Class No. 3 Corporate Notes are denominated and payable in United States dollars, at a fixed nominal annual interest rate of 9.75%, due on November 22, 2026. The Class No. 4 Corporate Notes are denominated and payable in Argentine Pesos at the rate calculated by the issuer on each interest payment date with a margin of 3%, due on March 7, 2025.

The Class No. 3 Corporate Notes were paid-in in accordance with the following detail: (i) U.S.$34,157,571 relates to the Integration in Kind Tranche through the delivery of Class No. 2 Corporate Notes at the Exchange Ratio; and (ii) U.S.$61,605,117 relates to the Regular Integration Tranche. Consequently, Class No. 2 Corporate Notes for a nominal value of U.S.$32,766,541 have been settled, with the remaining balance in outstanding nominal value of U.S.$27,233,459, due on November 22, 2024.

The Company’s Corporate Note’s debt structure, is as follows:

		in USD				ARS
Corporate Notes	Class	Outstanding Debt at 12/31/2021	Outstanding Debt at 12/31/2022	Outstanding Debt at 12/31/2023	Outstanding Debt at 4/24/2024	Outstanding Debt at 4/24/2024
Fixed rate note - Maturity 2022	9	98,057,000	-	-	-	-
Fixed rate note - Maturity 2024	2	-	30,000,000	60,945,000	27,233,459	-
Fixed rate note - Maturity 2025	1	-	55,244,538	55,244,538	55,244,538	-
Fixed rate note - Maturity 2026	3	-	-	-	95,762,688	-
Variable rate notes - Maturity 2025	4	-	-	-	-	24,398,289,361
Total		98,057,000	85,244,538	116,189,538	178,240,685	24,398,289,361

⁽¹⁾ Including coupon for cash consideration under existing Senior Notes.

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Derivatives Contracts

Management of derivative financial instruments

In 2022, with the aim of hedging the currency risk associated with the payment of our and Senior Notes due 2022 we entered into futures contracts to buy U.S. Dollars.

As of December 31, 2022, the economic impact of the transactions carried out in those fiscal years resulted in losses of Ps.539 million, which are recorded in the “Other finance costs” account of the Statement of Comprehensive (Loss) Income.

CRITICAL ACCOUNTING POLICIES AND ESTIMATES

Our Financial Statements are prepared in accordance with IFRS, as issued by the IASB. In preparing our financial statements, we make assumptions, judgments and estimates that can have a significant impact on amounts reported in our financial statements. We base our assumptions, judgments and estimates on historical experience and various other factors that we believe to be reasonable under the circumstances. Actual results could differ materially from these estimates under different assumptions or conditions. We regularly reevaluate our assumptions, judgments and estimates. Our critical accounting estimates and judgments are described in Note 6 to our Financial Statements, which are included elsewhere in this annual report.

Off-Balance Sheet Arrangements

We did not have any off-balance sheet arrangements as of December 31, 2023.

CONTRACTUAL OBLIGATIONS

Technical assistance fees

Corresponds to the technical advice on financial affairs that Edelcos (see “Item 7. Major Shareholders and Related Party Transactions”) has provided to the Company since July 1, 2021. For this service, the Company pays Edelcos either an annual amount of Ps.1,766 million or the amount equivalent to 1.75% of annual gross billing, whichever results in the higher amount, plus the associated value added tax. It expires in December 2026, but may be extended if so agreed by the parties hereto.

Fines and penalties

Pursuant to caption C of Section 37 of the Concession Agreement, the grantor of the concession may, without prejudice to other rights to which it is entitled thereunder, foreclose on the collateral granted by the Company when the cumulative value of the penalties imposed in the previous one-year period exceeds 20% of its annual billing, net of taxes and rates.

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As of December 31, 2023, total accrued fines and penalties amounted to Ps. 62,880 million, of which Ps. 61,669 million (including accrued interest) corresponded to penalties accrued but not yet imposed on us and Ps. 1,211 million (including accrued interest) correspond to penalties imposed on us but not yet paid.

Corporate Notes programs

The relevant information of our corporate notes program is detailed below :

		in USD				ARS
Corporate Notes	Class	Outstanding Debt at 12/31/2021	Outstanding Debt at 12/31/2022	Outstanding Debt at 12/31/2023	Outstanding Debt at 4/24/2024	Outstanding Debt at 4/24/2024
Fixed rate note - Maturity 2022	9	98,057,000	-	-	-	-
Fixed rate note - Maturity 2024	2	-	30,000,000	60,945,000	27,233,459	-
Fixed rate note - Maturity 2025	1	-	55,244,538	55,244,538	55,244,538	-
Fixed rate note - Maturity 2026	3	-	-	-	95,762,688	-
Variable rate notes - Maturity 2025	4	-	-	-	-	24,398,289,361
Total		98,057,000	85,244,538	116,189,538	178,240,685	24,398,289,361

⁽¹⁾ Including coupon for cash consideration under existing Senior Notes.

Item 6. Directors, Senior Management and Employees

DIRECTORS AND SENIOR MANAGEMENT

Board of Directors

Our business and affairs are managed by our Board of Directors in accordance with our bylaws and the Argentine Corporations Law. Our bylaws provide that our Board of Directors will consist of twelve directors and up to the same number of alternate directors. Pursuant to the Argentine Corporations Law, a majority of our directors must be residents of Argentina.

Edenor’s bylaws provide that holders of our Class A common shares are entitled to elect seven directors and up to seven alternate directors, while the holders of our Class B and Class C common shares are entitled to elect five directors and up to five alternate directors, one of which must be independent in accordance with CNV regulations. Holders of Class C common shares vote jointly as a single class with the holders of Class B common shares in the election of directors. In the absence of a director elected by holders of a class of shares, any alternate director elected by holders of the same class may legally attend and vote at meetings of our Board of Directors. The Board of Directors elects among its members a chairman and a vice president.

The Ordinary and Extraordinary Shareholders’ Meeting held on April 20, 2023 appointed the members and alternate members of the Board of Directors for fiscal year 2023.

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Regular directors Federico D´Angelo Campos and Lucas Gobbo, and alternate directors Matías Romero Fernández, Luis Angelo Vergara, Mariano Cuneo Libarona and Pablo Pereyra resigned from their positions on the Board of Directors. In addition, we regret to inform that Mr. Mariano Lucero passed away in 2023.

As of the date of this annual report, there are three vacant regular Board member seats.

The Board of Directors’ composition at the date of issuance of this annual report is as follows:

Name	Class	Position	Year of appointment
Bleasdale Neil Arthur	A	Chairman	2023
Macek Esteban Gabriel*	A	Vice-chairman / Independent	2023
Mallo Huergo Ricardo Nicolás	A	Regular	2023
Vila Eduardo Marcelo	A	Regular	2023
Volosin Edgardo Alberto	A	Regular	2023
Zin Federico Claudio*	A	Regular /  Independent	2023
Quevedo Victor Hugo	A	Regular	2023
Ferrera Hernán	B & C	Regular /  Independent	2023
Bernal Federico	B & C	Regular / Independent	2023
Vanoli Long Biocca Alejandro	B & C	Regular / Independent	2023
Pino Diego Hernán	A	Alternate	2023
Álvarez Sebastián	A	Alternate	2023
Grieco María Teresa	A	Alternate /Independent	2023
Mazer Pedro Iván	A	Alternate /Independent	2023
Maletta Mirta Silvia	A	Alternate /Independent	2023
Lago Marianela	B & C	Alternate /Independent	2023

* Independent under Argentine law and under Rule 10A-3 under the Securities Exchange Act of 1934, as amended.

The following is a brief description of our current directors’ and alternate directors’ background, experience and principal business activities:

Neil Arthur Bleasdale was born on April 28, 1956, studied at the University of Leeds in England, and has worked in Uruguay, Argentina, Peru, Brazil and the Netherlands during the last 42 years. In 2006, he began his career in the electricity distribution sector as director of Empresa Distribuidora de Electricidad de Mendoza S.A. (“EDEMSA”) and, from March 2008 to June 2021, he served as president and general director of such company.

Esteban Gabriel Macek was born on November 8, 1960 and obtained his degree as CPA at the University of Buenos Aires (“UBA”). He is the chairman of Fiduciaria Internacional Argentina S.A. and member of the board of directors at Inmobiliaria Madero S.A. He is also member of the supervisory committees of Prisma Medios de Pago S.A. He has a wide professional experience assisting domestic and international companies, and many years of experience as member of the board of directors and leading the audit comitte of Telecom Argentina S.A.

Ricardo Nicolás Mallo Huergo was born on December 26, 1969, and has specialized in the different stages of the oil & gas sector (exploration, development and exploitation). He graduated from the Universidad Católica Argentina as a lawyer and obtained a Master of Laws (LL.M.) with honors from Northwestern University School of Law, Chicago, in 1999. He is currently a member of the board of directors of Phoenix Global Resources Plc (Ticker: AIM: PGR), and has been a director of Ketsal S.A., Kilwer S.A., Integra Oil & Gas S.A.S. and Grecoil S.A., among other local and foreign companies. Within his specialization, he has advised local and foreign companies on corporate matters, mergers, acquisitions, privatizations and financing, public and private tenders, share offer mechanisms, acquisitions with leverage and other restructuring transactions, strategic investments and joint ventures, operations venture capital and project financing, and advice on structuring transactions.

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Eduardo Marcelo Vila was born on October 23, 1964 and graduated as a lawyer and public notary at the University of Mendoza. He has extensive experience in business consulting, mainly in regulated activities and in those subject to government control, such as media and companies that provide public services, especially in the electricity sector. For 20 years, he has been the director of the legal affairs department of Grupo América, one of the main multimedia companies in Argentina, where he has been in charge of all the legal issues related to the group in Argentina and abroad, and obtained vast experience in the communication services and information technology sectors, as well as in various companies related to real estate development, technology startup, fintech and family office activities. Also, as a member of the board of directors of some of the companies of the group, he has participated in local and international debt restructurings, acquisitions and sales of stock packages, mergers, and corporate and business restructuring processes. Likewise, he has advised Empresa Distribuidora de Electricidad de Mendoza S.A. (EDEMSA), the main electric power distribution company in the province of Mendoza.

Edgardo Alberto Volosin was born on May 18, 1953 and is a lawyer. Between 1987 and 1990, he served as the manager of human resources and legal affairs departments of the industrial companies of the Perez Companc Group. Between 1990 and 1992, he served as the director of human resources department at Telecom Argentina. Between 2002 and 2015, he worked at Edenor as director of the human resources and legal affairs department, then as director of the corporate affairs department, and finally as CEO of the company. Between 2016 and 2018, he served as the director of the public services area of the Province of Buenos Aires. Currently, he is Chairman of ADEERA.

Federico Claudio Zin was born on October 2, 1979. He earned a CPA degree from the Universidad Católica Argentina and a certified capital market advisor. He has extensive experience in finance, structured debt, and in reporting and relations with public entities. He previously served as Adeco Agro’s finance manager for Argentina and Uruguay and as director of the M&A department at Global Acquisition Land Opportunities Fund. In the public sector, he served as Undersecretary of SMEs and Entrepreneurs at the Ministry of Production of the Province of Buenos Aires, and as chief of staff of the Secretary General of Government and director of investments at the GLOBA agency for the Secretary General of the Province of Buenos Aires. Since 2019, he has serves as director of restructuring and debt & corporate finance areas at Zeta Consultoría.

Victor Hugo Quevedo was born on April 1, 1963. He is a lawyer graduated from the University of Buenos Aires. He obtained an LL.M. (Master of Laws) at the London School of Economics and Political Sciences, University of London, and a PGDip.GB (Postgraduate Diploma in Global Business) at Said Business School, University of Oxford. He has studied international financial law at Queen Mary & Westfield College, University of London, and energy law at the Center for Petroleum and Mineral Law and Policy, University of Dundee. He worked as a lawyer at Borns & Salas, Muñoz de Toro & Quevedo, and Klein & Franco law firms. He is currently partner at the Quevedo Abogados law firm. He was an arbitrator in local arbitrations and served on numerous boards of directors and supervisory commissions in the country and abroad. He served in public service as a lawyer for the Presidency’s Legal and Technical Secretariat and General Director of Organization, Secretariat of Public Function. He also served as an advisor for the Secretariat of Public Function, for the National Prosecutor for Administrative Investigations and for the Secretariat of Energy. In the academic field, he was a professor of financial law in the Master of Business Law at the University of San Andrés and professor of international financial operations at ESEADE (Higher School of Economics and Administration) and the University of Palermo.

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Hernán Ferrera was born in October 1959. He holds a degree in Sociology from the University of Buenos Aires and a degree in Electrical Engineering from Technical School No. 9 Ingeniero Luis Huergo. He has more than 10 years of experience in various technical areas, among which he has been in charge of operational management, purchasing and logistics, as well as the implementation and parameterization of different computer supports with vast experience in the systematization of methodology for ISO 9002. He has also been involved in undergraduate and postgraduate teaching at several universities.

Federico Bernal was born in June 1974. He has a degree in biochemistry and biotechnology from UBA. He specializes in Industrial Microbiology. He has extensive experience in energy matters, and he is also author of books and publications on this subject. He is currently the comptroller of the Ente Nacional Regulador del Gas. He is also a member of the Board of Directors of the following companies: Transener S.A, Edesa Holding S.A., Edesal Holding S.A.

Vanoli Long Biocca Alejandro has a bachelor’s degree in economics from the University of Buenos Aires in 1987. He is currently Director of Synthesis Argentina since October 2020. He was appointed as President of the Central Bank between October 2014 and December 2015 and was Deputy Governor of Argentina at the International Monetary Fund during the same period. Vanoli joined the Central Bank in 1988 through a public competition, serving for 27 years in different technical positions in the Central Bank and the Secretariat of Finance of the Ministry of Economy. From November 2009 to October 2014, he was the President of the Argentine Securities and Exchange Commission and, from 2006 to 2009, its Vice President. From December 10, 2019 to April 30, 2020, he was the Executive Director of ANSES, and he was also listed as a Regular Director of Consultatio S.A. from April 2020 to April 2023. Vanoli was the Professor of International Finance 1 and 2 from 1998 to 2014 and an associate of International Economics from 2001 to 2016, at the Economic Sciences of the University of Buenos Aires.

Diego Hernán Pino was born on August 16, 1969. He has a degree in Business Administration from the Marine Merchant University, with an MBA from the Argentine Catholic University. He has been a member of the board of directors of Transclor S.A. (“Transclor”) since 2005. He held different executive positions, in finance, production and commercial areas, including the position of CEO. He is currently a shareholder and holds the presidency of the company. Before joining Transclor, he was the president at Boro Norte, a company dedicated to the production and commercialization of hydrochloric acid.

Sebastián Álvarez was born on June 20, 1965. He is a public accountant, graduated from the University of Buenos Aires. He has been a member of the board of directors of Transclor S.A. since 2005. Prior to joining Transclor, he worked in the tax department of Canale food company. Later, he went to Gustavo Leers company, covering roles in the administrative and foreign trade areas. Also, he worked at Frigorífico Ramallo as administrative manager, and later as partner of a consulting and tax law firm. Since 2001, he has worked at the Issuer Company in different management roles.

María Teresa Grieco has a degree in Economics from the University of Buenos Aires, a Master in Economics and Industrial Development with a Specialization in SMEs at the National University of General Sarmiento, and a Master in Journalism at the Universidad Torcuato Di Tella - Diario La Nación. She has worked at the Secretariat for Economic Policy (Undersecretary for Microeconomic Programming) of the Ministry of the Economy. With more than 15 years of experience, she has specialized in productive development and public policies for industrial and service sectors, with experience in leading work teams and coordinating projects for the analysis of industrial and service sectors and their value chains and senior consultant of the program of sector tables of the Ministry of Production and Labor, a public-private coordination space for the consensus of work agendas aimed at improving the competitiveness and internationalization of the different productive sectors. She is currently part of the Edenor’s board of directors.

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Mirta Silvia Maletta was born in March, 1959. She is a public accountant, graduated from the University of Buenos Aires. She has more than 35 years of experience as an auditor and consultant for companies and non-profit entities. She is a retired partner from PwC. She is president of the supervisory commission of the ENARD since its creation. She is also a member of the board of directors of the ORT Association of Argentina and the operative committee of the Civil Association Management Contributions for the Third Sector. She has served as independent director of La Caja de Seguros S.A. since April 2019 and she is IDEA Trustee since May 2021.

Pedro Iván Mazer is a lawyer graduated from the University of Belgrano. He has a master’s degree in business economic law from the UCA. He is also a member of Alfaro Abogados SC firm. He has vast experience in corporate law, M&As, contracts, antitrust and compliance, capital markets and general practice of commercial law. In addition, he has specialized over the years in oil and gas and pharma markets, including by attending a specialization course in oil and gas law at the UBA.

Marianela Lago is a lawyer graduated from the National University of La Plata, and she has a specialization in Administrative and Economic Law from the Catholic University of Argentina. She works as a lawyer at ANSES and is currently in charge of the coordination, monitoring and corporate management of the energy sector of the Sustainability Guarantee Fund of ANSES.

Compensation

With regard to the remuneration policy for senior management, we have implemented a fixed and variable remuneration system. The fixed remuneration is related to both the level of responsibility required for the position and its competitiveness as compared to similar positions in the market, whereas the variable remuneration is associated with the business objectives set at the beginning of each fiscal year and the degree of achievement of such objectives by the performance of the executive member throughout each fiscal year.

Our Board of Directors has not designated a Remuneration Committee and has delegated to the Human Resources Department the approval of the general policy on the remuneration of the Company’s employees, as well as the responsibility of proposing options and subsequently implementing the specific decisions and policies on these issues. Due to the fact that he is a related party, our Chief Executive Officer’s remuneration has been approved by the Audit Committee and our Board of Directors. The aggregate remuneration paid to the members and alternate members of our Board of Directors, the members and alternate members of our supervisory committee and our senior management during 2023 was Ps.139.4 million, Ps.21.9 million and Ps.5,844 million at nominal currency, respectively.

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Board Practices

The duties and responsibilities of the members of our Board of Directors are set forth in Argentine law and our by-laws. Under Argentine law, directors must perform their duties with loyalty and the diligence of a prudent business person. Directors are prohibited from engaging in activities that compete with our company without express authorization of a shareholders’ meeting. Certain transactions between directors and our company are subject to ratification procedures established by Argentine law.

On November 29, 2012, the Argentine Government enacted Law No. 26,831 (the “Capital Markets Law” or “CML”) which revokes Law No. 17,811 and Decree No. 677/01. However, the CML adopted most of the provisions established in those regulations. The CML was enacted with the aim of creating an adequate legal framework to strengthen the level of protection of investors in the market. Other objectives of the CML were to promote the development, liquidity, stability, solvency and transparency of the market, generating procedures to guarantee the efficient distribution of savings and good practices in the administration of corporations.

The CML imposes the following duties on members of the Board of Directors of Argentine public companies:

· a duty to disclose all material events related to the company, including any fact or situation which is capable of affecting the value or trading of the securities of the company;

· a duty of loyalty and diligence;

· a duty of confidentiality; and

· a duty to consider the general interests of all shareholders over the interests of controlling shareholders.

There are no agreements between our company and the members of our Board of Directors that provide for any benefits upon termination of their designation as directors.

None of our directors maintains service contracts with us except as described in “Item 7. Major Shareholders and Related Party Transactions—Related Party Transactions.”

The significant differences between our corporate governance practices and the NYSE standards are listed on our website in compliance with the NYSE requirements. For a summary of these differences see “Item 16G. Corporate Governance”.

Executive Committee

On October 4, 2007, our Board of Directors created an Executive Committee, as contemplated by our by-laws and Argentine Law No. 19,550 (Commercial Companies Law), and delegated to the Executive Committee the authority to take certain actions on behalf of the board. The Executive Committee complements the work of the board by performing certain day-to-day tasks required to oversee our activity. By creating an Executive Committee, the board sought to increase the efficiency of our management. The Executive Committee is composed by Neil Arthur Bleasdale, Edgardo Alberto Volosin and Eduardo Marcelo Vila.

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Audit Committee

Pursuant to the CML and CNV rules, Argentine public companies must appoint a comité de auditoría (audit committee) composed of at least three members of the Board of Directors, a majority of which must be independent in accordance with the criteria set forth by Argentine law. They serve for one-year periods.

Pursuant to our by-laws, one director is appointed by holders of our Class A common shares and one by holders of our Class B common shares. Our audit committee’s duties include:

· monitoring our internal control, administrative and accounting systems;

· supervising the application of our risk management policies;

· providing the market adequate information regarding conflicts of interests that may arise between our company and our directors or controlling shareholders;

· rendering opinions on relevant transactions with related parties;

· supervising and reporting to regulatory authorities the existence of any kind of conflict of interest;

· supervising external audit and evaluating their independence, plans and performance;

· evaluating plans and performance of the internal audit,

· supervising the operations of the complaints channel.

As of the date of this report the members of our audit committee were:

Name	Position	Class electing member
Macek Esteban Gabriel (1)	Chairman	Class A
Zin Federico Claudio  (1)	Member	Class A

(1) Independent under Argentine law and under Rule 10A-3 under the Securities Exchange Act of 1934.

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Senior Management

The following table sets forth information regarding our senior management, as of the date of this annual report:

Name	Current Position
Neil Arthur Bleasdale	Chairman and Chief Executive Officer
María José Van Morlegan	Director of Legal and Regulatory Affairs
Fabiana Colombo	Director of Supply, Services and Logistics
Miguel Farrell	Technical Director
Ignacio Letemendia	Director of Human Resources
Ricardo Luttini	Internal Audit
Pablo Perez	Director of Operations and Customer Services
Diego Poggetti	Director of Information Technology and Telecommunications
Germán Ranftl	Chief Financial Officer
Edagrdo Volosin	Executive Director

María José Van Morlegan graduated as a lawyer from the Universidad Católica Argentina and obtained a master’s degree and an MBA from IAE. She has extensive experience working at major law firms and managerial roles in financial and advisory entities by working for major companies. She has spent 12 years in the banking sector, serving as counsel to the Chairman of Banco Macro. She has also served during 3 years as Director of the FGS. She is also member of the supervisory committee of CAMMESA, Caja de Valores S.A. and BYMA. She represents the Company at CACIER (Comité de Integración Energética Regional), ADEERA (Asociación de Distribuidores de Energía de la República Argentina) and ADELAT (Asociación de Distribuidoras de Energía Eléctrica Latinoamericana). She is also member of the Executive Board of CAE (Cámara de Sociedades Anónimas), MAI (Women Executives of IAE) and member of Women Corporate Directors.

Fabiana Colombo is a former CFO of Grupo América. Fabiana is an accountant, graduated from the University of Buenos Aires and has a certification in e-commerce finance from UCEMA and a degree from an executive program in corporate finance. She has specialized in administration and finance, budgeting, management and control. She has vast experience in finance, information and communication technologies, network deployment, audiovisual media and electronic commerce.

Miguel Farrel is an electrical engineer graduated from the University of Buenos Aires, with a master's degree in business administration from USAL-DEUSTO. He joined the Company in 1994 and he has held various positions, such as NEXUS project deputy manager and preventive maintenance deputy manager. He has been a planning and technical control manager since 2016.

Ignacio Letemendia Ignacio has a degree in Business Administration from the University of Buenos Aires. He did a BA in Economics at the University of Illinois, USA (1990), a master’s in human resources at IDEA (1995) and a Finance Executive program (2012). Since 1995, he has been the Director of Human Resources in different companies, such as: Gillette Argentina, YPF S.A, Maxus Energy Corporation Repsol YPF, Serono, Biosidus, Merck Serono, Belgrano Carga S.A; MetroGas S.A.

Ricardo Luttini is an accountant graduated from the University of Belgrano in 1986. He has worked at Axion Energy Argentina and at Telecom Argentina as audit director. In addition, he has served as business control and audit manager at La Caja de Ahorro y Seguro, general manager at Banco Caja de Ahorro, and manager of accounting, management control and internal audit at Banco Mercantil Argentino.

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Pablo Perez is an engineer graduated from the National Technological University (UTN) with a master´s degree in business administration from Universidad del Salvador. He has hold different positions within the company in areas related to operation and maintenance. In 2006, he was appointed as the operations manager for the Pilar area and, since August 2010, he has worked as the distribution manager. In such position, he has been in charge of coordinating the Company’s operations departments -the control center that includes the high, medium and low voltage network- and the technical processes inherent to the technical operations. He assumed his role as operations and client services director on October 1, 2021.

Diego Poggetti, is an Information Systems Engineer from the National Technological University of Buenos Aires, has a specialization in Digital Business and is passionate about technology, innovation and cultural transformation. Previously he was CIO and CDO of Grupo América, he has vast experience leading technology teams and digital transformation processes.

Germán Ranftl is a public accountant from the University of Buenos Aires and obtained an MBA from UCEMA. He has spent 11 years in the banking sector, 8 of which he served as vice president of corporate finance and investment banking. Since 1998 and for five years, he was the chief financial officer of Supercanal S.A. and later joined Integra Investment SA as vice president, a consulting firm with international and Argentine transactions in mergers and acquisitions, capital markets and debt restructuring. He also served as EDEMSA’s chief financial officer.

Supervisory Committee

Argentine law requires certain corporations, such as us, to have a Comisión Fiscalizadora (supervisory committee). The supervisory committee is responsible for overseeing compliance with our by-laws, shareholders’ resolutions and Argentine law and, without prejudice to the role of external auditors, is required to present to the shareholders at the annual ordinary general meeting a written report on the reasonableness of the financial information included in our annual report and in the financial statements presented to the shareholders by our Board of Directors. The members of the supervisory committee are also authorized to attend Board of Directors’, audit committee’s and shareholders’ meetings, call extraordinary shareholders’ meetings, and investigate written complaints of shareholders holding at least 2% of our outstanding shares. Pursuant to Argentine law, the members of the supervisory committee must be licensed attorneys or certified public accountants.

Our by-laws provide that our supervisory committee must consist of three members and three alternate members, elected by our shareholders at an ordinary meeting. Members of our supervisory committee are elected to serve one-year terms and may be re-elected. Pursuant to our by-laws, holders of our Class A common shares are entitled to appoint two members and two alternate members of the supervisory committee and holders of our Class B and Class C common shares are entitled to collectively appoint one member and one alternate member.

The members and alternate members of our supervisory committee as of December 31. 2023 were:

Name	Position	Class	Year of appointment
Carlos Esteban Cvitanich (1)	Chairman	A	2023
Javier Errecondo (1)	Regular	A	2023
Lisandro Vazquez Giménez (1)	Regular	B&C	2023
Carlos Borgatello (1)	Alternate	A	2023
Marcos Ambrosio Romero Carranza (1)	Alternate	A	2023
Vivian Haydee Stenghele (1)	Alternate	B&C	2023

(1) Independent under Argentine law.

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Carlos Esteban Cvitanich is an accountant graduated from the University of Buenos Aires. He has developed professional activities advising national and international companies in accounting, auditing, taxes, balance sheets, receiverships, mergers and acquisitions, and due diligence processes. He worked at PWC (Price Waterhouse Coopers) Firm from 1984 to 1999. He has been director of Multimedios Grupo América for more than 20 years. He has vast experience in the communication and information technology services sector, with dedication to the corporate area.

Javier Errecondo is a lawyer from the University of Buenos Aires. He has specialized in banking law and capital markets, restructuring of sovereign and corporate debt, purchase and sale of share packages and structuring of investment vehicles. He has more than 35 years of experience representing companies, financial institutions, investment fund managers and high net worth individuals. He is registered to practice professionally in the City of Buenos Aires and in the City of New York. He was a foreign associate in the New York office of the law firm Shearman & Sterling from 1988 to 1992. Since 2004, he has been a founding member of the EGFA Lawyers firm.

Lisandro Vázquez Giménez is a lawyer graduated from the University of Buenos Aires. He completed the Environmental Control Audit Programme at the Instituto Superior de Control de la Gestión Pública and the Professional Practice of the Law Degree at the Legal Clinic of FARN, where he also collaborated as an assistant. He works as a Corporate Trustee before companies with public participation. He participates in auditing, integrity, ethics and compliance activities. He assists FARN's Legal Affairs Coordination. Currently, he is part of the teaching staff of the National University of San Martin (UNSAM) of the diploma course on energy transition.

Carlos Borgatello has a degree in administration and finance. He has more than 35 years of experience in national and multinational companies of first level. He also has extensive knowledge of business in countries such as Brazil and Uruguay. He is currently an independent consultant in administration and finance. Previously, he worked as consulting and audit department partner at the consultants firms Gruslin, Martinez and Associates, and Rodriguez, Zachera and Associates.

Romero Carranza Marcos Amobrosio is a lawyer, graduated from the University of Buenos Aires (UBA) in 1990. He has specialized in areas related to maritime and land transportation, ports, banks, insurance, retail and basic industries, and advised companies and individuals related to these areas. He has been a member of several boards of directors of companies in Argentina with executive functions in legal and institutional areas. Since 2008, he has been a member of the law firm Romero Carranza, Rufino y Monsegur Abogados.

Haydee Stenghele is a National Public Accountant, graduated from the University of Buenos Aires and is currently pursuing a Master in Big Data and Business Intelligence and a Master in Project Management, both at ENEB. Since 2010 she has been working as a professional specializing in company auditing at the Sindicatura General de la Nación. Previously, he was Technical Area Manager at the Superintendence of Labor Risks and Manager of the Operations, Loan Portfolio Origination and Portfolio Management Areas of Banco Hipotecario S.A.

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Ethics and Corporate Governance Committee

The Company has an Ethics and Corporate Governance Committee, which reports to the Board of Directors and is composed of the Chairman and Chief Executive Officer, the Human Resources Director and the Legal and Regulatory Affairs Director.

The Committee carries out functions aimed at ensuring the correct application and implementation of the Corporate Governance Code and Edenor's Code of Ethics, with the main objective of creating and maintaining an ethical culture that serves as a line of defence in terms of compliance with internal and external regulations.

The Ethics and Corporate Governance Committee’s composition is as follows:

Name	Position
Neil Arthur Bleasdale	Chairman
Volosin Edgardo Alberto	Executive Director
Van Morlegan María José	Director of Legal and Regulatory Affairs
Ignacio Letemendia	Director of Human Resources

Risk Committee

Edenor has a Risk Committee which reports to the President, made up of members of Management and coordinated by the Risk Manager who approves the Company's Comprehensive Risk Management plan and carries out monitoring of said plan.

Below is its composition:

The Risk Committee’s composition is as follows:

Name	Position
Neil Arthur Bleasdale	Chairman and Chief Executive Officer
Edgardo Alberto Volosin	Executive Director
María José Van Morlegan	Director of Legal and Regulatory Affairs
Fabiana Colombo	Director of Supply, Services and Logistics
Miguel Farrell	Technical Director
Ignacio Letemendia	Director of Human Resources
Ricardo Luttini	Internal Audit
Pablo Perez	Director of Operations and Customer Services
Diego Poggetti	Director of Information Technology and Telecommunications
Germán Ranftl	Chief Financial Officer
Diego Estevez	Compliance Manager
Martín Romero	Risk Manager

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Employees

Edenor had 4,635 employees as of December 31, 2023, 4,658 employees as of December 31, 2022 and 4,688 employees as of December 31, 2021.

As of December 31, 2023, approximately 79% of our full-time employees were subject to two collective bargaining agreements.

The Company’s labor relations with its employees are reflected in the collective bargaining agreements entered into with the Sindicato de Luz y Fuerza (Electric Light and Power Labor Union or “LYF”) for production personnel and the Asociación del Personal Superior de Empresas de Energía (Association of Energy Companies’ Supervisory Personnel or “APSEE”) for supervision personnel. In July 1995, we signed two collective bargaining agreements with the Electric Light and Power Labor Union and Association of Energy Companies’ Supervisory Personnel, which are currently in force pursuant to collective bargaining agreements 817/06 “E” (LYF) and 805/06 “E” (APSEE). Such agreements were renewed on November 8, 2006 and October 5, 2006 respectively. The union agreements have a joint commission integrated by representatives of the Company and the unions, to interpret the agreements and analyze claims and unresolved issues that arise in our daily activities. The most common issues that arise are related to changes in the organization of working tasks, the conformation of the working teams, relocation and readjustment of employees’ positions, detailed situations with personnel and the analysis of the suitability of different technological advances and their applications.

Although the terms of the collective bargaining agreements approved by the competent authorities have expired, the working conditions arising therefrom continue to apply until the execution of a new agreement by virtue of the provisions of Section 12 of Law No. 14,250, pursuant to which a collective bargaining agreement shall remain valid after its expiration if it is not renewed.

Furthermore, the Company has entered into several memoranda of understanding with the aforementioned unions with an aim to improving the productivity, efficiency, and the integral application of multi-functionalism and multi-professionalism in the development of the tasks of personnel in order to increase the quality levels of the service provided to users.

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Additional improvements to optimize the Company’s human resources in the different operational areas include the incorporation and adoption of new technologies and the introduction of changes in organizational structures, work plans and management systems, including the realignment of positions, responsibilities, work shifts and integration of different workplaces.

During 2023, with the objective of maintaining and protecting the purchasing power of the employees salary, in accordance with the generalized price increases, various salary agreements were signed, including on:

-        February 14, 2023;

-        April 11, 2023;

-        September 7, 2023;

-        November 27, 2023; and

-        and December 21, 2023.

At the date of issuance of this annual report, there is no certainty about future collective bargaining agreements.

We outsource a number of activities related to our business to third party contractors in order to achieve a lower and more flexible cost base, so as not to oversize our structure following works and investments plans that change from year to year and to provide us with the ability to respond more quickly to changes in our market. We have contracts with third-party service companies that together employed a total of 6,647 employees as of December 31, 2023, 5,756 employees as of December 31, 2022 and 5,877 employees as of December 31, 2021. Although we have very strict policies regarding compliance with labor and social security obligations by our contractors, we are not in a position to ensure that, if conflicted, contractors’ employees will not initiate legal actions to seek indemnification from us based upon a number of judicial rulings issued by labor courts in Argentina recognizing joint and several liabilities between the contractor and the entity to which it is supplying services under certain circumstances. As of December 31, 2023, 2022 and 2021, labor complaints amounted to Ps.3,308.8 million, Ps.8,195.7 million and Ps.7,978.0 million, respectively.

Share Ownership

None of the members of our Board of Directors, our audit committee or our senior management beneficially own any shares of our capital stock. See “Item 7. Major Shareholders and Related Party Transactions.”

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Item 7. Major Shareholders and Related Party Transactions

The following table sets forth information relating to the ownership of our common shares as of the date of this annual report.

Shareholders (1)	Class A	Class B	Class C	% of capital stock	% of the Class
Edelcos (2)	462,292,111	-	-	51.00%	100.00%
Treasury shares	-	30,852,251	-	3.40%	6.97%
FGS ANSES	-	242,999,553	-	26.81%	54.91%
Floating	-	168,714,526	-	18.61%	38.12%
PPP	-	-	1,596,659	0.18%	100.00%
Total per class	462,292,111	442,566,330	1,596,659	100.00%
Total capital stock			906,455,100

(1) Each class of shares entitles holders to one vote per share.

(2) All of our Class A common shares have been pledged to the Argentine Government to secure our obligations under our concession and cannot be transferred without the prior approval of the ENRE. See “Item 4. Information on the Company—Business Overview—Our Obligations”.

All of our shares have the same voting rights. As of December 31, 2023, there were five registered shareholders of our ADSs in the United States and 3,757,486 of our ADSs were outstanding. Since certain of our ADSs are held by brokers or other nominees, the number of direct record holders in the United States may not be fully indicative of the number of direct beneficial owners in the United States or of where the direct beneficial owners of such shares reside. We have no information concerning holders with registered addresses in the United States that hold our shares not represented by ADSs.

Initial Public Offering

In April 2007, we completed the initial public offering of our Class B ordinary shares in the form of American Depositary Shares (ADSs). We and a group of our shareholders sold 18,050,097 ADSs, representing 361,001,940 ordinary Class B common shares, in an offering in the United States and other jurisdictions outside of Argentina, and the Employee Stock Participation Program sold 81,208,416 ordinary class B shares in a simultaneous offering in Argentina. The ADSs are listed on the New York Stock Exchange under the symbol “EDN” and the Class B common shares are listed on the BYMA under the same symbol. We received approximately U.S.$61.4 million from the initial public offering, before costs. Of this amount, we used approximately U.S.$36 million to repurchase some of our Discount Notes due 2014. The remainder of the proceeds from the initial public offering was used to repurchase some of our Fixed Rate Par Notes due 2016 and for capital expenditures. After the initial public offering, our controlling shareholder continues to own 51% of our ordinary shares.

Share Buy-Back Program

On November 14, 2008, we commenced an open-market share purchase program.

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We had our first share buy-back program between 2008 and 2009, under which we repurchased 9,412,500 of our own Class B shares. Subsequently, we had a second share buy-back program (approved on December 4, 2018) under which we repurchased 21,911,340 of our Class B shares.

More recently, we had a third share buy-back program approved on April 8, 2019 under which we repurchased 1,949,260 of our Class B shares.

The original term of own shares in portfolio was extended by resolution of the Ordinary General Meeting of Shareholders of the Company dated March 3, 2011, for the same term, computable from November of that year.

On November 18, 2014, the Extraordinary General Meeting of the Company approved an additional extension of three years which will allow for an automatic reduction of capital under the Capital Markets Law and develop a proposal to target those shares, which will be submitted for consideration and approval of the relevant corporate bodies.

On April 18, 2017, the Company held the Annual General Meeting that resolved by majority vote to approve the allocation of own shares in portfolio to the implementation of certain long-term incentive plan in favor of personnel under the terms of article 67 of the CML. For more information see “Item 7. Major Shareholders and Related Party Transactions—The Company’s Share-based Compensation Plan”.

On May 10, 2018, the Company held an Annual General Meeting that resolved by majority vote to approve the allocation of own shares in portfolio under the terms of article 67 of the CML.

On April 14, 2023, 142,040 treasury shares were awarded, as part of the Share-based Compensation Plan in favor of executive directors, managers or other personnel holding key executive positions in the Company.

As of December 31, 2023 and 2022, the Company’s treasury stock amounted to 30,852,251 and 30,994,291 Class B shares.

As of the date of this annual report, the Company’s treasury stock amounted to 30,772,779. There is no current share-based incentive plan in place.

The Company’s Share-based Compensation Plan

The incentive plan was created in 2016, and approved by shareholders in 2017, allocating all the treasury shares acquired at such date. As of the date of this annual report, there were 30,772,779 Class B Shares.

On April 14, 2023, 142,040 treasury shares were awarded, as part of the Share-based Compensation Plan in favor of executive directors, managers or other personnel holding key executive positions in the Company. Finally, on April 16, 2024, 79.472 treasury shares were awarded as part of the mentioned Share-based Compensation Plan corresponding to the last vesting.

A three-year extension of the Share-based Compensation Plan will be considered at the extraordinary shareholders’ meeting to be held on April 25, 2024.

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Recovery of Erroneously Awarded Compensation

On October 2, 2023, the New York Stock Exchange amended the Limited Company Manual to add Sections 303A.14 and 802.01F, following the adoption of Exchange Act Rule 10D-1 by the SEC. The rules require listed companies to have in place policies and procedures for recovery of erroneously awarded compensation, subject to limited exceptions. Even though the Company does not have an Incentive-Based Compensation Plan applicable to executives as set forth under Rule 10D-1, the Board of Directors has adopted a compensation recovery policy whereby all responsibilities have been delegated to the Executive Committee, who might proceed with the adoption of a clawback procedure as a result of a mistake on its financial statements subject to restatement. The SEC specifically provided for certain limited exemptions (“Impracticable Recovery”), including in cases where (i) the direct expenses paid to a third party to assist in recovering the compensation would exceed the amount of erroneously awarded compensation, (ii) recovery would violate the laws of Argentina; (iii) recovery would violate anti-alienation rules applicable to tax-qualified retirement plans.

Employee Stock Participation Program

At the time of the privatization of SEGBA (our predecessor), the Argentine Government allocated all of our Class C common shares, representing 10% of our outstanding capital stock, to establish a Programa de Propiedad Participada (employee stock participation program, or PPP), pursuant to Law No. 23,696 and regulations thereunder, through which certain eligible employees (including former employees of SEGBA who became our employees) were each entitled to receive a specified number of our Class C common shares, calculated in accordance with a formula that considered a number of factors, including the employee’s salary level, position and seniority. In order to implement the PPP, a general transfer agreement, a share syndication agreement and a trust agreement were executed.

Pursuant to the transfer agreement, participating employees were allowed to defer payment for the Class C common shares over time. As a guarantee for the payment of the deferred purchase price, the Class C common shares were pledged in favor of the Argentine Government. Furthermore, under the original trust agreement, the Class C common shares were placed in trust by the Argentine Government with Banco Nación, acting as trustee for the Class C common shares, for the benefit of the participant employees and the Argentine Government. In addition, pursuant to the share syndication agreement, all political rights of the participant employees (including the right to vote at our ordinary and extraordinary shareholders’ meetings) were to be exercised collectively until the payment in full of the deferred purchase price and the release of the pledge in favor of the Argentine Government. On April 27, 2007, the participant employees paid the deferred purchase price of all of the Class C common shares in full to the Argentine Government and, accordingly, the pledge was released and the share syndication agreement was terminated.

According to the regulations applicable to the employee stock participation program, participating employees who terminated their employment with us before the payment in full of the deferred purchase price to the Argentine Government were required to transfer their shares to the guarantee and repurchase fund, at a price calculated pursuant to a formula set forth in the transfer agreement. As of the date of payment of the deferred purchase price, the guarantee and repurchase fund had not paid in full the amounts due to the former participating employees for the transfer of their Class C common Shares.

A number of our and SEGBA’s former employees have brought claims against the guaranty and repurchase fund, the Argentine Government and, in certain limited cases, us, in each case relating to the administration of our Employee Stock Participation Program. The plaintiffs who are former employees of SEGBA were not deemed eligible by the relevant authorities to participate in the Employee Stock Participation Program at the time of its creation, which determination these plaintiffs´ dispute and are seeking compensation for. The plaintiffs, who are our former employees, are either seeking payment of amounts due to them by the guaranty and repurchase fund for share transfers that occurred upon their retirement from our employment or disputing the calculation of the amounts paid to them by the Guaranty and Repurchase Fund. In several of these claims, the plaintiffs have obtained attachment orders or injunctive relief against the guaranty and repurchase fund over approximately 1,567,231 Class C common shares and Ps.0.7 million of the funds on deposit in the fund, in each case up to the amount of their respective claims. Because the outcome of these proceedings has not yet been determined, the Argentine Government has instructed Banco Nación to create a Contingency Fund to hold a portion of the proceeds of the offering of Class B common shares by the Employee Stock Participation Program pending the outcome of these legal proceedings.

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According to the agreements, laws and Decrees that govern the employee stock participation program, our Class C common shares may only be held by our employees. Upon the closing of our initial public offering, substantially all of our Class C common shares were converted into Class B common shares and sold. In accordance with these agreements, laws and Decrees, the rights previously attributable to the Class C common shares have been combined with those attributable to the Class B common shares, and holders of the remaining Class C common shares will vote jointly as a single class with the holders of Class B common shares in the election of directors. Only 1,596,659 Class C common shares remain outstanding, representing 0.18% of our capital stock.

On April 20, 2023, the Company’s Ordinary and Extraordinary Shareholders’ Meeting approved the conversion of 355,945 Class C shares into Class B shares, in the framework of the termination of the Employee Stock Participation Program, which had been authorized by the CNV.

RELATED PARTY TRANSACTIONS

Technical Assistance Agreement with Edelcos

The agreement comprises the provision to the Company of technical advisory services, especially in financial matters. It expires in December 2026, but may be extended if so agreed by the parties thereto. In exchange for such services, the Company pays Edelcos either an annual amount of Ps.1,766 million or the amount equivalent to 1.75% of the annual gross billing, whichever results in the higher amount, plus the associated value added tax. Any of the parties may terminate the agreement at any time by giving 60 days’ notice, without having to comply with any further obligations or paying any indemnification to the other party. For more information, please see Note 35 of our Financial Statements.

Agreement with SACME

In the framework of the regulation of the Argentine electric power sector established by Law No. 24,065 and SEE Resolution No. 61/92, and after the awarding of the distribution areas of the city and metropolitan area of Buenos Aires to Edenor and Edesur, the bidding terms and conditions of the privatization provided that both companies were required to organize SACME to operate the electric power supervision and control center of the transmission and sub-transmission system that feeds the market areas transferred to those companies. For such purpose, on September 18, 1992, SACME was organized by Edenor and Edesur.

SACME’s purpose is to manage, supervise and control the operation of both the electric power generation, transmission and sub-transmission system in the City of Buenos Aires and the Buenos Aires metropolitan area and the interconnections with the SADI, to represent distribution companies in the operational management before CAMMESA, and, in general, to carry out the necessary actions for the proper development of its activities.

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The share capital of SACME is divided into 1,953,828 common, registered non-endorsable shares, of which 976,914 Class I shares are owned by Edenor and 976,914 Class II shares are owned by Edesur.

The operating costs borne by the Company in fiscal year 2023 amounted to Ps.633 million.

Item 8. Financial Information

See “Item 18. Financial Statements and Report of Independent Registered Public Accounting Firm (PCAOB ID 1349)” beginning on page F-1.

LEGAL AND ADMINISTRATIVE PROCEEDINGS

Legal Proceedings

In the ordinary course of our business, we participate as plaintiff and defendant in various types of lawsuits. Our management evaluates the merit of each claim and assesses its possible outcome, recording a reasonable allowance in our financial statements for the contingencies related to the claims filed in the lawsuits against the Company. As of December 31, 2023, we had established provisions in the aggregate amount of Ps.12,730 million to cover potential losses from such claims and legal proceedings. Except as disclosed below, we are not a party to any legal proceedings or claims that may have a material adverse effect on our financial position or results of operations.

We are not aware of any other contingencies that are reasonably possible and, as of December 31, 2023, there were no losses in excess of the contingencies that we recognized in our Financial Statements as of and for the year ended December 31, 2023.

The most significant legal actions in which the Company is a party involved are detailed below:

Legal action brought by Consumidores Financieros Asociación Civil Para Su Defensa (13563/2009)

In March 2010, Consumidores Financieros Asociación Civil Para Su Defensa (“CFD”) brought a class action against the Company and Edesur in National Court of Original Jurisdiction in Federal Administrative Matters No. 2, Clerk’s Office No. 3, seeking the reimbursement of: (i) interest applicable to the payment of energy purchased from the WEM, transferred to customers, (ii) the Value Added Tax (VAT) percentage on that interest, calculated on a taxable base that is allegedly contrary to the Consumer Protection Law; and (ii) the late payment charges calculated at the lending rate published by Banco de la Nación Argentina.

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On April 22, 2010, the Company answered the complaint, filing a motion to dismiss for lack of standing (“excepción de falta de legitimación”), requesting, at such opportunity, that a summons be served upon the Federal Government, the Federal Administration of Public Revenues (“AFIP”) and the ENRE as third-party defendants.

Prior to the time allowed to produce evidence, the Tax authorities were ordered to conduct a review of the proceedings in order to issue an opinion on the motion to dismiss for lack of standing filed by Edenor. After the proceedings were sent back to the court, the motion was rejected. At the time, the Company filed an appeal against such denial.

In 2022, evidence was offered and arguments were submitted, with the Company invoking lack of standing and the termination of the action by lapse of time. The rendering of a decision on the motions filed by the Company has been deferred and will be considered when final judgment is rendered. The action brought by ADDUC (which is detailed below) will be considered together with these actions.

As of the date of this annual report, this case is pending resolution.

Legal action brought by Asociación de Defensa de Derechos de Usuarios y Consumidores - ADDUC

On October 21, 2011, Asociación de Defensa de Derechos de Usuarios y Consumidores (“ADDUC”) brought a class action against the Company requesting: (i) that the Company be ordered to reduce or mitigate the default or late payment interest rates charged to customers; (ii) that the pacts or accords that would have stipulated the interest rates that the Company applies to its customers, as well as the administrative resolutions based on which it justifies the collection of interest be declared non-applicable; and (iii) that interest thus collected be reimbursed.

On April 8, 2014, the Court admitted the motion to dismiss due to the fact that the claims at issue were being litigated in another lawsuit (“excepción de litispendencia”), and ordered that the proceedings be sent to the Court hearing the case entitled “Consumidores Financieros Asociación Civil vs Edesur and Other defendants, for breach of contract”.

Prior to the time allowed to provide evidence, the Tax authorities were ordered to conduct a review of the proceedings in order to issue an opinion on the motion to dismiss for lack of standing filed by the Company, which was rejected.

The Company filed an appeal, which, on October 16, 2020, the National Court of Appeals in Federal Administrative Matters rejected, confirming the decision of the court of original jurisdiction. The case has been brought to trial.

As of the date of this annual report, this case is pending resolution.

Legal action brought by Consumidores Financieros Asociación Civil para su Defensa (9119/2022)

On May 4, 2021, CFD brought a class action against the Company in the Court having jurisdiction in Administrative and Tax Matters of the City of Buenos Aires, Clerk’s Office No. 3 of the Judicial Management Office in Consumer Relations, claiming damages allegedly caused by the Company to customers by virtue of the Agreement on the Regularization of Payment Obligations entered into in 2019 by the Company, the Energy Secretariat and the Electric Power Market and Renewable Resources Secretariat, and claiming the reinstatement of the penalties set forth therein, plus interest, loss of profit or opportunity and punitive damages.

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The Company answered the complaint and filed a motion to dismiss for lack of jurisdiction (“excepción de incompetencia”) of the local courts. The court admitted the motion to dismiss for lack of jurisdiction and, as a consequence thereof, on January 6, 2022, sent the proceedings to the Court having jurisdiction in Civil and Commercial Federal Matters No. 5 – Clerk’s Office No. 9. As of the date of this annual report, the case has been brought to trial. The Company’s management believes there exist reasonable grounds to believe that Edenor should prevail in this case.

Legal action brought by the Office of the Ombudsman of the City of Buenos Aires (Court record 30815/2023)

On April 4, 2023, the Ombudsman of the City of Buenos Aires filed a complaint against the Company and Edesur in the Court of Original Jurisdiction in Administrative, Tax and Consumer Relations Matters of the City of Buenos Aires No. 25, sole Clerk’s Office, claiming punitive damages and alleging a deficiency in the information about service interruptions, and requesting the granting of a precautionary measure consisting of the setting up of a workgroup to implement a communication system.

The Company filed an appeal against the precautionary measure, answered the complaint and filed a motion to dismiss for lack of jurisdiction of the local courts. On February 27, 2024, the court admitted the motion to dismiss for lack of jurisdiction. The Company’s management believes there exist reasonable grounds to believe that Edenor should prevail in this case.

Claim of the City of Buenos Aires Tax Authorities (“AGIP”). Assessment Resolution No. 3417/2017

On December 5, 2017, the AGIP claims alleged differences in the contribution that impacts electric power companies. The difference is based on the content of the contribution’s taxable base, which in the AGIP’s opinion, is made from the Company’s monthly income deriving from sales, without admitting the deduction for the sale of energy to railway companies provided for in the federal laws governing the contribution. The main objections made by the AGIP are the following: a) challenged the tax returns for the 2011-2013 tax periods; b) assessed the resulting tax for the 2011-2013 tax periods, plus interest; c) provided that for the income obtained in connection with the activity of “distribution of electricity and sale services” the Company should pay the aforementioned contribution for the referred to fiscal years at the rate of 6%; and (d) imposed fines.

On January 18, 2018, the Company filed a post-judgement motion for reversal (“recurso de reconsideración”), which was rejected on July 4, 2019. Against this denial, the Company filed an appeal before a higher administrative authority (“recurso jerárquico”). As of the date of this annual report, the AGIP has issued no resolution in regard to this appeal.

AFIP – Difference in contribution rate to the Single Social Security System (“SUSS”) (executive order 814/2001) for the 12/2011- 11/2019 fiscal periods

In 2011, the Company decided to apply the reduced rate for contributions to the SUSS set forth in section 2, sub-section b) of Executive Order No. 814/2001 as it is a corporation in which the Sustainability Guarantee Fund, managed by ANSES, has an equity interest in its business (Law 26,425, as amended).

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In 2021, after the tax audits conducted by the Large Employer Social Security Resources Control Division, three AFIP resolutions were issued against the Company claiming the adjustment of the contribution rate and rejecting the inclusion of Edenor in section 2, sub-section b) of Executive Order No. 814/2001.

The Company’s position is supported by the three appeals filed against the debt assessments (all of them filed in Courtroom III of the Federal Social Security Court of Appeals) given the nature of the shareholder ANSES-FGS, its significant role in the Board of Directors, the Federal Government’s participation in the Supervisory Committee through the SIGEN, the recognition that minority state-owned corporations are considered to be included among those entitled to the benefit of Executive Order No. 814/2001, to the extent that this has changed since the enactment of the aforementioned Law No. 27,541, as well as the existence of three similar cases with a favorable outcome in the other two courtrooms comprising the Court of Appeals (with such cases having been appealed by the AFIP before the CSJN).

In the three court records, the Company filed a surety bond as a substitute for the solve et repete (“Pay First”) requirement applicable to the filing of the appeals. The state of the appeals filed by the Company is as follows:

(i)       Edenor S.A. VS AFIP, CHALLENGE OF DEBT, Court record 20408/2021 (CI 25.329) (OI No. 1.578.472- for the 12/2011-12/2016 tax periods):

On September 13, 2021 an appeal was filed. As of the date of this annual report, a judgment on the case is still pending.

On February 29, 2024 evidence was filed in the court record that the Company is unable to comply with the First Pay requirement due to the long-overdue readjustment of revenue which, as with rates, must be issued by the competent authorities.

(ii)       Edenor S.A. VS AFIP, CHALLENGE OF DEBT, Court record 11840/2021 (CI 25.329) (OI No. 1.806.371- for the 01/2017-06/2019 tax periods):

On February 22, 2024, the Company was served with notice of the Court of Appeals’ decision, whereby the appeal filed by the Company was rejected as inadmissible, inasmuch as the appellate court does not agree with the criterion of the other courtrooms that accept the surety bond as a replacement for the “Pay First” requirement. In that regard, it stated that in order for the surety bond to be accepted, the impossibility of payment must be founded. The Company will file a federal extraordinary appeal (“recurso extraordinario federal”) (with stay of execution) with the Supreme Court of Justice, and, should it be denied, it will file an appeal against the denial to admit the extraordinary appeal (“recurso de queja”) (without stay of execution), which implies the immediate availability of the funds to continue with the Company’s defense.

(iii)       Edenor S.A. VS AFIP, SOCIAL SECURITY CONTRIBUTIONS (CI 24.920) (OI: 1893337- for the 07/2019-11/2019 tax periods- Court record No.: CSS 053731/2022):

On October 4, 2022 an appeal was filed. As of the date of this annual report, judgment on the case is still pending.

Furthermore, on February 29, 2024 evidence that the Company is unable to comply with the First Pay requirement was filed in the court record, in the same way as in the court record mentioned in (i) above.

Without prejudice to the immediacy of the appeal filed before the Supreme Court of Justice (“CSJN”) against the denial of the extraordinary appeal, which would be granted without stay of execution and, therefore, the conditions would be met to enforce payment of the debt in question in this specific process mentioned in (ii) above, the merits of the case have not yet been addressed in this Courtroom and, according to the Company’s understanding and based on the opinion of its legal advisors, the Company’s management considers that it has solid arguments to defend the inclusion of the Company under section 1 of Law No. 22,016, as it was in effect until the issuance of Executive Order No. 814/2001.

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National Regulatory Authority for the Distribution of Electricity, Proceeding for the Determination of a Claim” (Court record No. 16/2020)

On May 4, 2021, the Company was served notice of a complaint filed by the ENRE in connection with Edenor’s compliance with captions 9.2.1 and 9.2.2 of the “Agreement on the Renegotiation of the Concession Agreement” for differences arising from the date of payment of certain penalties included therein.

The Company answered the complaint, with the proceedings currently being at the stage of producing evidence. The Company’s management believes there exist reasonable grounds to believe that Edenor should prevail in this case.

AFIP’s tax claim for Income Tax, Undocumented outflows and VAT

The AFIP initiated a verification process to assess differences in connection with the VAT, undocumented outflows and the income tax, at the request of the Court hearing the case entitled “García Veronica Elizabeth and other defendants, Fraudulent tax evasion and Violation of law 24,769 – Prosecutor AFIP and others” (Case No. 58258/2017”), for bills issued by certain former suppliers of the Company, considered in such proceedings to be “usinas mixtas” (companies used as real and fake invoice plants). This led to the following proceedings:

(i)       “García Veronica Elizabeth and other defendants, Fraudulent tax evasion and Violation of law 24,769 – Prosecutor AFIP and others” (2017 and 2018 fiscal periods):

On July 2, 2020, the AFIP initiated a sua sponte assessment process.

On July 6, 2021, the Company answered the notice and filed a motion for annulment in connection with the AFIP’s tax claim, stating the legal foundations and submitting the relevant documentary evidence.

On November 17, 2021 the AFIP notified the Company of the sua sponte assessments made relating to the three taxes (VAT, IT and undocumented outflows), which were appealed by the Company to the Federal Tax Court on December 10, 2021. This appeal stays the execution of payment.

On December 26, 2022, the Company was served with notice of the acquittal of all its former Board of Directors members. The AFIP appealed such decision, and, on March 30, 2023, the San Martín Federal Court of Appeals revoked the acquittal based on the lack of conclusive evidence to either dismiss or confirm the charges against them. It also ordered that the investigation be reopened and that new evidence be produced. In that regard an accounting expert report was issued by the CSJN’s Bodies of Experts, whose conclusions were favorable to the Company.

On April 12, 2024, the court ordered the dismissal of Edenor and its directors.

(ii)       Verification Process Order (01/2019-10/2021 fiscal periods):

On February 18, 2022, the Company was notified of the initiation of a new verification process in respect of the same suppliers in question, with a request for additional information on transactions performed from January 2019 until October 2021. As of the date of this annual report, the verification process is in process, and no debt has yet been assessed.

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(iii)       Verification Process Order (11/2021-06/2022 fiscal periods):

On July 11, 2023, the Company was notified of the initiation of a new verification process in respect of the same suppliers in question, with a request for additional information on transactions performed from November 2021 until June 2022. As of the date of this annual report, the verification process is in process, and no debt has yet been assessed.

The Company’s management believes there exist reasonable grounds to believe that Edenor should prevail in this case.

Protección a los Consumidores y Usuarios de la República Argentina Asociación Civil (Procurar) – Class action for the protection of a constitutional right (“amparo colectivo”)

Protección a los Consumidores y Usuarios de la República Argentina Asociación Civil, jointly with two users domiciled in the District of San Martín, brought an action against the Company, the SE and CAMMESA.

In that framework, a provisional measure was issued, pursuant to which:

(i) the Company was ordered to refrain from paying CAMMESA any amounts earmarked for the carrying out of the investments necessary for ensuring the appropriate quality of the electricity service.

(ii) CAMMESA was ordered to refrain, both from claiming judicial payment by the Company of the energy supplied and/or to be supplied in the future to Edenor, and from issuing any precautionary measure affecting the latter’s equity, as a result of and/or due to energy supplied, maintaining the normal and regular dispatch of energy, affecting neither the continuity nor the quality of the public service the distributor must provide to its customers.

Legal action brought by the Company (Study, Review and Inspection of Works in Streets and/or Public Spaces Tax “TERI”)

On October 9, 2020, the Company filed a declaratory judgment action in the CSJN, against the Government of the City of Buenos Aires ("GCBA") in order to put an end to the state of uncertainty arising between the federal regulations governing the public service of electricity and the GCBA’s claim to impose payment of the TERI on the Company. Additionally, a petition for the granting of a prohibitory injunction was filed, requesting that the GCBA be ordered to refrain from claiming payment of the TERI, and from bringing enforcement actions and/or levying an attachment on the Company’s assets.

On December 21, 2022, the CSJN resolved that it had original jurisdiction over the case, ordered that notice of the complaint be served upon the GCBA for a term of sixty days, and rejected the precautionary measure sought by the Company. On August 13, 2023, the GCBA answered the complaint. As of the date of this annual report, the proceedings are at the stage of producing evidence.

Furthermore, the Company has filed complaints requesting the nullification of the GCBA’s Resolutions providing for the payment of the TERI. In one of those proceedings in particular (“Edenor S.A. vs GCBA, Challenge of actions taken by the Governmental Authority” Court record 286603/2024) a favorable judgement was rendered on February 28, 2024, considering section 377 of the City of Buenos Aires Tax Code to be unconstitutional. The Company’s management believes there exist reasonable grounds to believe that Edenor should prevail in this case.

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DIVIDENDS

Pursuant to the Argentine Corporations Law, declaration and payment of annual dividends, to the extent the distribution of available earnings complies with the requirements of such law, is determined by our shareholders at the annual ordinary shareholders’ meeting. From time to time, the Board of Directors makes a recommendation with respect to the payment of dividends. Edenor has not declared or paid any dividends since August 14, 2001.

Amount available for distribution

Dividends may be lawfully declared and paid only out of our retained earnings stated in our yearly financial statements prepared in accordance with IFRS and CNV regulations and approved by the annual ordinary shareholders’ meeting.

According to the Argentine Corporations Law and our by-laws we are required to maintain a legal reserve of 20% of our outstanding capital stock. The legal reserve is not available for distribution to shareholders. Under the Argentine Corporations Law and our by-laws, our yearly net income (as adjusted to reflect changes in prior results) is allocated in the following order:

(i) to comply with the legal reserve requirement;

(ii) to pay the accrued fees of the members of our Board of Directors and supervisory committee;

(iii) to pay any amounts owed to our employees under the “Bonos de Participación para el Personal” (which are bonds issued to our employees according to the provisions of our by-laws, that entitle each holder to a pro rata portion of 0.5% of our earnings, after payment of taxes);

(iv) for voluntary or contingent reserves, as may be resolved from time to time by our shareholders at the annual ordinary shareholders’ meeting; and

(v) remainder of the net income for the year may be distributed as dividends on common shares or as otherwise decided by our shareholders at the annual ordinary shareholders’ meeting.

Our Board of Directors submits our financial statements for the preceding fiscal year, together with reports thereon by the supervisory committee, at the annual ordinary shareholders’ meeting for approval. Within four months of the end of each fiscal year, an ordinary shareholders’ meeting must be held to approve the financial statements and determine the allocation of our net income for such year. Under applicable CNV regulations, cash dividends must be paid to shareholders within 30 days of the shareholders’ meeting approving any dividends. In the case of stock dividends, shares are required to be delivered within three months of our receipt of notice of the authorization of the CNV for the public offering of the shares arising from such dividends. The statute of limitations for any shareholder to receive dividends declared by the shareholders’ meeting is three years from the date in which they have been made available to the shareholder.

As from February 2017, pursuant to ENRE Resolution No. 63/17, the company no longer has regulatory restrictions to make dividend payments. Consequently, we could pay dividends out of our retained earnings, subject to the conditions set forth by the Argentine Corporations Law.

As of December 31, 2023, we have 30,852,251 treasury shares. The acquisition cost of such shares in the market, in accordance with the provisions of Title IV, Chapter III, article 3.11.c of the CNV’s Rules, restricts the amount of the realized and liquid gains that we may distribute to our shareholders.

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SIGNIFICANT CHANGES

Except as identified in this annual report on Form 20-F, no significant changes in our financial condition has occurred since the date of the most recent audited financial statements contained in this annual report.

Item 9. The Offer and Listing

Since April 26, 2007, our Class B common shares and the ADSs have been listed on the BYMA and the NYSE, respectively. The ADSs have been issued by the Bank of New York as depositary. Each ADS represents 20 Class B common shares.

Offer and Listing Details

The following table sets forth, for the periods indicated, the annual high and low market prices for the ADSs on the NYSE and for the shares on the BYMA.

The following tables set forth, for the periods indicated, the reported high and low sales prices for our shares on the BYMA and the reported high and low sales prices for the ADSs on the NYSE.

	Buenos Aires Stock Exchange		New York Stock Exchange
	Pesos per Share		U.S. Dollars per ADS
Period	High	Low	High	Low
2022
First Quarter	73.35	51.80	7.43	4.62
Second Quarter	64.90	54.80	7.00	4.35
Third Quarter	105.25	55.00	7.00	4.04
Fourth Quarter	137.90	99.00	7.99	6.30
Period	High	Low	High	Low
2023
First Quarter	182.35	137.85	10.26	6.70
Second Quarter	428.45	164.95	16.97	8.32
Third Quarter	570.25	379.90	16.87	11.75
Fourth Quarter	1041.85	436.30	21.11	10.19

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	Buenos Aires Stock Exchange		New York Stock Exchange
	Pesos per Share		U.S. Dollars per ADS
Period	High	Low	High	Low
2022
November	120.90	103.00	7.30	6.58
December	137.90	116.50	7.99	6.88
2023
January	183.00	144.00	10.26	8.30
February	180.00	157.25	9.75	8.60
March	169.50	137.00	9.03	6.70

THE ARGENTINE SECURITIES MARKETS

Trading on the Mercado de Valores de Buenos Aires

Trading in the Argentine securities market

Pursuant to the provisions of the CML, securities market in Argentina is comprised of several markets that require authorization from the CNV to operate (the “Authorized Markets”), including the BYMA, the Mercado Abierto Electrónico S.A., the Mercado Argentino de Valores S.A., the Mercado de Valores de Córdoba S.A., the Mercado a Término de Rosario S.A., among others. The CML allows the authorized Markets to delegate certain of its duties and rights as a market to other qualified entities, as previously authorized by the CNV. Securities listed on these exchanges include corporate equity, bonds and government securities.

On December 29, 2016, the CNV authorized BYMA and on January 2, 2017, IGJ and CNV authorized the creation and operation of BYMA. Most of its capital stock is free float and 31 percent is owned by BCBA.

The BYMA is the largest authorized market in Argentina. Pursuant to Resolution No. 18,629, the CNV authorized the BYMA to operate as an Authorized Market, and allowed BYMA to delegate certain of its rights and duties as a market in the BYMA, including without limitation, the right to authorize the listing of issuers and securities in the BYMA, and the right to publish the daily market gazette.

In Argentina, debt and equity securities traded on an exchange or the over-the-counter market must, unless otherwise instructed by their shareholders, be deposited with Caja de Valores S.A. (“Caja de Valores”). Caja de Valores is the central securities depositary of Argentina and provides central depositary facilities, as well as acting as a clearing house for securities trading and as a transfer and paying agent for securities transactions. Additionally, Caja de Valores handles the settlement of securities transactions carried out by the BYMA and operations the computerized exchange information system mentioned above.

BYMA incorporated 99.96% of Caja de Valores’ equity, and as a result, the operating cycle of the capital market industry is vertically integrated. At the technological level, BYMA acquired the Millennium Stock Exchange platform belonging to the London Stock Exchange group as a sign of its innovative vocation and with the aim of providing the best attention to its participants and investors. Millennium, a leading global technology provider in trading and post-trading software, currently serves the London, Milan, Oslo and Johannesburg Stock Exchanges, among others.

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Although companies may list all of their capital on the BYMA or any other Authorized Market, controlling shareholders in Argentina typically retain the majority of a company’s capital stock, resulting in a relatively small percentage of active trading of the companies’ stock by the public on any such Authorized Market.

Securities may also be listed and traded through over-the-counter market brokers who are linked to an electronic reporting system. The activities of such brokers are controlled and regulated by MAE, an electronic over-the-counter market reporting system that functions independently from the BYMA. Under an agreement between the BYMA and the MAE, trading in equity and equity-related securities is conducted exclusively on the BYMA and trading in corporate debt securities is conducted on both the S&P MERVAL/BYMA) and the MAE. Trading in Argentine Government securities, which are not covered by the agreement, may be conducted on either or both of the BYMA and the MAE. The agreement does not extend to other Argentine exchanges.

Recently, Caja de Valores S.A., member of BYMA Group adopted its new Custody System, developed with Nasdaq's leading CSD (Central Securities Depositories) technology, which aligns the Argentine Capital Market with the technologies used by the most developed markets in the world.

Regulation of the Argentine securities market

The Argentine securities market is regulated and overseen by the CNV, pursuant to Law No. 26,831, as well as stockbroker transactions, market operations, the public offering of securities, corporate governance matters relating to public companies and the trading of futures and options. Argentine insurance companies are regulated by a government agency, the Superintendencia de Seguros de la Nación, whereas financial institutions are regulated primarily by the Central Bank.

Before offering securities to the public in Argentina, an issuer must meet certain requirements established by the CNV with regard to the issuer’s assets, operating history and management, among others, and only securities for which an application for a public offering has been approved by the CNV may be listed on a stock exchange. Despite these requirements imposed by the CNV, CNV approval does not imply any kind of certification as to the quality of the securities or the solvency of the issuer, although issuers of listed securities are required to file unaudited quarterly financial statements and audited annual financial statements and various other periodic reports with the CNV and the stock exchange on which their securities are listed, as well as to report to the CNV and the relevant stock exchange any event related to the issuer and its shareholders that may affect materially the value or trading volume of the securities traded.

Money Laundering

The concept of money laundering is commonly used to refer to operations that aim to enter funds from criminal activities into the institutional system and thus convert profits from illegal activities into assets of apparently lawful origin.

On April 13, 2000, the Argentine Congress passed Law No. 25,246, as subsequently amended (the “Anti-Money Laundering Law”) which typifies money laundering as a crime. Additionally, such law, which amended several sections of the Argentine Criminal Code, has established sanctions for the ones incurring in such illicit activity and has created the Unidad de Información Financiera (“UIF”), which depends on the Ministry of Economy.

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The Argentine Criminal Code defines money laundering as a crime, defining it as the exchange, transfer, management, sale or any other use of money or other assets obtained through a crime, by a person who did not take part in such original crime, with the potential result that such original assets (or new assets resulting from such original assets) appear as if obtained through legitimate means, provided that the aggregate value of the assets involved exceed in the aggregate (through one or more related transactions) Ps.300,000.

The UIF is in charge of the analysis, supervision and conveyance of information in order to prevent the laundering of assets obtained from: (i) Crimes related to illegal traffic and commercialization of narcotics (Law No. 23,737); (ii) Crimes related to arms trafficking (Law No. 22,415); (iii) Crimes related to the activities of an illegal association as defined in Article 210 bis of the Argentine Criminal Code; (iv) Illegal acts committed by illegal associations (Article 210 of the Argentine Criminal Code) organized to commit crimes with political or racial motivation; (v) Crimes of fraud against the Public Administration (Article 174, Section 5 of the Argentine Criminal Code); (vi) Crime against the Public Administration under Chapters VI, VII, IX and IX bis of Title XI of Book Two of the Argentine Criminal Code; and (vii) Crimes of underage prostitution and child pornography under Articles 125, 125 bis and 128 of the Argentine Criminal Code.

The Anti-Money Laundering Law assigns information and control duties to certain private sector entities, such as banks, agents, stock exchanges and insurance companies, according to the regulations of the UIF, and for financial entities, the Central Bank. These regulations apply to many Argentine companies. These obligations consist mainly of maintaining internal policies and procedures aimed at preventing money laundering and financing of terrorism, especially through the application of “know your customer” (“KYC”) policies.

Financial entities must inform the UIF about any suspicious or unusual transaction, or transactions lacking economical or legal justification, or being unnecessarily complex. In addition, it has established guidelines and internal procedures for unusual or suspicious transactions, which must be implemented by financial institutions and other entities.

The UIF issued Resolution No. 229/2011, which was replaced by Resolution UIF No. 21/2018 and subsequently amended (“AML legislation in the Capital Market Sector”). The AML legislation in the Capital Market Sector establishes certain procedures that must be followed by the authorized agents of the CNV involved in the placement, intermediation and public offering of securities (the “Obliged Subjects in the Capital Market Sector”) in order to prevent, detect and report (within the deadlines established) the acts, transactions or omissions that may arise from the commission of money laundering and terrorist financing crimes in the capital market sector. Additionally, the AML legislation in the Capital Market Sector introduced general guidelines to identify different types of customers (including a distinction between frequent, casual and inactive customers), the requested information, the documentation to be kept and the procedure to detect and report – within the established deadlines – all suspicious transactions.

The Central Bank and the CNV should also comply with provisions of the Anti-Money Laundering Law. With respect to issuers (such as the Company), CNV regulations provide that any person (either individuals or legal entities) performing significant capital contributions or loans must be identified, whether or not a shareholder at the time of the contributions, and must meet the requirements for general participants in the public offering of securities, provided in the CNV regulations and the UIF regulations, especially with regards to the identification of such persons and to the origin and legality of the funds and loans provided.

On the other hand, with the issuance of Resolution No. 21/2018, as amended, the responsibility of the Obliged Subjects in the Capital Market Sector has been included in order to identify and evaluate the risks that they are exposed to and, as a result, to adopt administrative measures for mitigating them, in order to more effectively prevent money laundering. In accordance with this standard, the Obliged Subjects in the Capital Market Sector must have KYC policies, which must be applied according to the risk rating resulting from the implemented risk model.

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On October 14, 2016, the UIF issued Resolution No. 135/2016, which strengthened regulations regarding the international exchange of information between similar authorities which may enter into agreements or memorandum of understanding as well as to the foreign public bodies that are members of the Egmont Group of Financial Information Unit or the Asset Recovery Network of the Financial Action Task Force of Latin American (GAFILAT).

On January 11, 2017, the UIF published Resolution No. 4/2017, which established that special due diligence measures must be applied for identifying foreign and domestic investors (who shall comply with the requirements therein set forth to qualify as such) in the Republic of Argentina upon requesting the opening of special investment accounts.

On the other hand, under the Argentine tax amnesty (Law 27,260 and its regulatory Decree No. 895/16) (the “Tax Amnesty Law”) it was established that the information that had been voluntarily disclosed may be used for investigating and sanctioning crimes of money laundering and finance of terrorism. To this end, the UIF is enabled to inform other public intelligence agencies or investigations, based on a previous resolution of the president of the UIF and provide with information that show evidence of the commission of crimes of money laundering and/or financing of terrorism. In the same way, the AFIP is obliged to report to the UIF the suspicious transactions detected in the context of the Tax Amnesty Law and to provide all the information that the UIF requires, not being able to invoke the fiscal secrecy.

In November 2018, the UIF published Resolution No. 134/18, which updates the list of persons that should be considered “politically exposed persons” (“PEP”) in Argentina, considering the functions they perform or have performed, as well as its relationship of closeness or affinity with third parties who perform or have performed in such functions. Also, during 2019, the UIF issued Resolution No. 15/2019, which modified the PEP list and Resolution 128/19 established that foreign PEPs will be considered high risk and therefore subject to reinforced due diligence measures, with some exceptions.

For more information, you should seek advice from your legal counsel and read the applicable rules mentioned herein, including their amendments, which can be found at the following websites: www.infoleg.gov.ar, the UIF’s website: www.uif.gov.ar and the Central Bank’s website: www.bcra.gov.ar. The information contained on these websites is not part and shall not be deemed incorporated into, this annual report.

Corporate Criminal Liability Law

On March 1, 2018, the Corporate Criminal Liability Law No. 27,401 (“the Corporate Criminal Liability Law”) came into effect, after having been enacted by the Argentine Congress on November 8, 2017, providing for the criminal liability of corporate entities for offenses against the public administration and cross-border bribery committed by, among others, its shareholders, attorneys-in-fact, directors, managers, employees, or representatives. A company found liable under this law may be subject to various sanctions, including, among others, fines from two to five times the undue benefit obtained or that could have been obtained and the partial or total suspension of activities for up to ten years. In addition, this law extended the criminal liability under the Argentine Criminal Code to actions committed outside Argentina by Argentine citizens or companies domiciled in Argentina.

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On April 6, 2018, the Argentine Executive Power issued Decree No. 277/18, which regulates the Corporate Criminal Liability Law, providing that the Anticorruption Office of the Ministry of Justice and Human Rights will establish the guidelines to comply with the Corporate Criminal Liability Law’s provisions related to the Integrity Program. On October 4, 2018, the Anticorruption Office issued Resolution No. 27/2018, which approved the “Integrity’s Guidelines for the best compliance of sections 22 and 23 of the Corporate Criminal Liability Law”.

Upon the enactment and entry into force of the Corporate Criminal Liability Law, our Board of Directors assessed the level of compliance with the Integrity Program set forth in sections 22 and 23 of such law, which seeks to implement a set of internal proceedings, mechanisms and actions for integrity, supervision and control, geared at preventing, detecting and correcting the irregularities and illegal acts covered by such law.

The Integrity Program set forth by law has mandatory and optional requirements, and we have defined the need to comply with all of them.

Furthermore, the Integrity Program is periodically monitored by the Board of Directors to identify the existence of improvement opportunities or necessary updates. The Board of Directors has defined that our legal affairs department will be responsible for the implementation of the Integrity Program.

Item 10. Additional Information

MEMORANDUM AND ARTICLES OF INCORPORATION

Set forth below is a brief summary of certain significant provisions of our by-laws and Argentine law. This description does not purport to be complete and is qualified by reference to our by-laws, which have been filed as an exhibit to this annual report.

On March 18, 2024 the Board of Director convened a shareholders’ meeting to consider, among other matters, the amendment of Articles 4 (corporate purpose), 16 (extraordinary shareholders’ meetings), and 25 (operaiton of Board of Directors). The shareholders’ meeting will be held on April 25, 2024.

For a description of the provisions of our by-laws relating to our Board of Directors and statutory auditors, see “Item 6. Directors, Senior Management and Employees.”

Description of Capital Stock

We are a public service company incorporated on July 21, 1992 as a sociedad anónima, a limited liability corporation, duly incorporated under the laws of Argentina for a 95−year period and registered on August 3, 1992 with the Public Registry of Commerce of the City of Buenos Aires under No. 7041 of Book 111, Volume A of Sociedades Anónimas.

As of the date of this annual report, our capital stock consists of 906,455,100 common shares, represented by 462,292,111 book-entry Class A common shares, with a par value of one Peso each and the right to one vote per share, 442,566,330 book-entry Class B common shares, with a par value of one Peso each and the right to one vote per share, and 1,596,659 book-entry Class C common shares, with a par value of one Peso each and the right to one vote per share. Under our by-laws, we are required to ensure, unless the ENRE approves otherwise, that Class A common shares represent 51% of our outstanding capital stock and that new Class A, Class B and Class C common shares are issued pro rata to the percentage of the outstanding capital stock represented by them prior to a capital increase, unless a general or special shareholder’s meeting approves otherwise. All of our outstanding shares are currently fully paid.

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Our shareholders authorized a capital increase of 83,161,020 common shares on June 7, 2006 composed of 42,412,120 Class A common shares, 32,432,797 Class B common shares and 8,316,102 Class C common shares. Our Class B common shares have been listed on the BYMA since 1995 although they have never been traded effectively on that exchange or any other market. Holders of Class A common shares may convert any Class B common shares they may hold into Class A common shares, on a one−for−one basis, if such conversion would be required to maintain at all times 51% of our outstanding capital stock. Our Class A common shares have been pledged in favor of the Argentine Government to secure our obligations under our concession and may not be transferred, not even to shareholders of the same class, without the prior approval of the ENRE.

Upon the closing of our IPO, substantially all our Class C common shares were converted into Class B common shares. The rights previously attributable to our Class C common shares were combined with those attributable to our Class B common shares, and holders of our remaining Class C common shares vote jointly as a single class with the holders of our Class B common shares in the election of directors.

As of the date of this annual report, we have a request of Banco Nación, as trustee under the Employe Stock Participation Program to convert 355,945 Class C shares into Class B Shares. Please see “Share Ownership-Employee Stock” Participation Program”.

Corporate Purpose

Article 4 of our by-laws establishes that our corporate purpose is to engage in the distribution and sale of electricity within our concession area. We can also acquire the capital stock of other electricity distribution companies, subject to regulatory approval, lease our network to provide power line communication or other voice, data and image transmission services, and render operating, advisory, training, maintenance, consultancy, management services and know-how related to the distribution of electricity both in Argentina and abroad. These activities may be conducted directly by us or through subsidiaries or affiliates. In addition, we may act as trustees of trusts created under Argentine law to the extent they are related to credit facilities granted to vendors and service providers acting in the distribution and sale of electricity who have guarantees granted by reciprocal guaranty companies owned by us. The Company has filed with ENRE a proposal to amend its bylaws to incorporating certain additional ancillary activities to its corporate purpose.

Shareholders’ Liability

Under the Argentine Corporations Law, shareholder liability for a company’s losses is limited to the value of the shareholder’s shareholding in the company. However, shareholders who have a conflict of interest with the company with respect to certain matters and who do not abstain from voting on such matters may be held liable for damages to the company, provided that their votes were involved in the adoption of the relevant decision. In addition, shareholders who voted in favor of a resolution that is subsequently declared void by a court as contrary to Argentine law or the company’s by-laws (or regulations, if any) may be held jointly and severally liable for damages to the company, other shareholders or third parties resulting from the resolution. See also “Item 3. Key Information—Risk factors—Risks related to our ADSs and Class B common shares—Our shareholders may be subject to liability for certain votes of their securities.”

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Appraisal Rights

Whenever our shareholders approve:

· a merger or spin-off in which we are not the surviving corporation, unless the acquirer shares are authorized for public offering or listed on any stock exchange;

· a transformation of our corporate legal status;

· a fundamental change in our by-laws;

· a change in our domicile outside Argentina;

· a voluntary termination of the public offering or listing authorization;

· a decision in favor of our continuation upon delisting or cancellation of our public offering authorization; or

· a total or partial recapitalization following a mandatory reduction of our capital or liquidation.

Any shareholder that voted against such action or did not attend the relevant meeting may exercise appraisal rights, that is, the rights to withdraw as our shareholder and have its shares cancelled in exchange for the book value of its shares, determined on the basis of our latest Statement of Financial Position, or that should have been prepared, in accordance with Argentine laws and regulations, provided that such shareholder exercises its appraisal rights within the time frame set forth below.

Appraisal rights must be exercised within five days following the meeting at which the relevant resolution was adopted, in the event of a dissenting shareholder that voted against such resolution, or within 15 days following such meeting in the case of a dissenting shareholder that did not attend the meeting and who can prove that it was a shareholder at the date of the meeting. In the case of mergers or spin-offs involving an entity authorized to make public offering of its shares, appraisal rights may not be exercised if the shares to be received as a result of the transaction are listed in any stock exchange. Appraisal rights are terminated if the resolution giving rise to such rights is overturned at another shareholders’ meeting held within 60 days as from the meeting at which the resolution was adopted.

Payment of appraisal rights must be made within one year of the date of the shareholders’ meeting at which the resolution was adopted, except where the resolution was to delist our capital stock, in which case the payment period is reduced to 60 days from the date of the relevant resolution.

Because of the absence of legal precedents directly on point, there is doubt as to whether holders of ADSs would be able to exercise appraisal rights either directly or through the depositary with respect to our Class B common shares represented by ADSs.

Redemption or Repurchase

According to the CML, a “sociedad anónima” may acquire its own shares, provided that the public offering and listing thereof has been authorized, subject to the following terms and conditions and other regulations that may be issued by the CNV. The conditions are: (a) the shares to be acquired should be fully paid; (b) there shall be a resolution of the Board of Directors to such effect, (c) the acquisition shall be made out of net profits or voluntary reserves; (d) the total amount of shares acquired by the company, including previously acquired shares, shall not exceed 10% of the capital stock or such lower percentage determined by the CNV. The shares acquired in excess of such limit shall be disposed of within 90 days after the date of the acquisition originating the excess.

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The shares acquired by the company shall be disposed of by the company within a maximum term of three years counted as from the date of the acquisition thereof. Upon disposition of the shares, the company shall make a preemptive rights offering of such shares. The offer is not mandatory if the shares are issued in connection with a compensation plan or program for the company’s employees or if the shares are distributed among all shareholders in proportion to their shareholding. If shareholders do not exercise in whole or in part, their preemptive rights, the sale shall be made in a stock exchange.

For more information, see “Item 7. Major Shareholders and Related Party Transaction—Share Buy-Back Program”.

On November 18, 2014, we held the general annual meeting which resolved by majority of votes to extend for another three years the term for holding the treasury shares acquired within the scope of Section 68 of Law No. 17,811 (text consolidated by Decree No. 677/01). All the shares issued have been fully paid-in. On April 18, 2017, the Company held the Annual General Meeting that resolved by majority vote to approve the allocation of own shares in portfolio to the implementation of the long-term incentive plan in favor of personnel dependent on company under the terms of article 67 of the CML.

On May 10, 2018, December 4, 2018 and April 8, 2019 the Company’s Board of Directors approved the allocation of own shares in portfolio under the terms of article 67 of the CML. See “Item 7. Major Shareholders and Related Party Transactions—Share Buy-Back Program” above.

As of December 31, 2022 and 2021 the Company owned 30,994,291 and 31,134,420 shares, respectively, held as treasury stock. On April 22, 2022, 140,129 treasury shares were awarded, as part of the Share-based Compensation Plan, to executive directors, managers and other personnel holding key executive positions in the Company.

Preemptive and Accretion Rights

Under Argentine law, shareholders of any given class of common shares have preemptive rights, on a pro rata basis, to subscribe shares of the same class owned by them, and accretion rights, on a pro rata basis, to subscribe additional shares of its class or other classes of shares not subscribed by other shareholders of the same class. Preemptive rights and accretion rights may be waived only by each shareholder on a case-by-case basis. Pursuant to the Argentine Corporations Law, in exceptional cases and on a case by case basis when required for the best interest of the relevant company, its shareholders at an extraordinary meeting with a special majority may decide to limit or suspend preemptive rights, provided that the resolution is included in the meeting’s agenda and the shares to be issued are paid in kind or are issued to cancel preexisting obligations.

In the event of a capital increase, our by-laws provide that holders of Class A, Class B and Class C common shares have preemptive rights, on a pro rata basis, to subscribe new Class A, Class B or Class C common shares, as the case may be, in order to maintain their pro rata interest in our capital stock, unless otherwise decided at our general or extraordinary shareholders’ meeting. The holders of our Class A common shares, in any capital increase, must exercise their preemptive rights to maintain at least 51% of our capital stock outstanding after giving effect to the capital increase, unless otherwise authorized by the ENRE or to the extent any other legal mechanism is used to secure the 51% ownership of our capital stock. In order for the participant employees of the PPP to participate in such an offering, all of our Class C common shares (including shares of PPP participants who will not participate in such an offering) shall be converted into Class B common shares.

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Pursuant to Argentine law, if approved by an extraordinary shareholders’ meeting, companies authorized to make a public offering of their securities may shorten the period during which preemptive rights may be exercised from 30 to 10 days following the publication of the offering in the Argentine Official Gazette and a newspaper of wide circulation in Argentina. Preemptive rights are exercisable following such publication (which must be made for three days) for a period of 30 days, provided the period is not reduced in the manner described above.

Shareholders who have exercised their preemptive rights have the right to exercise accretion rights, on a pro rata basis, with respect to any unsubscribed shares. Shares not subscribed by shareholders by virtue of preemptive or accretion rights may be offered to third parties. Pampa and certain of our selling shareholders have assigned their preemptive and accretion rights to the international underwriters. Holders of ADSs may be restricted in their ability to exercise preemptive rights if a prospectus under the Securities Act relating thereto has not been filed or is not effective or an exemption is not available.

Voting Rights

Under our by-laws, each class of common shares entitles its holder to one vote per share at any meeting of our shareholders. Pursuant to the Argentine Corporations law, a shareholder is required to abstain from voting any resolution in which his direct or indirect interest conflicts with that of, or is different from, the Company. In the event that such shareholder votes on such resolution, and such resolution would not have been approved without such shareholder’s vote, the resolution may be declared void by a court and such shareholder may be held liable for damages to the Company, other shareholders and third parties.

Registration Requirements of Foreign Companies Holding Class B Shares

Under Argentine regulations, foreign companies that hold shares directly (and not indirectly through ADSs) in an Argentine company must register with the IGJ to exercise certain shareholder rights, including voting rights. The registration requires the filing of certain corporate and accounting documents in order to demonstrate that the foreign shareholder is not a special purpose vehicle organized solely to conduct business in Argentina that it is entitled to conduct business in its place of incorporation and meets certain foreign assets requirements.

Liquidation Rights

In case of liquidation or dissolution, our assets will be applied to satisfy our outstanding liabilities and then be proportionally distributed among holders of our common stock without distinction of classes.

Ordinary and Extraordinary Shareholders’ Meetings

Shareholders’ meetings may be either ordinary meetings or extraordinary, and may be held in the legal address of the Company or virtually by any means that allows the communication between all the attendants with image and sound . We are required to convene and hold an ordinary meeting of shareholders within four months of the close of each fiscal year to consider the matters specified in the first two paragraphs of Section 234 of the Argentine Corporations Law, such as the approval of our financial statements, allocation of net income for such fiscal year, approval of the reports of the Board of Directors and the statutory audit committee and election, performance and remuneration of directors and members of the statutory audit committee. In addition, pursuant to the CML, at an ordinary shareholders’ meetings, our shareholders must consider (i) the disposition of, or creation of any lien over, our assets as long as such decision has not been performed under the ordinary course of our business and (ii) the execution of administration or management agreements and whether to approve any agreement by virtue of which the assets or services provided to us are paid partially or totally with a percentage of our income, results or earnings, if the payment is material when measured against the volume of the ordinary course of business and our shareholders’ equity. Other matters which may be considered at an ordinary meeting convened and held at any time include the responsibility of directors and members of the statutory audit committee, capital increases and the issuance of certain corporate bonds. Extraordinary shareholders’ meetings may be called at any time to consider matters beyond the authority of an ordinary meeting including, without limitations, the amendment of our by-laws, issuance of debentures, early dissolution, merger, spin off, reduction of capital stock and redemption of shares, transformation from one type of entity to another, appointment, removal and retribution of the liquidators and limitation or suspension of shareholders’ preemptive rights.

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Special Shareholders Meetings of Classes of Shares

In the event a shareholder’s meeting is held to adopt any resolution affecting the rights of a class of shares, the consent or ratification of shareholders of that class is required and a special shareholder’s meeting shall be held. The special shareholder’s meetings shall be governed by the rules provided for the ordinary shareholder’s meetings.

Notices of Meetings

Notices of shareholders’ meetings are governed by the provisions of Argentine Corporations Law. Furthermore, notice of shareholders’ meetings must be published for five days in the Official Gazette, in an Argentine newspaper of wide circulation and in the bulletin of the BASE, at least 10 but not more than 30 days prior to the date on which the meeting is to be held. Such notice must include information regarding the type of meeting to be held, the date, time and place of such meeting and the agenda. If quorum is not available at such meeting, a notice for a second meeting, which must be held within 30 days of the date on which the first meeting was called, must be published for 3 days, at least 8 days before the date of the second meeting. Notices of shareholders’ meetings may be published simultaneously for the second meeting to be held on the same day as the first meeting, only in the case of ordinary meetings and special shareholder’s meetings of a relevant class of shares. Shareholders’ meetings may be validly held without notice if all shares of our outstanding capital stock are present and resolutions are adopted by unanimous vote of shares entitled to vote.

Quorum and Voting Requirements

The quorum for ordinary meetings of shareholders on first call is a majority of the shares entitled to vote, and action may be taken by the affirmative vote of an absolute majority of the shares present that are entitled to vote on such action. If a quorum is not available at the first meeting a second meeting may be held at which action may be taken by the holders of an absolute majority of the shares present, regardless of the number of such shares. The quorum for an extraordinary shareholders’ meeting on first call is 70% of the shares entitled to vote, and if such quorum is not available, a second meeting may be held, for which the quorum is 35% of the shares entitled to vote.

Action may be taken at extraordinary shareholders’ meetings by the affirmative vote of an absolute majority of shares present that are entitled to vote on such action, except that: the approval of a majority of shares with voting rights (for these purposes non−voting preferred shares shall have voting rights), without application of multiple votes, is required at both the first and second meeting for: (i) the transfer of our domicile outside Argentina, (ii) a fundamental change of the corporate purpose set forth in our bylaws, (iii) our anticipated dissolution, (iv) the total or partial redemption of shares, or (v) the transformation of our corporate legal status, in which cases resolutions shall be adopted by the affirmative vote of the majority of shares with the right to vote. Preferred shares will be entitled to one vote in these circumstances. Moreover, pursuant to our by-laws, the extension of the company’s duration, the withdrawal from public offering or delisting, the total or partial recapitalization, the merger or spin-off (including if we are the surviving entity) or the termination of the Concession Agreement for the distribution and sale of electricity, on first and second calls, shall be taken by the affirmative vote of shares representing at least 80% of the outstanding shares entitled to vote, whether present or not at the shareholder’s meeting, without application of multiple votes, if applicable. An amendment to our by-laws requires the prior approval of the ENRE. Shareholder’s meetings shall approve amendments “ad-referendum” of the ENRE.

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Shareholders’ meetings may be called by the Board of Directors or the members of the statutory audit committee whenever required by law or whenever they deem it necessary. Also, the board or the members of the statutory audit committee are required to call shareholders’ meetings upon the request of shareholders representing an aggregate of at least five percent of our outstanding capital stock in which case the meeting must take place within 40 days of such shareholders’ request. If the board or the statutory audit committee fails to call a meeting following such a request, a meeting may be ordered by the CNV or by the courts. In order to attend a meeting, a shareholder must also deposit with us a certificate of book-entry shares registered in its name and issued by Caja de Valores. at least three business days prior to the date on which the meeting is to be held. If so entitled to attend a meeting, a shareholder may be represented by proxy. Proxies may not be granted to our board, members of the statutory audit committee, officers or employees.

Election of Directors

Our Board of Directors must have 12 acting directors and the number of alternate directors that the shareholders may resolve in a general annual ordinary meeting or at a class annual ordinary meeting, such number not to exceed the number of acting directors. All directors are elected to serve for one fiscal year. Holders of Class A common shares are entitled to elect, at a general annual ordinary meeting or at an annual ordinary meeting of Class A holders 7 directors, two of which must be independent in accordance with CNV regulations and our by-laws. Holders of Class B common shares are entitled to elect, at a general annual ordinary meeting or at an annual ordinary meeting of Class B holders, 4 directors one of which must also be independent in accordance with CNV regulations and our by-laws. Holders of Class C common shares are entitled to elect, at a general annual ordinary meeting or at an annual ordinary meeting of Class C holders 1 director until the percentage of our capital stock represented by Class C common shares decreases below 6% at which moment holders of Class C common shares will be required to vote together with holders of Class B common shares to elect, as a common class, 5 directors. Upon the closing of the Argentine offering (to the extent consummated), substantially all Class C common shares will have been converted into Class B common shares and a nominal amount of Class C common shares will remain outstanding. Accordingly, any rights previously attributable to the Class C common shares will have been combined with those attributable to the Class B common shares, and holders of the remaining Class C common shares will vote jointly as a single class with the holders of Class B common shares in the election of directors.

Form and Transfer

Our current capital stock is represented by book-entry shares. Our shareholders are required to hold their shares through book-entries directly made by Caja de Valores in the stock registry of the company carried by Caja de Valores or through book-entries with brokers, banks and other entities approved by the CNV that have accounts with Caja de Valores, or with the participants of the Caja de Valores. Caja de Valores is in charge of maintaining a stock registry on our behalf based on information received from shareholders that chose to hold their shares directly by registration on the stock registry of the company and from participants of the Caja de Valores, and in accordance with Argentine law only those holders listed in the stock registry either directly or through participants of the Caja de Valores will be recognized as shareholders. Shares held by participants of the Caja de Valores -have the same rights as shares recorded in our shareholders’ register.

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MATERIAL CONTRACTS

We are party to various contracts in the ordinary course of business. See “Item 5. Operating and Financial Review and Prospects – Contractual Obligations”

EXCHANGE CONTROLS

The following is a summary of the main measures taken by the Central Bank with the purpose of regulating inflows and outflows in the Argentine Free Exchange Market (“MLC” for its Spanish acronym) to maintain the exchange rate stability and protect international reserves in view of the high degree of uncertainty and volatility in the exchange rate by tightening exchange controls and restrictions on the inflow and outflow of foreign exchange. In this regard, as of the date of this annual report, the Central Bank has issued a series of communications, which introduced additional restrictions to access the MLC associated, among other factors, to the carry out of transactions with securities and other external liquid assets, holding and disposal of liquid foreign assets and repayment of external indebtedness.

In this regard, in order to access the MLC for the making of any payment abroad, local residents must (i) have their foreign-currency holdings in the country deposited in accounts with local financial institutions and (ii) not have available liquid external assets for an amount equivalent to or higher than U.S.$.100,000.

The term “liquid external assets” comprise, among others: holdings of foreign currency notes and coins, holdings of gold in the form of good delivery bars or coins, demand deposits in foreign financial institutions and other investments allowing for the immediate availability of foreign currency (for example, investments in foreign public securities, funds in investment accounts deposited with investment managers located abroad, crypto assets, funds deposited in payment service providers’ accounts, etc.). Funds deposited abroad which may not be freely used by the customer as they are reserve or guarantee funds constituted under foreign financing agreements, or funds kept as collateral for foreign transactions with derivatives entered into abroad are exempted from such definition. Other exceptions apply including, among others, funds deposited in foreign bank accounts disbursed under external financial indebtedness for an amount not to exceed the amount of the debt service payments corresponding to the following 365 (three hundred and sixty-five) calendar days. Certain repatriation obligations were also imposed under the referred regulations.

Moreover, local residents are required to file an affidavit certifying: (i) that, the customer has not performed security sales transactions with settlement in in foreign currency, transferred securities to depository institutions abroad, exchange securities for other external liquid assets nor purchased foreign securities in the country with pesos during the 90 (ninety) calendar days preceding the access to the MLC and that it undertakes not to carry out those transactions during the following 90 calendar days; and (ii) in the case of legal entities, (a) the identity of the individuals or legal entities exercising direct control over the customer, and (b) that, on such date and during the previous 90 (ninety) calendar days, the customer has not transferred in the country any local currency funds or other liquid local assets, to any individual or legal entity exercising direct control over them, except for those directly associated to regular transactions between residents for the acquisition of goods and/or services.

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In addition, to access the MLC the client must not be included in (i) the AFIP’s database of apocryphal invoices or documents; and (ii) the list of individual tax IDs (CUIT) registering inconsistent transactions provided and updated by the Central Bank. If the client is included in the referred list, the intervening financial institution must reinforce the control measures to ensure the reasonableness and genuineness of the transactions.

Payments of imports and other purchases of goods abroad

Access to the MLC for the payment of imports of goods is subject to several limitations.

Previously, imports of goods and services were governed by the Integral Monitoring System (“SIMI”). 

In addition to the documentation requirements established in connection with import payments, in case -due to the type of imported good- the import is subject to the approval (“SALIDA” status) of a declaration in the Integral Import Monitoring System (“SIMI”), access to the MLC for the payment of imports shall be subject to compliance of any of the as of March 3, 2022, (iii) the import is associated to a category B SIMI declaration with SALIDA status and payment is not made earlier than the expiration of a 180 day terms as from the nationalization of the goods; (iv) the import is associated to a category B SIMI declaration with SALIDA status and the goods qualify as capital assets; (v) the import is associated to a category B SIMI declaration with SALIDA status and the imported goods are related to Covid 19 detection and treatment; (vi) the import is associated to a category B SIMI declaration with SALIDA status and the imported goods are subject to non-automatic import licenses; (vii) the import is associated to a category B SIMI declaration with SALIDA status and the import is made by the public sector, companies controlled by the Argentine Government or public trusts. Obtention of A SIMI declarations shall be limited to an annual amount limitation equal to the lower of: (i) the FOB value of the importer’s 2021 imports plus 5% and (ii) the FOB value of the importer’s 2020 imports plus 70%. If the importer has not registered imports during 2020/2021 or the amount resulting from the aforementioned calculation is lower, the applicable annual limitation shall be of U.S.$ 50,000. The category A SIMI declaration amounts that may be requested from time to time shall be equal to the proportional value of the annual cap accrued as of the application date plus 20% of the annual cap. In no case may the annual cap be exceeded. All the FOB value of imports registered between January 1, 2022 and March 3, 2022 shall be deducted from the annual cap.

On October 14, 2022, the BCRA issued Com. “A” 7622 regulating Federal Tax Authority (AFIP) General Resolution 5271/2022 which replaced the “SIMI” by the Import System of the Argentine Republic (“SIRA”). The SIRA regulations stablish access to the MLC may be granted for payment of imports of goods in transactions associated with the SIRA to the extent that the payment is made once the term in calendar days -to be determined for each case by the Secretary of Commerce- has expired, counted as from the date of registration of the customs entry of the goods. The payment of certain imports are set a minimum of days to access to the MLC. In the case of SIMI’s that are in “SALIDA” status as of October 17, 2022, the same conditions as above remain in force.

In addition to the aforementioned conditions, until December 31, 2022, Central Bank’s prior authorization shall be required to access the MLC to make import payments or to repay the principal of debts originating from the import of goods by companies, except in the following cases:

(a) The participating institution has an affidavit from the customer declaring that the total amount of payments related to its imports of goods made through the MLC on or after January 1, 2020, including the payment for which authorization is being requested does not exceed by more than U.S.$250,000 (or its equivalent) (i) the amount for which the importer would have access to the MLC upon computing all imports of goods recorded in its name in the SEPAIMPO system officially validated between January 1, 2020 and the day preceding the access to the MLC, plus (ii) the amount of payments cleared through the MLC on or after July 6, 2020 for imports of goods entered through a Private Application or Courier or transactions under the scope of Sections 10.9.1 to 10.9.3 of the restated text of the Central Bank regulations shipped on or after July 1, 2020 or, if previously shipped, have not arrived to Argentina prior to such date, plus (iii) the amount of payments made in the context of (c) to (f) and (h) to (i) below, not related to imports falling within the scope of clauses (i) and (ii) of this paragraph, plus (iv) the amount of payments associated with goods donated to the Argentine Ministry of Health to strengthen the Argentine medical or health care capacity, less (v) the amount of advance payments of imports pending customs registration made between September 1, 2019 and December 31, 2019. Additionally, and before executing payments for the import of goods, entities should verify that the affidavit requested to the customer is compatible with the Central Bank’s existing data.

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(b) Deferred payments of imports of goods shipped on or after July 1, 2020 or that have been shipped prior thereto but have not arrived in Argentina prior to such date.

(c) Payment related to a transaction not falling within the scope of section (b) above, provided that applied towards the payment of a commercial debt for imports of goods to (or guaranteed by) an export credit agency or a foreign financial institution, to the extent that the debt with such creditors arose prior to July 1, 2020 or from guarantee contracts prior to that date. In the case of payments for imports registered before January 1, 2020, the entity must have an affidavit from the customer stating that the portion of such imports paid has not been previously computed for the purpose of making payments under clause (a).

(d) Import payments made by: (i) the public sector, (ii) all business organizations, irrespective of their legal forms, where the Argentine Government holds a majority stake in the capital or voting of corporate actions, or (iii) the trusts created out of contributions from the national public sector.

(e) A payment with pending customs clearance registration to be made by a legal entity responsible for supplying critical medicines to be entered upon a private request from the beneficiary of such medical coverage.

(f) A payment of imports with pending customs clearance registration for the purchase of kits used in detection of COVID-19 or other goods with tariff items listed in Decree No. 333/2020 as supplemented.

(g) An advance payment of imports intended to purchase capital goods, with an affidavit from the customer stating that, including the payment whose course is being requested, the amount pending regularization for payments made under this item as of December 1, 2021 does not exceed the equivalent amount of U.S.$1,000,000 (United States Dollars One Million Dollars). In the event that the amount indicated is exceeded, the following conditions must be verified: (i) the amount of the advance payments made under this clause does not exceed 30% of the total amount of the goods to be imported; and (ii) such amount, on demand and of commercial debt without customs entry record made under this clause, does not exceed 80% of the total amount of the goods to be imported.

(h) Payment of principal under commercial debts for the import of goods provided that the customer has a “Certification of Increase of Exports of Goods in 2021” for the same value of the amount to be paid.

(i) The customer has a certification issued within the previous 5 (five) business days within the framework of Section 3.19 of the restated text of the Central Bank regulations, for the equivalent of the amount to be paid.

(j) In the case of payments of import medicine supplies or other health or medical care goods or supplies required manufacture the same in the country, the entity has an affidavit from the customer stating that, including the advance import payment for which authorization is requested, it does not exceed by more than U.S.$3,000,000 (United States Dollars Three Million Dollars) (or its equivalent in other currencies) the amounts referred to in paragraphs (a) to (e) above.

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Prior to processing payments of imports of goods, the participating institution shall, in addition to requesting the affidavit from the customer, confirm that such affidavit is consistent with data held by the Central Bank based on the online system implemented for such purposes.

(k) Demand import payments or commercial debts without customs registration, complying with the following conditions: (i) the transaction corresponds to the import of supplies for the manufacture of goods in Argentina; (ii) the payments made under this clause do not exceed, in the current calendar month and for all financial entities, the average amount of the imports of supplies during the last twelve (12) closed calendar months, net of the delayed non-regularized amount for import payments with pending customs entry record; and (iii) in those cases in which a SIMI declaration is required for the registration of the customs entry of goods, any of the conditions set forth in Sections 10.3.2.7(i), 10.3.2.7(ii) or 10.3.2.7(vi) of the restated text of the Central Bank regulations are met.

The aforementioned amounts will be increased in an amount equal to 50% of the amounts entered and settled by the importer through the MLC under advance export payments or external prefinancing of exports with a minimum tenor of 180 days.

Access for the remaining 50% shall also be allowed to the extent that the additional part corresponds to payments for imports of capital goods and/or supplies required for the production of exportable goods. In the latter case, the entity must have an affidavit from the customer regarding the type of good involved and its status as an input in the production of goods to be exported.

The access to make the corresponding payment must be made within 5 (five) business days of the settlement of the advance or pre-financing from abroad. The entity through which the settlement was made may send the corresponding certification to the entity/s through which the customer wishes to access the foreign exchange market.

The new administration has replaced the SIRA with the Import Statistical System (SEDI). Since then, all goods or services can be imported into Argentina without the need for an import license. SEDI consists on a report filed by an importer which, once approved, will be valid for 360 calendar days.

Upon filing the SEDI, AFIP will assess the request based on the information available in its records and the importer’s tax status. The evaluation of the economic and financial capacity (“CEF” for its acronym in Spanish) of importers was eliminated by AFIP General Resolution No. 5478/2024.

Once the above assessment is cleared, a SEDI declaration will be approved and labeled under an “Official” status, allowing importation.

Operations exempt from the SEDI declarations include:

· Importing for consumption, carried out under the sample, donation, and diplomatic franchise regimes;

· Goods with duty and tax exemptions;

· Goods entering under the courier or postal shipment regime;

· Goods covered by the import regime for scientific-technological research inputs;

· Goods originating from the Special Customs Area of the Federal Territory of Tierra del Fuego, Antarctica and South Atlantic Islands (the “Special Customs Area”) that are imported into the mainland territory, as well as import operations of goods from the mainland to this Special Customs Area; and

· All goods falling under AFIP General Resolution No. 3,628 –goods processed through specific files and/or particular summary assignments-.

Goods included in the SEDI declaration will have a tolerance in the unit FOB value of 7% more or less, and in the quantity of 7% more, with no limitations being established when this is less than what is declared in the SEDI declaration in relation to what is stated in the corresponding import destination applications for consumption.

Under the new regime, there are rules applicable to the debt accumulated before December 13, 2023, and rules applicable to debt generated after such date.

For imports of goods and services made before December 12, 2023, the new foreign exchange regulations establish that access to the official foreign exchange market to make payments related to such imports (goods or services) will be subject to previous authorization from the Central Bank.

In order to regularize these debts, importers must declare all debts for imports of goods and services incurred by December 12, 2023 in the Registry of Commercial Debt for Imports. Importers with commercial debt for imports of goods or services had until January 24, 2024 to declare their accumulated debt in the Registry.

The Argentine Government is openly attempting to block all payments related to previous imports, and it has been reported that the governmental authorities are analyzing a regularization plan. The estimated deadline for the implementation of this plan is March 2024.

Access to the official foreign exchange market for imports of goods performed after December 13, 2023 is subject to the payment terms described below:

(a) Fuel & Energy: Immediate payment.

(b) For pharmaceutical products used in local processing and manufacturing, as well as fertilizers and phytosanitary products: 30 calendar days from the date of clearance through Customs of the imported Goods.

(c) For the payment of automobiles and items of certain Harmonized Tariff Schedule (HTS) codes: 180 calendar days since the date of clearance through Customs of the imported Goods.

Rest of items: (a) 25% after 30 calendar days of the import, (b) an additional 25% after 60 calendar days, (c) an additional 25% after 90 calendar days, and (d) the remaining 25% after 120 calendar days.

Import of Services: Services can be paid after 30 days in the case for services rendered between unrelated parties, or 180 days in the case of services rendered between related parties.

Although this new regulation applicable to imports of goods and services made on or after December 13, 2023 is an attempt to expedite payments abroad, it has not yet been duly implemented. Consequently, as of the date of this annual report, importers of goods and services are unable, in practice, to access the MLC to make payments abroad related to imports of goods and services. Therefore, as of the date of this annual report, the restrictions to access the MLC to make payments for imports abroad are still in place.

Payments of principal of and interest on external financial indebtedness

Access to the MLC for the cancellation of principal and interest services under debt securities registered outside Argentina and other foreign financial indebtedness is allowed, provided that the following requirements are met:

(a) The debtor shall evidence that an amount equivalent to the principal amount of the external financial indebtedness has been previously entered and settled in the MLC. This condition will be deemed met in the following cases:

(i) funds disbursed as from September 1, 2019, which have been previously entered and settled in the MLC;

(ii) external indebtedness originated from September 1, 2019 onwards, that do not imply any disbursement as a result of being refinancing of external financial debts that would have had access to the MLC, provided that the refinancing does not anticipate payment of the original debt;

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(iii) the amount of transaction and/or issuance expenses and other expenses debited abroad in connection with the relevant banking transactions;

(iv) the difference between the actual issue amount and the principal amount of issues of debt securities publicly registered abroad placed under par;

(v) capitalization of interest as contemplated in the relevant credit agreement;

(vi) the portion of issues of debt securities publicly registered abroad, made as from October 9, 2020, with an average life of at least 2 (two) years, delivered to creditors of external financial indebtedness and/or foreign currency denominated debt securities publicly registered in Argentina maturing between October 15, 2020 and December 31, 2022 to reach the refinancing standards set forth in Section 3.17 of the restated text of the Central Bank regulations;

(vii) the portion of issues of debt securities publicly registered abroad, made as from January 7, 2021, delivered to creditors to refinance existing financial indebtedness with an extension of their average life, corresponding to the refinanced principal amount, interest accrued until the refinancing date, and, provided that the new debt securities do not have any principal payments during the first 2 (two) years, an amount equivalent to the interest that would accrue in the first 2 (two) years on the indebtedness subject to refinancing and/or the extension of the maturity of the refinanced principal amount and/or the interest that would accrue on the refinanced amounts; and

(viii) the portion subscribed with foreign currency in Argentina of issues of debt securities publicly registered abroad, made as from February 5, 2021, to the extent that all the following conditions are satisfied: (i) the debtor evidences that before the issue of the debt securities it made exports or that the placement proceeds were used to satisfy external commitments (if the debtor is unable to comply with at least one of these conditions, the issue must have obtained the Central Bank’s prior approval); (ii) the average life of the debt securities is at least five (5) years; (iii) the first payment of principal takes place no earlier than three (3) years after the issue date; (iv) the local subscription does not exceed 25% of the total subscription amount; and (v) as of the MLC access date, all the funds subscribed abroad and in Argentina must have been settled in the MLC.

(b) If applicable, evidence should be provided that the transaction was reported in the most recent filing made under the Survey of External Assets and Liabilities Regime.

(c) Access to the MLC occurs on a date that is not earlier than 3 (three) business days before the maturity date of the applicable principal or interest payment. The Central Bank’s previous consent will be required to access the MLC on an earlier date, unless the debtor falls under the scope of any of the following events, and all the conditions set forth in each case are met:

(i) Prepayment of principal and interest simultaneously with the settlement of new external financial indebtedness:

· The prepayment must be made simultaneously with funds settled under a new financial indebtedness disbursed as from October 17, 2019.

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· The new indebtedness has a longer average life than the average life of the outstanding balance being prepaid.

· The aggregate principal payments of the new indebtedness shall at no time exceed the aggregate principal payments of the debt being cancelled.

(ii) Prepayment of interest under a process of debt securities exchange:

· The prepayment must be made in the context of a process of a debt securities exchange issued by the client;

· The prepaid amount corresponds to interest accrued as of the exchange closing date;

· The average life of the new debt securities is longer than the remaining average life of the exchanged securities; and

· The cumulative amount of the principal payments under the new securities may not exceed at any time the amount of the principal payments under the exchanged title.

(iii) Prepayment under a refinancing process carried out pursuant to the provisions of Section 3.17 of the restated text of the Central Bank regulations:

· Prepayment of principal and/or interest occurs in the context of a debt refinancing process that satisfies the conditions set forth in Section 3.17;

· Access to the MLC occurs within 45 (forty-five) calendar days before the maturity date;

· The interest amount paid does not exceed the amount of interest accrued on the refinanced indebtedness until the refinancing’s closing date; and

· The cumulative amount of principal payments under the new indebtedness does not exceed the cumulative amount of the principal payments under the refinanced indebtedness.

Moreover, to the extent that the Central Bank’s previous consent is required to access the MLC exchange market to repay principal and/or interest under external financial indebtedness upon maturity, this requirement will not apply provided that all the following conditions are met: (i) the funds have been used to finance projects under the Gas.Ar Plan; (ii) the proceeds have been transferred and settled through the MLC as from November 16, 2020; and (iii) the indebtedness has an average life of at least 2 (two) years.

Until December 31, 2023, access to the MLC for the payment of principal under indebtedness with related parties is subject to Central Bank approval, unless the customer has a “Certification of Increase of Exports of Goods in 2022” issued for the same value of the amount to be paid. Moreover, to the extent that the Central Bank’s previous consent is required to access the MLC to repay principal under external financial indebtedness with related parties, the authorization shall not be required provided that all the following conditions are met: (i) the funds have been entered and settled through the MLC as from November 16, 2020; and (ii) the indebtedness has an average life of at least 2 (two) years.

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The regulations also allow exporters to apply abroad the proceeds of their exports of goods and services to repay principal and interest under external financial indebtedness applied to specific purposes, provided that the requirements set forth in Section 7.9 of the restated text of the Central Bank’s regulations are met. Subject to the compliance of specific requirements, Section 7.9.5 also allows to accumulate export proceeds abroad in external and/or local bank accounts to repay or guarantee the debt services under such financings.

Until December 31, 2024, prior approval from the BCRA will be required for access to the foreign exchange market for the repayment of principal and interest on financial indebtedness abroad when the creditor is a counterparty related to the debtor.

This requirement shall not apply when the transaction falls under any of the following situations:

(a) it is an operation of local financial entities;

(b) it is a financial indebtedness abroad with an average life of not less than 2 (two) years and the funds have been deposited and settled by the foreign exchange market as from October 2, 2020;

(c) it is a financial indebtedness abroad that meets all of the following conditions:

(i) the funds were used to finance projects within the framework of the “Plan for the Promotion of Argentine Natural Gas Production - Supply and Demand Scheme 2020-2024” established in Section 2 of Decree No. 892/20 (“PLAN GAS”);

(ii) the funds have been deposited and settled through the foreign exchange market on or after November 16, 2020;

(iii) the indebtedness has an average life of not less than 2 (two) years;

(d) the client has a “Certification of increase of exports of goods” for the years 2021 to 2023 issued under the provisions of Section 3.18. of the restated text of the Central Bank regulations for the equivalent of the amount of principal to be paid;

(e) it is a financial indebtedness abroad with an average life of not less than 2 (two) years settled between August 27, 2021 and December 12, 2023 and that was used to pay commercial debts for the importation of goods and services as from the issuance of a “Certification of entry of new financial indebtedness abroad” within the framework of Section 1 of Communication “A” 7348 and related provisions (provisions duly included in item 3.19. of the Annex to Communication “A” 7914);

(f) it is a financial indebtedness with an average life of not less than 2 (two) years originated between August 27, 2021 and December 12, 2023, as a result of a refinancing of commercial debts for the import of goods and services with the creditor itself, as defined in Section 20 of Communication “A” 7626 and related provisions (provisions duly included in Section 3.20 of the Annex to Communication “A” 7914).

Access to the MLC to repay principal payments maturing on or before December 31, 2023 must comply with the provisions of Section 3.17 of the restated text of the Central Bank regulations.

In line with the rules established by the Central Bank, the CNV issued General Resolution No. 861 to facilitate debt refinancing transactions through the capital markets. In this regard, it provided that whenever the issuer intends to refinance debts through an exchange offer or new issues of negotiable obligations, in both cases offered in exchange or as consideration for negotiable obligations previously issued by the company and placed privately and/or existing claims against it, the requirement of placement by public offering will be deemed met when the new issue is subscribed through this method, by creditors of the company who are holders of negotiable obligations without public offering and/or existing claims representing a percentage of not more than thirty percent (30%) of the total amount effectively placed, and the remaining percentage is subscribed or paid in cash or in kind, by delivering negotiable obligations originally placed by public offering, or other securities publicly offered and listed and/or traded in markets authorized by the CNV, issued by the same company, by persons domiciled in Argentina or in countries not included in the list of non-cooperating jurisdictions for purposes of fiscal transparency, as contemplated in Section 24 of the Exhibit to Decree No. 862/2019 or any rules that may succeed it. Moreover, it established those certain requirements should be met to comply with the requirement of placement by public offering.

For more information regarding Argentina’s foreign exchange policies, you should seek advice from your legal counsel and read the applicable rules mentioned herein, including their amendments, which can be found at the following websites: www.infoleg.gov.ar and the Central Bank’s website: www.bcra.gov.ar. The information contained on these websites is not part and shall not be deemed incorporated into, this annual report.

Taxation

The following summary contains a description of the principal Argentine and U.S. federal income tax consequences of the Acquisition, ownership and disposition of common shares or ADSs, but it does not purport to be a comprehensive description of all the tax considerations that may be relevant to a decision to purchase common shares or ADSs. The summary is based upon the tax laws of Argentina and regulations thereunder and on the tax laws of the United States and regulations thereunder as in effect on the date hereof, which are subject to change. Investors should consult their own tax advisors as to the tax consequences of the Acquisition, ownership and disposition of common shares or ADSs.

Although there is no income tax treaty between Argentina and the United States, the tax authorities of the two countries have signed an Information Exchange Agreement that establishes a mechanism with which banks must annually communicate the tax information of US persons who have accounts in Argentina. Said data exchange will be automatically between the two countries, of Argentine or American citizens who have assets in the other jurisdiction, with the aim of dismantling eventual tax evasion and avoidance maneuvers through concealment or under-declaration of assets.

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From now on, Argentine financial entities will have to submit once a year to the Argentine tax authority, the identification of the account holder, the balance or value of the account at the end of the calendar year or at the immediately preceding moment if it was closed. , and interest or dividends earned on those investments. The procedures differ depending on whether or not they are pre-existing accounts on the date of entry of the agreement, whether they belong to individuals or legal entities, and the amount of the balances.

Said information must be submitted by financial entities until June 30 of the year following the one to which the report corresponds. In this way, the agency will send the information to the Internal Revenue Service (IRS) until September 30 of each year.

In a similar way, tax information related to Argentines who have assets in that country will be received by its US counterpart.

The general terms of the information that the United States will send to our country, as it arises from the terms of the FATCA Agreement are the following:

- Identification of the account holder

- Account number

- Identification of the financial entity

- Gross amount of interest or dividends paid on the account

- Gross amount from other sources of US-origin income credited to the account

The information will be received on September 30 of the year following the report. The US must send a note to Argentina that reports compliance with the corresponding information security standards and infrastructure for automatic exchange. As a result, the Argentine tax consequences described in this section may apply to a US resident holder of our common shares or ADSs.

Argentine Tax Considerations Capital gains tax

Resident individuals.

The Law No. 27,430 provides for the taxation of Argentine resident individuals’ income from the sale, exchange or other disposition of shares will be subject to income tax rate of 15%.

On December 29, 2017, the Executive Power promulgated and put into effect through Decree 1112/2017 a tax reform enacted in the National Congress through Law No. 27,430 (the “Tax Reform”), which establishes an exemption for individuals tax residents on the sale of shares that are publicly traded in stock exchanges under the supervision of the Argentine Securities and Exchange Commission (the “CNV”).

The Solidarity Law abrogated, as from fiscal year 2020, the provisions of Article 95 and part of the provisions of Article 96 of the ITL that established a cedular tax on interest payments resulting from the placement of capital in Argentine securities.

Furthermore, Article 33 of the Solidarity Law restored the validity of the Article 36 bis Exemption that exempts from, among others, income tax the results derived from the sale, exchange, conversion or other disposition of notes and the interest received by individuals and undivided estates that are considered residents in Argentina for tax purposes if the notes comply with the Exemption Requirements and Conditions. 

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Finally, section 26(u) of reside in non-cooperative jurisdictions provides an income tax exemption for capital gains from the sale, exchange, or other disposition of notes that complies with certain requirements, as described above.

Consequently, Argentine tax resident individuals and undivided estates located in Argentina will not be subject to income tax on the exchange of the Existing Notes if the provisions explained above apply.

Foreign beneficiaries.

Pursuant to the Law No. 27,430, all income resulting from the purchase and sale, exchange or other disposition of shares and other securities earned by foreign beneficiaries will be exempt of the Income Tax, if they are listed on stock exchanges or securities markets and/or have an authorization for public offering under the supervision of the CNV and the foreign beneficiaries do not reside in or the funds not arising from “non-cooperating jurisdictions”. In case that the disposition does not meet the former requirements, the income obtained by foreign individual and legal entities will be taxable at a 13,5% rate on the gross price or 15% rate on the net capital gain (with the possibility of upgrading the cost of acquisitions from January 1, 2018 and onwards, considering the variation of the Internal Wholesale Price Index). In addition, Pursuant to Law No. 26,893, capital gains obtained by non-Argentine residents from the sale, exchange or other disposition of shares and other equity interests, bonds and other securities of Argentine companies were subject to capital gains tax until December 30, 2017, even if those transactions were entered into between non-residents.

The Tax Reform, effective as of January 1, 2018, specifies that in case of share certificates issued abroad that represent shares issued by Argentine companies (i.e., ADSs), the “source” is defined by the location of the original issuer of the shares. However, the tax will not be due if the publicly traded exemption described above applies in respect of the underlying shares.

In the case the foreign beneficiaries reside in or the funds arise from “non-cooperating jurisdictions”, the exemption will not apply and income will be subject to income tax rate of 35% applied on a presumed net gain of the sale price.

The non-cooperating jurisdictions list is prepared and published by the Argentine Executive Power. The United State of America is currently not a non-cooperating jurisdiction.

On December 9, 2019, the official list of "“non-cooperating"” jurisdictions for tax purposes was published by means of Decree No. 682/19862/19. Argentine tax authorities are required to report any news to the Ministry of Finance to modify this list:

1. Bosnia and Herzegovina;

2. Brecqhou;

3. Burkina Faso;

4. State of Eritrea;

5. Vatican City State;

6. State of Libya;

7. Independent State of Papua New Guinea;

8. Plurinational State of Bolivia;

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9. British Overseas Territories, Saint Helena, Ascension and Tristan de Cunha;

10. Sark Island;

11. Solomon Islands;

12. Federated States of Micronesia;

13. Mongolia;

14. Montenegro;

15. Kingdom of Buthan;

16. Kingdom of Cambodia;

17. Kingdom of Lesotho;

18. Kingdom of Eswatini (Swaziland);

19. Kingdom of Thailand;

20. Kingdom of Tonga;

21. Hashemite Kingdom of Jordan;

22. Kyrgyz Republic;

23. Arab Republic of Egypt;

24. Syrian Arab Republic;

25. Peoples’ Democratic Republic of Algeria;

26. Central African Republic;

27. Cooperative Republic of Guyana;

28. Republic of Angola;

29. Republic of Belarus;

30. Republic of Botswana;

31. Republic of Burundi;

32. Republic of Cabo Verde;

33. Republic of Côte d'’Ivoire;

34. Republic of Cuba;

35. Republic of the Philippines;

36. Republic of Fiji;

37. Republic of The Gambia;

38. Republic of Guinea;

39. Republic of Equatorial Guinea;

40. Republic of Haiti;

41. Republic of Honduras;

42. Republic of Iraq;

43. Republic of Kenya;

44. Republic of Kiribati,

45. Republic of the Union of Myanmar;

46. Republic of Liberia;

47. Republic of Madagascar;

48. Republic of Malawi;

49. Republic of Maldives;

50. Republic of Mali;

51. Republic of Mozambique;

52. Republic of Namibia;

53. Republic of Nicaragua;

54. Republic of Palau;

55. Republic of Rwanda;

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56. Republic of Sierra Leone;

57. Republic of South Sudan;

58. Republic of Suriname;

59. Republic of Tajikistan;

60. Republic of Trinidad and Tobago;

61. Republic of Uzbekistan;

62. Republic of Yemen;

63. Republic of Djibouti;

64. Republic of Zambia;

65. Republic of Zimbawe;

66. Republic of Chad;

67. Republic of the Niger;

68. Republic of Paraguay;

69. Republic of the Sudan;

70. Democratic Republic of São Tomé and Príncipe;

71. Democratic Republic of Timor-Leste;

72. Republic of the Congo;

73. Democratic Republic of the Congo;

74. Federal Democratic Republic of Ethipia;

75. Lao People’s Democratic Republic;

76. Democratic Socialist Republic of Sri Lanka;

77. Federal Republic of Somalia;

78. Federal Democratic Republic of Nepal;

79. Gabonese Republic;

80. Islamic Republic of Afghanistan;

81. Islamic Republic of Iran;

82. Islamic Republic of Mauritania;

83. People’s Republic of Bangladesh;

84. Republic of Benin;

85. Democratic People’s Republic of Korea;

86. Socialist Republic of Vietnam;

87. Tongolese Republic;

88. United Republic of Tanzania;

89. Sultanate of Oman;

90. British Overseas Territory Pitcaim; Henderson, Ducie and Oeno Islands;

91. Tuvalu;

92. Union de Comoros.

On January 27, 2023, Decree No. 48/2023 was published in the Official Gazette, whereby the National Executive Power amended Article 24 of the Regulatory Decree of the Income Tax Law Decree No. 862/2019) which contains the list of jurisdictions considered as “non-cooperating” for the purposes set forth in the Income Tax Law.

With the changes introduced by decree, the following jurisdictions are removed from the list of non-cooperative jurisdictions: the Republic of Paraguay, Bosnia and Herzegovina, Mongolia, Montenegro, the Kingdom of Swaziland, the Kingdom of Thailand, the Hashemite Kingdom of Jordan, the Republic of Botswana, the Republic of Cape Verde, the Republic of Kenya, the Republic of Liberia, the Republic of Maldives, the Republic of Namibia, the Islamic Republic of Mauritania and the Sultanate of Oman.

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The provisions of such decree have entered into force as of its publication in the Official Gazette and will be applicable to the fiscal periods initiated as of such date (i.e., January 27, 2023).

In such scenarios, according to AFIP General Resolution No. 4,227, the income tax should be withheld and paid to the AFIP under the following procedures: (i) in case the securities were sold by a foreign beneficiary, through an Argentine stock exchange market, the custodian entity should withhold and pay the tax if it is involved in the payment process; if it is not involved in the payment process but there is an Argentine buyer involved, the Argentine buyer should withhold the income tax (ii) in case the securities were sold by a foreign beneficiary, but not through an Argentine stock exchange market and there is an Argentine buyer involved, the Argentine buyer should withhold the income tax; and (iii) when both the seller and the buyer are foreign beneficiaries and the sale is not performed through an Argentine stock exchange market, the person liable for the tax shall be the legal representative of the seller of the shares or securities being transferred or directly by the seller, in the event that there was no local legal representative. In this case, the payment shall be made through an international bank via wire transfer to the AFIP. Holders are encouraged to consult a tax advisor as to the particular Argentine income tax consequences derived from the holding and disposing of ADSs or Class B Shares.

Local entities.

Decree No. 1,076/92, as amended by Decree No. 1157/1992, ratified by Argentine Law No. 24,307, eliminated the Article 36 bis Exemption for holders of negotiable obligations subject to Title VI of the ITL. As a result, Argentine Entities will be subject to income tax on interest arising from the New Notes and capital gains derived from the sale, exchange, conversion or other disposition of the New Notes.

Pursuant to Law 27,630 the income tax rate applicable to Argentine Entities is amended, establishing a progressive tax rate system from 25% to 35% depending on the accumulated taxable net income detailed below:

Net accumulated profit (full figures)		Pay Ps. (full figures)	%	On surplus in Ps. (full figures)
over Ps.	to Ps.
0	34,703,523.08	0	25%	0
34,703,523.08	347,035,203.79	8,675,880.77	30%	34,703,523.08
347,035,230.79	onwards	102,375,393.08	35%	347,035,230.79

* Scale applicable to fiscal year beginning on January 1, 2024 through December 31, 2024.

Losses from the sale of the Company's common shares or ADSs may be applied to offset such gains. The aforementioned amounts shall be updated annually, as from 01/01/2022, considering the annual variation of the consumer price index (CPI) provided by the National Institute of Statistics and Census (INDEC), a decentralized agency under the Ministry of Economy, corresponding to the month of October of the year prior to the adjustment, with respect to the same month of the previous year. The amounts determined by application of the described mechanism will be applicable for the fiscal years that begin after each update.

The Article 36 bis Exemption and the exemption under subsection u) of the Article 26 of the ITL are not applicable to Argentine taxpayers subject to the tax adjustment for inflation rules in Argentina in accordance with Title VI of the ITL (in general, such taxpayers are legal entities organized under Argentine laws, local branches of foreign legal entities based in Argentina, sole proprietorships or natural persons engaged in certain commercial activities in Argentina, among others) (“Argentine Entities”). Hence, such taxpayers would be subject to capital gains tax on the exchange of the Existing Notes for the New Notes and for accrued and unpaid interest on the Existing Notes.

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Pursuant to Law 27,630 the income tax rate applicable to Argentine Entities is amended, establishing a progressive tax rate system (rates from 25% to 35% depending on the accumulated taxable net income) and the application of a vat% withholding rate to any dividend or profit made by said subjects to Argentine resident individuals and Foreign Beneficiaries generated as from January 1, 2018, inclusive, disregarding the tax period when the respective dividend or profit is made available for said shareholders. Said modifications will take effect from the fiscal periods beginning as of January 1, 2021.

Dividends tax

With 27.430 Law and after the amendments introduced by 27.541 Law and 27.630 Law, the net income of individuals, undivided estates and Beneficiaries Abroad derived from dividends and profits distributed by Argentine Entities began to be taxed. The applicable rate is 7%.

Such tax must be withheld by the entities paying such dividends and profits.

General Resolution (AFIP) No. 5060 adjusts the rate applicable to the dividend and profit withholding regime within the framework of the amendments introduced in the income tax by Law 27,630, among other matters.

For the preceding fiscal years, the 30% rate was applicable to capital gains obtained by Argentine entities, while the rate for dividends and similar profits distributed by such entities will be 7%, regardless of the fiscal period in which such dividends and profits are made available.

Article 20 of the Income Tax Law defines as low or no-tax countries those whose tax rate is lower than 60% of the Argentine corporate rate. By replacing a single rate with a progressive scale, Law 27,630 defines that for purposes of determining this limit, the lowest rate of the scale (i.e. 25%) must be considered.

Through 27,638 Law, applicable as from the tax period 2021 and subsequent periods, an exemption is established with respect to interest or the denomination of the yield resulting from the placement of capital in instruments issued in local currency intended to promote productive investment, established by the National Executive Power, provided that it is so provided in the regulation that governs them, and to the extent that they are not included in the first paragraph of article 26 paragraph h) of the Income Tax Law.

On the other hand, Decree 621/2021 provides a definition of those instruments in local currency included in the second paragraph of paragraph h) of Article 26 of the Income Tax Law, incorporating an article after Article 80 of the regulatory decree of the Income Tax Law.With respect to dividends paid to shareholders residing abroad, such withholding may be reduced by a tax treaty between Argentina and their country of residence. See “Item 10. Additional Information—Taxation—Tax Treaties” below.

Capital reductions and other distributions

Capital reductions and redemptions of our shares and ADSs are not subject to income tax up to an amount equivalent to the contributed capital corresponding to the shares and ADSs to be redeemed. Any distribution exceeding this amount, however, will be considered as a dividend for tax purposes and subject to withholding tax as described above.

Other Income Tax provisions

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Transfer pricing

The Transfer Pricing regime includes import and export controls of any product with the intervention of an international intermediary, that is not the importer at destination or exporter at origin, respectively.

In addition, for exports of goods with known prices and with the intervention of an intermediary (either related, or located in “non-cooperating” or low or no tax jurisdictions), the Law requires the Argentine exporter to file with AFIP the agreements supporting the transactions.

Upgrade

The Tax Reform re-establishes the adjustment for inflation procedures in the Income Tax Law with the following rules: (i) inflation adjustment of new acquisitions and investments carried out from January 1, 2018 and onwards, considering the variation of the Internal Wholesale Price Index (in Spanish, Índice de Precios Internos al Consumidor Nivel General or IPC) supplied by the INDEC; and (ii) the application of an integral inflation adjustment mechanism when, the variation of the IPC is higher than 100% for the 36-month period before the end of the fiscal period or else, with respect to the first, second and third fiscal year of effectiveness, this procedure will be applicable in case the accumulated variation of the IPC, calculated from the beginning of the first of them and until the end of each year, exceeds fifty-five percent (55%), thirty percent (30%) and fifteen percent (15%) for the first, second and third year of application, respectively.

Solidarity and Extraordinary Contribution

As from the enactment of Law 27,605, an extraordinary contribution was created, on an emergency basis and for one time only, which is mandatory and applies to the assets existing as of December 18, 2020 belonging to certain individuals and undivided estates (the "Extraordinary Contribution").

Among the subjects reached by this Extraordinary Contribution are: (a) individuals and undivided estates resident in the country as well as those individuals of Argentine nationality whose domicile or residence is in "non-cooperating jurisdictions" or "low or no tax jurisdictions" under the terms of the Income Tax Law, for the totality of their assets in the country and abroad; and (b) individuals and undivided estates resident abroad (except those mentioned in the previous point) for the totality of their assets in the country.

In order to determine the residence of the taxpayer of the Extraordinary Contribution, the situation of such taxpayer as of December 31, 2019 must be considered and the residence criteria established in the Income Tax Law must be used.

In both cases, taxpayers will be exempt from this Extraordinary Contribution when the value of all their assets, included and valued according to the terms established in the Personal Property Tax Law, regardless of their treatment before such tax and without deduction of any non-taxable minimum, does not exceed Ps. 200,000,000, inclusive. When such amount is exceeded, the totality of the taxpayer's assets shall be subject to the Extraordinary Contribution.

For the taxpayers mentioned in point a), the taxable amount of this Extraordinary Contribution will be determined considering the total of the assets in the country and abroad owned by them, including contributions to trusts, trusts or private interest foundations and other similar structures, participation in companies or other entities of any kind without fiscal personality and direct or indirect participation in companies or other entities of any kind, existing at the date of entry into force of this law.

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The Extraordinary Contribution to be paid will be determined based on a scale and rates that vary between 2 and 5.25%, depending on (i) the total value of the assets and (ii) the place where they are located. The differential of the assets located abroad with respect to those located in the country will be eliminated in the event of the repatriation of part of such assets within a certain term and as long as the funds remain until December 31, 2021 deposited in an account in the name of its owner or assigned, once such deposit has been made, to any of the destinations established by the National Executive Power (“PEN”).

The application, collection and control of this Extraordinary Contribution will oversee the AFIP, and the provisions of the Tax Procedures Law (Law 11,683, text as amended in 1998 and its amendments) and the Criminal Tax Regime of Title IX of Law 27,430 and its amendments will be supplementary applicable.

Finally, it should be noted that the regulation of the Extraordinary Contribution by the PEN is still pending at the date of preparation of this document.

Although the Extraordinary Contribution was conceived as a one-time tax to be paid on assets existing as of December 18, 2020, it is important to mention that in Argentina there are precedents of taxes that have been created on an exceptional basis and for a limited period, which later have been extended for additional periods (e.g., Tax on Credits and Debits in Bank Accounts).

Value Added Tax

All financial transactions and operations related to the issuance, placement, purchase, sale, transfer, payment of principal and/or interest, or the redemption of the New Notes and the Existing Notes placed through public offering and their guarantees are exempt from Value Added Tax provided that their issuance complies with all the Exemption Requirements and Conditions. Interest under the Private Notes would also be exempt from Value Added Tax when the notes comply whit the requirements mentioned before.

Furthermore, even if the Exemption Requirements and Conditions are not met, the sale or transfer of New Notes will be exempt from this tax pursuant to Article 7(b) of the Value Added Tax Act, in accordance with the amendments effected by Decree No. 280/1997. The above-mentioned exemptions operate in relation to transactions carried out in Argentina with respect to both Argentine and foreign securities; while those carried out abroad are outside the scope of the tax.

Personal assets tax

Under the Personal Assets Tax Act No. 23,966, as amended (the “Personal Assets Tax Act”), and Regulatory Decree No. 127/1996, individuals and undivided estates resident in Argentina are subject to a Personal Assets Tax (the “Personal Assets Tax”) on their assets located both in the country or abroad (such as the New Notes) held at December 31 of each year, unless an exemption applies. Individuals and undivided estates not residing in Argentina are only liable for this tax upon their assets located in Argentina (such as the New Notes) held at December 31 of each year, unless an exemption applies. Securities, such as the New Notes, are only deemed to be located in Argentina when issued by an entity residing in Argentina, such as the Issuer.

The Personal Assets Tax is calculated by reference to market value, in the case of negotiable securities listed on any market, or to the acquisition cost plus the interest accrued and unpaid and exchange rate differences, in the case of negotiable securities not listed on public markets, in both cases as of December 31 of each year. Assets are taxable when the aggregate value thereof exceeds the total amount of Ps.27,377,408.28 in the 2023 tax period.

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The applicable tax rates for individuals and undivided estates resident in Argentina and holding assets subject to taxation for an amount exceeding the minimum threshold are shown below (except for the holding of shares or other participations in companies regulates by the General Companies Law):

(i) On total assets located in Argentina subject to taxation:

Aggregate value of assets exceeding the minimum threshold (full figures)		Pay Ps. (full figures)	plus %	Over the exceeding amount of Ps. (full figures)
More than Ps.	To Ps.
0	13,688,704.14, inclusive	0	0.50 %	0
13,688,704.14	29,658,858.98, inclusive	68,443.51	0.75 %	13,688,704.14
29,658,858.98	82,132,224.86, inclusive	188,219.68	1.00 %	29,658,858.98
82,132,224.86	456,290,138.07 inclusive	712,953.35	1.25 %	82,132,224.86
456,290,138.07	1,368,870,414.25 inclusive	5,389,927.27	1.50%	456,290,138.07
1,368,870,414.25	onwards	19,078,631.41	1.75%	1,368,870,414.25

Source: Article 3, Law No. 27,667.

(ii) On total assets located abroad subject to taxation:

Aggregate value of assets located in Argentina and abroad (full figures)		Aggregate value of assets located abroad exceeding the minimum threshold not computed against the assets located in Argentina must pay %
Over Ps.	Up to Ps.
0	13,688,704.14, inclusive	0.70%
13,688,704.14	29,658,858.98, inclusive	1.20%
29,658,858.98	82,132,224.86, inclusive	1.80%
82,132,224.86	onwards	2.25%

Source: Article 4, Law No. 27,667.

According to Article four of AFIP General Resolution No. 3363 (and amendments), it is understood that the last financial statements of an Argentine entity that must be considered are those prepared under Argentine GAAP without considering the effect arising from the changes in the purchasing power of the currency. AFIP had ratified this criterion on several occasions. Notwithstanding this, during 2022, we learned that AFIP has modified its opinion and understands that the financial statements that must be used as the calculation basis for the determination and liquidation of the tax are those that were submitted for consideration and approved by the body competent company according to the type of company in question. That is, if the company applies IFRS, the financial statements prepared with such standards should be used.

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As from fiscal years starting on January 1, 2022, inclusive, the amounts of the minimum threshold and the amounts of the tables above, shall be updated annually considering the annual variation of CPI provided by the INDEC, corresponding to the month of October of the year prior to the adjustment, with respect to the same month of the previous year.

Residents in the country who own assets abroad and have repatriated financial assets will be exempt from the differential rate and will be taxed, on all of their assets, under the conditions established for assets in the country.

Repatriation is understood as the entry into the country of money in foreign currency held abroad and the amounts arising from the sale of financial assets, until March 31 of each year.

The total amount of repatriated assets must reach at least 5% of the total assets located abroad and these funds must remain in the country until December 31, deposited in an account opened in the name of their owner in a financial institution. Additionally, the law established a definition for the concept “financial assets located abroad” by listing different types of assets such as deposits in foreign currency in banks and/or foreign financial or similar institutions and corporate shares or equivalent (private securities, shares, quotas and other participations) of all types of entities.

Through the enactment of 27,638 Law, applicable as from the tax period 2021 and subsequent periods, certain tax exemptions are established, among which are negotiable obligations issued in local currency that comply with the Exemption Requirements and Conditions.

Regarding assets located in Argentina, individuals and undivided estates resident abroad will be subject to the 0.50% rate, without the right to deduct the non-taxable minimum it being stipulated, however, that the tax will not apply when its amount is equivalent to or less than Ps.255.75. Personal assets tax applies to the market value of the New Notes (or the acquisition costs plus accrued and unpaid interest and exchange rate differences in the event the New Notes are no longer listed) as of December 31 of every calendar year.

Although the New Notes directly held by individuals residing abroad and undivided estates located abroad would technically be subject to the Personal Assets Tax, under current legislation the procedure for payment of the tax has not been established in relation to the New Notes held by such taxpayers, unless the notes are owned jointly by Argentine residents or held in escrow or otherwise, deposited, or managed by Argentine residents on a jointly basis, in which case such Argentine residents are required to pay Personal Assets Tax accordingly.

Although Personal Assets Tax applies only to securities held by individuals or undivided estates resident in Argentina or abroad, as described above, the Personal Assets Act sets forth a legal presumption, regardless of any evidence to the contrary, whereby securities issued by Argentine private issuers directly owned by a foreign legal entity that (i) is a resident in a jurisdiction not requiring registration of private shares or securities, and (ii) either (a) under its corporate charter, or under the regulatory system applying to such foreign entity, may only carry on investment activities outside the jurisdiction where it was organized, or (b) may not enter into certain transactions permitted under its corporate charter or under the regulatory framework in its jurisdiction of incorporation, are deemed to be owned by an individual domiciled, or an undivided estate located, in Argentina, and therefore subject to Personal Assets Tax.

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In such case, the law provides that the issuer (the “Substitute Obligor”) has the duty to pay Personal Assets Tax at twice the rate stated above. The Personal Assets Tax Act empowers the Substitute Obligor to seek reimbursement of any tax amount so paid, including by way of withholding or foreclosing directly on the assets originating such payment.

The above legal presumption does not apply to the following foreign entities that are direct holders of securities such as the New Notes: (a) insurance companies; (b) open-end mutual funds; (c) pension funds; and

(d) banks or financial institutions whose headquarters are located in countries whose central banks or equivalent bodies have adopted the international banking supervision standards established by the Basel Committee. Similarly, Decree 812/1996 dated July 24, 1996 provides that the legal presumption analysed above shall not apply to private shares and securities, such as the New Notes, whose public offering has been authorized by the CNV and which may be traded in markets or stock exchanges located in Argentina or abroad. In order to ensure that this legal presumption will not apply, and therefore that the Argentine private issuer will not be liable as a Substitute Obligor in connection with the New Notes, the issuer shall keep in its records a duly certified copy of the CNV resolution authorizing the public offering of the private shares or debt securities (in this case, the New Notes) and evidence that such certificate or authorization was in effect on December 31 of the year in which the tax obligation arose as required by General Resolution (AFIP) No. 2,151 dated October 31, 2006.

Bank Debits and Credits Tax

Act No. 25,413, as amended, establishes, with exceptions, a tax applicable to debits and credits in accounts opened with institutions governed by the Argentine Financial Entities Law No. 21,526 and on other transactions replacing the use of such current accounts.

The general rate is 0.6% on each debit and credit. Rates of 1.2% or 0.075% may be applied to certain specially planned transactions.

Pursuant to Decree No. 409/2018 (published in the Official Gazette of Argentina on May 7, 2018), 33% of the tax paid levied on the debits and credits at the 0.6% tax rate and 33% of the tax paid on transactions levied at a 1.2% rate will be considered as a payment on account of federal taxes and/or on account of the Special Tax for Cooperatives. The remaining amount may be deducted from the income tax base. If a lower rate were applicable the tax credit would be 20%.

For micro, small and medium-sized companies registered as such in accordance with the provisions of Argentine legislation, the percentage of prepayment of the income tax may be higher, as applicable.

Regarding debits and credits verified in accounts opened in Argentine financial entities, the Solidarity Law provides that, for taxable events occurred as of December 24, 2019, when cash withdrawals are made under any form, debits incurred in such accounts will be subject to the double of the tax rate set forth for each case, over the amount of the relevant withdrawal. This rate increase will not apply to accounts whose holders are individuals or legal entities that evidence their condition as “micro” and “small” companies.

Article 10 subsection (s) of the Annex to Decree No. 380/2001 as amended, sets forth that debits and credits from and into special current accounts (Communication “A” 3250 of the Argentine Central Bank ) are not subject to this tax if the holders of such accounts are foreign entities and the accounts are exclusively used in connection with financial investments in Argentina.

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In order to obtain certain exemptions and/or reductions in the rate of this tax, it may be necessary to register the bank accounts with the tax authority (AFIP-DGI) in accordance with the provisions of General Resolution AFIP No. 3900/2016.

Act No. 27,432 (promulgated and published in the Official Gazette on December 29, 2017) extended this tax until December 31, 2022, inclusive.

Decree 796/2021 incorporates several amendments to the regulation of the tax on bank credits and debits (Decree No. 380/2001), among which, we highlight that it provides that the tax exemptions will not be applicable when the movement of funds are linked to the purchase, sale, swap, brokerage and/or any other transaction on cryptoassets, cryptocurrencies, digital currencies, or similar instruments.

Tax for an Inclusive and Solidary Argentina

The Productive Reactivation Law created an emergency 30% tax (the “PAIS Tax”) for a term of five fiscal periods, applicable to direct or indirect purchases of foreign currency transactions carried out by individuals and legal entities resident in Argentina. Also, by means of Decree No. 377/2023, the following transactions were included as transactions taxed by the PAIS Tax, subject to differentiated rates: (i) the acquisition abroad, or in Argentina when rendered by non-residents, of telecommunications, financial and IT services, among others; (ii) the acquisition abroad, or in Argentina when rendered by non-residents, of freight and other transportation services; and (iii) the import of goods included in the Mercosur Common Nomenclature, except for certain exceptions.

In addition, AFIP General Resolution No. 4815/2020, as amended, established for transactions subject to PAIS Tax and for taxpayers defined in Section 36 of the Productive Reactivation Law that qualify as Argentine residents, under the terms of Section 116 and following of the Income Tax Law, a collection system for transactions subject to PAIS Tax aimed at anticipating the payment of obligations corresponding to income tax or personal property tax, as the case may be.

This collection will be treated as a payment on account and will be computable in the annual income tax return or, as the case may be, in the annual personal property tax return, corresponding to the tax period in which they were made.

Through Executive Branch Decree No. 29/2023 and AFIP General Resolutions Nos. 5463/2023 and 5464/2023, the rates have been modified with respect to the collection established by AFIP General Resolution No. 4815/2020, establishing a single collection at a rate of 30% on certain transactions subject to PAIS Tax.

Likewise, Decree No. 29/2023 modified the rate applicable to the purchase of foreign currency for payment of freight services and other transportation services abroad for import or export transactions of goods, or their acquisition in Argentina when provided by non-residents, identified with the BCRA Monthly Accounting Information System Code for Exchange Transactions S04, S30 and S31, which will now be subject to a rate of 17.5% on the price, net of taxes and fees (previously rated at 7.5%).

Secondly, the same regulation modified the rate to 17.5% (previously 7.5%) applicable to the total amount of the transaction for the direct or indirect purchase of foreign currency, for the payment of import of goods included in the Mercosur Common Nomenclature, with the exception of: (1) the tariff positions mentioned in the first paragraph of item 1 of sub. b) of art. 13 bis of Decree 13/2019, or positions 2710.12.59, 2710.19.21, 2710.19.29, 2710.19.31, 2710.19.32, 2713.20.00, 3811.21.10, 3811.21.50, and 3811.90. 90; (2) inputs and intermediate goods directly related to products of the basic food basket as established by the Ministry of Economy and the AFIP; and (3) other goods related to the generation of energy, under the terms established by the SE.

Transactions related to the import of goods considered as luxury goods are taxed at a rate of 30% and are subject to a 30% collection.

In addition, the acquisition abroad, or in Argentina when rendered by non-residents, of business, telecommunications, financial, computer services, among others, is subject to the PAIS Tax at a rate of 25%.

Finally, services classified as “digital services” according to the Value Added Tax Law are taxed at a rate of 8%, plus a collection of 30%.

Turnover Tax

The turnover tax is a local tax; therefore, the rules of the relevant provincial jurisdiction should be considered, which may levy this tax on the customary purchase and sale, exchange or other disposition of common shares and ADSs, and/or the collection of dividends at an average rate between 6% and 10%, unless an exemption is applicable. In the particular case of the City of Buenos Aires, any transaction involving common shares and/or the collection of dividends and revaluations is exempt from this tax.

Provincial Collection Regimes on Credits in Bank Accounts

Different provincial revenue agencies (such as Corrientes, Córdoba, Tucumán, Buenos Aires and Salta, among others, as well as the City of Buenos Aires) have established collection regimes for the turnover tax that may be applicable to the credits arising from bank accounts opened at Argentine financial institutions, whatever their nature or type, and embracing all their branches, regardless of the territory where they are based. These regimes apply to those taxpayers enrolled with the revenue agency of each jurisdiction. The applicable rates depend on each agency, in a range that goes up to 5.0%.

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For taxpayers subject to these advanced payment regimes, any payment applicable qualifies as an advanced payment of the turnover tax.

In relation to these regimes, when signing the Fiscal Consensus, the Argentine provinces and the City of Buenos Aires undertook to establish an automatic refund mechanism to the taxpayer of the positive balance generated by withholdings and collections accumulated during a reasonable period which may not exceed in any circumstances six months from the filing of the request made by the taxpayer, provided that the conditions and the procedure established by the local jurisdictions for this refund are satisfied and followed. Likewise, by means of the agreement signed on December 4, 2020, between the Executive Power and the representatives of certain Argentine jurisdictions, the Argentine jurisdictions assumed the commitment to seek the necessary measures for the purposes of applying mechanisms of automatic refund, compensation or credit transfer of the positive balance generated by the withholdings and collections, provided that the taxpayers comply with the specific requirements of the case in question.

Investors will have to confirm the existence of these mechanisms depending on the jurisdiction involved.

Value added tax

The sale, exchange or other disposition of our common shares or ADSs and the distribution of dividends are exempted from the value added tax.

Transfer taxes

The sale, exchange or other disposition of our common shares or ADSs is not subject to transfer taxes.

Stamp taxes

Stamp taxes may apply in the City of Buenos Aires and in certain Argentine provinces in case transfer of our common shares or ADSs is performed or executed in such jurisdictions by means of written agreements.

Other taxes

Commissions paid on brokerage transactions for the sale of our common shares on the BYMA are subject to VAT at a rate of 21%.

There is no inheritance, gift, succession or VAT applicable to the ownership, transfer, exchange or disposition of our common shares or ADSs, except for the inheritance tax applicable only to corporations or individuals with tax domicile in the Province of Buenos Aires with a fixed amount tax plus a tax rate between 1% and 9% depending on the relationship and the amount of inheritance).

Tax treaties

Argentina has signed tax treaties for the avoidance of double taxation with Australia, Belgium, Bolivia, Brazil, Canada, Chile, Denmark, Finland, France, Germany, Italy, Mexico, Norway, Qatar, Russia, Spain, Sweden, Switzerland, The Netherlands, United Arab Emirates, United Kingdom, and Uruguay (through an information exchange treaty that contains clauses for avoidance of double taxation). In addition, Argentina has signed tax treaties with Turkey, Luxembourg, Japan, Austria and China, but they are still pending to approval by the Argentine Congress. Foreign shareholders located in certain jurisdictions with a current tax treaty with Argentina may be exempt payment of personal property tax.

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On December 5, 2022, Argentina and the United States signed an agreement for the automatic exchange of financial information (the “2022 Tax Agreement”). The object of the 2022 Tax Agreement is the reciprocal exchange, for tax purposes, of information regarding accounts opened in financial institutions by residents of either country.

The 2022 Tax Agreement specifies that the Argentine reportable accounts of a reporting U.S. financial institution are financial accounts opened in a financial institution of the United States if: (i) in the case of a depository account, the account is held by an individual resident in Argentina and more than U.S.$10 of interest is paid to such account in any given calendar year; or (ii) in the case of a financial account other than a depository account, the account holder is a resident of Argentina, including an entity that certifies it is a resident of Argentina for tax purposes, with respect to which U.S. source income that is subject to reporting under chapter three of subtitle A or chapter 61 of subtitle F of the U.S. Internal Revenue Code is paid or credited.

In particular, the U.S. Government will obtain and exchange with the Federal Administration of Public Revenue (“AFIP”) the following information with respect to Argentine reportable accounts:

(i) the name, address, and CUIT/CUIL of any Argentine resident who holds the account;

(ii) the account number, or its functional equivalente, in the absence of an account number;

(iii) the name and identifying number of reporting U.S. financial institution;

(iv) the gross amount of interest paid on a Depositary Account (as defined in the 2022 Tax Agreement);

(v) the gross amount of U.S. source dividends paid or credited to the account; and

(vi) the gross amount of other U.S. source income paid or credited to the account, to the extent subject to reporting under chapter three of subtitle A or chapter 61 of subtitle F of the U.S. Internal Revenue Code.

The 2022 Tax Agreement will enter into force on January 1 of the calendar year following the date on which Argentina makes a written notification to the United States confirming the completion of Argentina’s necessary internal procedures for the entry into force of the 2022 Tax Agreement.

The obligation of Argentina to obtain and exchange information relating to Reportable U.S. Accounts (as defined in the 2022 Tax Agreement) shall become effective on the date the 2022 Tax Agreement enters into force.

Instead, the obligation of the United States to obtain and exchange with Argentina information relating to Argentine reportable accounts shall take effect on the day on which the competent authority of the United States, the Secretary of the Treasury or his delegate, provides a written notification to the competent authority of Argentina, the AFIP or his delegate, when it is satisfied that Argentina has in place: (i) appropriate safeguards to ensure that the information received pursuant to the 2022 Tax Agreement shall remain confidential and be used solely for tax purposes, and (ii) the infrastructure for an effective exchange relationship (including established processes for ensuring timely, accurate, and confidential information exchanges, effective and reliable communications, and demonstrated capabilities to promptly resolve questions and concerns about exchanges or requests for exchanges and to administer the provisions of article five of the 2022 Tax Agreement related to collaboration on compliance and enforcement).

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Once the obligation of the United States becomes effective, it will be required to obtain and send to Argentina the information for the whole calendar year of entry into force of the 2022 Tax Agreement and for all subsequent years.

The Tax Agreement was signed on December 5, 2022 and became effective on January 1, 2023. As of the date of this annual report, it remains in force.

Value Added Tax (VAT)

Investments Tax Returns

The return of tax credits originated in investments in fixed assets will be given, in case that, 6 months after their payment, have not been absorbed by fiscal debits generated by the activity.

Tax on Fuels

The Fuel tax scheme is modified, incorporating a tax on carbon dioxide emissions. The same tax pressure existing before the reform will be maintained.

United States Federal Income Tax Considerations

This summary describes certain U.S. federal income tax consequences for a U.S. holder (as defined below) of acquiring, owning, and disposing of ADSs. This summary applies to a holder only if such holder holds the ADSs as capital assets for tax purposes. This summary does not address the Medicare tax on net investment income, the alternative minimum tax or under special timing rules prescribed under section 451(b) of the Code. This summary also does not apply to investors that are members of a class of holders subject to special rules, such as:

· a dealer in securities or currencies;

· a trader in securities that elects to use a mark-to-market method of accounting for securities holdings;

· a bank;

· a life insurance company;

· a tax-exempt organization;

· an entity or arrangement treated as a partnership for U.S. federal income tax purposes, or a partner therein;

· a person that holds ADSs that are a hedge or that are hedged against interest rate or currency risks;

· a person that holds ADSs as part of a straddle or conversion transaction for tax purposes;

· a person whose functional currency for U.S. tax purposes is not the U.S. Dollar; or

· a person that owns or is deemed to own 10% or more of any class of our stock.

This summary is based on the Internal Revenue Code of 1986, as amended, its legislative history, existing and proposed regulations promulgated thereunder, published rulings and court decisions, all as currently in effect. These laws are subject to change, possibly on a retroactive basis. Investors should consult their own tax advisors concerning the consequences of purchasing, owning, and disposing of ADSs in their particular circumstances, including the possible application of state, local, non-U.S. or other tax laws. For purposes of this summary, an investor is a “U.S. holder” if such investor is a beneficial owner of an ADS and is:

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· an individual who is a citizen or resident of the United States;

· a U.S. domestic corporation; or

· otherwise subject to U.S. federal income tax on a net income basis with respect to income from the ADS.

In general, if an investor is the beneficial owner of ADSs, such investor will be treated as the beneficial owner of the common stock represented by those ADSs for U.S. federal income tax purposes, and no gain or loss will be recognized if such investor exchanges an ADS for the common stock represented by that ADS.

Dividends

The gross amount of distributions that investors receive (prior to deduction of Argentine taxes) generally will be subject to U.S. federal income taxation as foreign source dividend income, to the extent paid out of our current or accumulated earnings and profits, as determined under U.S. federal income tax principles. We do not expect to maintain calculations of our earnings and profits in accordance with U.S. federal income tax principles. U.S. Holders therefore should expect that distributions generally will be treated as dividends for U.S. federal income tax purposes. Dividends paid in Argentine Pesos will be included in an investor’s income in a U.S. Dollar amount calculated by reference to the exchange rate in effect on the date of the depositary’s receipt of the dividend, regardless of whether the payment is in fact converted into U.S. Dollars. A U.S. holder will have a tax basis in such Pesos for U.S. federal income tax purposes equal to the U.S. Dollar value on the date of such receipt. Any subsequent gain or loss in respect of such Pesos arising from exchange rate fluctuations will be ordinary income or loss and will be treated as income from U.S. sources for foreign tax credit purposes. If such a dividend is converted into U.S. Dollars on the date of receipt, investors generally should not be required to recognize foreign currency gain or loss in respect of the dividend income.

Subject to certain exceptions for short-term (60 days or less) positions, the U.S. Dollar amount of dividends received by an individual U.S. holder in respect of ADSs generally will be subject to taxation at a maximum rate of 20% if the dividends are “qualified dividends.” Dividends paid on the ADSs will be treated as qualified dividends if (i) the ADSs are readily tradable on an established securities market in the United States and (ii) we were not, in the year prior to the year in which the dividend was paid, and are not, in the year in which the dividend is paid, a passive foreign investment company (a “PFIC”). The ADSs are listed on the New York Stock Exchange and will qualify as readily tradable on an established securities market in the United States so long as they are so listed. Based on our audited financial statements and relevant market and shareholder data, we believe that we were not treated as a PFIC for U.S. federal income tax purposes with respect to our 2022 and 2023 taxable years. In addition, based on our current expectations regarding the value and nature of our assets, the sources and nature of our income, and relevant market and shareholder data, we do not anticipate becoming a PFIC for our 2024 taxable year. Based on existing guidance, it is not entirely clear whether dividends received with respect to the Class B Shares underlying ADSs will be treated as qualified dividends, because the Class B Shares underlying ADSs are not themselves listed on a U.S. exchange. U.S. holders should consult their tax advisors regarding the availability of the preferential dividend tax rates in light of their particular circumstances.

Because the common shares are not themselves listed on a U.S. exchange, dividends received with respect to the common shares may not be treated as qualified dividends. U.S. holders should consult their own tax advisors regarding the availability of the reduced dividend tax rate in the light of their own particular circumstances.

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Distributions of additional shares in respect of ADSs that are made as part of a pro-rata distribution to all of our shareholders generally will not be subject to U.S. federal income tax, unless a U.S. Holder that receives the distribution has the right to receive cash or property, in which case the U.S. Holder will be treated as if it received cash equal to the fair market value of the distribution.

In the event of a distribution of bonds or other property, U.S. holders of ADSs or Class B common shares should consult their tax advisors regarding the tax consequences to them of receipt of such bonds or other property (or, in the case of a holder of ADSs, the receipt of the proceeds of the sale or other disposition by the depositary of such bonds or other property).

Sale or other disposition

Upon a sale or other disposition of ADSs, an investor will recognize gain or loss for U.S. federal income tax purposes in an amount equal to the difference between the U.S. Dollar value of the amount realized and such investor’s tax basis, determined in U.S. Dollars, in the ADSs. Generally, such gain or loss realized on the sale or other disposition of ADSs will be treated as U.S. source capital gain or loss, and will be long-term capital gain or loss if the ADSs were held for more than one year. The ability to offset capital losses against ordinary income is limited. Long-term capital gain recognized by an individual U.S. holder generally is subject to taxation at a reduced rate.

Foreign tax credit considerations

Investors should consult their own tax advisors to determine whether they are subject to any special rules that limit their ability to make effective use of foreign tax credits. If no such rules apply, a U.S. holder may be able to claim a credit against its U.S. federal income tax liability for Argentine income taxes withheld at the appropriate rate applicable to the U.S. holder from cash dividends on the ADSs, if the tax is treated for U.S. federal income tax purposes as imposed on the U.S. holder, so long as the U.S. holder has owned the ADSs (and not entered into specified kinds of hedging transactions) for at least a 16-day period that includes the ex-dividend date. Dividend distributions with respect to the ADSs generally will be treated as “passive category” income from sources outside the United States for purposes of determining a U.S. Holder’s U.S. foreign tax credit limitation. If a gain realized on the sale or other disposition of ADSs is subject to withholding tax, a U.S. holder may not be able to credit the tax against its U.S. federal income tax liability unless such credit can be applied (subject to applicable conditions and limitations) against tax due on other income treated as derived from foreign sources. It is unclear whether the Argentine personal assets tax (as described in “—Argentine Tax Considerations”) is treated as an income tax for U.S. federal income tax purposes. If the Argentine personal assets tax is not treated as an income tax for U.S. federal income tax purposes, a U.S. holder would be unable to claim a foreign tax credit for any Argentine personal assets tax withheld. A U.S. holder may be able to deduct such tax in computing its U.S. federal income tax liability, subject to applicable limitations. The calculation of foreign tax credits and, in the case of a U.S. holder that elects to deduct foreign taxes, the availability of deductions, involve the application of complex rules that depend on a U.S. holder’s particular circumstances. Investors should consult their own tax advisors regarding the creditability or deductibility of such taxes.

U.S. Information reporting and backup withholding rules

Payments of dividends and sales proceeds that are made within the United States or through certain U.S.-related financial intermediaries are subject to information reporting unless the holder is an exempt recipient and may also be subject to backup withholding unless the holder (1) provides its taxpayer identification number and certifies that it is not subject to backup withholding or (2) otherwise establishes an exemption from backup withholding.

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Investors may obtain a refund of any excess amounts withheld under the backup withholding rules by timely filing the appropriate claim or refund with the Internal Revenue Service and filing any required information.

A holder that is a foreign corporation or a non-resident alien individual may be required to comply with certification and identification procedures in order to establish its exemption from information reporting and backup withholding.

Specified Foreign Financial Assets

Certain U.S. holders that own “specified foreign financial assets” with an aggregate value in excess of U.S.$50,000 on the last day of the taxable year or U.S.$75,000 at any time during the taxable year are generally required to file an information statement along with their tax returns, currently on Form 8938, with respect to such assets. “Specified foreign financial assets” include any financial accounts held at a non-U.S. financial institution, as well as securities issued by a non-U.S. issuer that are not held in accounts maintained by financial institutions. Higher reporting thresholds apply to certain individuals living abroad and to certain married individuals. Regulations extend this reporting requirement to certain entities that are treated as formed or availed of to hold direct or indirect interests in specified foreign financial assets based on certain objective criteria. U.S. holders who fail to report the required information could be subject to substantial penalties. In addition, the statute of limitations for assessment of tax would be suspended, in whole or part. Investors should consult their own tax advisors concerning the application of these rules to their particular circumstances.

Description of American Depositary Shares

American Depositary Receipts

The Bank of New York is the depositary for the American Depositary Shares, also referred to as ADSs. Each ADS represents 20 Class B common shares (or a right to receive 20 Class B common shares) deposited with the principal Buenos Aires office of Banco Río de la Plata S.A., as custodian for the depositary in Argentina. Each ADS will also represent any other securities, cash or other property which may be held by the depositary. The depositary’s office at which the ADRs are administered is located at 101 Barclay Street, 22W, New York, NY 10280.

The depositary is required to keep books at its corporate trust office for the registration of ADSs and transfers of ADSs which at all reasonable times shall be open for inspection by the holders of ADSs, provided that such inspection shall not be for the purpose of communicating with holders in the interest of a business or object other than the business of Edenor or a matter related to the deposit agreement or the receipts.

Investors hold ADSs directly either by having an American Depositary Receipt, also referred to as an ADR, which is a certificate evidencing a specific number of ADSs, registered in the investor’s name, or by having ADSs registered in the investor’s name in the Direct Registration System. Investors also hold ADSs indirectly by holding a security entitlement in ADSs through the investor’s broker or other financial institution. If investors hold ADSs directly, they are ADS registered holders. This description assumes that such investors are ADS registered holders. If investors hold the ADSs indirectly, the investors must rely on the procedures of their broker or other financial institution to assert their rights as ADS registered holders described in this section. Investors should consult with their broker or financial institution to learn what those procedures are.

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The Direct Registration System, or DRS, is a system administered by The Depository Trust Company, also referred to as DTC, pursuant to which the depositary may register the ownership of uncertificated ADSs, which ownership shall be evidenced by periodic statements sent by the depositary to the registered holders of uncertificated ADSs.

We do not treat ADS holders as one of our shareholders and ADS holders do not have shareholder rights. Argentine law governs shareholder rights. The depositary is the holder of the common shares underlying the ADSs. Holders of ADSs have ADS holder rights. A deposit agreement among us, the depositary, the ADS holder, and the beneficial owners of ADSs sets out ADS holder rights as well as the rights and obligations of the depositary. New York law governs the deposit agreement and the ADSs.

The following is a summary of the material provisions of the deposit agreement. For more complete information, investors should read the entire deposit agreement and the form of ADR.

Dividends and Other Distributions

How will investors receive dividends and other distributions on the shares?

The depositary has agreed to pay to ADS holders the cash dividends or other distributions it or the custodian receives on common shares or other deposited securities, after deducting its fees and expenses described below. ADS holders will receive these distributions in proportion to the number of common shares your ADSs represent.

Cash

The depositary will convert any cash dividend or other cash distribution we pay on the common shares into U.S. Dollars; if it can do so on a reasonable basis and can transfer the U.S. Dollars to the United States. If that is not possible or if any Government approval is needed and cannot be obtained, the deposit agreement allows the depositary to distribute the foreign currency only to those ADR holders to whom it is possible to do so. It may hold the foreign currency it cannot convert for the account of the ADR holders who have not been paid. It will not invest the foreign currency and it will not be liable for any interest.

Before making a distribution, the depositary will deduct any withholding taxes that must be paid. See “Item 10. Additional Information—Taxation”. It will distribute only whole U.S. Dollars and cents and will round fractional cents to the nearest whole cent. If the exchange rates fluctuate during a time when the depositary cannot convert the foreign currency, holders of ADSs may lose some or all of the value of the distribution.

Shares

The depositary may distribute additional ADSs representing any common shares we distribute as a dividend or free distribution. The depositary will only distribute whole ADSs. It will try to sell common shares, in lieu of delivering fractional ADS and distribute the net proceeds in the same way as it does with cash. The depositary may also sell a portion of the distributed common shares to pay its fees and expenses in connection with the distribution. If the depositary does not distribute additional ADSs, the outstanding ADSs will also represent the new common shares.

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Rights to Purchase Additional Common Shares

If we offer holders of our securities any rights to subscribe for additional common shares or any other rights, the depositary may make these rights available to holders of ADSs. If the depositary decides it is not legal and practical to make the rights available but that it is practical to sell the rights, the depositary will use reasonable efforts to sell the rights and distribute the proceeds in the same way as it does with cash. The depositary will allow rights that are not distributed or sold to lapse. In that case, holders of ADSs will receive no value for them.

If the depositary makes rights to purchase common shares available to holders of ADSs, it will exercise the rights and purchase the common shares on their behalf. The depositary will then deposit the shares and deliver ADSs to the investor. It will only exercise rights if the investor pays it the exercise price and any other charges the rights require the investor to pay.

U.S. securities laws may restrict transfers and cancellation of the ADSs representing common shares purchased upon exercise of rights. For example, you may not be able to trade these ADSs freely in the United States. In this case, the depositary may deliver restricted depositary shares that have the same terms as the ADSs described in this section except for changes needed to put the necessary restrictions in place.

Other Distributions

The depositary will send to holders of ADSs anything else we distribute on deposited securities by any means it thinks is legal, fair and practical. If it cannot make the distribution in that way, the depositary has a choice. It may decide to sell what we distributed and distribute the net proceeds, in the same way as it does with cash. Or, it may decide to hold what we distributed, in which case ADSs will also represent the newly distributed property. However, the depositary is not required to distribute any securities (other than ADSs) to holders of ADSs unless it receives satisfactory evidence from us that it is legal to make that distribution. The depositary may sell a portion of the distributed property to pay its fees and expenses in connection with the distribution.

The depositary is not responsible if it decides that it is unlawful or impractical to make a distribution available to any ADR holders. We have no obligation to register ADSs, common shares, rights or other securities under the Securities Act. We also have no obligation to take any other action to permit the distribution of ADSs, common shares, rights or anything else to ADS holders. This means that holders of ADSs may not receive the distributions we make on our common shares or any value for them if it is illegal or impractical for us to make them available to holders of ADSs.

Deposit, Withdrawal and Cancellation

How are ADSs issued?

The depositary will deliver ADSs if the investor or the investor’s broker deposits common shares or evidence of rights to receive common shares with the custodian. Upon payment of its fees and expenses and of any taxes or charges, such as stamp taxes or stock transfer taxes or fees, the depositary will register the appropriate number of ADSs in the names the investor requests.

How do ADS holders cancel ADSs and obtain shares?

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If an investor surrenders ADSs to the depositary, upon payment of the investor’s fees and expenses and of any taxes or charges, such as stamp taxes or stock transfer taxes or fees, the depositary will deliver the common shares and any other deposited securities underlying the surrendered ADSs to the investor or a person the investor designates at the office of the custodian. Or, at the investor’s request, risk and expense, the depositary will deliver the deposited securities at its office, if feasible.

How do ADS holders interchange between certified ADSs and uncertified ADSs?

Investors may surrender their ADRs to the depositary for the purpose of exchanging their ADR for uncertificated ADSs. The depositary will cancel that ADR and will send to the ADS registered holder a statement confirming that the ADS registered holder is the registered holder of uncertificated ADSs. Alternatively, upon receipt by the depositary of a proper instruction from a registered holder of uncertificated ADSs requesting the exchange of uncertificated ADSs for certificated ADSs, the depositary will execute and deliver to the ADS registered holder an ADR evidencing those ADSs.

Voting Rights

How do holders of ADSs vote?

Holders of ADSs may instruct the depositary to vote the number of common shares their ADSs represent. If we ask for the instructions of the holders of the ADSs, the depositary will notify the holders of the ADSs of shareholders’ meetings and the upcoming vote and arrange to deliver our voting materials to the holder of the ADSs. Those materials will describe the matters to be voted on and explain how holders of ADSs may instruct the depositary to vote the shares or other deposited securities underlying their ADSs as the holder of the ADSs directs by a specified date. For instructions to be valid, the depositary must receive them on or before the date specified.

The depositary will try, as far as practical, subject to Argentine law and the provisions of our by-laws or similar documents, to vote or to have its agents vote the number of common shares or other deposited securities represented by the ADSs as the holder of the ADSs instructs. Otherwise, the holder of the ADSs will not be able to exercise their right to vote unless they withdraw the shares underlying their ADSs. In the absence of the instruction of the holder of the ADSs, our company may request the depositary to vote as we instruct at the corresponding meeting. The holder of the ADSs may otherwise not know about the meeting far enough in advance to withdraw the shares. We will use our best efforts to request that the depositary notify holders of ADSs of upcoming votes and ask for the instructions of holders of ADSs.

If we timely ask the depositary to solicit the instructions of holders of ADSs and the depositary does not receive voting instructions from the holder of the ADSs by the specified date, the depositary will consider the holder of the ADSs to have authorized and directed it to vote the number of deposited securities represented by their ADSs in favor of all resolutions proposed by our Board of Directors or, if not so proposed, to vote in the same manner as the majority of all other shares voted in respect of this resolution. The depositary will vote as described in the preceding sentence unless we notify the depositary that:

· we do not wish the depositary to vote those deposited securities;

· we think there is substantial shareholder opposition to the particular question; or

· we think the particular question would have an adverse impact on our shareholders.

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Fees and Expenses

Reclassifications, Recapitalizations and Mergers

If we:

Then:

·                  Change the nominal or par value of our common shares ·                  Reclassify, split up or consolidate any of the deposited securities ·                  Distribute securities on the common shares that are not distributed to the holders of ADSs ·                  Recapitalize, reorganize, merge, liquidate, sell all or substantially all of our assets, or take any similar action

The cash, shares or other securities received by the depositary will become deposited securities. Each ADS will automatically represent its equal share of the new deposited securities. The depositary may distribute some or all of the cash, shares or other securities it received. It may also deliver new ADRs or ask the holder of ADSs to surrender their outstanding ADRs in exchange for new ADRs identifying the new deposited securities.

Limitations on Obligations and Liability

Limits on Our Obligations and the Obligations of the Depositary; Limits on Liability to Holders of ADRs

The deposit agreement expressly limits our obligations and the obligations of the depositary. It also limits our liability and the liability of the depositary. We and the depositary:

· are only obligated to take the actions specifically set forth in the deposit agreement without negligence or bad faith;

· are not liable if either of us is prevented or delayed by law or circumstances beyond our control from performing our obligations under the deposit agreement;

· are not liable if either of us exercises discretion permitted under the deposit agreement;

· have no obligation to become involved in a lawsuit or other proceeding related to the ADRs or the deposit agreement on behalf of holders of ADSs or on behalf of any other party; and

· may rely upon any documents we believe in good faith to be genuine and to have been signed or presented by the proper party.

In the deposit agreement, we agree to indemnify the depositary for acting as depositary, except for losses caused by the depositary’s own negligence or bad faith, and the depositary agrees to indemnify us for losses resulting from its negligence or bad faith.

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       Requirements for Depositary Actions

Before the depositary will deliver or register a transfer of an ADR, make a distribution on an ADR, or permit withdrawal of common shares, the depositary may require:

· payment of stock transfer or other taxes or other Governmental charges and transfer or registration fees charged by third parties for the transfer of any common shares or other deposited securities;

· satisfactory proof of the identity and genuineness of any signature or other information it deems necessary; and

· compliance with regulations it may establish, from time to time, consistent with the deposit agreement, including presentation of transfer documents.

The depositary may refuse to deliver ADSs or register transfers of ADSs generally when the transfer books of the depositary or our transfer books are closed or at any time if the depositary or we think it advisable to do so.

The Right of Holders of ADSs to Receive the Common Shares Underlying their ADRs

Holders of ADSs have the right to surrender their ADSs and withdraw the underlying common shares at any time except:

When temporary delays arise because: (i) the depositary has closed its transfer books or we have closed our transfer books; (ii) the transfer of common shares is blocked to permit voting at a shareholders’ meeting; or (iii) we are paying a dividend on our common shares.

When holder of ADSs seeking to withdraw common shares owe money to pay fees, taxes and similar charges.

When it is necessary to prohibit withdrawals in order to comply with any laws or Governmental regulations that apply to ADRs or to the withdrawal of common shares or other deposited securities.

This right of withdrawal may not be limited by any other provision of the deposit agreement.

Pre-Release of ADSs

The deposit agreement permits the depositary to deliver ADSs before deposit of the underlying common shares. This is called a Pre-Release of the ADSs. The depositary may also deliver common shares upon the receipt and cancellation of pre-released ADSs (even if the ADSs are surrendered before the Pre-Release transaction has been terminated). A Pre-Release is terminated as soon as the underlying common shares are delivered to the Depositary. The depositary may receive ADSs instead of common shares to satisfy a Pre-Release. The depositary may pre-release ADSs only under the following conditions: (a) before or at the time of the pre-release, the person to whom the pre-release is being made represents to the depositary in writing that it or its user (i) owns the common shares or ADSs to be deposited; (ii) transfers all beneficial right, title and interest in such common shares or ADSs, as the case may be, to the Depositary in its capacity as such and for the benefit of the Beneficial Owners, and (iii) will not take any action with respect to such common shares or ADSs, as the case may be, that is inconsistent with the transfer of ownership (including, without the consent of the Depositary, disposing of common shares or ADSs, as the case may be, other than in satisfaction of such Pre-Release); (b) the pre-release is fully collateralized with cash or other collateral that the depositary considers appropriate; (c) the depositary must be able to terminate the pre-release on not more than five business days’ notice and (d) Pre-Release is subject to such further indemnities and credit regulations as the Depositary deems appropriate. In addition, the depositary will limit the number of ADSs that may be outstanding at any time as a result of Pre-Release, although the depositary may disregard the limit from time to time, if it thinks it is appropriate to do so.

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Direct Registration System

In the deposit agreement, all parties to the deposit agreement acknowledge that the DRS and Profile Modification System, or Profile, will apply to uncertificated ADSs upon acceptance thereof to DRS by DTC. DRS is the system administered by DTC pursuant to which the depositary may register the ownership of uncertificated ADSs, which ownership shall be evidenced by periodic statements sent by the depositary to the registered holders of uncertificated ADSs. Profile is a required feature of DRS which allows a DTC participant, claiming to act on behalf of a registered holder of ADSs, to direct the depositary to register a transfer of those ADSs to DTC or its nominee and to deliver those ADSs to the DTC account of that DTC participant without receipt by the depositary of prior authorization from the ADS registered holder to register that transfer.

In connection with and in accordance with the arrangements and procedures relating to DRS/Profile, the parties to the deposit agreement understand that the depositary will not verify, determine or otherwise ascertain that the DTC participant, which is claiming to be acting on behalf of an ADS registered holder in requesting registration of transfer and delivery described in the paragraph above, has the actual authority to act on behalf of the ADS registered holder (notwithstanding any requirements under the Uniform Commercial Code). In the deposit agreement, the parties agree that the depositary’s reliance on and compliance with instructions received by the depositary through the DRS/Profile System and in accordance with the deposit agreement, shall not constitute negligence or bad faith on the part of the depositary.

Shareholder Communications and Inspection of Register of Holders of ADSs

The holders of ADSs are holders of deposited securities. As such, the depositary will make available for inspection by the holders of ADSs at its office all communications that it receives from us that we make generally available to holders of deposited securities. The depositary will send holders of ADSs copies of those communications if we ask it to. Holders of ADSs have a right to inspect the register of holders of ADSs, but not for the purpose of contacting those holders about a matter unrelated to our business or the ADSs.

Amendment and Termination

We may agree with the depositary to amend the deposit agreement and the ADRs without the consent of holders of ADSs for any reason. If an amendment adds or increases fees or charges, except for taxes and other Governmental charges or expenses of the depositary for registration fees, facsimile costs, delivery charges or similar items, or prejudices a substantial right of ADR holders, it will not become effective for outstanding ADRs until 30 days after the depositary notifies ADR holders of the amendment. At the time an amendment becomes effective, the holders of ADSs are considered, by continuing to hold their ADR, to agree to the amendment and to be bound by the ADRs and the deposit agreement as amended.

The depositary will terminate the deposit agreement if we ask it to do so. The depositary may also terminate the deposit agreement if the depositary has told us that it would like to resign and we have not appointed a new depositary bank within 60 days. In either case, the depositary must notify the holder of ADSs at least 30 days before termination.

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After termination, the depositary and its agents will do the following under the deposit agreement but nothing else: (a) advise the holders of ADSs that the deposit agreement is terminated, (b) collect distributions on the deposited securities, (c) sell rights and other property, and (d) deliver common shares and other deposited securities upon surrenders of ADRs. One year after termination, the depositary may sell any remaining deposited securities by public or private sale. After that, the depositary will hold the money it received on the sale, as well as any other cash it is holding under the deposit agreement for the pro rata benefit of the ADR holders that have not surrendered their ADRs. It will not invest the money and has no liability for interest. The depositary’s only obligations will be to account for the money and other cash. After termination our only obligations will be to indemnify the depositary and to pay fees and expenses of the depositary that we agreed to pay.

Fees, Expenses and Payment of Taxes

See “Item 12. Description of Securities other than Equity Securities”.

DOCUMENTS ON DISPLAY

The materials included in this annual report on Form 20-F, and exhibits thereto, may be inspected and copied at the Securities and Exchange Commission’s public reference room in Washington, D.C. Please call the Securities and Exchange Commission at 1-800-SEC-0330 for further information on the public reference rooms. The Securities and Exchange Commission maintains a World Wide Web site on the Internet at http://www.sec.gov that contains reports and information statements and other information regarding us. The reports and information statements and other information about us can be downloaded from the Securities and Exchange Commission’s website.

Item 11. Quantitative and Qualitative Disclosures about Market Risk

The Company’s activities and the market in which it operates expose the Company to a number of financial risks: market risk (including currency risk, cash flows interest rate risk, fair value interest rate risk and price risk), credit risk and liquidity risk.

The management of the financial risk is part of the Company’s overall policies, which focus on the unpredictability of the financial markets and seek to minimize potential adverse effects on its financial performance. Financial risks are the risks derived from the financial instruments to which the Company is exposed during or at the end of each year. The Company uses derivative instruments to hedge exposure to certain risks whenever it deems appropriate in accordance with its internal risk management policy.

Risk management is controlled by the Finance and Control Department, which identifies, evaluates and hedges financial risks. Risk management policies and systems are periodically reviewed so that they can reflect the changes in the market’s conditions and the Company’s activities.

See Note 5 of our financial statements for further information.

Foreign Currency Risk

Our cash, deposits and financial assets denominated in U.S. Dollars amounted to U.S.$0.2 million and U.S.$51.1 million of sovereign bonds as of December 31, 2023.

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As of December 31, 2023, the potential loss to the Company that would result from a hypothetical 10% change in foreign currency exchange rates, after giving effect to the impact of the change on our assets and liabilities denominated in foreign currency as of December 31, 2023, was approximately Ps.5,270 million.

The Company does not currently hedge its exposure to currency risk. Therefore, any depreciation of the Peso could significantly increase its debt service burden, which, in turn, could have a substantial adverse effect on its financial and cash position (including its ability to repay its Corporate Notes) and the results of its operations.

Interest rate risk

Interest rate risk is the risk of fluctuation in the fair value or cash flows of an instrument due to changes in market interest rates. The Company’s exposure to interest rate risk arises mainly from its long-term debt obligations.

Indebtedness at floating rates exposes the Company to interest rate risk on its cash flows. Indebtedness at fixed rates exposes the Company to interest rate risk on the fair value of its liabilities. As of December 31, 2023 and 2022, 100% of the loans were obtained at fixed interest rates. The Company’s policy is to keep the highest percentage of its indebtedness in instruments that accrue interest at fixed rates.

The table below shows the breakdown of the Company’s loans according to interest rate and the currency in which they are denominated:

Item 12. Description of Securities Other than Equity Securities

Persons depositing common shares or holders of ADSs will be required to pay certain fees and expenses, as described in the table below, which the depositary is entitled to deduct prior to making any cash dividend or other cash distribution on the deposited shares.

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Persons depositing common shares or ADS holders must pay:	For:
U.S.$5.00 (or less) per 100 ADSs (or portion of 100 ADSs)	·        Issuance of ADSs, including issuances resulting from a distribution of common shares or rights or other property ·        Cancellation of ADSs for the purpose of withdrawal, including if the deposit agreement terminates
U.S.$0.02 (or less) per ADS	·        Any cash distribution to the holder of the ADSs
U.S.$0.02 (or less) per ADS per year	·        Depositary services
A fee equivalent to the fee that would be payable if securities distributed to the holder of ADSs had been common shares and the shares had been deposited for issuance of ADSs	·        Distribution of securities distributed to holders of deposited securities which are distributed by the depositary to ADR holders
Registration or transfer fees	·        Transfer and registration of common shares on our common share register to or from the name of the depositary or its agent when the holder of ADSs deposits or withdraw common shares.
Expenses of the depositary in converting foreign currency to U.S. Dollars
Expenses of the depositary	·        Cable, telex and facsimile transmissions (when expressly provided in the deposit agreement)
Taxes and other Governmental charges the depositary or the custodian have to pay on any ADSs or common share underlying ADSs, for example, stock transfer taxes, stamp duty or withholding taxes
Any charges incurred by the depositary or its agents for servicing the deposited securities	·        No charges of this type are currently made in the Argentine market

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Reimbursement of fees

The Bank of New York Mellon, as depositary, reimbursed us for certain expenses relating to our initial public offering and establishment of our ADR program in 2007. Aside from that initial payment, we did not receive any reimbursement from the depositary for expenses we incur that are related to the maintenance of the ADS program.

The depositary collects fees for delivery and surrender of ADSs directly from investors depositing shares or surrendering ADSs for the purpose of withdrawal or from intermediaries acting for them. The depositary collects fees related to making distributions to investors by deducting those fees from the amounts distributed or by selling a portion of distributable property to pay the fees. The depositary may collect its annual fee for depositary services by deduction from cash distributions or by directly billing investors or by charging the book-entry system accounts of participants acting for them. The depositary may generally refuse to provide fee-attracting services until its fees for those services are paid.

Payment of taxes

The depositary may deduct the amount of any taxes owed from any payments to the holder of ADSs. It may also sell deposited securities, by public or private sale, to pay any taxes owed. The holder of ADSs will remain liable if the proceeds of the sale are not enough to pay the taxes. If the depositary sells deposited securities, it will, if appropriate, reduce the number of ADSs to reflect the sale and pay to the holder of ADSs any proceeds, or send to the holder of ADSs any property, remaining after it has paid the taxes.

PART II

Item 13. Defaults, Dividend Arrearages and Delinquencies

The 2001 and 2002 economic crisis in Argentina had a material adverse effect on our operations. The depreciation of the Peso caused the Peso value of our U.S. Dollar-denominated indebtedness to increase significantly, resulting in significant foreign exchange losses and a significant increase, in Peso terms, in our debt service requirements. At the same time, our cash flow remained Peso-denominated and our distribution margins were frozen and pesified by the Argentine Government pursuant to the Public Emergency Law. Moreover, the 2001 and 2002 economic crisis in Argentina had a significant adverse effect on the overall level of economic activity in Argentina and led to deterioration in the ability of our users to pay their bills. These developments caused us to announce on September 15, 2002 the suspension of principal payments on our financial debt. On September 26, 2005, our Board of Directors decided to suspend interest payments on our financial debt until the restructuring of this debt was completed.

On January 20, 2006, we launched a voluntary exchange offer and consent solicitation to the holders of our then-outstanding financial debt. All of these holders elected to participate in the restructuring and, as a result, on April 24, 2006, we exchanged all of our then-outstanding financial debt for three series of newly-issued notes, which we refer to as the restructuring notes. As of the date of this annual report, all of the restructuring notes have been repaid and cancelled. For a description of our debt following the restructuring see “Item 5. Operating and Financial Review and Prospects—Liquidity and Capital Resources—Debt”.

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Item 14. Material Modifications to the Rights of Security Holders and Use of Proceeds

Use of Proceeds

On April 30, 2007, we completed an initial public offering. We received U.S.$57.7 million in net proceeds from the offering. We did not receive any proceeds from the sale of our shares and ADSs by our selling shareholders in the offering. We used all of the net proceeds we received from the offering to repurchase a part of our then outstanding Fixed Rate Par Notes due 2016 and Discount Notes due 2014 in various market repurchase transactions during 2007 and to make capital expenditures.

Item 15. Controls and Procedures

a) Disclosure Controls and Procedures.

Our management has evaluated, under the supervision of our chief executive officer and chief financial officer, the effectiveness of the design and operation of the Company’s disclosure controls and procedures (as defined in Rules 13a-15(e) and 15d-15(e) of the Securities Exchange Act of 1934) as of December 31, 2023.

There are inherent limitations to the effectiveness of any system of disclosure controls and procedures, including the possibility of human error and the circumvention or overriding of the controls and procedures. Accordingly, even effective disclosure controls and procedures can only provide reasonable assurance of achieving their control objectives. Based on such evaluation, our Chief Executive Officer and Chief Financial Officer concluded that Company's disclosure controls and procedures were effective as of December 31, 2023.

b) Management’s Annual Report on Internal Control Over Financial Reporting

Our management is responsible for establishing and maintaining adequate internal control over financial reporting as defined in Rules 13a-15(f) and 15d-15(f) under the Securities Exchange Act of 1934. The company’s internal control over financial reporting is designed to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with IFRS. The Company’s internal control over financial reporting includes those policies and procedures that:

i. pertain to the maintenance of records that, in reasonable detail, accurately and fairly reflect the transactions and dispositions of the assets of the Company;

ii. provide reasonable assurance that transactions are recorded as necessary to permit preparation of financial statements in accordance with generally accepted accounting principles, and that receipts and expenditures of the Company are being made only in accordance with authorizations of management and directors of the Company; and

iii. provide reasonable assurance regarding prevention or timely detection of unauthorized acquisition, use or disposition of the Company’s assets that could have a material effect on the financial statements.

Because of its inherent limitations, internal control over financial reporting may not prevent or detect misstatements. Also, projections of any evaluation of effectiveness to future periods are subject to the risk that controls may become inadequate because of changes in conditions, or that the degree of compliance with the policies or procedures may deteriorate.

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Our management assessed the effectiveness of the Company’s internal control over financial reporting as of December 31, 2023. In making this assessment, management used the criteria set forth by the Committee of Sponsoring Organizations of the Treadway Commission (COSO) in Internal Control-Integrated Framework (2013). Based on our assessment and those criteria, management concluded that the Company maintained effective internal control over financial reporting as of December 31, 2023.

The effectiveness of the Company’s internal control over financial reporting as of December 31, 2023 has been audited by Price Waterhouse & Co. S.R.L., an independent registered public accounting firm, as stated in their report which appears herein.

c) Attestation Report of the Registered Public Accounting Firm

The effectiveness of the Company’s internal control over financial reporting as of December 31, 2023 has been audited by Price Waterhouse & Co. S.R.L., an independent registered public accounting firm, as stated in their report which appears herein.

d) Changes in Internal Control over Financial Reporting

There has been no change in our internal control over financial reporting during 2023 that has materially affected, or is reasonably likely to materially affect, our internal control over financial reporting.

Item 16A. Audit Committee Financial Expert

Our Board of Directors has determined that Esteban Gabriel Macek, an independent member of our Board of Directors, under Argentine law and Rule 10A-3, is an “audit committee financial expert” as defined in Item 16A of Form 20-F under the Securities and Exchange Act of 1934. See “Item 6. Directors, Senior Management and Employees—Board Practices—Audit Committee”.

Item 16B. Code of Ethics

Our company adopted a Code of Ethics in May 1999, which applies to all of our employees, including our principal executive, financial and accounting officers. Our Code of Ethics was further reviewed and updated in 2012, 2015, 2019 and 2020.

Our updated Code of Ethics continues to be applied. We posted a copy of our Code of Ethics on our website at http://www.edenor.com.ar.

The Code provides a roadmap to how we expect to conduct ourselves and lays the foundation for delivering the service of excellence we set out to achieve.

The Code of Ethics is also available on both the integration, communication and management platform “Edenorcerca” and the platform where employee payslips are stored.

Item 16C. Principal Accountant Fees and Services

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Price Waterhouse & Co. S.R.L. (member firm of PricewaterhouseCoopers network) acted as our independent registered public accounting for the fiscal years ended December 31, 2023 and 2022. The chart below sets forth the services rendered to us by Price Waterhouse & Co. S.R.L. and the fees accrued in the last two years for those services (including related expenses), and breaks down these amounts by category of service in million of Pesos in constant currency:

	Year ended December 31,
	2023	2022
Audit fees	260.1	185.6
Audit-related fees	30.2	140.0
Tax fees	-	-
All other fees	-	-
Total	290.3	325.6

We have adopted pre-approval policies and procedures under which all audit services provided by our external auditors must be pre-approved by the audit committee as set forth in our internal policies. Any service proposals submitted by external auditors need to be discussed and approved by the audit committee during its meetings. Once the proposed service is approved, we formalize the engagement of services. The approval of any audit services to be provided by our external auditors is specified in the minutes of our audit committee.

Item 16D. Exemptions from the Listing Standards for Audit Committees

Not applicable.

Item 16E. Purchases of Equity Securities by the Issuer and Affiliated Purchasers

Not applicable.

Item 16F. Change in Registrant’s Certifying Accountant

Not applicable.

Item 16G. Corporate Governance

Pursuant to Rule 303A.11 of the Listed Company Manual of the New York Stock Exchange (NYSE), we are required to provide a summary of the significant ways in which our corporate governance practices differ from those required for U.S. companies under the NYSE listing standards. Our corporate governance practices are governed by our bylaws, Argentine corporate and securities law (including the Argentine Corporations Law, the CML and Law No. 26,386) and the regulations issued by the CNV, such as the Corporate Governance Code CNV’s General Resolution No. 797/19 (the “CGC”).

NYSE LISTED COMPANY MANUAL SECTION 303.A Edenor’s Corporate Practices

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SECTION 303A.01. Independent directors must constitute the majority of a listed company’s Board of Directors. Edenor follows Argentine law, which does not require that a majority of the Board of Directors be comprised of independent directors. Argentine law instead requires that public companies in Argentina have a sufficient number of independent directors to be able to form an audit committee of at least three members, the majority of which must be independent pursuant to the criteria established by the CNV. As of the date of this annual report, five of Edenor’s ten directors are independent under Argentine law and Rule 10A-3 of the Securities Exchange Act of 1934, as amended (the “Exchange Act”).

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SECTION 303A.02. This rule establishes the standards that determine whether a director qualifies as independent. It provides that directors cannot qualify as independent unless the Board of Directors finds them to have no material relationship with the listed company. A number of per se exclusions from independence apply, generally triggered by having a connection, individually or through an immediate family member, to the listed company or to a company that has a material relationship with the listed company as a shareholder, employee, officer, or director of the listed company.

The CNV’s Regulations, specifically Article 11 of Section III, Chapter III, Title II and Article 24 of Section VII, Chapter I, Title VI, indicate the criteria for establishing independence of a director. They provide that any director is not independent when: Has been a member of the management body for the controlling entity or another company belonging to the same economic group of the issuer by a preexistent relationship to the moment of his/her election, or if said relationship had ceased to exist during the previous three years; Is associated to the issuer or any of its shareholders that have significant participation, directly or indirectly, with the issuer; or with companies with which they have significant participation, directly or indirectly; or if he/she was associated to them by an employment relationship for the past three years; Has professional relationships or is affiliated to a professional organization or entity that maintains a frequent professional relationship of such nature and of relevant volume with, or that entitles him or she to a remuneration or fees (different from those corresponding to the functions that he/she fulfils in the management body), from the issuer, the issuer´s shareholders that have directly or indirectly “significant participations” or with companies in which these too have, directly or indirectly, “significant participations”. This prohibition comprises the professional relationships and affiliation during the last three years prior to his/hers appointment as director; Holds FIVE percent (5%) or more, directly or indirectly, of shares attached with voting rights and/or capital stock of the issuer or any company with a “significant participation” in it; Directly or indirectly, sells and/or provides goods and/or services – different from those accounted for in subsection c) – frequently and in such nature and volume relevant to the issuer or its shareholders that have a “significant participation” with it, directly or indirectly, for which he or she has perceived amounts substantially superior to those perceived for his or her functions as a member of the management body. This prohibition comprises the commercial relationships that took place during the last three years prior to his/her appointment as director; Has been director, manager, administrator or principal executive of nonprofit organizations that have been benefited from funds proceeding from the company, its controlling company and any other company belonging to the same organization, by an amount superior to those described in article 12 subsection I) of the Resolution UIF Nº 30/11 and its amendments thereto; Receives any payment, including the participation in plans or stock option schemes, from the company or from another company belonging to the same economic group, other than the compensation paid as a member of the Board of Directors, except dividends paid as a shareholder of the company in the terms of paragraph d) and the corresponding to the consideration described in paragraph e); Has been a director for the issuer, the controlling entity or another company belonging to the same economic group of the issuer for more than ten years. If said relationship had ceased to exist during the previous three years, the independent condition will be recovered; Is spouse or a legally recognized partner, up to the third grade of consanguinity or second grade of affinity, of the members of the management body of the company that do not comply with the conditions described in the previous points; Is a member of the Board of Directors or supervisory committee in one or more companies registered as negotiating agent, liquidation and compensation agent and/or broker of negotiable securities, that are members of the respective stock exchange market or are linked by a dependency relationship with members of such stock exchange market; and Maintains, directly or indirectly, a significant participation in one or more companies registered as negotiating agent, liquidation and compensation agent and/or broker of negotiable securities, which are members of the stock exchange market. In addition, Article 4 of Section III, Chapter I, Title XII of the CNV’s Regulations provides that at each election of directors, the non-independence or independence of any candidates proposed at the shareholders’ meeting must be disclosed. Moreover, after the shareholders’ meeting in which directors are appointed, the personal data of the appointed directors and their qualification as independent or non-independent (in the latter case in the form of an affidavit executed by each director) must be disclosed to the CNV and the exchanges where the company has its securities listed.

SECTION 303A.03. This rule requires regular scheduled meetings of non-management directors to increase the involvement and efficiency of such director.

N Under Argentine Law No. 19,550 (Commercial Companies Law) requires that the board meets at least once every three months. The Board of Directors meets regularly and participates actively and with a high degree of involvement in the management of the Company. Edenor’s Board of Directors as a whole is responsible for administering and monitoring the company’s affairs. Under Argentine law, the Board of Directors may approve the delegation of specific responsibilities to designated directors or executive directors and or managers of the Company. Also, it is mandatory for public companies to have a supervisory committee (Comisión Fiscalizadora), which is responsible for monitoring legal compliance by the Company with Argentine law, its bylaws and shareholders’ resolutions. The supervisory committee, without prejudice to the role of external auditors, is also required to present to the shareholders at the annual ordinary general meeting a written report on the reasonableness of the financial information of the Company’s annual report and the financial statements presented to the shareholders by Edenor’s Board of Directors. The supervisory committee also presents a report to the Board of Directors on Edenor’s quarterly financial statements. The members of the supervisory committee are not directors of the company.

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SECTION 303A.04. Listed companies must organize a Nominating and Corporate Governance Committee composed entirely of independent directors.

Neither Argentine law nor Edenor’s bylaws require having a Corporate Governance Committee nor a Nominating Committee. CNV recommends having a Nominating Committee. The entire Board of Directors is in charge of overseeing Edenor’s corporate governance practices. Also the Boards often nominates Board members candidates for consideration by Shareholders Meeting.

SECTION 303A.05. Listed companies must organize a Compensation Committee composed entirely of independent directors. which satisfy additional independence requirements specific to Compensation Committee membership.

Neither Argentine law nor Edenor’s bylaws require having a compensation committee. CNV recommends having one. Within this framework, different incentive programs have been created for the Company’s executives, in order to align them with the Companies objectives and encourage them to fulfil their obligations in an equitable manner. The Human Resources and General Management, approves, in an integrated and coordinated manner, the process to set remuneration by which, on an annual basis, all employees, including Managers, are evaluated in relation to the performance of their duties. The Issuer has established a fixed and variable remuneration scheme that is associated with the fulfilment of objectives and the degree of compliance with these objectives. In addition, the remuneration of the members of the Board of Directors is approved annually by the shareholders at the General Ordinary Shareholders' Meeting, in advance to Shareholders Meeting, Edenor’s Audit Committee (composed entirely of independent directors) is required to issue an opinion about the reasonability of Board members’ fees.

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SECTION 303A.06. Listed companies must organize an audit committee that meets the requirements set forth in the Securities Exchange Act of 1934. Edenor is subject to and in compliance with §303A.06 and Rule 10A-3. Edenor’s audit committee is entirely composed of independent members of Edenor’s Board of Directors.

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SECTION 303A.07. The audit committee must have at least 3 members, all of whom must qualify as independent. In addition, the audit committee must have written regulations establishing: (i) the purpose of the committee; (ii) the annual assessment of the committee’s performance; and (iii) the committee’s duties and responsibilities. Finally, the rule establishes that listed companies must have internal audit functions within their organization in order to assist both the audit committee and the company’s management in matters related to risk and internal control processes.

As a foreign private issuer, Edenor is not subject to §303A.07. As such, Edenor’s audit committee charter may not provide for every one of the specific duties required by §303A.07. The duties of the audit committee include monitoring Edenor’s internal control, administrative and accounting systems; supervising the application of Edenor’s risk management policies; providing the market adequate information regarding conflicts of interests that may arise between Edenor’s company and Edenor’s directors or controlling shareholders; rendering opinions on relevant transactions with related parties; and supervising and reporting to regulatory authorities the existence of any kind of conflict of interest, oversight of external audit, internal audit and procedures for receipt and treatment of complaints regarding accounting, internal control and audit matters. Edenor has an Internal Audit Department and Risk Control Department that assist both the Audit Committee and management in risk and internal control matters. The scope of the committee’s powers and obligations is detailed in Article 110 of the CML and Article 17 Section 5, Chapter III, Title II, of the CNV’s Regulations. A member of the Audit Committee with extensive expertise on audit matters has been appointed by the Board as audit committee financial expert (as defined in Item 16.A). Under Argentine law, there is no requirement related to the financial expertise of the members of the audit committee. However, the members of Edenor’s audit committee have extensive corporate and financial experience. At least one member of the audit committee has sufficient expertise as an external auditor to be recognized by the Board of Directors of Edenor as an “audit committee financial expert” as defined in Item 16A of Form 20-F. In accordance with Edenor’s internal policies, Edenor’s audit committee must pre-approve all audit and non-audit services provided by external auditors.

SECTION 303A.08. The shareholders must be given the opportunity to vote on equity-compensation plans and their material revisions, although there are exceptions to this requirement, such as when these compensation plans serve as labor incentive tools.

The Company does not have a share-based incentive plan. The last incentive plan was created in 2016, and in 2017 was approved by shareholders, allocating all the treasury shares acquired at such date. As of December 31, 2023, there were 6,992,251 Class B Shares subject to any potential extension of the share-based compensation plan; and such decision can be implemented by further consideration of the Executive Committee.

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SECTION 303A.09. Listed companies must adopt and disclose their corporate governance guidelines.

CML requires Edenor to provide governance-related information in the annual reports to the CNV, including information relating to the decision- making organization (corporate governance), the company’s internal control system, norms for director and management compensation, and any other compensation system applying to board members and managers. All relevant information provided by the Company to the CNV is sent through the CNV’s electronic financial reporting database and may be viewed by the public on the CNV website. Edenor’s Annual Report, financial statements and press releases may also be viewed on the Company’s Web site (www.Edenor.com.ar). Under Argentine law, the board’s performance is evaluated at the annual Shareholders’ Meeting. Annually, listed companies must meet the disclosure requirements of the CGC, stating how they follow the practices recommended by CNV or else explaining the alternative practices they observe”. Once filed with the CNV and the exchange markets where the company is listed, the CGC report qualifies as public information. Edenor complies with the CGC annual disclosure requirements and fully disclose all corporate governance policies and practices. This information may be viewed on the company’s website at http://www.Edenor.com.ar.

SECTION 303A.10. Listed companies must adopt and disclose to the market a Code of Ethics and Business Conduct which is applicable to their directors, officers and employees. In addition, any waiver of the provisions contained in this Code in favor of any of the parties that are subject to it must be immediately disclosed.

Under Argentine Law No 27,401 Criminal Responsibility of Legal Persons, establishes as a requirement to exempt themselves from liability that companies has an Integrity Program, composed of the set of mechanisms and internal procedures for the promotion of the integrity, supervision and control, aimed at preventing, detecting and correcting irregularities and unlawful acts, including the Code of Ethics and Corporate Governance Our company adopted a Code of Ethics in 1999, which applies to all of our employees, including our principal executive, financial and accounting officers. In 2015, 2019 and 2021, we reviewed and updated our Code of Ethics and Corporate Governance .

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SECTION 303A.12(a). The Chief Executive Officer (CEO) of a listed company must certify on an yearly basis that he or she has no knowledge of any violation or default of the corporate governance listing standards. Additionally, the CEO must promptly notify the NYSE in writing after any executive officer of the listed company becomes aware of any non-compliance with any provision of the governance listing standards. Finally, listed companies must file an annual statement and updated reports with the NYSE disclosing any changes in the composition of their Board of Directors or any of the committees described in Section 302A of the NYSE LCM. No similar obligation exists under Argentine legislation. However, in accordance with Argentine law the directors of a company must annually submit for its shareholders’ approval such company’s annual report and financial statements at such company’s annual shareholders’ meeting. Also, Edenor discloses material events in regulatory filings both with the CNV in Argentina and with the SEC on form 6K in the United States (as “materiality” is understood in each of those respective jurisdictions). Under applicable rules of the NYSE, Edenor is required to disclose to the NYSE certain changes in its audit committee, including any change that affects the committee’s independence. Edenor is subject to and complies with §303A.12(b), to the extent that it relates to the sections of the NYSE Listed Company Manual that apply to foreign private issuers. Edenor complies with the certification requirements under §303A.12(c).  

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Item 16 H. Mine Safety Disclosures

Not applicable.

Item 16 I. Disclosure Regarding Foreign Jurisdictions that Prevent Inspections

Not applicable.

Item 16 J. Insider Trading Policies

Not applicable.

Item 16 K. Cybersecurity

Risk Management and strategy

We have a risk management model (the “Risk Management Model”) in place, which is an integral part of our organization’s culture and activities and is present at all levels in the Company’s processes and projects. It is integrated with our internal control and management systems to achieve organizational efficiency and effectiveness and rational decision-making. It is aligned with the best practices in the field (ISO 31000:2018, COSO 2013 and COSO-ERM 2017). 

Our current Risk Management Model has 2 levels: 

· Level 1 - Strategic: risks that could arise from business decisions, the implementation of decisions or the ability to respond to industry changes. Regarded as high-level risks and the Senior Management’s responsibility, their impact often affects the Company in general.

· Level 2 - Operational: risks that may cause an impact as a result of human performance, the design and effectiveness of internal processes and/or systems and as a consequence of external events. Their impact is often limited to specific activities as they relate to specific and defined processes and projects.

At both levels, but with different scope, cybersecurity risks are considered, inasmuch as any vulnerability in information systems could have severe implications, including disruptions in the supply of electricity, loss of sensitive information, damages to the infrastructure and risks to public safety. 

The identified risks are analyzed and valued according to likelihood and impact in order to determine risk severity/criticality. Additionally, control activities in place are identified and supplementary mitigating actions as well as those responsible for them are determined. 

The Risk Management Model is based on an iterative approach. Therefore, we constantly monitor the internal and external contexts with the aim of verifying that the assessment of the identified risks and the established mitigating actions remain applicable. In turn, we monitor if new events that could turn into emerging risks have emerged.

214

Through the Information Security Department, we implement and apply the processes for mitigating cybersecurity risks following the best practices in the field (ISO 27001:2022, CIS Controls and NIST). 

Fostering a proactive attitude towards cybersecurity, we implement robust security controls, such as firewalls, intrusion monitoring and detection systems, multi-factor authentication and data encryption, to protect the networks and systems against unauthorized access. We have also implemented incident response plans to take fast and effective action in the event of a cyberattack, thereby minimizing downtime and potential damages. 

In order to carry out some of our activities, the Information Security Department engages the services of advisors and consultants who are experts in the field. Some of the contracted services are: 

- The operation of the Security Operation Center (SOC).

- The carrying out of regular pen tests, both on the infrastructure and the applications.

- The permanent monitoring of vulnerabilities to identify security gaps.

- The improvement of the internal security processes maturity, based on industry standards.

- The strengthening of the Disaster Recovery Plan (DRP).

- The annual reviews of IT general controls (ITGC) defined for the Information Security process.

In 2023, the following milestones were achieved: 

- Implementation of a Security Information and Event Management System (SIEM) to access data-based information and combat threats, protecting the business and mitigating risks at scale with machine learning-based analysis.

- At cloud service management level, the “Zero Trust” security posture, which is based on the premise that organizations should trust nothing automatically, even when it comes from internal sources, was strengthened.

- Strengthening of the Operational Technology (OT) network security, by defining new and more secure architectures for substations connectivity and incorporating electric protection networks to the OT cybersecurity model, increasing network security and segregation.

- Definition and implementation of a new Vulnerability Management continuous process, which allows us to identify, assess and treat security vulnerabilities in the systems and the software that runs on them.

- Implementation of a digital risk protection platform focused on early incident detection and fraud prevention, using artificial intelligence and automated processes to monitor the Company’s digital assets.

- Implementation of a solution to manage and optimize security regulations and policies on the management of firewall policies, which allows us to improve compliance requirements as well as reduce exposure risk.

- Taking out of a cybersecurity insurance that protects the Company against residual risks and the costs associated with cybersecurity events.

215

Finally, staff training and awareness are fundamental aspects. Therefore, awareness raising programs on cybersecurity and information safeguarding are provided, through phishing drills, newsletters and interactive modules. 

We have not identified any cybersecurity threats that have materially affected or are reasonably likely to materially affect our business strategy, operations results, or financial condition. However, we cannot eliminate all cybersecurity risks or provide assurances that we have not experienced an undetected cybersecurity incident in the past or that we will not experience such an incident in the future. Any significant disruption to our service or access to our systems could result in revenue loss, legal actions, regulatory penalties, reputational harm, among other consequences. Additional information on cybersecurity risks we face can be found in “Item 3. Key Information— Risk Factors—Risks Relating to Our Business—Cybersecurity events, such as interruptions or failures in our information technology systems as well as cyber-attacks, could adversely affect our business, financial condition, results of operations and cash flows”.

Governance 

Although the Company’s Risk Management Model is implemented by the Senior Management, with the assistance of the Risk Management Department, it is important to point out that risk management is the responsibility of the Board of Directors, the Senior Management and of each and every employee, regardless of the duties of their positions. 

We have set up a Risk Committee that is comprised of the Chief Executive Officer, the Operational Directors and the Compliance Officer. The Risk Committee’s main responsibilities include: promoting a risk management culture, ensuring the development, implementation and appropriate functioning of the Risk Management Model, and participating actively in each of the stages of the process. In turn, the Risk Committee actively participates in the critical event response process with the aim of assessing the event’s impact and materiality. 

The Information Security Department has defined the KPIs for the cybersecurity process, which make it possible to measure the Company’s posture as well as the efficiency of protection measures. In turn, the Department immediately informs the Risk Committee about critical incidents.

216

The Risk Management Department presents, at least on a quarterly basis, its management reports to the Risk Committee, and, in such meetings, severity/criticality levels are updated or new risks to be dealt with, if appropriate, are identified. Additionally, the Department presents, at least on an annual basis, a report to the Audit Committee, which is responsible for overseeing the application of the Company’s information policies on risk management. The Audit Committee is comprised of experienced and qualified members to audit and assess the risks faced by the Company, the internal controls and the corporate governance processes to competently direct the Company towards its objectives.

PART III

Item 17. Financial Statements

The Registrant has responded to Item 18 in lieu of this Item.

Item 18. Financial Statements

Our financial statements are included in this annual report beginning on page F-1.

Item 19. Exhibits

Documents filed as exhibits to this annual report:

1.1 Estatutos sociales (corporate bylaws) of Empresa Distribuidora y Comercializadora Norte S.A. (EDENOR S.A.) (English translation) (previously filed as Exhibit 3.1 to Edenor’s Registration Statement on Form F-1 (File No. 333-141894) on April 4, 2007 and incorporated by reference herein.)

2.1 Form of Deposit Agreement among Empresa Distribuidora y Comercializadora Norte S.A. (EDENOR S.A.), The Bank of New York, as depositary, and the Holders from time to time of American Depositary Shares issued thereunder, including the form of American Depositary Receipts (previously filed as Exhibit 4.1 to Edenor’s Amendment No. 2 to Registration Statement on Form F-1 (File No. 333-141894) on April 20, 2007 and incorporated by reference herein.)

2.3 Registration Rights Agreement, between Empresa Distribuidora y Comercializadora Norte S.A. (EDENOR S.A.) and Citigroup Global Markets Inc. and Deutsche Bank Securities Inc. as Representatives of the Initial Purchasers (previously filed as Exhibit 2.4 to Edenor’s Annual Report on Form 20-F (File No. 001-33422) on June 26, 2008 and incorporated by reference herein).

2.D Description of securities registered under Section 12 of the Securities Exchange Act of 1934.

12.1 Certification of Chief Financial Officer pursuant to Section 302 of the Sarbanes-Oxley Act of 2002.

12.2 Certification of Chief Executive Officer pursuant to Section 302 of the Sarbanes-Oxley Act of 2002.

13.1 Certification pursuant to Section 906 of the Sarbanes-Oxley Act of 2002.

217

97.1  Policy for Recovery of Erroneously Awarded Incentives-Based Compensation.

104 Cover Page Interactive Data File (formatted as Inline XBRL and contained in Exhibit 101)

218

SIGNATURE

The registrant hereby certifies that it meets all of the requirements for filing on Form 20-F and that it has duly caused and authorized the undersigned to sign this annual report on its behalf.

	Empresa Distribuidora y Comercializadora Norte Sociedad Anónima (EDENOR S.A.)
	/s/ GERMAN RANFTL
Date: April 24, 2024	Name: German Ranftl Title: Chief Financial Officer

219

 

Report of Independent Registered Public Accounting Firm

To the Board of Directors and Shareholders of

Empresa Distribuidora y Comercializadora Norte

Sociedad Anónima (Edenor S.A.)

Opinions on the Financial Statements and Internal Control over Financial Reporting

We have audited the accompanying statement of financial position of Empresa Distribuidora y Comercializadora Norte Sociedad Anónima (the “Company”) as of December 31, 2023 and 2022, and the related statements of comprehensive income (loss), changes in equity and cash flows for each of the three years in the period ended December 31, 2023, including the related notes (collectively referred to as the “financial statements”). We also have audited the Company’s internal control over financial reporting as of December 31, 2023, based on criteria established in Internal Control - Integrated Framework (2013) issued by the Committee of Sponsoring Organizations of the Treadway Commission (COSO).

In our opinion, the financial statements referred to above present fairly, in all material respects, the financial position of the Company as of December 31, 2023 and 2022, and the results of its operations and its cash flows for each of the three years in the period ended December 31, 2023 in conformity with International Financial Reporting Standards as issued by the International Accounting Standards Board. Also in our opinion, the Company maintained, in all material respects, effective internal control over financial reporting as of December 31, 2023, based on criteria established in Internal Control - Integrated Framework (2013) issued by the COSO.

Basis for Opinions

The Company's management is responsible for these financial statements, for maintaining effective internal control over financial reporting, and for its assessment of the effectiveness of internal control over financial reporting, included in Management’s Annual Report on Internal Control over Financial Reporting appearing under Exhibit 2. Our responsibility is to express opinions on the Company’s financial statements and on the Company's internal control over financial reporting based on our audits. We are a public accounting firm registered with the Public Company Accounting Oversight Board (United States) (PCAOB) and are required to be independent with respect to the Company in accordance with the U.S. federal securities laws and the applicable rules and regulations of the Securities and Exchange Commission and the PCAOB.

We conducted our audits in accordance with the standards of the PCAOB. Those standards require that we plan and perform the audits to obtain reasonable assurance about whether the financial statements are free of material misstatement, whether due to error or fraud, and whether effective internal control over financial reporting was maintained in all material respects.

Our audits of the financial statements included performing procedures to assess the risks of material misstatement of the financial statements, whether due to error or fraud, and performing procedures that respond to those risks. Such procedures included examining, on a test basis, evidence regarding the amounts and disclosures in the financial statements. Our audits also included evaluating the accounting principles used and significant estimates made by management, as well as evaluating the overall presentation of the financial statements. Our audit of internal control over financial reporting included obtaining an understanding of internal control over financial reporting, assessing the risk that a material weakness exists, and testing and evaluating the design and operating effectiveness of internal control based on the assessed risk. Our audits also included performing such other procedures as we considered necessary in the circumstances. We believe that our audits provide a reasonable basis for our opinions.

 220

Definition and Limitations of Internal Control over Financial Reporting

A company’s internal control over financial reporting is a process designed to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles. A company’s internal control over financial reporting includes those policies and procedures that (i) pertain to the maintenance of records that, in reasonable detail, accurately and fairly reflect the transactions and dispositions of the assets of the company; (ii) provide reasonable assurance that transactions are recorded as necessary to permit preparation of financial statements in accordance with generally accepted accounting principles, and that receipts and expenditures of the company are being made only in accordance with authorizations of management and directors of the company; and (iii) provide reasonable assurance regarding prevention or timely detection of unauthorized acquisition, use, or disposition of the company’s assets that could have a material effect on the financial statements.

Because of its inherent limitations, internal control over financial reporting may not prevent or detect misstatements. Also, projections of any evaluation of effectiveness to future periods are subject to the risk that controls may become inadequate because of changes in conditions, or that the degree of compliance with the policies or procedures may deteriorate.

Critical Audit Matters

The critical audit matter communicated below is a matter arising from the current period audit of the financial statements that was communicated or required to be communicated to the audit committee and that (i) relates to accounts or disclosures that are material to the financial statements and (ii) involved our especially challenging, subjective, or complex judgments. The communication of critical audit matters does not alter in any way our opinion on the financial statements, taken as a whole, and we are not, by communicating the critical audit matter below, providing a separate opinion on the critical audit matter or on the accounts or disclosures to which it relates.

Impairment Assessment of Property, Plant and Equipment

As described in Notes 6.c and 14 to the financial statements, as of December 31, 2023, the Company’s property, plant and equipment balance was $1,272,989 million. As disclosed in Note 6.c, the Company analyzes the recoverability of its long-lived assets (including property, plant and equipment) on a periodic basis or when events or changes in circumstances indicate that the recoverable amount of the long-lived assets, which is measured as the higher of value in use or fair value less costs to sell at the end of the period, may be impaired. According to the situation described in Notes 1 and 2.b., the projections made by the Company concerning the recoverability of its property, plant and equipment have been updated. The value in use is determined on the basis of projected and discounted cash flows, using discount rates that reflect the time value of money and the specific risks of the assets under consideration. Management’s cash flow projections included significant judgments and assumptions relating to nature, timing, and form of the electricity rate increases; demand for electricity projections; development of the costs to be incurred; investment needs to maintain the service quality levels required by the regulatory authority, and macroeconomic variables, such as growth rates, inflation rates and foreign currency exchange rates.

 221

 

The principal consideration for our determination that performing procedures relating to impairment assessment of property, plant and equipment is a critical audit matter is that there was significant judgment by management when developing the recoverable value measurement of the property, plant and equipment, which, in turn, led to a high degree of auditor judgment, subjectivity, and effort in performing procedures to evaluate management’s cash flow projections and significant assumptions, including the discount rate; nature, timing, and form of the electricity rate increases; demand for electricity projections; development of the costs to be incurred; investment needs to maintain the service quality levels required by the regulatory authority, and macroeconomic variables, including growth rates, inflation rates and foreign currency exchange rates. In addition, the audit effort involved the use of professionals with specialized skill and knowledge to assist us in performing these procedures and evaluating the audit evidence obtained from these procedures.

Addressing the matter involved performing procedures and evaluating audit evidence in connection with forming our overall opinion on the financial statements. These procedures included testing the effectiveness of controls relating to management’s impairment assessment, including controls over the valuation of the Company’s property, plant and equipment. These procedures also included, among others, testing management’s process for developing the value-in-use estimate; evaluating the appropriateness of the discounted cash flow model, as well as the mathematical accuracy of the calculations; testing the completeness, accuracy, and relevance of underlying data used in the model; and evaluating the significant assumptions used by management relating to the discount rate; nature, timing, and form of the electricity rate increases; demand for electricity projections; development of the costs to be incurred; investment needs to maintain the service quality levels required by the regulatory authority, and macroeconomic variables, including growth rates, inflation rates and foreign currency exchange rates. Evaluating management’s assumptions involved evaluating whether the assumptions used by management were reasonable considering (i) the current and past performance of the energy distribution business, (ii) the consistency with external market and industry data, and (iii) whether these assumptions were consistent with evidence obtained in other areas of the audit. Professionals with specialized skill and knowledge were used to assist us in the evaluation of the Company’s discounted cash flow model and certain significant assumptions, including the discount rate. The procedures performed also included evaluating the sufficiency of the information disclosed in the financial statements regarding the evaluation of the recoverable amount of property, plant and equipment.

/s/ PRICE WATERHOUSE & CO. S.R.L.

______________________________

/s/ Raúl Leonardo Viglione (Partner)

Autonomous City of Buenos Aires, Argentina

March 8, 2024

We have served as the Company’s auditor since 2006.

 222

FINANCIAL STATEMENTS

AS OF DECEMBER 31, 2023 AND 2022

AND FOR THE YEARS ENDED DECEMBER 31, 2023, 2022 AND 2021

(Stated in millions of Argentine Pesos in constant currency – Note 3)

2023 FINANCIAL STATEMENTS

Legal Information		F-2
Statement of Comprehensive Income (Loss)		F-3
Statement of Financial Position		F-4
Statement of Changes in Equity		F-6
Statement of Cash Flows		F-7
Notes to the Financial Statements:
1 |	General information	F-9
2 |	Regulatory framework	F-10
3 |	Basis of preparation	F-15
4 |	Accounting policies	F-18
5 |	Financial risk management	F-29
6 |	Critical accounting estimates and judgments	F-36
7 |	Interest in joint ventures	F-39
8 |	Contingencies and lawsuits	F-39
9 |	Revenue from sales and energy purchases	F-44
10 |	Expenses by nature	F-46
11 |	Other operating income (expense)	F-48
12 |	Net finance costs	F-49
13 |	Basic and diluted earnings (loss) per share	F-49
14 |	Property, plant and equipment	F-50
15 |	Right-of-use assets	F-52
16 |	Inventories	F-52
17 |	Financial instruments	F-53
18 |	Other receivables	F-55
19 |	Trade receivables	F-56
20 |	Financial assets at fair value through profit or loss	F-57
21 |	Cash and cash equivalents	F-57
22 |	Share capital and additional paid-in capital	F-58
23 |	Allocation of profits	F-58
24 |	The Company’s share-based compensation plan	F-58
25 |	Trade payables	F-59
26 |	Other payables	F-59
27 |	Deferred revenue	F-61
28 |	Borrowings	F-61
29 |	Salaries and social security taxes payable	F-64
30 |	Benefit plans	F-64
31 |	Income tax and deferred tax	F-66
32 |	Tax liabilities	F-68
33 |	Provisions	F-68
34 |	Related-party transactions	F-69
35 |	Keeping of documentation	F-70
36 |	Shareholders’ Meetings	F-70
37 |	Events after the reporting year	F-71
Report of Independent Registered Public Firm (PCAOB – ID 1349)

2023 FINANCIAL STATEMENTS

Glossary of Terms

The following definitions, which are not technical ones, will help readers understand some of the terms used in the text of the notes to the Company’s Financial Statements.

Terms	Definitions
ADS	American Depositary Shares
AMBA	Buenos Aires Metropolitan Area
BCRA	Central Bank of Argentina
BNA	Banco de la Nación Argentina
CABA	City of Buenos Aires
CAMMESA	Compañía Administradora del Mercado Mayorista Eléctrico S.A. (the company in charge of the regulation and operation of the wholesale electricity market)
CNV	National Securities Commission
CPD	Distribution Own Cost
DNU	Executive Order issued on the grounds of Necessity and Urgency
EASA	Electricidad Argentina S.A.
edenor	Empresa Distribuidora y Comercializadora Norte S.A.
ENRE	National Regulatory Authority for the Distribution of Electricity
FACPCE	Argentine Federation of Professional Councils in Economic Sciences
GBA	Greater Buenos Aires
GWh	Gigawatt hour
IAS	International Accounting Standards
IASB	International Accounting Standards Board
IFRIC	International Financial Reporting Interpretations Committee
IFRS	International Financial Reporting Standards
IGJ	Inspección General de Justicia (the Argentine governmental regulatory agency of corporations)
INDEC	National Institute of Statistics and Census
MEM	Wholesale Electricity Market
PBA	Province of Buenos Aires
PEN	Federal Executive Power
RECPAM	Gain (Loss) on exposure to the changes in the purchasing power of the currency
RT	Tariff Structure Review
SACME	S.A. Centro de Movimiento de Energía
SE	Energy Secretariat
SEGBA	Servicios Eléctricos del Gran Buenos Aires S.A.
VAD	Distribution Added Value

F-1 

2023 FINANCIAL STATEMENTS

Legal Information

Corporate name: Empresa Distribuidora y Comercializadora Norte S.A.

Legal address: 6363 Av. Del Libertador Ave., City of Buenos Aires

Main business: Distribution and sale of electricity in the area and under the terms of the Concession Agreement by which this public service is regulated.

Date of registration with the Public Registry of Commerce:

· of the Articles of Incorporation: August 3, 1992

· of the last amendment to the Bylaws: April 10, 2023 (Note 36)

Term of the Corporation: August 3, 2087

Registration number with the “Inspección General de Justicia” (the Argentine governmental regulatory agency of corporations): 1,559,940

Parent company: Empresa de Energía del Cono Sur S.A.

Legal address: 1252 Maipú Ave., 12^th Floor - CABA

Main business of the parent company: Investment company and provider of services related to the distribution of electricity, renewable energies and development of sustainable technology.

Interest held by the parent company in capital stock and votes: 51%

CAPITAL STRUCTURE

AS OF DECEMBER 31, 2023

(amounts stated in pesos)

Class of shares	Subscribed and paid-in (See Note 22)
Common, book-entry shares, face value 1 and 1 vote per share
Class A	462,292,111
Class B (1)	442,566,330
Class C (2)	1,596,659
	906,455,100

(1) Includes 30,852,251 treasury shares as of December 31, 2023.

(2) Relates to the Employee Stock Ownership Program Class C shares that have not been transferred.

F-2 

2023 FINANCIAL STATEMENTS

edenor

Statement of Comprehensive Income (Loss)

for the years ended December 31, 2023, 2022 and 2021

(Stated in millions of Argentine Pesos in constant currency – Note 3)

	Note	12.31.23	12.31.22	12.31.21
Revenue	9	701,098	640,994	688,502
Energy purchases	9	(458,944)	(446,030)	(423,413)
Distribution margin		242,154	194,964	265,089
Transmission and distribution expenses	10	(214,428)	(171,625)	(176,595)
Gross profit		27,726	23,339	88,494
Selling expenses	10	(82,764)	(73,717)	(69,728)
Administrative expenses	10	(69,122)	(55,598)	(45,170)
Other operating income	11	25,335	32,412	29,369
Other operating expense	11	(20,951)	(23,730)	(29,643)
(Loss) Income from interest in joint ventures	7	(10)	(17)	12
Operating result		(119,786)	(97,311)	(26,666)
Agreement on the Regularization of Obligations	2.c	197,731	56,479	-
Financial income	12	367	203	395
Financial costs	12	(319,435)	(273,335)	(163,544)
Other financial results	12	(31,286)	(4,452)	10,560
Net financial costs		(350,354)	(277,584)	(152,589)
Monetary gain (RECPAM)		454,589	310,205	144,620
Income (Loss) before taxes		182,180	(8,211)	(34,635)
Income tax	31	(133,809)	(46,187)	(94,840)
Income (Loss) for the year		48,371	(54,398)	(129,475)
Other comprehensive income
Items that will not be reclassified to profit or loss
Results related to benefit plans	30	(1,447)	(2,037)	1,215
Tax effect of actuarial profit (loss) on benefit plans	31	507	713	(427)
Total other comprehensive results		(940)	(1,324)	788
Comprehensive income (loss) for the year attributable to:
Owners of the parent		47,431	(55,722)	(128,687)
Comprehensive income (loss) for the year		47,431	(55,722)	(128,687)
Basic and diluted income (loss) per share:
Income (Loss) per share (argentine pesos per share)	13	55.28	(62.17)	(147.97)

The accompanying notes are an integral part of the Financial Statements.

F-3 

2023 FINANCIAL STATEMENTS

edenor

Statement of Financial Position

as of December 31, 2023 and 2022

(Stated in millions of Argentine Pesos in constant currency – Note 3)

	Note	12.31.23	12.31.22
ASSETS
Non-current assets
Property, plant and equipment	14	1,272,989	1,233,003
Interest in joint ventures	7	57	66
Right-of-use asset	15	3,540	2,202
Other receivables	18	3	9
Total non-current assets		1,276,589	1,235,280
Current assets
Inventories	16	39,816	20,048
Other receivables	18	34,046	58,232
Trade receivables	19	66,597	87,167
Financial assets at fair value through profit or loss	20	82,628	89,379
Cash and cash equivalents	21	9,128	5,076
Total current assets		232,215	259,902
TOTAL ASSETS		1,508,804	1,495,182

F-4 

2023 FINANCIAL STATEMENTS

edenor

Statement of Financial Position

as of December 31, 2023 and 2022 (continued)

(Stated in millions of Argentine Pesos in constant currency – Note 3)

	Note	12.31.23	12.31.22
EQUITY
Share capital and reserve attributable to the owners of the Company
Share capital	22	875	875
Adjustment to share capital	22	340,453	340,419
Treasury stock	22	31	31
Adjustment to treasury stock	22	7,288	7,322
Additional paid-in capital	22	4,716	4,674
Cost treasury stock		(27,946)	(27,946)
Legal reserve		23,621	23,621
Voluntary reserve		228,747	228,747
Other comprehensive loss		(3,472)	(2,532)
Accumulated losses		(135,502)	(183,873)
TOTAL EQUITY		438,811	391,338
LIABILITIES
Non-current liabilities
Trade payables	25	1,597	2,866
Other payables	26	158,924	54,458
Borrowings	28	44,345	45,268
Deferred revenue	27	13,474	11,451
Salaries and social security payable	29	2,449	2,402
Benefit plans	30	4,922	5,795
Deferred tax liability	31	478,696	345,384
Provisions	33	9,861	17,293
Total non-current liabilities		714,268	484,917
Current liabilities
Trade payables	25	240,950	559,936
Other payables	26	29,340	19,692
Borrowings	28	50,663	573
Deferred revenue	27	50	137
Salaries and social security payable	29	26,636	29,084
Benefit plans	30	578	729
Tax liabilities	32	4,639	4,102
Provisions	33	2,869	4,674
Total current liabilities		355,725	618,927
TOTAL LIABILITIES		1,069,993	1,103,844
TOTAL LIABILITIES AND EQUITY		1,508,804	1,495,182

The accompanying notes are an integral part of the Financial Statements.

F-5 

2023 FINANCIAL STATEMENTS

edenor

Statement of Changes in Equity

for the years ended December 31, 2023, 2022 and 2021

(Stated in millions of Argentine Pesos in constant currency – Note 3)

	Share capital	Adjust- ment to share capital	Treasury stock	Adjust- ment to treasury stock	Additional paid-in capital	Cost treasury stock	Legal reserve	Voluntary reserve	Other reserve	Other comprehen- sive results	Accumula- ted (losses) profits	Total                   equity
Balance at December 31, 2020	875	340,329	31	7,412	4,609	(27,946)	23,621	390,734	-	(1,996)	(161,987)	575,682
Ordinary Shareholders’ Meeting held on April 27, 2021	-	-	-	-	-	-	-	(161,987)	-	-	161,987	-
Other Reserve Constitution - Share-based compensation plan	-	-	-	-	-	-	-	-	37	-	-	37
Payment of Other Reserve Constitution - Share-based compensation plan	-	56	-	(56)	37	-	-	-	(37)	-	-	-
Other comprehensive results	-	-	-	-	-	-	-	-	-	788	-	788
Loss for the year	-	-	-	-	-	-	-	-	-	-	(129,475)	(129,475)
Balance at December 31, 2021	875	340,385	31	7,356	4,646	(27,946)	23,621	228,747	-	(1,208)	(129,475)	447,032
Other Reserve Constitution - Share-based compensation plan	-	-	-	-	-	-	-	-	28	-	-	28
Payment of Other Reserve Constitution - Share-based compensation plan	-	34	-	(34)	28	-	-	-	(28)	-	-	-
Other comprehensive results	-	-	-	-	-	-	-	-	-	(1,324)	-	(1,324)
Loss for the year	-	-	-	-	-	-	-	-	-	-	(54,398)	(54,398)
Balance at December 31, 2022	875	340,419	31	7,322	4,674	(27,946)	23,621	228,747	-	(2,532)	(183,873)	391,338
Other Reserve Constitution - Share-based compensation plan (Note 24)	-	-	-	-	-	-	-	-	42	-	-	42
Payment of Other Reserve Constitution - Share-based compensation plan (Note 24)	-	34	-	(34)	42	-	-	-	(42)	-	-	-
Other comprehensive results	-	-	-	-	-	-	-	-	-	(940)	-	(940)
Income for the year	-	-	-	-	-	-	-	-	-	-	48,371	48,371
Balance at December 31, 2023	875	340,453	31	7,288	4,716	(27,946)	23,621	228,747	-	(3,472)	(135,502)	438,811

The accompanying notes are an integral part of the Financial Statements.

F-6 

2023 FINANCIAL STATEMENTS

edenor

Statement of Cash Flows

for the years ended December 31, 2023, 2022 and 2021

(Stated in millions of Argentine Pesos in constant currency – Note 3)

	Note	12.31.23	12.31.22	12.31.21
Cash flows from operating activities
Income (Loss) for the year		48,371	(54,398)	(129,475)
Adjustments to reconcile net (loss) income to net cash flows from operating activities:
Depreciation of property, plant and equipment	14	82,753	56,656	55,207
Depreciation of right-of-use assets	15	2,829	3,216	2,777
Loss on disposals of property, plant and equipment	14	889	1,084	1,510
Net accrued interest	12	318,507	272,679	162,928
Income from customer surcharges	11	(14,003)	(9,439)	(11,743)
Exchange difference	12	48,327	(4,604)	9,716
Income tax	31	133,809	46,187	94,840
Allowance for the impairment of trade and other receivables, net of recovery	10	6,662	6,847	11,902
Adjustment to present value of receivables	12	1,410	1,054	909
Provision for contingencies, net of recovery	33	9,718	13,719	14,263
Changes in fair value of financial assets and financial liabilities	12	(33,778)	(8,799)	(24,065)
Accrual of benefit plans	10	2,428	3,743	4,580
Recovery of provision for credit RDSA	12	-	-	(3,519)
Result from the cancelattion of Corporate Notes	12	-	1,132	(19)
Loss on debt restructuring	12	-	1,398	-
Income from non-reimbursable customer contributions	11	(157)	(192)	(283)
Other financial costs	12	15,327	14,271	6,418
Result from interest in joint ventures	7	10	17	(12)
Agreement on the Regularization of Obligations	2.c	(197,731)	(56,479)	-
Recovery of allowance for the impairment of trade receivables - Agreement on the Regularization of Obligations	2.c	-	(8,252)	-
Monetary gain (RECPAM)		(454,589)	(310,205)	(144,620)
Changes in operating assets and liabilities:
Increase in trade receivables		(29,798)	(21,578)	(16,305)
Increase in other receivables		(3,838)	(37,273)	(4,902)
Increase in inventories		(11,033)	(7,222)	(5,138)
Increase in deferred revenue		940	6,390	1,638
Increase in trade payables		110,373	192,586	110,626
Increase in salaries and social security payable		18,975	16,184	5,319
Decrease in benefit plans		(470)	(831)	(430)
Increase (Decrease) in tax liabilities		3,283	(1,454)	(11,927)
Increase (Decrease) in other payables		13,125	(4,145)	1,134
Decrease in provisions	33	(867)	(1,672)	(1,825)
Payment of income tax payable		-	(299)	-
Net cash flows generated by operating activities		71,472	110,321	129,504

F-7 

2023 FINANCIAL STATEMENTS

edenor

Statement of Cash Flows

for the years ended December 31, 2023, 2022 and 2021 (continued)

(Stated in millions of Argentine Pesos in constant currency – Note 3)

	Note	12.31.23	12.31.22	12.31.21
Cash flows from investing activities
Payment of property, plants and equipments		(119,781)	(98,797)	(89,331)
Sale (Purchase) net of Mutual funds and negotiable instruments		40,720	(17,057)	(65,658)
Derivative financial instruments payments		-	(489)	-
Mutuum charges granted to third parties		-	-	31
Net cash flows used in investing activities		(79,061)	(116,343)	(154,958)
Cash flows from financing activities
Proceeds from borrowings	28	17,424	13,764	-
Payment of borrowings	28	(1,032)	(18,928)	-
Payment of lease liability		(6,461)	(3,647)	(3,192)
Payment of interests from borrowings	28	(1,857)	(2,790)	(5,428)
Payment of Corporate Notes issuance expenses	28	(736)	(1,759)	-
Cancelattion of Corporate Notes	28	-	(1,470)	(103)
Net cash flows generated by (used in) financing activities		7,338	(14,830)	(8,723)
Decrease in cash and cash equivalents		(251)	(20,852)	(34,177)
Cash and cash equivalents at the beginning of the year	21	5,076	19,242	39,926
Financial results in cash and cash equivalents		4,510	6,767	13,518
Result from exposure to inflation		(207)	(81)	(25)
Decrease in cash and cash equivalents		(251)	(20,852)	(34,177)
Cash and cash equivalents at the end of the year	21	9,128	5,076	19,242
Supplemental cash flows information
Non-cash activities
Adquisition of advances to suppliers, property, plant and equipment through increased trade payables		(3,847)	(6,774)	(9,240)
Adquisition of advances to suppliers, right-of-use assets through increased trade payables		(4,166)	(2,840)	(3,270)

The accompanying notes are an integral part of the Financial Statements.

F-8 

2023 FINANCIAL STATEMENTS

NOTES

Note 1 |    General information

Empresa Distribuidora y Comercializadora Norte S.A. (hereinafter “edenor” or “the Company”) is a corporation (sociedad anónima) organized under the laws of Argentina, with legal address at 6363 Av. Del Libertador Ave - City of Buenos Aires, Argentine Republic, whose shares are traded on Bolsas y Mercados Argentinos S.A. (ByMA) (Argentine Stock Exchange and Securities Market) and the New York Stock Exchange (NYSE).

The corporate purpose of edenor is to engage in the distribution and sale of electricity within the concession area. Furthermore, among other activities, the Company may subscribe or acquire shares of other electricity distribution companies, subject to the approval of the regulatory agency, assign the use of the network to provide electricity transmission or other voice, data and image transmission services, and render advisory, training, maintenance, consulting, and management services and know-how related to the distribution of electricity both in Argentina and abroad. These activities may be conducted directly by edenor or through subsidiaries or related companies. In addition, the Company may act as trustee of trusts created under Argentine laws.

History and development of the Company

edenor was organized on July 21, 1992 by Executive Order No. 714/92 in connection with the privatization and concession process of the distribution and sale of electric power carried out by SEGBA.

By means of an International Public Bidding, the PEN awarded 51% of the Company’s capital stock, represented by the Class "A" shares, to the bid made by EASA, the parent company of edenor at that time. The award as well as the transfer contract were approved on August 24, 1992 by Executive Order No. 1,507/92 of the PEN.

On September 1, 1992, EASA took over the operations of edenor.

As a consequence of the share purchase and sale agreement entered into on December 28, 2020 between Pampa Energía S.A. and Empresa de Energía del Cono Sur S.A., all the Class A shares, representing 51% of the Company’s share capital and votes were transferred to the latter. That transaction was approved by means of ENRE Resolution No. 207/2021 dated June 24, 2021. Therefore, Empresa de Energía del Cono Sur S.A. is the parent company of edenor.

The Company’s economic and financial situation

As of December 31, 2023, the Company shows a notable improvement in its economic performance, as a consequence of the positive trend towards the sector’s normalization -closely related to the electricity rate increases of the first six-month period-, the Agreements on the Regularization of Payment Obligations entered into with CAMMESA, and the prospect that the electricity rates will be periodically adjusted and subsidies will be reduced in the short term.

In particular, the recent electricity rate adjustments of February 2023 implied an increase in the CPD of 107.8% for the month of April and 73.7% for the month of June, which resulted in an improvement in the Company’s gross profit for the current fiscal year. Despite the fact that this trend did not continue until the end of the fiscal year, and that the subsequent changes made to the values of the Company’s electricity rate schedules implied only the passing through of the seasonal prices, the investments necessary, both for the operation of the network and for maintaining and even improving the quality of the service, have been made, complying with the investment targets for fiscal year 2023.

Furthermore, by means of Executive Order No. 55/2023, the new Administration provided for the emergency of the National Energy Sector until December 31, 2024. In line with that, ENRE Resolution No. 102/2024 approved the values of the Company’s electricity rate schedule as from February 16, 2024, which implied the granting of a 319.2% increase in the CPD and monthly adjustments from May 2024, making it possible to restore the Company’s electricity rate situation and its economic and financial equation, ensuring the economic self-sufficiency of the electricity system for a foreseeable future (Note 2.b).

F-9 

2023 FINANCIAL STATEMENTS

NOTES

Additionally, the government issued Executive Order No. 70/2023, which provided for the economic, financial, fiscal, pension, tariff, healthcare, social and administrative emergency until December 31, 2025, together with other measures of a deregulatory nature for the economy as a whole, with the aim, as stated, of achieving fiscal balance. Furthermore, supplementing the aforementioned Executive Order, the bill entitled “Law of bases and starting points for the freedom of the Argentine people”, which included a comprehensive package of measures and provided, among other issues, for changes in energy-related regulations and the creation of a new regulatory entity, was introduced to Congress. Due to the fact that the aforementioned bill was rejected by a majority of lawmakers, the Executive Power decided that the bill, as it had been introduced to Congress to be dealt with in the extraordinary legislative sessions, would not be discussed again.

The context of volatility and uncertainty continued as of the date of issuance of these financial statements. The reforms proposed by the new administration have begun, as mentioned in the preceding paragraph, to be discussed in the legislature. At the date of issuance of these financial statements, it is not possible to predict the outcome of such discussions or whether new measures will be announced. The Company’s Management permanently monitors the development of the variables that affect its business, in order to define its course of action and identify the potential impacts on its financial and cash position.

The Company’s financial statements must be read in the light of these circumstances.

Notwithstanding the above-described situation, it is worth pointing out that even though in the last few fiscal years the Company recorded negative working capital, as a consequence of the insufficient adjustments of the electricity rate over the last few years, in general terms, the quality of the electricity distribution service has been improved, both in duration and frequency of power cuts. In this regard, the Company is optimistic and expects that the new electricity rates will result in the Company’s operating once again under a regulatory framework with clear and precise rules, which will make it possible to meet the costs associated with the provision of the service, as well as the need for additional investments to satisfy the demand, in order to maintain the provision of the public service, object of the concession, in a satisfactory manner in terms of quality and reliability. Therefore, these financial statements have been prepared using the ongoing concern basis of accounting.

Note 2 |    Regulatory framework

a) Concession

The term of the concession is 95 years, which may be extended for an additional maximum period of 10 years. The term of the concession is divided into management periods. At the end of each management period, the Class “A” shares representing 51% of edenor‘s share capital, currently held by Empresa de Energía del Cono Sur S.A., must be offered for sale through a public bidding. If the latter makes the highest bid, it will continue to hold the Class “A” shares, and no further disbursements will be necessary. On the contrary, if Empresa de Energía del Cono Sur S.A. is not the highest bidder, then the bidder who makes the highest bid shall pay Empresa de Energía del Cono Sur S.A. the amount of the bid in accordance with the conditions of the public bidding. The proceeds from the sale of the Class “A” shares will be delivered to Empresa de Energía del Cono Sur S.A. after deducting any amounts receivable to which the Grantor of the concession may be entitled.

F-10 

2023 FINANCIAL STATEMENTS

NOTES

The Company has the exclusive right to render electric power distribution and sales services within the concession area to all the customers who are not authorized to obtain their power supply from the WEM, thus being obliged to supply all the electric power that may be required in due time and in accordance with the established quality levels. In addition, the Company must allow free access to its facilities to any WEM agents whenever required, under the terms of the Concession. No specific fee must be paid by the Company under the Concession Agreement during the term of the concession.

The Company is subject to the terms and conditions of its Concession Agreement and the provisions of the Regulatory Framework comprised of Federal Laws Nos. 14,772, 15,336 and 24,065, Executive Order No. 714/92 of the PEN, resolutions and regulatory and supplementary regulations issued by the authorities responsible for this matter, with the Company being responsible for the provision of the public service of electricity distribution and sale with a satisfactory quality level, complying for such purpose with the requirements set forth in both the aforementioned agreement and the Regulatory Framework.

Failure to comply with the established guidelines will result in the application of penalties, based on the economic damage suffered by the customer when the service is provided in an unsatisfactory manner, the amounts of which will be determined in accordance with the methodology stipulated in the above-mentioned agreement. The ENRE is the authority in charge of controlling strict compliance with the pre-established guidelines.

b) Electricity rate situation

On December 16, 2023, the Federal Government, by means of Executive Order No. 55/2023, declares the emergency of the National Energy Sector -including the electricity distribution segment- until December 31, 2024, and provides for the following:

o The implementation by the SE of a program of necessary and indispensable measures in order to establish the mechanisms for setting prices under conditions of competition and free access, maintain, in real terms, income levels and cover investment needs to ensure the continuous provision of the public services of electricity transmission and distribution under appropriate technical and economic conditions, both for the providers and all user categories.

o The commencement of the RT for the providers of the public services of electricity transmission and distribution under federal jurisdiction, with the proviso that the resulting electricity rate schedules shall come into effect not later than December 31, 2024.

o The intervention of the ENRE from January 1, 2024 until the appointment of the members comprising the Board of Directors.

o The implementation of mechanisms allowing for citizen participation in the transitional rate adjustment process.

Furthermore, on January 2, 2024, by means of Resolution No. 2/2024, the ENRE called a Public Hearing for January 26, 2024, to make known and listen to opinions on the transitional electricity rate system of the distribution companies in charge of the public service of electricity.

In the above-mentioned Hearing, the Company’s presentation focused on the following:

- The importance of its customer service role, as it is the link that attends and provides the service to users.

- The fact that it acts as a collecting agent, but only 29% of the bill it “collects” constitutes real income, with the remaining percentage going to the other WEM participants and to the Federal Government through taxes.

- The insufficient adjustment of the electricity rate, which has once again led to the Company’s not having the necessary funds to pay its debts for energy purchased.

- The commencement of a process for the offsetting of the regulatory assets (receivables from non-compliance with the RT), and the consideration of the debt with CAMMESA resulting from the insufficient adjustment of the electricity rate.

F-11 

2023 FINANCIAL STATEMENTS

NOTES

Finally, on February 15, 2024, by means of Resolution No. 102/2024, the ENRE approved the values of the Company’s electricity rate schedule effective from the billing relating to the reading of meters subsequent to 12:00 AM on the date of publication of the aforementioned resolution in the Official Gazette, which was February 16, 2024.

In view of the National Energy Sector emergency declared by Executive Order No. 55/2023 and the Public Hearing held on January 26, 2024, the approval of ENRE Resolution No. 102/2024 implies the readjustment of the Company’s electricity rate through the granting of a 319.2% increase in the CPD, with the aim of reducing the Federal Government’s transfers to the electricity sector and promoting a sustainable economic balance. The “correction” of electricity rates is essential for restoring relative prices in the economy, ensuring the economic self-sufficiency of the electricity system and laying the foundations to promote private investment.

With regard to the foregoing, it is provided that the electricity rate set in the aforementioned resolution will be temporarily in effect for a term of one year and will be adjusted on a monthly basis as from May 2024, so as to maintain its real value, by means of an adjustment mechanism of the CPD that will take into consideration the Consumer Price Index (CPI), the Wholesale Price Index (WPI), and the Salary Variation Index prepared by the INDEC.

The following resolutions were issued by the SE and the ENRE, in connection with the Company’s electricity rate schedules and the seasonal reference prices (Stabilized Price of Energy and Power Reference Price):

Resolution	Date	What it approves	Effective as from
SE No. 323/2023	April 29, 2023	Seasonal reference prices (1)	May 1
ENRE No. 399/2023	May 4, 2023	Electricity rate schedules	May 1
ENRE No. 423/2023	May 31, 2023	Electricity rate schedules	June 1
SE No. 612/2023	July 25, 2023	Seasonal reference prices	August 1
ENRE No. 574/2023	August 1, 2023	Electricity rate schedules	August 1
SE No. 884/2023	October 31, 2023	Seasonal reference prices (2)	November 1
ENRE No. 784/2023	November 2, 2023	Electricity rate schedules	November 1
SE No. 7/2024	February 2, 2024	Seasonal reference prices	February 1
ENRE No. 102/2024	February 15, 2024	Electricity rate schedules	February 16

(1) It approves the Winter Seasonal Programming for the WEM submitted by CAMMESA, relating to the May 1, 2023-October 31, 2023 period.

(2) It approves the Summer Seasonal Programming for the WEM submitted by CAMMESA, relating to the November 1, 2023-April 30, 2024 period.

c)     Memorandum of Agreement on Regularization of Payment Obligations – Debt for the purchase of energy in the WEM

With regard to the Memorandum of Agreement entered into on December 29, 2022 by the Company, the Federal Government and the ENRE, of which CAMMESA was notified, concerning the Regularization of Payment Obligations for the periods between September 30, 2020 and August 31, 2022 (Note 2.c to the Financial Statements as of December 31, 2022), on July 27, 2023, the SE instructed CAMMESA to define the Payment plan in accordance with the methodologies set forth therein. In this regard, on July 31, 2023, CAMMESA agreed to the payment plan by means of Note B-168538-1. The Company has recognized that it owes a sum of $ 32,985, which adjusted in accordance with the established procedures amounts to $ 52,276.

Pursuant to Article Six of the Memorandum of Agreement, the payment of all the obligations when due has as a condition precedent that the ENRE grant an increase in the VAD, which also implies the approval of the payment schedule, independently of the readjustment of the electricity rate.

F-12 

2023 FINANCIAL STATEMENTS

NOTES

Furthermore, on July 28, 2023, the Company and CAMMESA entered into an Agreement on the Regularization of Payment Obligations for the periods between September 1, 2022 and February 28, 2023 (SE Resolutions Nos. 56 and 555/2023), pursuant to which the Company recognizes that it owes CAMMESA a sum of $ 26,388, which adjusted in accordance with the procedure set forth in SE Resolution No. 56/2023 amounts to $ 42,391, for the past due periods from September 2022 through February 2023. The Company agrees to pay the aforementioned debt through a new Payment plan in 96 installments, with the value of each monthly installment being adjusted in accordance with the development of the MWh value in effect at each time.

As of December 31, 2023 and 2022, the impact of the aforementioned agreements -those signed on December 29, 2022 and on July 28, 2023, and the one signed on December 29, 2022 (the part relating to the credits recognized by CAMMESA)-, amounts to $ 197,731 and $ 56,479, respectively, and is disclosed in the Agreement on the Regularization of Payment Obligations line item of the Statement of Comprehensive Income (Loss). The Payment plan liability, including both financial components accrued and payments made, amounts to $ 121,224, and is disclosed in the Other payables account of the Statement of Financial Position.

At the date of issuance of these financial statements, the Company has delivered post-dated checks for $ 5,022 to pay the first ten installments with maturities from August 2023 through January 2024.

Furthermore, based on the provisions of Article Six of the Memorandum of Agreement and taking into consideration that the ENRE had not granted an increase in the VAD, the Company was forced to partially suspend the payment of its current obligations. Due to that situation, the SE, in the event of a communication from CAMMESA, and after having demanded that the Company regularize its payment obligations, could at its sole discretion provide that the Memorandum of Agreement or any part thereof be terminated. The Company believes that the likelihood of this situation occurring is remote due to the ongoing negotiations.

d)       Agreement on Recognition of Consumption in Vulnerable Neighborhoods

On August 30, 2022, the Company, the Federal Government and the PBA, entered into an Agreement to Renew the Agreement on the Recognition of Electricity Consumption in Vulnerable Neighborhoods (Framework agreement).

- Electricity consumption from August through December 2020: the ENRE validated receivables for $ 1,115, which the Company recognized as the ENRE certified compliance with the degree of completion of the works of the Preventive and Corrective Maintenance Work Plan for the Electricity Distribution Network, as stipulated in the Agreement described in Note 2.d to the Financial Statements as of December 31, 2022.

- Electricity consumption from January through December 2021: the Company opted to offset it against the debts incurred for the purchase of energy from CAMMESA (Note 2.d to the Financial Statements as of December 31, 2022). On March 21, 2023, the Federal Government’s portion had been effectively settled in accordance with CAMMESA’s statement of accounts, with the relevant adjustments having been recognized.

- Electricity consumption from January through December 2022: the Federal Government must make a contribution of $ 1,436, and the PBA a contribution of $ 553, which total a receivable in favor of the Company of $ 1,989 that has been recognized along with the receivable mentioned in the preceding paragraph. In this regard, the PBA’s contribution will be made in six monthly installments, the first four of which have been already collected by the Company.

- Electricity consumption from January through September 2023: on October 19, 2023, the ENRE validated receivables for $1,431 and $ 1,056, which must be contributed by the Federal Government and the PBA, respectively. The PBA’s contribution is pending collection.

F-13 

2023 FINANCIAL STATEMENTS

NOTES

At the date of issuance of these financial statements, the Company has recognized for the described concepts a total of $ 5,986, which is disclosed in the Other operating income line item of the Statement of Comprehensive Income (Loss).

e) Agreement on the Regularization of Obligations – Transfer of jurisdiction and offsetting of receivables and payables

On May 10, 2019, edenor, Edesur S.A. and the SE entered into the Agreement on the Regularization of Obligations for the Transfer of Concession Holders to the Local Jurisdictions, whereby, prior to the transfer of the respective concessions to the jurisdictions of the PBA and the CABA, respectively, (i) the existing debts and credits are mutually offset; (ii) a term and modality of payment of the fines payable to users and the Government are agreed-upon, in three and five years, respectively; (iii) settlement of the fines payable to the Government is allowed to be made through investments in specific works to improve the service; and (iv) it is agreed that any legal actions against the Federal Government for damages caused by the freeze on rates since 2017 will be abandoned. The effects of this agreement were recognized in the Company’s financial statements as of December 31, 2019.

On January 19, 2021, the Federal Government, the PBA and the CABA entered into a new Agreement according to which the Federal Government retains the capacity as grantor of the concession in connection with the concession agreements (Executive Order No. 292/2021 and SE Resolution No. 16/2021).

On September 21, 2021, the National Ministry of Economy issued ME Resolution No. 590/2021 declaring the Agreement contrary to the public interest, thus paving the way for the filing of a legal action to declare it null and void. It also provided for the suspension of the administrative procedures relating to the fulfilment of the obligations arising from such Agreement.

Without prejudice to the foregoing, at the date of issuance of these financial statements, the Company has not been served notice of the filing of any legal action in order for the Agreement or the acts resulting therefrom to be declared null and void. The administrative act in question has not provided for the suspension of the legal effects of said Agreement, which is, therefore, in full force and effect. Against this resolution, the Company has filed an appeal (recurso jerárquico) to the Office of the Head of the Cabinet of Ministers (higher administrative authority) and a motion for clarification with the Ministry of Economy, which was granted and answered by ME Resolution No. 656/2021, notified on October 20, 2021, whereby said Ministry confirms that such Agreement has not been suspended.

Finally, on August 22, 2022, by means of ENRE Resolution No. 292/2022, it is provided that all the proceedings be provisionally terminated because the docket shows no activity as a result of ME Resolutions Nos. 590 and 656/2021, and that the provisions of such resolutions shall be in effect until notice of the final judgements on the related proceedings is given to the ENRE by any reliable means, situation which remains unchanged at the date of issuance of these financial statements.

f) Penalties

The ENRE is empowered to control the quality levels of the technical product and service, the commercial service and the compliance with public safety regulations, as provided for in the Concession Agreement. If the Distribution Company fails to comply with the obligations assumed, the ENRE may apply the penalties stipulated in the aforementioned Agreement.

As of December 31, 2023 and 2022, the Company has recognized in its financial statements the penalties accrued, whether imposed or not yet issued by the ENRE, relating to the control periods elapsed as of those dates, following the criteria and estimates available, which may differ from the actual ones.

Furthermore, ENRE Resolution No. 63/17, as amended and supplemented, has set out the control procedures, the service quality assessment methodologies, and the penalty system, applicable as from February 1, 2017, for the 2017–2023 period.

F-14 

2023 FINANCIAL STATEMENTS

NOTES

In accordance with the provisions of Sub-Appendix XVI to the referred to Resolution, the Company is required to submit in a term of sixty calendar days the calculation of global indicators, interruptions for which force majeure had been alleged, the calculation of individual indicators, and will determine the related discounts, crediting the amounts thereof within ten business days. In turn, the ENRE will examine the information submitted by the Company, and in the event that the crediting of such discounts were not verified will impose a fine, payable to the Federal Government, equivalent to twice the value that should have been recorded. The referred to Sub-Appendix provides for a similar treatment for the analysis of product quality and commercial service quality. With regard to Public Safety, a penalty is imposed on the existence of facilities that due to their condition pose a risk to public safety; to define them ENRE Resolution No. 421/11 provided a list of those situations to be regarded as anomalous.

The penalty system provides that penalties are updated in accordance with the variation of the Distributor’s CPD or by the energy tariff average price, as the case may be. Furthermore, whom the penalty amounts will be payable/credited to varies between the affected users, total active users or the administration, depending on each case and as defined by the regulator.

By means of Resolution No. 15/2021, the ENRE approved the new methodology for crediting and distributing the penalties payable to all the Active Users and the modality of crediting penalties to the Solidarity Account for Users in Vulnerable Situations, as well as the manner in which edenor must produce that information and send it to the ENRE

Furthermore, there exist certain penalties related to the quality of the information and the quality of the technical service, the penalty procedure of which is being challenged by the Company due to the fact that it applies retroactively to time-barred periods and has calculation defects in relation to the applicable regulations.

The effects of the resolutions detailed in this note have been quantified by the Company and recognized as of December 31, 2023 and 2022, which does not imply the Company’s consent to the applied criteria.

g) Restriction on the transfer of the Company’s common shares

The Bylaws provide that Class “A” shareholders may transfer their shares only with the prior approval of the ENRE. The ENRE must communicate its decision within ninety days upon submission of the request for such approval, otherwise the transfer will be deemed approved.

Furthermore, Caja de Valores S.A. (the Public Register Office), which keeps the Share Register of the shares, is entitled (as stated in the Bylaws) to reject such entries which, at its criterion, do not comply with the rules for the transfer of common shares included in (i) the Business Organizations Law, (ii) the Concession Agreement and (iii) the Bylaws.

In addition, the Class “A” shares will be pledged during the entire term of the concession as collateral to secure the performance of the obligations assumed under the Concession Agreement.

In connection with the issuance of Corporate Notes, during the term thereof, Empresa de Energía del Cono Sur S.A. is required to be the beneficial owner and owner of record of not less than 51% of the Company’s issued, voting and outstanding shares, otherwise the maturity of principal of the corporate notes could be accelerated.

Note 3 |    Basis of preparation

The financial statements for the year ended December 31, 2023 have been prepared in accordance with IFRS issued by the IASB and IFRIC interpretations, which have been adopted and incorporated by the CNV. The financial statements were approved for issue by the Company’s Board of Directors on March 8, 2024.

F-15 

2023 FINANCIAL STATEMENTS

NOTES

By means of General Resolution No. 622/2013, the CNV provided for the application of Technical Resolution No. 26 of the FACPCE, which adopts the IFRS issued by the IASB, for those entities that are included in the public offering system of Law No. 17,811, as amended, whether on account of their capital or their corporate notes, or have requested authorization to be included in the aforementioned system.

Comparative information

The balances as of December 31, 2022, disclosed in these financial statements for comparative purposes, arise as a result of restating the financial statements as of that date to the purchasing power of the currency at December 31, 2023. This, as a consequence of the retrospective adjustment of the financial information described hereunder. Furthermore, certain amounts of the financial statements presented on a comparative basis have been reclassified in order to maintain consistency of presentation with the amounts of the reporting year.

Restatement of financial information

The financial statements as of December 31, 2023, including the figures relating to the previous year, have been stated in terms of the measuring unit current at December 31, 2023, in accordance with IAS 29 “Financial reporting in hyperinflationary economies”. As a result thereof, the financial statements are stated in terms of the measuring unit current at the end of the reporting year.

The inflation rate applied for the fiscal year commenced January 1, 2023 and ended December 31, 2023, based on that indicated in the preceding paragraph, was 211.4%.

According to IAS 29, the restatement of financial statements is necessary when the functional currency of an entity is that of a hyperinflationary economy. To define a state of hyperinflation, IAS 29 provides a set of guidelines, including but not limited to the following, which consist of (i) analyzing the behavior of population, prices, interest rates and wages faced with the development of price indexes and the loss of the currency’s purchasing power, and (ii) as a quantitative feature, which, in practice, is the mostly considered condition, verifying whether the cumulative inflation rate over three years approaches or exceeds 100%.

Consequently, the Argentine economy should be regarded as highly inflationary as from July 1, 2018. The standard states that the adjustment will be resumed from the date on which it was last made, February 2003. Moreover, on July 24, 2018, the FACPCE issued a communication confirming that which has been previously mentioned. Additionally, it should be taken into account that on December 4, 2018 the Official Gazette published Law No. 27,468 pursuant to which the provisions of Executive Order No. 664/2003 of the PEN, which did not allow for the filing of inflation-adjusted financial statements, are no longer in effect. This regulation states that the provisions of section 62 of Business Organizations Law No. 19,550 -preparation of financial statements to reflect the effects of inflation- will continue to apply, thus reinstating the adjustment for inflation. On December 28, 2018, the CNV, reaffirming the provisions of Law No. 27,468, published Resolution No. 777/18 stating that issuing companies shall apply the restatement method of financial statements to reflect the effects of inflation in conformity with IAS 29.

In order to not only assess the aforementioned quantitative condition but also restate the financial statements, the CNV has stated that the series of indexes to be used for the application of IAS 29 is that determined by the FACPCE. That series of indexes combines the CPI published by the INDEC from January 2017 (base month: December 2016) with the WPI published by the INDEC through that date, computing for the months of November and December 2015 -in respect of which there is no available information from the INDEC on the development of the WPI-, the variation recorded in the CPI of the City of Buenos Aires.

Taking into consideration the above-mentioned index, in the fiscal years ended December 31, 2023, 2022, 2021, 2020 and 2019, the inflation rate amounted to 211.4%, 94.8%, 50.9%, 36.1% and 53.8%, respectively.

F-16 

2023 FINANCIAL STATEMENTS

NOTES

The effects of the application of IAS 29 are summarized below:

Restatement of the Statement of Financial Position

(i) Monetary items (those with a fixed nominal value in local currency) are not restated inasmuch as they are already expressed in terms of the measuring unit current at the closing date of the reporting year.

(ii) Non-monetary items carried at historical cost or at the current value of a date prior to the end of the reporting year are restated using coefficients that reflect the variation recorded in the general level of prices from the date of acquisition or revaluation to the closing date of the reporting year. Depreciation charges of property, plant and equipment and amortization charges of intangible assets recognized in profit or loss for the year, as well as any other consumption of non-monetary assets will be determined on the basis of the new restated amounts.

(iii) The restatement of non-monetary assets in terms of the measuring unit current at the end of the reporting year without an equivalent adjustment for tax purposes, gives rise to a taxable temporary difference and to the recognition of a deferred tax liability, whose contra-account is recognized.

Restatement of the Statement of Comprehensive Income

(i) Income and expenses are restated from the date when they were recorded, except for those profit or loss items that reflect or include in their determination the consumption of assets carried at the purchasing power of the currency as of a date prior to the recording of the consumption, which are restated based on the date when the asset to which the item is related originated (for example, depreciation, impairment and other consumptions of assets valued at historical cost).

(ii) The net gain from the maintenance of monetary assets and liabilities is presented in a line item separately from the profit or loss for the year, called RECPAM.

Restatement of the Statement of Changes in Equity

(i) The components of equity, except for reserved earnings and unappropriated retained earnings, have been restated from the dates on which they were contributed, or on which they were otherwise set up.

(ii) The restated unappropriated retained earnings were determined by the difference between net assets restated at the date of transition and the other components of opening equity expressed as indicated in the preceding headings.

(iii) After the restatement at the date indicated in (i) above, all components of equity are restated by applying the general price index from the beginning of the year, and each variation of those components is restated from the date of contribution or the date on which it otherwise arose.

Restatement of the Statement of Cash Flows

IAS 29 requires all the items of this Statement to be restated in terms of the measuring unit current at the closing date of the reporting year.

The monetary gain or loss generated by cash and cash equivalents is presented in the statement of cash flows separately from cash flows from operating, investing and financing activities, as a specific item of the reconciliation between cash and cash equivalents at the beginning and end of the year.

F-17 

2023 FINANCIAL STATEMENTS

NOTES

Note 4 |    Accounting policies

The main accounting policies used in the preparation of these financial statements are detailed below.

Note 4.1 |   New accounting standards, amendments and interpretations issued by the IASB, that are effective as of December 31, 2023 and have been adopted by the Company

The Company has first applied the following standards and/or amendments as from January 1, 2023:

- IFRS 17 “Insurance contracts”, issued in May 2017 and amended in June 2020 and December 2021. It replaces IFRS 4, introduced as an interim standard in 2004, which allowed entities to account for insurance contracts using their local accounting requirements, resulting in multiple application approaches. IFRS 17 sets the principles for the recognition, measurement, presentation, and disclosure of insurance contracts.

- IAS 1 “Presentation of financial statements”, amended in January and July 2020, February 2021 and October 2022. It incorporates the requirement that an entity disclose its material accounting policies rather than its significant accounting policies. It explains how an entity can identify a material accounting policy.

- IAS 8 “Accounting policies, changes in accounting estimates and errors”, amended in February 2021. It replaces the definition of accounting estimates. Under the new definition, accounting estimates are monetary amounts in the financial statements that are subject to measurement uncertainty.

- IAS 12 “Income tax”, amended in May 2021. It clarifies how an entity accounts for deferred tax on transactions such as leases and decommissioning obligations.

There are no new IFRS or IFRIC applicable as from this fiscal year that have a material impact on the Company’s financial statements.

New accounting standards, amendments and interpretations issued by the IASB that are not yet effective and have not been early adopted by the Company

- IAS 1 “Presentation of financial statements”, amended in January and July 2020, February 2021 and October 2022. It incorporates amendments to the classification of liabilities as current or non-current. The amendments apply to annual periods beginning as from January 1, 2024, with early adoption permitted. The application thereof will impact neither the Company’s results of operations nor its financial position.

- IFRS 16 “Leases”, amended in September 2022. It clarifies how a seller-lessee subsequently measures sale and leaseback transactions that satisfy the requirements in IFRS 15 to be accounted for as a sale. The amendments apply to annual periods beginning as from January 1, 2024.

- IFRS Sustainability Disclosure Standards, amended in June 2023. IFRS S1 sets out overall requirements in order for an entity to disclose information about its sustainability-related risks and opportunities that is useful to the users of general purpose financial reports in making decisions relating to providing resources to the entity. IFRS S2 sets out the requirements for identifying, measuring and disclosing information about climate-related risks and opportunities that is useful to the users of general purpose financial reports in making decisions relating to providing resources to the entity. The amendments apply to annual periods beginning as from January 1, 2024.

Note 4.2 |       Property, plant and equipment

Property, plant and equipment, except for works in progress, is valued at acquisition cost restated to reflect the effects of inflation, net of accumulated depreciation and recognized impairment losses. Depreciation has been calculated by applying the straight-line method over the remaining useful life of the assets, which was determined on the basis of engineering studies.

F-18 

2023 FINANCIAL STATEMENTS

NOTES

Subsequent costs (major maintenance and reconstruction costs) are either included in the value of the assets or recognized as a separate asset, only if it is probable that the future benefits associated with the assets will flow to the Company, being it possible as well that the costs of the assets may be measured reliably and the investment will improve the condition of the asset beyond its original state. The other maintenance and repair expenses are recognized in profit or loss in the year in which they are incurred.

In accordance with the Concession Agreement, the Company may not pledge the assets used in the provision of the public service nor grant any other security interest thereon in favor of third parties, without prejudice to the Company’s right to freely dispose of those assets which in the future may become inadequate or unnecessary for such purpose. This prohibition does not apply in the case of security interests granted over an asset at the time of its acquisition and/or construction as collateral for payment of the purchase and/or installation price.

The residual value and the remaining useful lives of the assets are reviewed and adjusted, if appropriate, at the end of each fiscal year (reporting period).

Land is not depreciated.

Facilities in service: between 30 and 50 years

Furniture, tools and equipment: between 5 and 20 years

Construction in process is valued based on the degree of completion and is recorded at cost restated to reflect the effects of inflation less any impairment loss, if applicable. Cost includes expenses attributable to the construction, when they are part of the cost incurred for the purposes of acquisition, construction or production of property, plant and equipment that necessarily takes a substantial period of time to get ready for its intended use. These assets begin to be depreciated when they are in economic conditions of use.

Gains and losses on the sale of property, plant and equipment are calculated by comparing the price collected with the carrying amount of the asset, and are recognized within Other operating expense or Other operating income in the Statement of Comprehensive Income (Loss).

The Company considers three alternative probability-weighted scenarios and analyzes the recoverability of its long-lived assets as described in Critical accounting estimates and judgments.

The valuation of property, plant and equipment, taken as a whole, does not exceed its recoverable value, which is measured as the higher of value in use and fair value less costs to sell at the end of the year (Note 6.c).

Note 4.3 |       Interests in joint ventures

The main conceptual definitions are as follow:

i. A joint arrangement takes place among two or more parties when they have joint control: joint control is the contractually agreed sharing of control of an arrangement, which exists only when decisions about the relevant activities require the unanimous consent of the parties sharing control.

ii. A joint venture is a joint arrangement whereby the parties that have joint control of the arrangement have rights to the net assets of the arrangement. Such parties are called joint venturers.

iii. A joint operation is a joint arrangement whereby the parties that have joint control of the arrangement have rights to the assets, and obligations for the liabilities, relating to the arrangement. These parties are called joint operators.

F-19 

2023 FINANCIAL STATEMENTS

NOTES

The Company accounts for its investment in joint ventures in accordance with the equity method. Under this method, the interest is initially recognized at cost and subsequently adjusted by recognizing the Company’s share in the profit or loss obtained by the joint venture, after acquisition date. The Company recognizes in profit or loss its share of the joint venture’s profit or loss and in other comprehensive income its share of the joint venture’s other comprehensive income.

When the Company carries out transactions in the joint ventures, the unrealized gains and losses are eliminated in accordance with the percentage interest held by the Company in the jointly controlled entity.

The joint ventures’ accounting policies have been modified and adapted, if applicable, to ensure consistency with the policies adopted by the Company.

Furthermore, taking into account that the interests in joint ventures are not regarded as significant balances, the disclosures required under IFRS 12 have not been made.

Note 4.4 |       Revenue recognition

In accordance with IFRS 15 Revenue from Contracts with Customers, the Company has classified the most relevant contracts with customers as detailed herein below:

a. Revenue from sales

The contracts with customers for the provision of the electricity distribution service and other services (Note 9) are recognized when all of the following conditions is met:

1. Identification of the contracts with customers, where “contract” is understood to mean an agreement between two or more parties that creates enforceable rights and obligations.

2. Identification of the performance obligations, which are understood to mean a promise in the contract with the customer to either transfer a good or provide a service.

3. Determination of the transaction price, in reference to the amount of the consideration for satisfying each performance obligation.

4. Allocation of the transaction price to each of the identified performance obligations, in accordance with the methods described in the standard.

5. Recognition of revenue when the performance obligations identified in the contracts with customers are satisfied.

According to IFRS 15, revenue is recognized when the customer obtains control of the service or product, in this case the electricity supply. Furthermore, the incremental costs of obtaining the contracts with customers are recognized as an asset, if the Company expects to recover those costs.

Revenue from sales is measured at the fair value of the consideration collected or to be collected, taking into account the estimated amount of any discount, thus determining the net amounts.

Revenue from the electricity supplied by the Company to low-income areas and shantytowns is recognized to the extent that a renewal of the Framework Agreement is formalized for the period in which the service was rendered (Note 2.d).

Revenue from operations is recognized on an accrual basis and derives mainly from electricity distribution. Such revenue includes electricity supplied, whether billed or unbilled, at the end of each year, which has been valued on the basis of applicable electricity rates.

The Company also recognizes revenue from other concepts included in distribution services, such as new connections, reconnections, rights of use on poles, transmission of electricity to other distribution companies, inasmuch as the services are provided on the basis of the price established in each contract. Revenue is not adjusted for the effect of the financing components as sales’ payments are not deferred over time, which is consistent with market practice.

F-20 

2023 FINANCIAL STATEMENTS

NOTES

b. Interest income

Interest income is disclosed separately from revenue from contracts with customers and has been recognized only to the extent that the related asset of the contract (or account receivable) has been recognized in the accounting for a contract with a customer. Interest income is recognized when it is probable that the economic benefits associated with the transaction will flow to the Entity and the amount of the transaction can be measured reliably.

Interest income is recognized by applying the effective interest rate method. Interest income is recorded in the accounting on a time basis by reference to the principal amount outstanding and the applicable effective rate.

Note 4.5 |       Effects of the changes in foreign currency exchange rates

a.        Functional and presentation currency

The information included in the financial statements is measured using the Company’s functional currency, which is the currency of the main economic environment in which the Entity operates. The financial statements are measured in pesos (legal currency in Argentina), restated to reflect the effects of inflation as indicated in Note 3, which is also the presentation currency.

b.       Transactions and balances

Foreign currency denominated transactions and balances are translated into the functional and presentation currency using the rates of exchange prevailing at the date of the transactions or revaluation, respectively. The gains and losses generated by foreign currency exchange differences resulting from each transaction and from the translation of monetary items valued in foreign currency at the end of the year are recognized in the Statement of Comprehensive Income.

The foreign currency exchange rates used are the buying (bid price) and selling (offer price) rates for monetary assets and liabilities, respectively, and the specific exchange rate for foreign currency denominated transactions.

Note 4.6 |       Trade and other receivables

a. Trade receivables

The receivables arising from services billed to customers but not collected as well as those arising from services rendered but unbilled at the closing date of each year are recognized at fair value and subsequently measured at amortized cost using the effective interest rate method.

The receivables from electricity supplied to low-income areas and shantytowns are recognized, along with revenue, when the Framework Agreement has been renewed for the period in which the service was provided and the Federal or the Provincial Government assumes responsibility for the payment of consumption.

b. Other receivables

Other receivables are initially recognized at fair value (generally the original billing/settlement amount) and subsequently measured at amortized cost, using the effective interest rate method, and when significant, adjusted by the time value of money. The Company records impairment allowances when there is objective evidence that it will not be able to collect all the amounts owed to it in accordance with the original terms of the receivables.

Assigned and held-in-custody assets are measured in accordance with Note 4.8.

The subsidies received from the Government are recognized when the defined works plans are carried out.

F-21 

2023 FINANCIAL STATEMENTS

NOTES

Note 4.7 |       Inventories

The Company’s inventories are materials and supplies to be consumed in the service rendering process. Inventories are valued at acquisition cost restated to reflect the effects of inflation, less recognized impairment losses.

They are valued based on the purchase price, import duties (if applicable), and other taxes (that are not subsequently recovered), and other costs directly attributable to the acquisition of those assets.

Cost is determined by applying the weighted average price (WAP) method.

The Company has classified inventories into current and non-current depending on the period of time in which they are expected to be used, whether for maintenance or capital expenditures. The non-current portion of inventories is disclosed in the “Property, plant and equipment” account.

The valuation of inventories, taken as a whole, does not exceed their recoverable value at the end of each fiscal year.

Note 4.8 |       Financial assets

Note 4.8.1 |      Classification

The Company classifies financial assets into the following categories: those measured at amortized cost and those subsequently measured at fair value. This classification depends on whether the financial asset is an investment in a debt or an equity instrument. In order for a financial asset to be measured at amortized cost, the two conditions described in the following paragraph must be met. All other financial assets are measured at fair value. IFRS 9 requires that all investments in equity instruments be measured at fair value.

a.        Financial assets at amortized cost

Financial assets are measured at amortized cost if the following conditions are met:

i. The objective of the Company’s business model is to hold the assets to collect the contractual cash flows; and

ii. The contractual terms give rise, on specified dates, to cash flows that are solely payments of principal and interest on principal.

b.       Financial assets at fair value

If any of the above-detailed conditions is not met, financial assets are measured at fair value through profit or loss.

All investments in equity instruments are measured at fair value. For those investments that are not held for trading, the Company may irrevocably elect at the time of their initial recognition to present the changes in fair value in other comprehensive income. The Company’s decision was to recognize the changes in fair value in profit or loss.

Note 4.8.2 |      Recognition and measurement

The regular way purchase or sale of financial assets is recognized on the trade date, i.e. the date on which the Company agrees to acquire or sell the asset. Financial assets are derecognized when the rights to receive the cash flows from the investments have expired or been transferred and the Company has transferred substantially all the risks and rewards of the ownership of the assets.

F-22 

2023 FINANCIAL STATEMENTS

NOTES

Financial assets are initially recognized at fair value plus, in the case of financial assets that are not measured at fair value through profit or loss, transaction costs directly attributable to the acquisition of those financial assets.

The gains or losses generated by investments in debt instruments that are subsequently measured at fair value and are not part of a hedging transaction are recognized in profit or loss. Those generated by investments in debt instruments that are subsequently measured at amortized cost and are not part of a hedging transaction are recognized in profit or loss when the financial asset is derecognized or impaired and by means of the amortization process using the effective interest rate method.

The Company subsequently measures all the investments in equity instruments at fair value. When it elects to present the changes in fair value in other comprehensive income, such changes cannot be reclassified to profit or loss. Dividends arising from these investments are recognized in profit or loss to the extent that they represent a return on the investment.

The Company reclassifies financial assets if and only if its business model to manage financial assets is changed.

The expected losses, in accordance with calculated coefficients, are detailed in Note 6.a).

Note 4.8.3 |      Impairment of financial assets

At the end of each annual reporting period, the Company assesses whether there is objective evidence that the value of a financial asset or group of financial assets measured at amortized cost is impaired. The value of a financial asset or group of financial assets is impaired, and impairment losses are incurred only if there is objective evidence of impairment as a result of one or more events that occurred after the initial recognition of the asset (a “loss event”), and that loss event (or events) has an impact on the estimated future cash flows of the financial asset or group of financial assets that can be reliably measured.

Impairment tests may include evidence that the debtors or group of debtors are undergoing significant financial difficulties, have defaulted on interest or principal payments or made them after they had come due, the probability that they will enter bankruptcy or other financial reorganization, and when observable data indicate that there is a measurable decrease in the estimated future cash flows, such as changes in payment terms or in the economic conditions that correlate with defaults.

In the case of financial assets measured at amortized cost, the amount of the impairment loss is measured as the difference between the asset’s carrying amount and the present value of estimated future cash flows (excluding future credit losses that have not been incurred) discounted at the financial asset’s original effective interest rate. The asset’s carrying amount is reduced and the amount of the impairment loss is recognized in the Statement of Comprehensive Income.

While cash, cash equivalents and financial assets measured at amortized cost are also subject to the impairment requirements of IFRS 9, the identified impairment loss is immaterial.

Note 4.8.4 |      Offsetting of financial instruments

Financial assets and liabilities are offset, and the net amount reported in the Statement of Financial Position, when there is a legally enforceable right to offset the recognized amounts, and there is an intention to settle on a net basis, or realize the asset and settle the liability simultaneously.

Note 4.9 |       Derivative financial instruments

Derivative financial instruments are initially recognized at fair value on the date on which the relevant contract is signed. Subsequent to the initial recognition, they are remeasured at their fair value. The method for recognizing the resulting loss or gain depends on whether the derivative has been designated as a hedging instrument and, if that is the case, on the nature of the item being hedged. As of December 31, 2022, the economic impact of these transactions, which resulted in a loss of $ 539, is recorded in the “Other finance income (costs)” account of the Statement of Comprehensive Income (Loss).

F-23 

2023 FINANCIAL STATEMENTS

NOTES

Note 4.10 |    Cash and cash equivalents

Cash and cash equivalents include cash on hand, deposits held at call with banks and other short-term highly liquid investments with original maturities of three months or less from their acquisition date, with significant low risk of change in value.

i. Cash and banks in local currency: at nominal value.

ii. Cash and banks in foreign currency: at the exchange rate in effect at the end of the year.

iii. Money market funds, which have been valued at the prevailing market price at the end of the year. Those that do not qualify as cash equivalents are disclosed in the Financial assets at fair value through profit or loss account.

Note 4.11 |    Equity

Changes in this account have been accounted for in accordance with the relevant legal or statutory regulations and the decisions adopted by the shareholders’ meetings.

a.        Share capital

Share capital represents issued capital, which is comprised of the contributions committed and/or made by the shareholders, represented by shares, including outstanding shares at nominal value, restated to reflect the effects of inflation as indicated in Note 3.

b.       Treasury stock

The Treasury stock account represents the nominal value of the Company’s own shares acquired by the Company, restated to reflect the effects of inflation as indicated in Note 3.

c.        Other comprehensive income (loss)

Represents recognition, at the end of the year, of the actuarial gain (loss) associated with the Company’s employee benefit plans, restated to reflect the effects of inflation as indicated in Note 3.

d.       Retained earnings

Retained earnings are comprised of profits or accumulated losses with no specific appropriation. When positive, they may be distributed, if so decided by the Shareholders’ Meeting, to the extent that they are not subject to legal restrictions. Retained earnings, where applicable, are comprised of the amounts transferred from other comprehensive income and prior year adjustments due to the application of accounting standards, restated to reflect the effects of inflation as indicated in Note 3.

Pursuant to Section 27 Part I Chapter I of the CNV’s Regulations, the Shareholders in the Meetings at which they should decide upon the approval of financial statements in which the Unappropriated retained earnings account has a significant negative balance that requires the application, as appropriate, of sections 94 -sub-section 5-, 96 or 206 of the Business Organizations Law, or, quite to the contrary, a positive balance, must adopt an express resolution as to the allocation of such balance (taking into consideration for calculation purposes the fiscal year’s results as well as its retained earnings/accumulated deficit), whether to dividend distribution, capitalization, setting up of reserves or a combination of these. The Company Shareholders’ Meetings have complied with the above-mentioned requirement.

F-24 

2023 FINANCIAL STATEMENTS

NOTES

CNV General Resolution No. 593/11 provided that Shareholders in the Meetings at which they should decide upon the approval of financial statements in which the Unappropriated retained earnings account has a positive balance, must adopt an express resolution as to the allocation of such balance.

Note 4.12 |    Trade and other payables

a. Trade payables

Trade payables are payment obligations with suppliers for the purchase of goods and services in the ordinary course of business. Trade payables are classified as current liabilities if payments fall due within one year or in a shorter period of time. Otherwise, they are classified as non-current liabilities.

Trade payables are initially recognized at fair value and subsequently measured at amortized cost using the effective interest rate method.

b. Customer deposits

Customer deposits are initially recognized at the amount received and subsequently measured at amortized cost using the effective interest rate method.

In accordance with the Concession Agreement, the Company is allowed to receive customer deposits in the following cases:

i. When the power supply is requested and the customer is unable to provide evidence of his legal ownership of the premises;

ii. When service has been suspended more than once in one-year period;

iii. When the power supply is reconnected and the Company is able to verify the illegal use of the service (fraud).

iv. When the customer is undergoing liquidated bankruptcy or reorganization proceedings.

The Company has decided not to request customer deposits from residential tariff customers.

Customer deposits may be paid either in cash or through the customer’s bill and accrue monthly interest at a specific rate of BNA for each customer category.

When the conditions for which the Company is allowed to receive customer deposits no longer exist, the customer’s account is credited with the principal amount plus any interest accrued thereon, after deducting, if appropriate, any amount owed by the customer to the Company.

c. Customer contributions

Refundable: The Company receives assets or facilities (or the cash necessary to acquire or build them) from certain customers for services to be provided, based on individual agreements and in the framework of ENRE Resolution No. 215/12 provisions. These contributions are initially recognized as trade payables at fair value with a contra-account in property, plant and equipment, and subsequently measured at amortized cost using the effective interest rate method.

d. Other payables

The financial liabilities recorded in Other Payables and the advances for the execution of works are initially recognized at fair value and subsequently measured at amortized cost.

F-25 

2023 FINANCIAL STATEMENTS

NOTES

The recorded liabilities for penalties accrued, whether imposed or not yet issued by the ENRE (Note 2.f), and other provisions are the best estimate of the settlement value of the present obligation in the framework of IAS 37 provisions at the closing date of these financial statements.

The balances of ENRE Penalties and Discounts are updated in accordance with the regulatory framework applicable thereto and on the basis of the Company’s estimate of the outcome of the renegotiation process described in Note 2.f.

Note 4.13 |    Borrowings

Borrowings are initially recognized at fair value, less direct costs incurred in the transaction. Subsequently, they are measured at amortized cost; any difference between the funds obtained (net of direct costs incurred in the transaction) and the amount to be paid at maturity is recognized in profit or loss during the term of the borrowings using the effective interest rate method.

Note 4.14 |    Deferred revenue

Non-refundable customer contributions: The Company receives assets or facilities (or the cash necessary to acquire or build them) for services to be provided, based on individual agreements. The assets received are recognized by the Company as property, plant and equipment with a contra-account in deferred revenue, the accrual of which depends on the nature of the identifiable services, in accordance with the following:

· Customer connection to the grid: revenue is accrued until such connection is completed;

· Continuous provision of the electric power supply service: throughout the shorter of the useful life of the asset and the term for the provision of the service.

Government grants: The Company receives transfers of resources in return for past or future compliance with certain conditions related to the entity’s operating activities. The grants related to assets are recognized as deferred income items and amortized on a systematic basis over the useful life of the relating asset.

Note 4.15 |    Employee benefits

· Benefit plans

The Company operates several benefit plans. Usually, benefit plans establish the amount of the benefit an employee will receive at the time of his/her retirement, generally based on one or more factors such as age, years of service and salary.

The liability recognized in the Statement of Financial Position in respect of benefit plans is the present value of the benefit plan obligation at the closing date of the year, together with the adjustments for past service costs and actuarial gains or losses. The benefit plan obligation is calculated annually by independent actuaries in accordance with the projected unit credit method. The present value of the benefit plan obligation is determined by discounting the estimated future cash outflows using actuarial assumptions about demographic and financial variables that affect the determination of the amount of such benefits. The benefit plans are not funded.

The Company’s accounting policy for benefit plans is as follow:

a. Service costs are immediately recorded in profit or loss, unless the changes to the benefit plan are conditional on the employees’ remaining in service for a specified period of time (the vesting period). In this case, past service costs are amortized on a straight-line basis over the vesting period.

F-26 

2023 FINANCIAL STATEMENTS

NOTES

b. Actuarial gains and losses arising from experience adjustments and changes in actuarial assumptions are recognized in “Other comprehensive income” in the year in which they arise.

· The Company’s Share-based Compensation Plan

The Company had a share-based compensation plan under which it received services from some employees in exchange for the Company’s shares. The fair value of the services received is recognized as an operating expense in the “Salaries and social security taxes” line item. The total amount of the referred to expense is determined by reference to the fair value of the shares granted.

When the employees provide the services before the shares are granted, the fair value at the grant date is estimated in order to recognize the relevant result.

Furthermore, taking into account that share-based payments are not considered significant balances, the disclosures required under IFRS 2 have not been made.

Note 4.16 |    Income tax

The income tax is recognized in profit or loss, other comprehensive income or in equity depending on the items from which it originates.

The Company determines the income tax payable by applying the effective 35% rate, resulting from the application of the tax scale in effect, to the estimated taxable profit.

By means of Law No. 27,630, a change was introduced in the corporate income tax rate, applicable to fiscal years beginning from January 1, 2021. The tax is determined according to the following scale:

Accumulated net taxable income		Amount to be paid $	Plus %	On the amount exceeding $
From more than $	To $
$ 0	$ 5	$ 0	25%	$ 0
$ 5	$ 50	$ 1.25	30%	$ 5
$ 50	onwards	$ 14.75	35%	$ 50

The amounts of the detailed scale will be adjusted annually, beginning January 1, 2022, taking into consideration the annual variation of the Consumer Price Index (CPI) provided by the National Institute of Statistics and Census (INDEC).

Additionally, the deferred tax is recognized, in accordance with the liability method, on the temporary differences arising between the tax base of assets and liabilities and their carrying amounts in the Statement of Financial Position. However, no deferred tax liability is recognized if such difference arises from the initial recognition of goodwill, or from the initial recognition of an asset or liability other than in a business combination, which at the time of the transaction affected neither the accounting nor the taxable profit.

The deferred tax is determined using the effective rate resulting from the application of the tax scale in effect at the closing date of the financial statements and which is expected to apply when the deferred tax assets are realized or the deferred tax liabilities are settled.

Deferred tax assets and liabilities are offset if the Company has a legally enforceable right to offset recognized amounts and when deferred tax assets and liabilities relate to income tax levied by the same tax authority on the same taxable entity. Deferred tax assets and liabilities are stated at their undiscounted nominal value.

Moreover, in accordance with the provisions of Law No. 27,430, the Company has applied the tax inflation adjustment set forth in Title VI of the Income Tax Law, effective for fiscal years beginning as from January 1, 2018, albeit with a limited scope of application for certain accounts.

F-27 

2023 FINANCIAL STATEMENTS

NOTES

The tax inflation adjustment for the first, second and third fiscal year was applicable as from its effective date in the year 2018, if the CPI cumulative variation, calculated from the beginning to the end of each year, exceeded fifty-five percent (55%), thirty percent (30%) and fifteen percent (15%) for fiscal years 2018, 2019 and 2020, respectively. Although as of December 31, 2018, the CPI cumulative variation did not exceed the 55% threshold for the application of the tax inflation adjustment in that first fiscal year, as of December 31, 2020 and 2019, the CPI cumulative variations for the 12 months of each year had amounted to 36.13% and 53.77%, respectively, which exceeded the 15% and 30% thresholds fixed for the third and second transition years of the tax inflation adjustment, and, therefore, the Company recognized the effect of the tax inflation adjustment in the calculation of the current and deferred income tax provision in those fiscal years.

As from fiscal years ended in December 2021, fourth fiscal year since the implementation of the tax inflation adjustment, the threshold for its application is that the cumulative variation of the aforementioned index for the thirty-six months prior to the closing date of the relevant fiscal year be greater than 100%. Furthermore, unlike fiscal years 2019 and 2020, for fiscal year 2021, such adjustment was no longer to be applied with deferrals (over six fiscal years) but rather computed in full in the tax balance sheet for that period.

Furthermore, in accordance with the provisions of Law 27,701 on the 2023 Budget, the deferral in thirds (over three fiscal years) of the tax inflation adjustment is to be retroactively applied to the first and second fiscal years beginning as from January 1, 2022. Such deferral applies to those taxpayers whose investments in the purchase, construction, manufacturing, processing or definitive importation of fixed assets (except for automobiles), during each of the two fiscal periods immediately following the period of the initial one-third computation, are greater than or equal to $ 30,000. Failure to comply with this requirement will result in the loss of the benefit. The Company recognized the effects of the deferral of the tax inflation adjustment in the calculation of the current and deferred income tax provision.

Note 4.17 |    Right-of-use assets

A right-of-use asset and a lease liability are recognized for lease contracts from the date on which the leased asset is available for use, at the present value of the payments to be made over the term of the contract, using the discount rate implicit in the lease contract, if it can be determined, or the Company’s incremental borrowing rate.

Subsequent to their initial measurement, leases will be measured at cost less accumulated depreciation, impairment losses, and any adjustment resulting from a new measurement of the lease liability.

Note 4.18 |    Provisions and contingencies

Provisions have been recognized in those cases in which the Company is faced with a present obligation, whether legal or constructive, that has arisen as a result of a past event, whose settlement is expected to result in an outflow of resources, and the amount thereof can be estimated reliably.

The amount recognized as provisions is the best estimate of the expenditure required to settle the present obligation at the end of the reporting year, taking into account the corresponding risks and uncertainties. When a provision is measured using the estimated cash flow to settle the present obligation, the carrying amount represents the present value of such cash flow. This present value is obtained by applying a pre-tax discount rate that reflects market conditions, the time value of money and the specific risks of the obligation.

The provisions included in liabilities have been recorded to face contingent situations that could result in future payment obligations. To estimate the amount of provisions and the likelihood of an outflow of resources, the opinion of the Company’s legal advisors has been taken into account.

F-28 

2023 FINANCIAL STATEMENTS

NOTES

Note 4.19 |    Balances with related parties

Receivables and payables with related parties are recognized at amortized cost in accordance with the terms agreed upon by the parties involved.

Note 4.20 |    Classification of assets and liabilities into current and non-current

Assets and liabilities are presented as current and non-current in the Statement of Financial Position.

An asset is classified as current when the Company:

- expects to realize the asset or intends to sell or consume it in its normal operating cycle;

- holds the asset primarily for the purpose of trading;

- expects to realize the asset within twelve months after the reporting year; or

- the asset is cash or a cash equivalent unless the asset is restricted and cannot be exchanged or used for the settlement of a liability for at least twelve months after the closing of the reporting year.

All other assets are classified as non-current.

A liability is classified as current when the Company:

- expects to settle the liability in its normal operating cycle;

- the liability is due to be settled within twelve months after the closing date of the reporting year; or

- does not have an unconditional right to defer settlement of the liability for at least twelve months after the closing date of the reporting year.

All other liabilities are classified as non-current.

Deferred tax assets and liabilities are always classified as non-current assets or liabilities as appropriate.

Note 5 |    Financial risk management

Nota 5.1 |   Financial risk factors

The Company’s activities and the market in which it operates expose the Company to a number of financial risks: market risk (including currency risk, cash flows interest rate risk, fair value interest rate risk and price risk), credit risk and liquidity risk.

The management of the financial risk is part of the Company’s overall policies, which focus on the unpredictability of the financial markets and seek to minimize potential adverse effects on its financial performance. Financial risks are the risks derived from the financial instruments to which the Company is exposed during or at the end of each year. The Company uses derivative instruments to hedge exposure to certain risks whenever it deems appropriate in accordance with its internal risk management policy.

Risk management is controlled by the Finance and Control Division, which identifies, evaluates and hedges financial risks. Risk management policies and systems are periodically reviewed so that they can reflect the changes in the market’s conditions and the Company’s activities.

This section includes a description of the main risks and uncertainties that could have a material adverse effect on the Company’s strategy, performance, results of operations and financial position.

F-29 

2023 FINANCIAL STATEMENTS

NOTES

a. Market risks

i. Currency risk

Currency risk is the risk of fluctuation in the fair value or future cash flows of a financial instrument due to changes in foreign currency exchange rates. The Company’s exposure to currency risk relates to the collection of its revenue in pesos, in conformity with regulated electricity rates that are not indexed in relation to the US dollar, whereas a significant portion of its existing financial debt is denominated in US dollars. Therefore, the Company is exposed to the risk of a loss resulting from a devaluation of the peso. The Company may hedge its currency risk by trying to enter into currency futures. At the date of issuance of these financial statements, the Company has not hedged its exposure to the US dollar.

If the Company continued to be unable to effectively hedge all or a significant part of its exposure to currency risk, any devaluation of the peso could significantly increase its debt service burden, which, in turn, could have a substantial adverse effect on its financial and cash position (including its ability to repay its Corporate Notes) and the results of its operations.

As of December 31, 2023 and 2022, the Company’s balances in foreign currency are as follow:

	Currency	Amount in foreign currency	Exchange rate (1)	Total 12.31.23	Total 12.31.22
ASSETS
CURRENT ASSETS
Other receivables	USD	26.3	805.450	21,183	10,635
Financial assets at fair value through profit or loss	USD	51.1	805.450	41,158	45,024
Cash and cash equivalents	USD	0.2	805.450	161	109
TOTAL CURRENT ASSETS				62,502	55,768
TOTAL ASSETS				62,502	55,768
LIABILITIES
NON-CURRENT LIABILITIES
Borrowings	USD	54.9	808.450	44,345	45,268
TOTAL NON-CURRENT LIABILITIES				44,345	45,268
CURRENT LIABILITIES
Trade payables	USD	22.9	808.450	18,514	9,768
	EUR	0.6	894.712	537	118
	CHF	0.3	963.121	289	-
Borrowings	USD	62.3	808.450	50,379	573
	CNY	2.5	113.910	284	-
Other payables	USD	1.4	808.450	1,129	710
TOTAL CURRENT LIABILITIES				71,132	11,169
TOTAL LIABILITIES				115,477	56,437

(1) The exchange rates used are the BNA exchange rates in effect as of December 31, 2023 for US Dollars (USD), Euros (EUR), Swiss francs (CHF) and Chinese yuans (CNY).

The table below shows the Company’s exposure to currency risk resulting from the financial assets and liabilities denominated in a currency other than the Company’s functional currency.

	12.31.23	12.31.22
Net position
US dollar	(51,865)	(551)
Chinese Yuan	(284)	-
Euro	(537)	(118)
Swiss franc	(289)	-
Total	(52,975)	(669)

F-30 

2023 FINANCIAL STATEMENTS

NOTES

The Company estimates that a 10% devaluation of the Argentine peso with respect to each foreign currency, with all other variables held constant, would give rise to the following decrease in the profit (loss) for the year:

	12.31.23	12.31.22
Net position
US dollar	(5,187)	(55)
Chinese Yuan	(28)	-
Euro	(54)	(12)
Swiss franc	(29)	-
Decrease in the results of operations for the year	(5,298)	(67)

ii. Price risk

The Company’s investments in listed equity instruments are susceptible to market price risk arising from the uncertainties concerning the future value of these instruments. Due to the low significance of the investments in equity instruments in relation to the net asset/liability position, the Company is not significantly exposed to the referred to instruments price risk.

Furthermore, the Company is not exposed to commodity price risk.

iii. Interest rate risk

It is the risk of fluctuation in the fair value or cash flows of an instrument due to changes in market interest rates. The Company’s exposure to interest rate risk is related mainly to the long-term debt obligations.

Indebtedness at floating rates exposes the Company to interest rate risk on its cash flows. Indebtedness at fixed rates exposes the Company to interest rate risk on the fair value of its liabilities. As of December 31, 2023 and 2022, except for the Payment plan with CAMMESA that is disclosed in the Other payables account (Note 2.c and 26), 100% of the loans were obtained at fixed interest rates. The Company’s policy is to keep the largest percentage of its indebtedness in instruments that accrue interest at fixed rates.

The Company analyzes its exposure to interest rate risk in a dynamic manner. Several scenarios are simulated taking into account the positions with respect to refinancing, renewal of current positions, alternative financing and hedging. Based on these scenarios, the Company calculates the impact on profit or loss of a specific change in interest rates. In each simulation, the same interest rate fluctuation is used for all the currencies. Scenarios are only simulated for liabilities that represent the most relevant interest-bearing positions.

b. Credit risk

It is the risk of a financial loss as a consequence of a counterparty’s failure to comply with the obligations assumed in a financial instrument or commercial contract. The Company’s exposure to credit risk results from its operating (particularly from its commercial receivables) and financial activities, including deposits in financial entities and other instruments.

Credit risk arises from cash and cash equivalents, deposits with banks and financial entities and derivative financial instruments, as well as from credit exposure to customers, including outstanding balances of accounts receivable and committed transactions.

With regard to banks and financial entities, only those with high credit quality are accepted.

With regard to debtors, if there are no independent credit risk ratings, the Finance Department evaluates the debtors’ credit quality, past experience and other factors.

F-31 

2023 FINANCIAL STATEMENTS

NOTES

Individual credit limits are set in accordance with the limits set by the Company’s CEO, on the basis of the internal or external ratings approved by the Finance and Control Division.

The Company has different procedures in place to reduce energy losses and allow for the collection of the balances owed by its customers. The Operations and Customer Service Divisions periodically monitor compliance with the above-mentioned procedures.

One of the significant items of delinquent balances is that related to the receivable amounts with Municipalities, in respect of which the Company applies different offsetting mechanisms against municipal taxes it collects in the name and to the order of those government bodies and debt refinancing plans, with the aim of reducing its exposure.

At each fiscal year-end, the Company analyzes whether the recording of an impairment is necessary. As of December 31, 2023 and 2022, delinquent trade receivables totaled approximately $ 11,355 and $ 20,435, respectively. As of December 31, 2023 and 2022, the financial statements included allowances for $ 6,241 and $ 14,431, respectively.

The inability to collect the amounts receivable in the future could have an adverse effect on the Company’s results of operations and its financial position, which, in turn, could have an adverse effect on the Company’s ability to repay loans, including payment of the Corporate Notes.

The balances of the bills for electricity consumption of T1 (small-demand), T2 (medium-demand) and T3 (large-demand) customers that remain unpaid seven working days after the bills’ first due dates are considered delinquent trade receivables. Additionally, the amounts included in the Framework Agreement are not considered within delinquent balances of the electricity supplied to low-income areas and shantytowns.

The Company’s maximum exposure to credit risk is based on the book value of each financial asset in the financial statements, after deducting the corresponding allowances.

c. Liquidity risk

The Company monitors the risk of a deficit in cash flows on a periodical basis. The Finance Department supervises the updated projections of the Company’s liquidity requirements in order to ensure that there is enough cash to meet its operating needs, permanently maintaining sufficient margin for undrawn credit lines so that the Company does not fail to comply with the indebtedness limits or covenants, if applicable, of any line of credit. Such projections give consideration to the Company’s debt financing plans, compliance with covenants, with internal balance sheet financial ratios objectives and, if applicable, with external regulations and legal requirements, such as, restrictions on the use of foreign currency.

Cash surpluses held by the Company and the balances in excess of the amounts required to manage working capital are invested in money market funds and/or time deposits that accrue interest, currency deposits and securities, choosing instruments with appropriate maturities or sufficient liquidity to provide sufficient margin as determined in the aforementioned projections. As of December 31, 2023 and 2022, the Company’s current financial assets at fair value amount to $ 82,628 and $ 89,379, respectively, which are expected to generate immediate cash inflows to manage the liquidity risk.

The table below includes an analysis of the Company’s non-derivative financial liabilities, which have been classified into maturity groupings based on the remaining period between the closing date of the fiscal year and the contractual maturity date. Derivative financial liabilities are included in the analysis if their contractual maturities are essential for an understanding of the timing of the cash flows. The amounts disclosed in the table are the contractual undiscounted cash flows.

F-32 

2023 FINANCIAL STATEMENTS

NOTES

	No deadline	Less than 3 months	From 3 months to 1 year	From 1 to 2 years	From 2 to 5 years	Total
As of December 31, 2023
Trade payables and other liabilities	100,329	158,282	44,816	18,809	161,323	483,559
Borrowings	-	-	50,663	44,345	-	95,008
Total	100,329	158,282	95,479	63,154	161,323	578,567
As of December 31, 2022
Trade payables and other liabilities	375,157	210,919	29,484	1,274	73,820	690,654
Borrowings	-	-	573	45,268	-	45,841
Total	375,157	210,919	30,057	46,542	73,820	736,495

Nota 5.2 |   Concentration risk factors

a.      Related to customers

The Company’s receivables derive primarily from the sale of electricity.

No single customer accounted for more than 10% of sales for the years ended December 31, 2023 and 2022.

b.     Related to employees who are union members

As of December 31, 2023, the Company’s employees are members of unions, Sindicato de Luz y Fuerza de Capital Federal (Electric Light and Power Labor Union of the Federal Capital) and Asociación del Personal Superior de Empresas de Energía (Association of Supervisory Personnel of Energy Companies). These employees labor cost depends on negotiations between the Company and the unions; a sensitive change in employment conditions generates a significant impact on the Company’s labor costs.

Collective bargaining agreements were entered into in the months of February, April, September, November and December 2023, as a consequence of the inflationary context in which the Argentine economy is immersed. At the date of issuance of the financial statements, there is no certainty concerning future collective bargaining agreements.

Nota 5.3 |   Capital risk management

The Company’s objectives when managing capital are to safeguard its ability to continue operating as a going concern and to maintain an optimal capital structure to reduce the cost of capital.

Consistent with others in the industry, the Company monitors its capital on the basis of the gearing ratio. This ratio is calculated as net debt divided by total capital. Net debt is calculated as total liabilities (current and non-current) less cash and cash equivalents. Total capital is calculated as equity, as shown in the Statement of Financial Position, plus net debt.

The gearing ratios at December 31, 2023 and 2022 were as follow:

F-33 

2023 FINANCIAL STATEMENTS

NOTES

	12.31.23	12.31.22
Total liabilities	1,069,993	1,103,844
Less: Cash and cash equivalents and Financial assets at fair value through profit or loss	(91,756)	(94,455)
Net debt	978,237	1,009,389
Total Equity	438,811	391,338
Total capital attributable to owners	1,417,048	1,400,727
Gearing ratio	69.03%	72.06%

Nota 5.4 |   Regulatory risk factors

Pursuant to caption C of Section 37 of the Concession Agreement, the Grantor of the Concession may, without prejudice to other rights to which the Grantor is entitled thereunder, foreclose on the collateral granted by the Company when the cumulative value of the penalties imposed to the Company in the previous one-year period exceeds 20% of its annual billing, net of taxes and fees.

The Company’s Management evaluates the development of this indicator on an annual basis. At the date of issuance of these financial statements, there are no events of non-compliance by the Company that could lead to that situation.

Nota 5.5 |   Information security-related risk factors

The Company has a Security Information and Event Management System in place to access data-based information, mitigating risks at scale with machine learning-based analysis.

Furthermore, there are information security awareness programs addressed to the staff, and a liability insurance that covers the Company against the residual risks and costs associated with cybersecurity events.

F-34 

2023 FINANCIAL STATEMENTS

NOTES

Nota 5.1 |   Fair value estimate

The Company classifies the measurements of financial instruments at fair value using a fair value hierarchy that reflects the relevance of the variables used to carry out such measurements. The fair value hierarchy has the following levels:

· Level 1: quoted prices (unadjusted) in active markets for identical assets or liabilities.

· Level 2: inputs other than quoted prices included in level 1 that are observable for the asset or liability, either directly (i.e. prices) or indirectly (i.e. derived from the prices).

· Level 3: inputs for the asset or liability that are not based on observable market data (i.e. unobservable inputs).

The table below shows the Company’s financial assets and liabilities measured at fair value as of December 31, 2023 and 2022:

	LEVEL 1	LEVEL 2
At December 31, 2023
Assets
Other receivables
Transferred assets and in custody	20,406	-
Financial assets at fair value through profit or loss:
Negotiable instruments	588	-
Mutual funds	82,040	-
Cash and cash equivalents:
Mutual funds	7,730	-
Total assets	110,764	-
Liabilities
Other liabilities:
Payment plan - CAMMESA	-	59,988
Total liabilities	-	59,988

	LEVEL 1
At December 31, 2022
Assets
Other receivables
Transferred assets and in custody	14,558
Financial assets at fair value through profit or loss:
Negotiable instruments	42,713
Mutual funds	46,666
Cash and cash equivalents
Mutual funds	2,375
Total assets	106,312

The value of the financial instruments traded in active markets is based on the quoted market prices at the Statement of Financial Position date. A market is regarded as active if quoted prices are regularly available from a stock exchange, broker, sector-specific institution or regulatory agency, and those prices represent current and regularly occurring market transactions on an arms’ length basis. The quoted market price used for financial assets held by the Company is the current offer price. These instruments are included in level 1.

F-35 

2023 FINANCIAL STATEMENTS

NOTES

The fair value of financial instruments that are not traded in active markets is determined by using valuation techniques. These valuation techniques maximize the use of observable market data, where it is available, and rely as little as possible on the Company’s specific estimates. If all the significant variables to determine the fair value of a financial instrument are observable, the instrument is included in level 2.

If one or more of the significant variables used to determine fair value are not observable in the market, the financial instrument is included in level 3. There are no financial instruments that are to be included in level 3.

Note 6 |    Critical accounting estimates and judgments

The preparation of the financial statements requires the Company’s Management to make estimates and assessments concerning the future, exercise critical judgments and make assumptions that affect the application of the accounting policies and the reported amounts of assets and liabilities and revenues and expenses.

These estimates and judgments are continually evaluated and are based upon past experience and other factors that are reasonable under the existing circumstances. Future actual results may differ from the estimates and assessments made at the date of preparation of these financial statements.

The estimates that have a significant risk of causing adjustments to the amounts of assets and liabilities during the next fiscal year are detailed below:

a. Impairment of financial assets

The allowance for the impairment of accounts receivable is assessed based on the delinquent balance, which comprises all such debt arising from the bills for electricity consumption of T1 (small-demand), T2 (medium-demand), and T3 (large-demand) customers that remain unpaid seven working days after their first due dates. The Company’s Management records an allowance by applying to the delinquent balances of each customer category an uncollectibility rate that is determined according to each customer category, based on the historical comparison of collections made.

Additionally, and faced with temporary and/or exceptional situations, the Company’s Management may redefine the amount of the allowance, specifying and supporting the criteria used in all the cases.

The Company has performed a review of the financial assets it currently measures and classifies at fair value through profit or loss or at amortized cost and has concluded that they meet the conditions to maintain their classification; consequently, the initial adoption affected neither the classification nor the measurement of the Company’s financial assets.

b. Revenue recognition

Revenue is recognized on an accrual basis upon delivery to customers, which includes the estimated amount of unbilled distribution of electricity at the end of each year. The accounting policy for the recognition of estimated revenue is considered critical because it depends on the amount of electricity effectively delivered to customers, which is valued on the basis of applicable electricity rates. Unbilled revenue is classified as current trade receivables.

c. Impairment of long-lived assets

The Company analyzes the recoverability of its long-lived assets on a periodical basis or when events or changes in circumstances indicate that the recoverable amount of the long-lived assets, which is measured as the higher of value in use and fair value less costs to sell at the end of the year, may be impaired.

F-36 

2023 FINANCIAL STATEMENTS

NOTES

Due to the new events that occurred in the fiscal year, mainly those mentioned in Notes 1, 2.b. and 2.c., the projections made by the Company concerning the recoverability of its property, plant and equipment have been updated.

The value in use is determined on the basis of projected and discounted cash flows, using discount rates that reflect the time value of money and the specific risks of the assets under consideration.

Cash flows are prepared based on estimates concerning the future performance of significant assumptions that are sensitive to the determination of the recoverable amount, including the following: (i) nature, timing, and modality of the electricity rate increases; (ii) demand for electricity projections; (iii) development of the costs to be incurred; (iv) investment needs in line with the service quality levels required by the regulatory authority, and (v) macroeconomic variables, such as growth rates, inflation rates and foreign currency exchange rates. The other variables have low impact on the calculation and have been estimated by the Company using the best available information.

The Company has made its projections under the assumption that in the next few years it will obtain the long overdue electricity rates adjustments to which it is entitled in accordance with the applicable regulations, using as a basis a Discount rate (WACC) in dollars of 16.24%, translating it into Argentine pesos for the discount in each of the scenarios presented.

However, the Company is not in a position to ensure that the future performance of the assumptions used for making its projections will be in line with that which the control authorities will define, therefore, they could differ significantly from the estimates and assessments made at the date of preparation of these financial statements.

In order to consider the estimation risk included in the projections of the aforementioned variables, the Company has taken into consideration three alternative probability-weighted scenarios, which are detailed below:

a) Scenario No. 1: considers the adjustments in the VAD according to ENRE Resolution No. 102/2024 (Note 2.b.) as from February 2024, and an automatic and monthly adjustment from the monthly CPD as from May 2024. Includes an increase resulting from the RT in February 2025. Probability of occurrence assigned 25%.

b) Scenario No. 2: considers the adjustments in the VAD according to ENRE Resolution No. 102/2024 (Note 2.b.) as from February 2024, and an automatic and monthly adjustment from the monthly CPD as from May 2024. Includes a smaller increase resulting from the RT in February 2025. Probability of occurrence assigned 60%.

c) Scenario No. 3: considers the adjustments in the VAD according to ENRE Resolution No. 102/2024 (Note 2.b.) as from February 2024, and an automatic and monthly adjustment from the monthly CPD as from May 2024. Includes a minimal increase resulting from the RT in February 2025. Probability of occurrence assigned 15%.

In all the cases, payments under the payment plan resulting from the Agreements on the Regularization of Payment Obligations for the debt with CAMMESA (Note 2.c) are made. The debt generated between September 2023 and March 2024 is offset with the regulatory asset. As from April 2024, 100% of the invoice is paid.

The Company has assigned to these three scenarios the previously detailed probability of occurrence percentages based mainly on experience and giving consideration to the long overdue electricity rate adjustment, the current economic and financial situation, and the need to keep the public service, object of the concession, operative.

After having carried out the analysis of recoverability of long-lived assets, as of the date of these financial statements, the Company has recorded no additional impairments of property, plant and equipment.

F-37 

2023 FINANCIAL STATEMENTS

NOTES

Sensitivity analysis:

The main factors that could result in impairment charges or recoveries in future periods are: i) a distortion in the nature, timing, and modality of the electricity rate increases, ii) a distortion in the nature, timing, and modality of the settlement of the debt with CAMMESA. These factors have been taken into account in the aforementioned weight of scenarios. Due to the uncertainty inherent in these assumptions, the Company estimates that any sensitivity analysis that considers changes in any of them taken individually could lead to significant changes in the determination of the recoverable value.

d. Current and deferred income tax

A degree of judgment is required to determine the income tax provision inasmuch as the Company’s Management has to evaluate, on an ongoing basis, the positions taken in tax returns in respect of situations in which the applicable tax regulation is subject to interpretation and, whenever necessary, make provisions based on the amount expected to be paid to the tax authorities. When the final tax outcome of these matters differs from the amounts initially recognized, such differences will impact both the income tax and the deferred tax provisions in the fiscal year in which such determination is made.

There are many transactions and calculations for which the ultimate tax determination is uncertain. The Company recognizes liabilities for eventual tax claims based on estimates of whether additional taxes will be due in the future.

Deferred tax assets are reviewed at each reporting date and reduced according to the probability that a sufficient taxable base will be available to allow for the total or partial recovery of these assets. Deferred tax assets and liabilities are not discounted. The realization of deferred tax assets depends on the generation of future taxable income in the periods in which these temporary differences become deductible. To make this assessment, the Company’s Management takes into consideration the scheduled reversal of deferred tax liabilities, the projected future taxable income, the prevailing rates to be applied in each period, and tax planning strategies.

e. Benefit plans

The liability recognized by the Company is the best estimate of the present value of the cash flows representing the benefit plan obligation at the closing date of the year together with the adjustments for past service costs and actuarial losses. Cash flows are discounted using a rate that contemplates actuarial assumptions about demographic and financial conditions that affect the determination of benefit plans. Such estimate is based on actuarial calculations made by independent professionals in accordance with the projected unit credit method.

f. ENRE penalties and discounts

The Company considers its applicable accounting policy for the recognition of ENRE penalties and discounts critical because it depends on penalizable events that are valued on the basis of the Management´s best estimate of the expenditure required to settle the present obligation at the date of these financial statements. The balances of ENRE penalties and discounts are adjusted in accordance with the regulatory framework applicable thereto and have been estimated based on that which has been described in Note 2.f.

g. Contingencies and provisions for lawsuits

The Company is a party to several complaints, lawsuits and other legal proceedings, including customer claims, in which a third party is seeking payment for alleged damages, reimbursement for losses or compensation. The Company’s potential liability with respect to such claims, lawsuits and legal proceedings cannot be accurately estimated. The Company’s Management, with the assistance of its legal advisors, periodically analyzes the status of each significant matter and evaluates the Company’s potential financial exposure. If the loss deriving from a complaint or legal proceeding is considered probable and the amount can be reasonably estimated, a provision is recorded.

F-38 

2023 FINANCIAL STATEMENTS

NOTES

Provisions for contingent losses represent a reasonable estimate of the losses that will be incurred, based on the information available to Management at the date of the financial statements preparation, taking into account the Company’s litigation and settlement strategies. These estimates are mainly made by Management. However, if the Management’s estimates proved wrong, the current provisions could be inadequate and result in a charge to profits that could have a material effect on the Statements of Financial Position, Comprehensive Income (Loss), Changes in Equity and Cash Flows.

Note 7 |    Interest in joint ventures

The Company’s interests in joint ventures as of December 31, 2023 and 2022 are as follow:

Percentage interest held in capital stock and votes		Corporate purpose	Legal address	Equity attributable to the owners		(Loss) Income from interest in joint ventures
				12.31.23	12.31.22	12.31.23	12.31.22	12.31.21
SACME	50.00%	Control of the operation of both the electric power generation and transmission in the GBA	Av. España 3251, CABA	57	66	(10)	(17)	12

Note 8 |    Contingencies and lawsuits

The Company has contingencies and is a party to lawsuits that arise from labor, civil and commercial complaints that relate to atomized legal actions for individual non-significant amounts, which in the Company’s opinion are likely to result in an outflow of resources, and for which a provision in the amount of $ 12,730 has been recorded as of December 31, 2023.

Furthermore, there are significant judicial processes whose outcome, depending on the evidence produced in the cases and based on the legal advisors’ assessment, is uncertain. These judicial processes are detailed below:

- Legal action brought by Consumidores Financieros Asociación Civil Para Su Defensa (13563/2009)

In March 2010, Consumidores Financieros Asociación Civil Para Su Defensa (“CFD”) brought a class action against the Company and Edesur in National Court of Original Jurisdiction in Federal Administrative Matters No. 2, Clerk’s Office No. 3, seeking the reimbursement of: (i) interest applicable to the payment of energy purchased from the WEM, transferred to customers, (ii) the Value Added Tax (VAT) percentage on that interest, calculated on a taxable base that is allegedly contrary to the Consumer Protection Law; and (ii) the late payment charges calculated at the lending rate published by Banco de la Nación Argentina.

On April 22, 2010, the Company answered the complaint, filing a motion to dismiss for lack of standing (“excepción de falta de legitimación”), requesting, at such opportunity, that a summons be served upon the Federal Government, the AFIP and the ENRE as third-party defendants.

Prior to the time allowed to produce evidence, the Tax authorities were ordered to conduct a review of the proceedings in order to issue an opinion on the motion to dismiss for lack of standing filed by edenor. After the proceedings were sent back to the court, the motion was rejected. At the time, the Company filed an appeal against such denial.

In 2022, evidence was offered and arguments were submitted, with the Company invoking lack of standing and the termination of the action by lapse of time. The rendering of a decision on the motions filed by the Company has been deferred and will be considered when final judgment is rendered. The action brought by ADDUC (which is detailed below) will be considered together with these actions.

F-39 

2023 FINANCIAL STATEMENTS

NOTES

At the date of issuance of these financial statements, this case is pending resolution.

- Legal action brought by Asociación de Defensa de Derechos de Usuarios y Consumidores - ADDUC

On October 21, 2011, Asociación de Defensa de Derechos de Usuarios y Consumidores (“ADDUC”) brought a class action against the Company requesting: (i) that the Company be ordered to reduce or mitigate the default or late payment interest rates charged to customers; (ii) that the pacts or accords that would have stipulated the interest rates that the Company applies to its customers, as well as the administrative resolutions based on which it justifies the collection of interest be declared non-applicable; and (iii) that interest thus collected be reimbursed.

On April 8, 2014, the Court admitted the motion to dismiss due to the fact that the claims at issue were being litigated in another lawsuit (“excepción de litispendencia”), and ordered that the proceedings be sent to the Court hearing the case entitled “Consumidores Financieros Asociación Civil vs Edesur and Other defendants, for breach of contract”.

Prior to the time allowed to provide evidence, the Tax authorities were ordered to conduct a review of the proceedings in order to issue an opinion on the motion to dismiss for lack of standing filed by the Company, which was rejected.

The Company filed an appeal, which, on October 16, 2020, the National Court of Appeals in Federal Administrative Matters rejected, confirming the decision of the court of original jurisdiction. The case has been brought to trial.

At the date of issuance of these financial statements, this case is pending resolution.

- Legal action brought by Consumidores Financieros Asociación Civil para su Defensa (9119/2022)

On May 4, 2021, CFD brought a class action against the Company in the Court having jurisdiction in Administrative and Tax Matters of the City of Buenos Aires, Clerk’s Office No. 3 of the Judicial Management Office in Consumer Relations, claiming damages allegedly caused by the Company to customers by virtue of the Agreement on the Regularization of Payment Obligations entered into in 2019 by the Company, the Energy Secretariat and the Electric Power Market and Renewable Resources Secretariat, and claiming the reinstatement of the penalties set forth therein, plus interest, loss of profit or opportunity and punitive damages.

The Company answered the complaint and filed a motion to dismiss for lack of jurisdiction (“excepción de incompetencia”) of the local courts. The court admitted the motion to dismiss for lack of jurisdiction and, as a consequence thereof, on January 6, 2022, sent the proceedings to the Court having jurisdiction in Civil and Commercial Federal Matters No. 5 – Clerk’s Office No. 9. At present, the case has been brought to trial. The Company’s management believes there exist reasonable grounds to believe that edenor should prevail in this case.

- Legal action brought by the Office of the Ombudsman of the City of Buenos Aires (Court record 30815/2023)

On April 4, 2023, the Ombudsman of the City of Buenos Aires filed a complaint against the Company and Edesur in Court of Original Jurisdiction in Administrative, Tax and Consumer Relations Matters of the City of Buenos Aires No. 25, sole Clerk’s Office, claiming punitive damages adducing deficiency in the information about service interruptions, and requesting the granting of a precautionary measure consisting of the setting up of a workgroup to implement a communication system.

The Company filed an appeal against the precautionary measure, answered the complaint and filed a motion to dismiss for lack of jurisdiction of the local courts. On February 27, 2024, the court admitted the motion to dismiss for lack of jurisdiction. The Company’s management believes there exist reasonable grounds to believe that edenor should prevail in this case.

F-40 

2023 FINANCIAL STATEMENTS

NOTES

- Claim of the City of Buenos Aires Tax Authorities (“AGIP”). Assessment Resolution No. 3417/2017

On December 5, 2017, the AGIP claims alleged differences in the contribution that impacts electric power companies. The difference is based on the content of the contribution’s taxable base, which in the AGIP’s opinion, is made from the Company’s monthly income deriving from sales, without admitting the deduction for the sale of energy to railway companies provided for in the federal laws governing the contribution. The main objections made by the AGIP are the following: a) challenged the tax returns for the 2011-2013 tax periods; b) assessed the resulting tax for the 2011-2013 tax periods, plus interest; c) provided that for the income obtained in connection with the activity of “distribution of electricity and sale services” the Company should pay the aforementioned contribution for the referred to fiscal years at the rate of 6%; and (d) imposed fines.

On January 18, 2018, the Company filed a post-judgement motion for reversal (“recurso de reconsideración”), which was rejected on July 4, 2019. Against this denial, the Company filed an appeal before a higher administrative authority (“recurso jerárquico”). To date, the AGIP has issued no resolution in regard to this appeal.

- Federal Administration of Public Revenues (“AFIP”) – Difference in contribution rate to the Single Social Security System (“SUSS”) (executive order 814/2001) for the 12/2011- 11/2019 fiscal periods

The Company, based on the opinion (pronouncements) of its legal advisors in 2011, decided to apply the reduced rate for contributions to the SUSS set forth in section 2, sub-section b) of Executive Order No. 814/2001 as it is a corporation in which the Sustainability Guarantee Fund, managed by ANSES, has an equity interest in its business (Law 26,425, as amended).

In 2021, after the tax audits conducted by the Large Employer Social Security Resources Control Division, three AFIP resolutions fell on the Company claiming the adjustment of the contribution rate and rejecting the inclusion of edenor in section 2, sub-section b) of Executive Order No. 814/2001.

The Company’s position is supported by the three appeals filed against the debt assessments (all of them filed in Courtroom III of the Federal Social Security Court of Appeals) given the nature of the shareholder ANSES-FGS, its significant role in the Board of Directors, the Federal Government’s participation in the Supervisory Committee through the SIGEN, the recognition that minority state-owned corporations are regarded as included among those entitled to the benefit of Executive Order No. 814/2001, inasmuch as this changed as from the enactment of the referred-to Law No. 27,541, as well as the existence of three similar cases with a favorable outcome in the other two courtrooms comprising the Court of Appeals (with such cases having been appealed by the AFIP before the CSJN).

In the three court records, the Company filed a surety bond as a substitute for the solve et repete (“Pay First”) requirement applicable to the filing of the appeals. The state of the appeals filed by the Company is as follows:

(i)       Edenor S.A. VS AFIP, CHALLENGE OF DEBT, Court record 20408/2021 (CI 25.329) (OI No. 1.578.472- for the 12/2011-12/2016 tax periods):

On September 13, 2021 an appeal was filed. At present, judgment on the case is still pending.

On February 29, 2024 proof that the Company is unable to comply with the First Pay requirement due to the long-overdue readjustment of revenue, as with rates, which must be issued by the relevant authorities, was filed in the court record.

F-41 

2023 FINANCIAL STATEMENTS

NOTES

(ii)       Edenor S.A. VS AFIP, CHALLENGE OF DEBT, Court record 11840/2021 (CI 25.329) (OI No. 1.806.371- for the 01/2017-06/2019 tax periods):

On February 22, 2024, the Company was served notice of the Court of Appeals’ decision, whereby the appeal filed by the Company was rejected as inadmissible, inasmuch as the appellate court does not agree with the criterion of the other courtrooms that accept the surety bond as a replacement for the “Pay First” requirement. In that regard, it stated that in order for the surety bond to be accepted, the impossibility of payment must be founded. The Company will file a federal extraordinary appeal (“recurso extraordinario federal”) (with a stay of execution) with the Supreme Court of Justice, and, should it be denied, it will file an appeal against the denial to admit the extraordinary appeal (“recurso de queja”) (without a stay of execution), which implies the immediate availability of the funds to continue with the Company’s defense.

(iii)       Edenor S.A. VS AFIP, SOCIAL SECURITY CONTRIBUTIONS (CI 24.920) (OI: 1893337- for the 07/2019-11/2019 tax periods- Court record No.: CSS 053731/2022):

On October 4, 2022 an appeal was filed. At present, judgment on the case is still pending.

Furthermore, on February 29, 2024 proof that the Company is unable to comply with the First Pay requirement was filed in the court record, in the same way as in the court record mentioned in (i).

Without prejudice to the immediacy of the appeal filed to the CSJN against the denial to admit the extraordinary appeal, which would be granted without a stay of execution and, therefore, the conditions to enforce payment of the debt in question in this specific process mentioned in (ii) above would exist; the merits of the case have not yet been dealt with in this Courtroom and, according to the Company’s understanding and based on the opinion of its legal advisors, the Company’s management considers that it has solid arguments to defend the inclusion of the Company under section 1 of Law 22,016, as it was in effect until the issuance of Executive Order No. 814/2001.

- National Regulatory Authority for the Distribution of Electricity, Proceeding for the Determination of a Claim” (Court record No. 16/2020)

On May 4, 2021, the Company was served notice of a complaint filed by the ENRE in connection with edenor‘s compliance with captions 9.2.1 and 9.2.2 of the “Agreement on the Renegotiation of the Concession Agreement” for differences arising from the date of payment of certain penalties included therein.

The Company answered the complaint, with the proceedings currently being at the stage of producing evidence. The Company’s management believes there exist reasonable grounds to believe that edenor should prevail in this case.

- AFIP’s tax claim for Income Tax, Undocumented outflows and VAT

The AFIP initiated a verification process to assess differences in connection with the VAT, undocumented outflows and the income tax, at the request of the Court hearing the case entitled “García Veronica Elizabeth and other defendants, Fraudulent tax evasion and Violation of law 24,769 – Prosecutor AFIP and others” (Case No. 58258/2017”), for bills issued by certain former suppliers of the Company, considered in such proceedings to be “usinas mixtas” (companies used as real and fake invoice plants). This led to the following proceedings:

(i)       “García Veronica Elizabeth and other defendants, Fraudulent tax evasion and Violation of law 24,769 – Prosecutor AFIP and others” (2017 and 2018 fiscal periods):

F-42 

2023 FINANCIAL STATEMENTS

NOTES

On July 2, 2020, the AFIP initiated a sua sponte assessment process.

On July 6, 2021, the Company answered the notice and filed a motion for annulment in connection with the AFIP’s tax claim, stating the legal foundations and submitting the relevant documentary evidence.

On November 17, 2021 the AFIP notified the Company of the sua sponte assessments made relating to the three taxes (VAT, IT and undocumented outflows), which were appealed by the Company to the Federal Tax Court on December 10, 2021. This appeal stays the execution of payment.

On December 26, 2022, the Company was served notice of the acquittal of all its former Board of Directors members. The AFIP appealed such decision, and, on March 30, 2023, the San Martín Federal Court of Appeals revoked the acquittal based on the lack of conclusive evidence to either dismiss or confirm the charges against them. It also ordered that the investigation be reopened and that new evidence be produced. In that regard an accounting expert report was issued by the CSJN’s Corps of Experts, whose conclusions were favorable to the Company. At present, no decision has yet been issued by the court hearing the case and the case is pending resolution.

(ii)       Verification Process Order (01/2019-10/2021 fiscal periods):

On February 18, 2022, the Company was notified of the initiation of a new verification process in respect of the same suppliers in question, with a request for additional information on transactions performed from January 2019 until October 2021. At present, the verification process is in process, and no debt has yet been assessed.

(iii)       Verification Process Order (11/2021-06/2022 fiscal periods):

On July 11, 2023 the Company was notified of the initiation of a new verification process in respect of the same suppliers in question, with a request for additional information on transactions performed from November 2021 until June 2022. At present, the verification process is in process, and no debt has yet been assessed.

The Company’s management believes there exist reasonable grounds to believe that edenor should prevail in this case.

-                  Protección a los Consumidores y Usuarios de la República Argentina Asociación Civil (Procurar) – Class action for the protection of a constitutional right (“amparo colectivo”)

Protección a los Consumidores y Usuarios de la República Argentina Asociación Civil, jointly with two users domiciled in the District of San Martín, brought an action against the Company, the SE and CAMMESA.

In that framework, a provisional measure was issued, pursuant to which:

(i) the Company was ordered to refrain from paying CAMMESA any amounts earmarked for the carrying out of the investments necessary for ensuring the appropriate quality of the electricity service.

(ii) CAMMESA was ordered to refrain, both from claiming judicial payment by the Company of the energy supplied and/or to be supplied in the future to edenor, and from issuing any precautionary measure affecting the latter’s equity, as a result of and/or due to energy supplied, maintaining the normal and regular dispatch of energy, affecting neither the continuity nor the quality of the public service the distributor must provide to its customers.

F-43 

2023 FINANCIAL STATEMENTS

NOTES

-                  Legal action brought by the Company (Study, Review and Inspection of Works in Streets and/or Public Spaces Tax "TERI”)

On October 9, 2020, the Company filed a declaratory judgment action in the Supreme Court of Justice ("CSJN"), against the Government of the City of Buenos Aires ("GCBA") in order to put an end to the state of uncertainty arising between the federal regulations governing the public service of electricity and the GCBA’s claim to impose payment of the TERI on the Company. Additionally, a petition for the granting of a prohibitory injunction was filed, requesting that the GCBA be ordered to refrain from claiming payment of the TERI, and from bringing enforcement actions and/or levying an attachment on the Company’s assets.

On December 21, 2022, the CSJN resolved that it had original jurisdiction over the case, ordered that notice of the complaint be served upon the GCBA for a term of sixty days, and rejected the precautionary measure sought by the Company. On August 13, 2023, the GCBA answered the complaint. At present, the proceedings are at the stage of producing evidence.

Furthermore, the Company has filed complaints requesting the nullification of the GCBA’s Resolutions providing for the payment of the TERI. In one of those proceedings in particular (“Edenor S.A. vs GCBA, Challenge of actions taken by the Governmental Authority” Court record 286603/2024) a favorable judgement was rendered on February 28, 2024, considering section 377 of the City of Buenos Aires Tax Code to be unconstitutional. The Company’s management believes there exist reasonable grounds to believe that edenor should prevail in this case.

Note 9 |    Revenue from sales and energy purchases

We provide below a brief description of the main services provided by the Company:

Sales of electricity

Small demand segment: Residential use and public lighting (T1)	Relates to the highest demand average recorded over 15 consecutive minutes that is less than 10 kilowatts. In turn, this segment is subdivided into different residential categories based on consumption. This segment also includes a category for public lighting. Users are categorized by the Company according to their consumption.
Medium demand segment: Commercial and industrial customers (T2)	Relates to the highest demand average recorded over 15 consecutive minutes that is equal to or greater than 10 Kilowatts but less than 50 Kilowatts. The Company agrees with the user the supply capacity.
Large demand segment (T3)	Relates to the highest demand average recorded over 15 consecutive minutes that is greater than 50 Kilowatts. In turn, this segment is subdivided into categories according to the supply voltage -low, medium or high-, from voltages of up to 1 Kilovolt to voltages greater than 66 Kilovolts.
Other: (Shantytowns/ Wheeling system)	Revenue is recognized to the extent that a renewal of the Framework Agreement has been formalized for the period in which the service was rendered. In the case of the service related to the Wheeling system, revenue is recognized when the Company allows third parties (generators and large users) to access to the available transmission capacity within its distribution system upon payment of a wheeling fee.

The KWh price relating to the Company’s sales of electricity is determined by the ENRE by means of the periodic publication of electricity rate schedules (Note 2.b), for those distributors that are regulated by the aforementioned Regulatory Authority, based on the rate setting and adjustment process set forth in the Concession Agreement.

Other services

Right of use of poles	Revenue is recognized to the extent that the rental value of the right of use of the poles used by the Company’s electricity network has been agreed upon for the benefit of third parties.
Connection and reconnection charges	Relate to revenue accrued for the carrying out of the electricity supply connection of new customers or the reconnection of already existing users.

F-44 

2023 FINANCIAL STATEMENTS

NOTES

Energy purchases

Energy purchase

The Company bills its users the cost of its purchases of energy, which includes charges for purchases of energy and power. The Company purchases electric power at seasonal prices approved by the SE. The price of the Company’s electric power represents transmission costs and other regulatory charges.

Energy losses

Energy losses are equivalent to the difference between energy purchased and energy sold. These losses can be classified into technical and non-technical losses. Technical losses represent the energy lost during transmission and distribution within the network as a consequence of the natural heating of the conductors and transformers that carry electricity from power generation plants to users. Non-technical losses represent the remainder of the Company’s energy losses and are mainly due to the illegal use of its services or the theft of energy. Energy losses require that the Company purchase additional energy in order to meet the demand and its Concession Agreement allows it to recover from its users the cost of these purchases up to a loss factor specified in its concession for each rate category. The current loss factor recognized in the electricity rate by virtue of its concession amounts to approximately 9.1%.

	12.31.23		12.31.22		12.31.21
	GWh	$	GWh	$	GWh	$
Sales of electricity
Small demand segment: Residential use and public lighting (T1)	13,585	417,487	13,052	351,439	12,373	405,529
Medium demand segment: Commercial and industrial (T2)	1,552	78,638	1,529	65,506	1,447	73,705
Large demand segment (T3)	3,680	174,939	3,714	191,177	3,492	173,070
Other: (Shantytowns/Wheeling system)	4,721	26,682	4,531	29,023	4,398	31,496
Subtotal - Sales of electricity	23,538	697,746	22,826	637,145	21,710	683,800
Other services
Right of use of poles		2,934		3,472		4,257
Connection and reconnection charges		418		377		445
Subtotal - Other services		3,352		3,849		4,702
Total - Revenue		701,098		640,994		688,502

	12.31.23		12.31.22		12.31.21
	GWh	$	GWh	$	GWh	$
Energy purchases (1)	27,676	(458,944)	27,158	(446,030)	26,373	(423,413)

(1) As of December 31, 2023, 2022 and 2021, includes technical and non-technical energy losses for 4,138 GWh, 4,332 GWh and 4,663 GWh, respectively.

F-45 

2023 FINANCIAL STATEMENTS

NOTES

Note 10 | Expenses by nature

The breakdown of expenses by nature is as follows:

Expenses by nature at 12.31.23
Description	Transmission and distribution expenses	Selling expenses	Administrative expenses	Total
Salaries and social security taxes	76,213	10,521	24,024	110,758
Pension plans	1,670	231	527	2,428
Communications expenses	2,370	2,425	10	4,805
Allowance for the impairment of trade and other receivables	-	6,662	-	6,662
Supplies consumption	10,316	-	745	11,061
Leases and insurance	659	14	1,861	2,534
Security service	2,910	213	1,597	4,720
Fees and remuneration for services	49,005	18,882	29,640	97,527
Public relations and marketing	-	6,646	-	6,646
Advertising and sponsorship	-	3,424	-	3,424
Reimbursements to personnel	-	-	4	4
Depreciation of property, plant and equipment	65,094	9,700	7,959	82,753
Depreciation of right-of-use asset	283	566	1,980	2,829
Directors and Supervisory Committee members’ fees	-	-	161	161
ENRE penalties	5,898	12,749	-	18,647
Taxes and charges	-	10,729	432	11,161
Other	10	2	182	194
At 12.31.23	214,428	82,764	69,122	366,314

The expenses included in the chart above are net of the Company’s own expenses capitalized in property, plant and equipment as of December 31, 2023 for $ 16,783.0.

F-46 

2023 FINANCIAL STATEMENTS

NOTES

Expenses by nature at 12.31.22
Description	Transmission and distribution expenses	Selling expenses	Administrative expenses	Total
Salaries and social security taxes	70,230	10,509	21,192	101,931
Pension plans	2,579	386	778	3,743
Communications expenses	1,381	2,630	4	4,015
Allowance for the impairment of trade and other receivables	-	6,847	-	6,847
Supplies consumption	10,145	-	1,025	11,170
Leases and insurance	609	14	2,885	3,508
Security service	3,453	445	549	4,447
Fees and remuneration for services	31,903	17,875	20,679	70,457
Public relations and marketing	-	5,905	-	5,905
Advertising and sponsorship	-	3,042	-	3,042
Reimbursements to personnel	-	-	6	6
Depreciation of property, plant and equipment	44,566	6,641	5,449	56,656
Depreciation of right-of-use asset	322	643	2,251	3,216
Directors and Supervisory Committee members’ fees	-	-	215	215
ENRE penalties	6,432	8,728	-	15,160
Taxes and charges	-	10,051	428	10,479
Other	5	1	137	143
At 12.31.22	171,625	73,717	55,598	300,940

The expenses included in the chart above are net of the Company’s own expenses capitalized in property, plant and equipment as of December 31, 2022 for $ 13,966.5.

F-47 

2023 FINANCIAL STATEMENTS

NOTES

Expenses by nature at 12.31.21
Description	Transmission and distribution expenses	Selling expenses	Administrative expenses	Total
Salaries and social security taxes	68,495	10,899	15,474	94,868
Pension plans	3,307	526	747	4,580
Communications expenses	1,579	3,503	3	5,085
Allowance for the impairment of trade and other receivables	-	11,902	-	11,902
Supplies consumption	13,733	-	1,289	15,022
Leases and insurance	-	3	3,102	3,105
Security service	3,074	262	707	4,043
Fees and remuneration for services	35,380	18,836	15,689	69,905
Public relations and marketing	-	704	-	704
Advertising and sponsorship	-	364	-	364
Reimbursements to personnel	-	-	6	6
Depreciation of property, plant and equipment	43,426	6,471	5,310	55,207
Depreciation of right-of-use asset	277	554	1,946	2,777
Directors and Supervisory Committee members’ fees	-	-	215	215
ENRE penalties	7,321	5,079	-	12,400
Taxes and charges	-	10,622	517	11,139
Other	3	3	165	171
At 12.31.21	176,595	69,728	45,170	291,493

The expenses included in the chart above are net of the Company’s own expenses capitalized in property, plant and equipment as of December 31, 2021 for $ 13,954.3.

Note 11 | Other operating income (expense)

	Note	12.31.23	12.31.22	12.31.21
Other operating income
Income from customer surcharges		14,003	9,439	11,743
Commissions on municipal taxes collection		2,127	2,095	2,180
Fines to suppliers		561	366	713
Services provided to third parties		2,147	1,917	1,501
Income from non-reimbursable customer contributions		157	192	283
Expense recovery		5	155	190
Framework agreement	2.d	5,986	9,384	12,494
Recovery of allowance for the impairment of trade receivables - Agreement on the Regularization of Obligations	2.c	-	8,252	-
Other		349	612	265
Total other operating income		25,335	32,412	29,369
Other operating expense
Gratifications for services		(1,344)	(707)	(5,238)
Cost for services provided to third parties		(1,761)	(1,701)	(679)
Severance paid		(183)	(317)	(221)
Debit and Credit Tax		(6,562)	(6,062)	(6,480)
Provision for contingencies	33	(9,718)	(13,719)	(14,263)
Disposals of property, plant and equipment		(466)	(1,084)	(1,510)
Other		(917)	(140)	(1,252)
Total other operating expense		(20,951)	(23,730)	(29,643)

F-48 

2023 FINANCIAL STATEMENTS

NOTES

Note 12 | Net finance costs

	12.31.23	12.31.22	12.31.21
Financial income
Financial interest	367	203	395
Financial costs
Commercial interest	(256,214)	(232,268)	(134,857)
Interest and other	(62,622)	(40,590)	(28,438)
Fiscal interest	(38)	(24)	(28)
Bank fees and expenses	(561)	(453)	(221)
Total financial costs	(319,435)	(273,335)	(163,544)
Other financial results
Changes in fair value of financial assets and financial liabilities	33,778	8,799	24,065
Loss on debt restructuring	-	(1,398)	-
Net (loss) gain from the cancelattion of Corporate Notes	-	(1,132)	19
Exchange differences	(48,327)	4,604	(9,716)
Adjustment to present value of receivables	(1,410)	(1,054)	(909)
Recovery of provision for credit RDSA	-	-	3,519
Other financial costs (*)	(15,327)	(14,271)	(6,418)
Total other financial results	(31,286)	(4,452)	10,560
Total net financial costs	(350,354)	(277,584)	(152,589)

(*) As of December 31, 2023, 2022 and 2021, includes $ 14,875, $ 13,241 and $ 5,528 relating to EDELCOS’ technical assistance, respectively (Note 34).

Note 13 | Basic and diluted earnings (loss) per share

Basic

The basic earnings (loss) per share is calculated by dividing the profit (loss) attributable to the holders of the Company’s equity instruments by the weighted average number of common shares outstanding as of December 31, 2023, 2022 and 2021, excluding common shares purchased by the Company and held as treasury shares.

The basic earnings (loss) per share coincides with the diluted earnings (loss) per share, inasmuch as the Company has issued neither preferred shares nor Corporate Notes convertible into common shares.

	12.31.23	12.31.22	12.31.21
Income (Loss) for the year attributable to the owners of the Company	48,371	(54,398)	(129,475)
Weighted average number of common shares outstanding	875	875	875
Basic and diluted income (loss) per share – in pesos	55.28	(62.17)	(147.97)

F-49 

2023 FINANCIAL STATEMENTS

NOTES

Note 14 |    Property, plant and equipment

	Lands and buildings	Substations	High, medium and low voltage lines	Meters and Transformer chambers and platforms	Tools, Furniture, vehicles, equipment and communications	Construction in process	Supplies and spare parts	Total
At 12.31.22
Cost	34,578	323,650	803,775	353,649	91,728	279,728	3,750	1,890,858
Accumulated depreciation	(7,865)	(117,901)	(332,320)	(150,143)	(49,626)	-	-	(657,855)
Net amount	26,713	205,749	471,455	203,506	42,102	279,728	3,750	1,233,003
Additions	467	79	5,401	6,766	9,742	101,173	-	123,628
Disposals	(17)	(28)	(392)	(437)	(15)	-	-	(889)
Transfers	1,642	6,519	21,283	8,042	15,777	(55,524)	2,261	-
Depreciation for the year	(2,621)	(14,117)	(36,700)	(17,610)	(11,705)	-	-	(82,753)
Net amount 12.31.23	26,184	198,202	461,047	200,267	55,901	325,377	6,011	1,272,989
At 12.31.23
Cost	36,666	330,212	829,146	367,811	117,149	325,377	6,011	2,012,372
Accumulated depreciation	(10,482)	(132,010)	(368,099)	(167,544)	(61,248)	-	-	(739,383)
Net amount	26,184	198,202	461,047	200,267	55,901	325,377	6,011	1,272,989

·     During the year ended December 31, 2023, the Company capitalized as direct own costs $ 16,783.0.

F-50 

2023 FINANCIAL STATEMENTS

NOTES

	Lands and buildings	Substations	High, medium and low voltage lines	Meters and Transformer chambers and platforms	Tools, Furniture, vehicles, equipment and communications	Construction in process	Supplies and spare parts	Total
At 12.31.21
Cost	34,442	309,219	770,045	334,608	72,378	264,591	2,924	1,788,207
Accumulated depreciation	(7,334)	(106,873)	(308,210)	(137,575)	(43,043)	-	-	(603,035)
Net amount	27,108	202,346	461,835	197,033	29,335	264,591	2,924	1,185,172
Additions	250	264	2,417	3,144	6,318	93,177	1	105,571
Disposals	-	-	(670)	(414)	-	-	-	(1,084)
Transfers	87	14,175	33,391	16,533	13,029	(78,040)	825	-
Depreciation for the year	(732)	(11,036)	(25,518)	(12,790)	(6,580)	-	-	(56,656)
Net amount 12.31.22	26,713	205,749	471,455	203,506	42,102	279,728	3,750	1,233,003
At 12.31.22
Cost	34,578	323,650	803,775	353,649	91,728	279,728	3,750	1,890,858
Accumulated depreciation	(7,865)	(117,901)	(332,320)	(150,143)	(49,626)	-	-	(657,855)
Net amount	26,713	205,749	471,455	203,506	42,102	279,728	3,750	1,233,003

·     During the year ended December 31, 2022, the Company capitalized as direct own costs $ 13,966.5.

F-51 

2023 FINANCIAL STATEMENTS

NOTES

Note 15 |    Right-of-use asset

The Company leases commercial offices, two warehouses, the headquarters building (comprised of administrative, commercial and technical offices), the Energy Handling and Transformer Center (two buildings and a plot of land located within the perimeter of Puerto Nuevo and Nuevo Puerto Power Generation Plant) and Las Heras Substation. The Company’s lease contracts have cancelable terms and lease periods of 2 to 3 years.

The leases recognized as right-of-use assets in accordance with IFRS 16 and the development thereof are disclosed below:

	12.31.23	12.31.22
Balance at beginning of the year	2,202	2,578
Additions	4,167	2,840
Depreciation for the year	(2,829)	(3,216)
Balance at end of the year	3,540	2,202

The lease expense balance as of December 31, 2023 and 2022 is disclosed in Other payables (Note 26).

Note 16 | Inventories

	12.31.23	12.31.22
Supplies and spare-parts	39,816	20,047
Advance to suppliers	-	1
Total inventories	39,816	20,048

F-52 

2023 FINANCIAL STATEMENTS

NOTES

Note 17 | Financial instruments

Note 17.1 | Financial instruments by category

	Financial assets at amortized cost	Financial assets at fair value through profit or loss	Non-financial assets	Total
As of December 31, 2023
Assets
Trade receivables	66,597	-	-	66,597
Other receivables	4,887	20,406	8,756	34,049
Cash and cash equivalents
Cash and Banks	1,398	-	-	1,398
Mutual funds	-	7,730	-	7,730
Financial assets at fair value through profit or loss:
Negotiable instruments	-	588	-	588
Mutual funds	-	82,040	-	82,040
Total	72,882	110,764	8,756	192,402
As of December 31, 2022
Assets
Trade receivables	87,167	-	-	87,167
Other receivables	14,694	12,939	30,608	58,241
Cash and cash equivalents
Cash and Banks	2,701	-	-	2,701
Mutual funds	-	2,375	-	2,375
Financial assets at fair value through profit or loss:
Negotiable instruments	-	42,713	-	42,713
Mutual funds	-	46,666	-	46,666
Total	104,562	104,693	30,608	239,863

	Financial liabilities at amortized cost	Financial liabilities at fair value through profit or loss	Total
As of December 31, 2023
Liabilities
Trade payables	242,547	-	242,547
Other payables	128,276	59,988	188,264
Borrowings	95,008	-	95,008
Total	465,831	59,988	525,819
As of December 31, 2022
Liabilities
Trade payables	562,802	-	562,802
Other payables	74,150	-	74,150
Borrowings	45,841	-	45,841
Total	682,793	-	682,792

Financial instruments categories have been determined based on IFRS 9.

The income, expenses, gains and losses resulting from each financial instrument category are as follow:

F-53 

2023 FINANCIAL STATEMENTS

NOTES

	Financial assets at amortized cost	Financial assets at fair value through profit or loss	Total
As of December 31, 2023
Interest income	367	-	367
Exchange differences	38,751	32,949	71,700
Changes in fair value of financial assets	-	66,062	66,062
Total	39,118	99,011	138,129
As of December 31, 2022
Interest income	203	-	203
Exchange differences	12,193	24,823	37,016
Changes in fair value of financial assets	-	8,799	8,799
Total	12,396	33,622	46,018

	Financial liabilities at amortized cost	Financial liabilities at fair value through profit or loss	Total
As of December 31, 2023
Interest expense	(318,836)	-	(318,836)
Exchange differences	(120,027)	-	(120,027)
Changes in fair value of financial liabilities	-	(32,284)	(32,284)
Other financial results	(15,327)	-	(15,327)
Total	(454,190)	(32,284)	(486,474)
As of December 31, 2022
Interest expense	(272,858)	-	(272,858)
Exchange differences	(32,412)	-	(32,412)
Loss on debt restructuring	(1,398)	-	(1,398)
Net loss from the repurchase of Corporate Notes	(1,132)	-	(1,132)
Other financial results	(14,271)	-	(14,271)
Total	(322,071)	-	(322,071)

Note 17.2 | Credit quality of financial assets

The credit quality of financial assets that are neither past due nor impaired may be assessed based on external credit ratings or historical information:

	12.31.23	12.31.22
Customers with no external credit rating:
Group 1  (i)	34,143	60,408
Group 2 (ii)	26,906	6,944
Group 3 (iii)	5,548	19,815
Total trade receivables	66,597	87,167

(i) Relates to customers with debt to become due.

(ii) Relates to customers with past due debt from 0 to 3 months.

(iii) Relates to customers with past due debt from 3 to 12 months.

F-54 

2023 FINANCIAL STATEMENTS

NOTES

Note 18 |    Other receivables

	Note	12.31.23	12.31.22
Non-current:
Related parties	34.c	3	9
Current:
Framework agreement (1)	2.d	276	8,624
Assigned assets and in custody (2)		20,406	14,558
Judicial deposits		374	649
Security deposits		366	307
Prepaid expenses		897	1,184
Advances to personnel		-	5
Financial credit		-	43
Advances to suppliers		1,373	961
Tax credits		8,756	30,608
Debtors for complementary activities		1,642	1,265
Other		15	164
Allowance for the impairment of other receivables		(59)	(136)
Total current		34,046	58,232

(1) As of December 31, 2023 and 2022, $ 276 and $ 4,724 relate to the Framework Agreement related to the Recognition of consumption in vulnerable neighborhoods period 2022, respectively, and as of December 31, 2022, $ 3,900 relates to the Framework Agreement signed in December 2020 related to the Works Plan of the AMBA’s network.

(2) As of December 31, 2023 and 2022, relate to Securities issued by private companies for NV 19,610,291 and NV 11,771,500, respectively, assigned to Global Valores S.A. As of December 31, 2022, included cash deriving from the collection of securities for USD 2,924,022. The Company retains the risks and rewards of the aforementioned assets and may make use of them at any time, at its own request.

The value of the Company’s other financial receivables approximates their fair value.

The non-current other receivables are measured at amortized cost, which does not differ significantly from their fair value.

F-55 

2023 FINANCIAL STATEMENTS

NOTES

The roll forward of the allowance for the impairment of other receivables is as follows:

	12.31.23	12.31.22
Balance at beginning of the year	136	178
Increase	56	75
Result from exposure to inflation	(133)	(95)
Recovery	-	(22)
Balance at end of the year	59	136

The aging analysis of these other receivables is as follows:

	12.31.23	12.31.22
Without expiry date	740	956
Past due	3,247	6,976
Up to 3 months	2,101	11,382
From 3 to 6 months	4,856	12,516
From 6 to 9 months	1,365	6,783
From 9 to 12 months	21,737	19,619
More than 12 months	3	9
Total other receivables	34,049	58,241

At the Statement of Financial Position date, the maximum exposure to credit risk is the carrying amount of each class of other receivables. 

The carrying amount of the Company’s other receivables is denominated in Argentine pesos.

Note 19 | Trade receivables

	12.31.23	12.31.22
Current:
Sales of electricity – Billed	35,566	49,863
Receivables in litigation	104	893
Allowance for the impairment of trade receivables	(6,241)	(14,431)
Subtotal	29,429	36,325
Sales of electricity – Unbilled	34,214	47,749
PBA & CABA government credit	2,952	3,087
Fee payable for the expansion of the transportation and others	2	6
Total current	66,597	87,167

The value of the Company’s trade receivables approximates their fair value.

The roll forward of the allowance for the impairment of trade receivables is as follows:

	Note	12.31.23	12.31.22
Balance at beginning of the year		14,431	36,435
Increase		6,606	6,794
Decrease		(1,566)	(978)
Recovery - Agreement on the Regularization of Obligations	2.c	-	(8,252)
Result from exposure to inflation		(13,230)	(19,568)
Balance at end of the year		6,241	14,431

F-56 

2023 FINANCIAL STATEMENTS

NOTES

The aging analysis of these trade receivables is as follows:

	12.31.23	12.31.22
Past due	32,454	26,759
Up to 3 months	34,143	60,408
Total trade receivables	66,597	87,167

At the Statement of Financial Position date, the maximum exposure to credit risk is the carrying amount of each class of trade receivables. 

The carrying amount of the Company’s trade receivables is denominated in Argentine pesos.

Sensitivity analysis of the allowance for impairment of trade receivables:

- 5% increase in the uncollectibility rate estimate
	12.31.23
Allowance	6,553
Variation	312

- 5% decrease in the uncollectibility rate estimate
	12.31.23
Allowance	5,928
Variation	(313)

Note 20 | Financial assets at fair value through profit or loss

	12.31.23	12.31.22
Negotiable instruments	588	42,713
Mutual funds	82,040	46,666
Total Financial assets at fair value through profit or loss	82,628	89,379

Note 21 | Cash and cash equivalents

	12.31.23	12.31.22
Cash and banks	1,398	2,701
Mutual funds	7,730	2,375
Total cash and cash equivalents	9,128	5,076

F-57 

2023 FINANCIAL STATEMENTS

NOTES

Note 22 |    Share capital and additional paid-in capital

	Share capital	Additional paid-in capital	Total
Balance at December 31, 2021	348,647	4,646	353,293
Payment of Other reserve constitution - Share-based compensation plan	-	28	28
Balance at December 31, 2022	348,647	4,674	353,321
Payment of Other reserve constitution - Share-based compensation plan	-	42	42
Balance at December 31, 2023	348,647	4,716	353,363

On April 20, 2023, the Company’s Ordinary and Extraordinary Shareholders’ Meeting approved the conversion of 355,945 Class C shares into Class B shares, in the framework of the termination of the Employee Stock Ownership Program, which had been authorized by the CNV.

As of December 31, 2023, the Company’s share capital amounts to 906,455,100 shares, divided into 462,292,111 common, book-entry Class A shares with a par value of one peso each and the right to one vote per share; 442,566,330 common, book-entry Class B shares with a par value of one peso each and the right to one vote per share; and 1,596,659 common, book-entry Class C shares with a par value of one peso each and the right to one vote per share.

Listing of the Company’s shares

The Company’s shares are listed on ByMA, forming part of the Merval Index, as well as on the NYSE, where each ADS represents 20 common shares.

Note 23 | Allocation of profits

The restrictions on the distribution of dividends by the Company are those provided for by the Business Organizations Law and the negative covenants established by the Corporate Notes Global Program. As of December 31, 2023, the Company complies with the debt ratio established in such Program (see Note 28).

If the Company’s Debt Ratio were higher than 3, the negative covenants included in the Corporate Notes program, which establish, among other issues, the Company’s impossibility to make certain payments, such as dividends, would apply.

Additionally, in accordance with Title IV, Chapter III, section 3.11.c of the CNV, the amounts subject to distribution will be restricted to the amount equivalent to the acquisition cost of the Company’s own shares.

Note 24 | The Company’s Share-based Compensation Plan

Of the total of treasury shares acquired in the framework of the Program for the repurchase of shares approved in 2008, 6,991,651 shares are to be used for the implementation of a Long-Term Incentive Plan in favor of the staff in an employment relationship with the Company in 2017, in accordance with the provisions of section 67 of the Law on Capital Markets.

F-58 

2023 FINANCIAL STATEMENTS

NOTES

On April 14, 2023, 142,040 treasury shares were awarded, as part of the implementation of an Incentive Plan, to certain employees, beneficiaries of said plan, which was to be in effect and which was approved by the shareholders’ meeting of April 18, 2017. The fair value of the shares at the award date amounted to $ 65 and has been recorded in the Salaries and social security taxes line item, with a contra account in Equity. The amount recorded in Equity is net of the tax effect.

Note 25 | Trade payables

		12.31.23	12.31.22
Non-current
Customer guarantees		1,235	1,881
Customer contributions		362	985
Total non-current		1,597	2,866
Current
Payables for purchase of electricity - CAMMESA (1)		135,632	444,332
Provision for unbilled electricity purchases - CAMMESA		43,738	72,827
Suppliers		59,658	40,221
Related parties	34.c	624	638
Advance to customer		1,225	1,809
Customer contributions		37	106
Discounts to customers		36	3
Total current		240,950	559,936

(1) As of December 31, 2023, includes $ 22,550 ($ 13,162 for principal plus $ 9,388 of interest) relating to post-dated checks issued by the Company in favor of CAMMESA.

The fair values of non-current customer contributions as of December 31, 2023 and 2022 amount to $ 43.1 and $ 121.1, respectively. The fair values are determined based on estimated discounted cash flows in accordance with a representative market rate for this type of transactions. The applicable fair value category is Level 3.

The value of the rest of the financial liabilities included in the Company’s trade payables approximates their fair value.

Note 26 | Other payables

	Note	12.31.23	12.31.22
Non-current
Payment plan - CAMMESA	2.c	106,298	-
ENRE penalties and discounts (1)		51,875	54,335
Financial Lease Liability  (2)		751	123
Total Non-current		158,924	54,458
Current
Payment plan - CAMMESA	2.c	14,926	-
ENRE penalties and discounts (1)		11,005	17,391
Related parties	34.c	1,234	828
Advances for works to be performed		13	40
Financial Lease Liability   (2)		2,161	1,428
Other		1	5
Total Current		29,340	19,692

F-59 

2023 FINANCIAL STATEMENTS

NOTES

As of December 31, 2023, the fair value of the payment plan with CAMMESA, which is adjusted in accordance with the development of the MWh value (Note 2.c) amounts to $ 59,988. Such value has been determined on the basis of the MWh monomic price published by CAMMESA at the end of each period. The applicable fair value category is Level 2.

The value of the rest of the financial liabilities included in the Company’s other payables approximates their fair value.

(1) The development of ENRE penalties and discounts is as follows:

	12.31.23	12.31.22
Balance at the beginning of the year	71,726	78,423
Increases	72,552	49,530
Decreases	(6,043)	(8,274)
Result from exposure to inflation for the year	(75,355)	(47,953)
Balance at the end of the year	62,880	71,726

(*) As of December 31, 2023 and 2022, the balances of $ 51,390 and $ 53,519 relate to penalties payable to users as stipulated in Article 2 of the Agreement on the Regularization of Payment Obligations signed in May 2019.

(2) The development of the Finance lease liability is as follows:

	12.31.23	12.31.22
Balance at beginning of the year	1,551	2,106
Increase	3,067	1,812
Payments	(6,461)	(3,647)
Exchange difference	4,901	1,510
Interest	908	791
Result from exposure to inlfation	(1,054)	(1,021)
Balance at end of the year	2,912	1,551

As of December 31, 2023 and 2022, future minimum payments with respect to finance leases are those detailed below:

	12.31.23	12.31.22
2023	-	1,868
2024	5,251	212
2025	1,430	47
2026	329	-
Total future minimum lease payments	7,010	2,127

The Company has entered into contracts with certain cable television companies granting them the right to use the network poles. As of December 31, 2023 and 2022, future minimum collections with respect to operating assignments of use are those detailed below:

	12.31.23	12.31.22
2023	-	3,036
2024	956	93
2025	952	93
2026	931	78
2027	-	-
Total future minimum lease collections	2,839	3,300

F-60 

2023 FINANCIAL STATEMENTS

NOTES

Note 27 | Deferred revenue

	12.31.23	12.31.22
Non-current
Nonrefundable customer contributions	13,474	11,451
Current
Nonrefundable customer contributions	50	137

Note 28 | Borrowings

	12.31.23	12.31.22
Non-current
Corporate notes (1)	44,345	45,268
Current
Corporate notes (1)	49,271	-
Interest from corporate notes	1,108	573
Financial loans	284	-
Total current	50,663	573

(1) Net of debt issuance, repurchase and redemption expenses.

(2) Relate to Import financing loans taken with ICBC bank, for 2,489,696 Chinese yuans (CNY). Annual interest rate: 15.5%

The fair values of the Company’s existing Corporate Notes as of December 31, 2023 and 2022 amount approximately to $ 94,623.4 and $ 43,689.1 respectively. Such values were determined on the basis of the estimated market price of the Company’s Corporate Notes at the end of each year. The applicable fair value category is Level 1.

On March 7, 2023, upon the expiration of the Tender Period of Class No. 2 Additional Corporate Notes, the Company approved the issuance and placement of the Additional Corporate Notes for a nominal value of USD 30,000,000, as set forth in the Prospectus Supplement dated February 28, 2023. The issuance was above par, with the issuance total value thus amounting to USD 30,945,000.

Furthermore, an amount of $ 480 was disbursed as issuance expenses of Class No. 2 Additional Corporate Notes.

The Company is subject to restrictions on its ability to incur indebtedness pursuant to the terms and conditions of Class No. 2 Corporate Notes due 2024 and Class No. 1 Corporate Notes due 2025, which indicate that the Company may not incur new Indebtedness, except for certain Permitted Indebtedness or when the Debt ratio is not greater than 3.75 or less than zero and the Interest Expense Coverage ratio is less than 2. As of December 31, 2023, the values of the above-mentioned ratios meet the established parameters.

Additionally, on March 22, 2023, the Company convened Meetings of the Holders of Corporate Notes to deal with a consent solicitation so that the Company can provide guarantees in favor of CAMMESA and thereby comply with the Memorandum of Agreement on the Regularization of Payment Obligations dated December 29, 2022 (Note 2.c).

In this regard, on April 25, 2023, the waiver of Section 9.1 of the Indenture pursuant to which the Company’s Class No 1 Corporate Notes due October 2025 had been issued was approved. However, the Extraordinary Meeting of the Holders of Class No. 2 Corporate Notes was not constituted as the quorum required to call the meeting to order was not present.

Furthermore, on January 30, 2024 the Company approved the terms and conditions of issue of Class No. 3 and Class No. 4 Corporate Notes, for an aggregate nominal value of USD 60,000,000, which may be extended to USD 100,000,000, in the framework of the Global Program for the Issuance of Simple Corporate Notes, in accordance with the provisions of the Prospectus Supplement dated February 22, 2024.

F-61 

2023 FINANCIAL STATEMENTS

NOTES

On March 7, 2024, the Company issued Class No. 3 and Class No. 4 Corporate Notes for a nominal value of USD 95,762,688 and $ 3,577, respectively.

The Class No. 3 Corporate Notes were paid-in in accordance with the following detail: (i) USD 34,157,571 relates to the Integration in Kind Tranche through the delivery of Class 2 Corporate Notes at the Exchange Ratio; and (ii) USD 61,605,117 relates to the Regular Integration Tranche.

Consequently, Class No. 2 Corporate Notes for a nominal value of USD 32,766,541 have been settled, with the remaining balance in outstanding nominal value (USD 27,233,459) maturing on November 22, 2024.

The Company’s borrowings are denominated in the following currencies:

	12.31.23	12.31.22
US dollars	94,724	45,841
Chinese yuans	284	-
Total Borrowings	95,008	45,841

The maturities of the Company’s borrowings and their exposure to interest rates are as follow:

	12.31.23	12.31.22
Fixed rate
Less than 1 year	50,663	573
From 1 to 2 years	44,345	45,268
Total fixed rate	95,008	45,841

The roll forward of the Company’s borrowings during the year was as follows:

	12.31.23	12.31.22	12.31.21
Balance at beginning of the year	45,841	62,245	76,922
Proceeds from borrowings	17,424	13,764	-
Payment of borrowings' interests	(1,857)	(2,790)	(5,428)
Paid from repurchase of Corporate Notes	-	(1,470)	(103)
Gain from repurchase of Corporate Notes	-	1,132	(19)
Payment of borrowings	(1,032)	(18,928)	-
Loss on debt restructuring	-	1,398	-
Payment of Corporate Notes issuance expenses	(736)	(1,759)	-
Exchange diference and interest accrued	81,985	25,277	16,798
Result from exposure to inflation	(46,617)	(33,028)	(25,925)
Balance at the end of year	95,008	45,841	62,245

Corporate Note programs

The Company has a Corporate Notes program, the relevant information of which is detailed below:

Debt issued in United States dollars

The Company’s Corporate Note debt structure as of December 31, 2023 and 2022, is comprised of as follows:

F-62 

2023 FINANCIAL STATEMENTS

NOTES

		in USD					in millions of $
Corporate Notes	Class	Debt structure at 12/31/2022	Exchange	Issue	Payment / Repurchase	Debt structure at 12/31/2023	Debt structure at 12/31/2022	Debt structure at 12/31/2023
Fixed rate par note - Maturity 2024	2	30,000,000	-	30,945,000	-	60,945,000	16,010	49,854
Fixed rate par note - Maturity 2025	1	55,244,538	-	-	-	55,244,538	29,831	44,870
Total		85,244,538	-	30,945,000	-	116,189,538	45,841	94,724

		in USD					in millions of $
Corporate Notes	Class	Debt structure at 12/31/2021	Exchange	Issue	Payment / Repurchase	Debt structure at 12/31/2022	Debt structure at 12/31/2021	Debt structure at 12/31/2022
Fixed rate par note - Maturity 2022	9	98,057,000	(52,695,600)	-	(45,361,400)	-	62,248	-
Fixed rate par note - Maturity 2024	2	-	-	30,000,000	-	30,000,000	-	16,010
Fixed rate par note - Maturity 2025	1	-	55,244,538	-	-	55,244,538	-	29,831
Total		98,057,000	2,548,938	30,000,000	(45,361,400)	85,244,538	62,248	45,841

The main covenants are those detailed below:

i. Negative Covenants

The terms and conditions of the Corporate Notes include a number of negative covenants that limit the Company’s ability to, among other things:

- Create or permit liens on its property or assets;

- Incur indebtedness, in certain specified cases;

- Sell the Company’s assets related to its main business;

- Carry out transactions with shareholders or related companies;

- Make certain payments (including, but not limited to, dividends, purchases of edenor’s common shares or payments on subordinated debt);

- Enter into merger transactions, unless they meet certain criteria.

ii. Suspension of Covenants:

Certain negative covenants set forth in the terms and conditions of the Corporate Notes will be suspended or adapted if:

- The Company attains an Investment Grade Rating on its long term debt, or the Debt Ratio is equal to or lower than 3.75 and the Interest Expense Coverage Ratio is less than 2.

- If the Company subsequently loses its Investment Grade rating or its Debt Ratio is greater than 3.75 and the Interest Expense Coverage Ratio is less than 2, as applicable, the suspended negative covenants will again be applicable.

At the date of issuance of these financial statements, the previously mentioned ratios have been met.

F-63 

2023 FINANCIAL STATEMENTS

NOTES

Note 29 | Salaries and social security taxes payable

a. Salaries and social security taxes payable

	12.31.23	12.31.22
Non-current
Seniority-based bonus	2,449	2,402
Current
Salaries payable and provisions	23,375	25,719
Social security payable	2,988	3,276
Early retirements payable	273	89
Total current	26,636	29,084

The value of the Company’s salaries and social security taxes payable approximates their fair value.

b. Salaries and social security taxes charged to profit or loss

	12.31.23	12.31.22	12.31.21
Salaries	79,746	73,390	68,305
Social security taxes	31,012	28,541	26,563
Total salaries and social security taxes	110,758	101,931	94,868

Early retirements payable correspond to individual optional agreements. After employees reach a specific age, the Company may offer them this option. The related accrued liability represents future payment obligations, which, as of December 31, 2023 and 2022, amount to $ 438.8 and $ 45.2, respectively.

The seniority-based bonus included in collective bargaining agreements in effect consists of a bonus to be granted to personnel with a certain number of years of service. As of December 31, 2023 and 2022, the related liabilities amount to $ 2,329.6 and $ 2,278.3, respectively.

As of December 31, 2023 and 2022, the number of employees amounts to 4,635 and 4,658, respectively.

Note 30 | Benefit plans

The defined benefit plans granted to Company employees consist of a bonus for all the employees who have the necessary years of service and have made the required contributions to retire under ordinary retirement plans.

The amounts and conditions vary depending on the collective bargaining agreement and for non-unionized personnel.

	12.31.23	12.31.22
Non-current	4,922	5,795
Current	578	729
Total Benefit plans	5,500	6,524

The breakdown of the benefit plan obligations as of December 31, 2023 and 2022 is as follows:

	12.31.23	12.31.22
Benefit payment obligations at beginning of year	6,524	6,835
Current service cost	284	1,165
Interest cost	2,144	2,578
Actuarial losses	1,447	2,037
Result from exposure to inflation for the year	(4,429)	(5,260)
Benefits paid to participating employees	(470)	(831)
Benefit payment obligations at end of year	5,500	6,524

F-64 

2023 FINANCIAL STATEMENTS

NOTES

As of December 31, 2023 and 2022, the Company does not have any assets related to post-retirement benefit plans.

The breakdown of the charge recognized in the Statement of Comprehensive Income (Loss) is as follows:

	12.31.23	12.31.22	12.31.21
Cost	284	1,165	402
Interest	2,144	2,578	4,178
Actuarial results - Other comprehensive results	1,447	2,037	(1,215)
	3,875	5,780	3,365

The actuarial assumptions used are based on market interest rates for Argentine government bonds, past experience, and the Company Management’s best estimate of future economic conditions. Changes in these assumptions may affect the future cost of benefits and obligations. The main assumptions used are as follow:

	12.31.23	12.31.22	12.31.21
Discount rate	5%	5%	5%
Salary increase	1%	1%	1%
Inflation	89%	48%	57%

Sensitivity analysis:

	12.31.23
Discount Rate: 4%
Obligation	6,294
Variation	450
	8%
Discount Rate: 6%
Obligation	5,300
Variation	(544)
	(9%)
Salary Increase : 0%
Obligation	5,280
Variation	(564)
	(10%)
Salary Increase: 2%
Obligation	6,311
Variation	467
	8%

The expected payments of benefits are as follow:

	In 2024	In 2025	In 2026	In 2027	In 2028	Between 2029 to 2033
At December 31, 2023
Benefit payment obligations	578	108	102	108	19	101

F-65 

2023 FINANCIAL STATEMENTS

NOTES

Estimates based on actuarial techniques imply the use of statistical tools, such as the so-called demographic tables used in the actuarial valuation of the Company’s active personnel.

In order to determine the mortality of the Company’s active personnel, the “1971 Group Annuity Mortality” table has been used. In general, a mortality table shows for each age group the probability that a person in any such age group will die before reaching a predetermined age. Male and female mortality tables are elaborated separately inasmuch as men and women’s mortality rates are substantially different.

In order to estimate total and permanent disability due to any cause, 80% of the “1985 Pension Disability Study” table has been used.

In order to estimate the probability that the Company’s active personnel will leave the Company or stay therein, the “ESA 77” table has been used.

Liabilities related to the above-mentioned benefits have been determined taking into consideration all the rights accrued by the beneficiaries of the plans through the closing date of the year ended December 31, 2023.

These benefits do not apply to key management personnel.

Note 31 | Income tax and deferred tax

The breakdown of income tax, determined in accordance with the provisions of IAS 12 is as follows:

	12.31.23	12.31.22	12.31.21
Deferred tax	(133,382)	(46,757)	(38,478)
Change in the income tax rate	-	-	(45,332)
Current tax	-	-	(12,388)
Difference between provision and tax return	(427)	570	1,358
Income tax expense	(133,809)	(46,187)	(94,840)

The detail of the income tax expense for the year includes two effects: (i) the current tax for the year payable in accordance with the tax legislation applicable to the Company; and (ii) the effect of applying the deferred tax method on the temporary differences arising from the valuation of assets and liabilities for accounting and tax purposes.

The breakdown of deferred tax assets and liabilities is as follows:

F-66 

2023 FINANCIAL STATEMENTS

NOTES

	12.31.22	Result from exposure to inflation	Charged to Profit and loss	Charged to Other comprenhen- sive income / Equity		12.31.23
Deferred tax assets
Tax loss carryforward (1)	51,511	(34,970)	9,939	-		26,480
Trade receivables and other receivables	4,474	(3,037)	997	-		2,434
Trade payables and other payables	5,322	(3,613)	5,278	-		6,987
Salaries and social security taxes payable	2,435	(1,653)	1,216	(10)	(*)	1,988
Benefit plans	629	(427)	(1)	507		708
Tax liabilities	134	(91)	61	-		104
Provisions	7,053	(4,788)	2,225	-		4,490
Deferred tax asset	71,558	(48,579)	19,715	497		43,191
Deferred tax liabilities:
Property, plant and equipment	(357,251)	242,531	(295,107)	-		(409,827)
Financial assets at fair value through profit or loss	(5,466)	3,711	(15,487)	-		(17,242)
Borrowings	(616)	418	185	-		(13)
Tax inflation adjustment	(53,609)	36,394	(77,590)	-		(94,805)
Deferred tax liability	(416,942)	283,054	(387,999)	-		(521,887)
Net deferred tax liability	(345,384)	234,475	(368,284)	497		(478,696)

	12.31.21	Result from exposure to inflation	Charged to Profit and loss	Charged to Other comprenhen- sive income / Equity		12.31.22
Deferred tax assets
Tax loss carryforward (1)	-	-	51,511	-		51,511
Trade receivables and other receivables	13,546	(6,593)	(2,479)	-		4,474
Trade payables and other payables	7,287	(3,547)	1,582	-		5,322
Salaries and social security taxes payable	3,229	(1,573)	789	(10)	(*)	2,435
Benefit plans	106	(53)	(137)	713		629
Tax liabilities	153	(75)	56	-		134
Provisions	9,803	(4,771)	2,021	-		7,053
Deferred tax asset	34,124	(16,612)	53,343	703		71,558
Deferred tax liabilities:
Property, plant and equipment	(309,280)	150,505	(198,476)	-		(357,251)
Financial assets at fair value through profit or loss	(2,320)	1,130	(4,276)	-		(5,466)
Borrowings	(6)	3	(613)	-		(616)
Tax inflation adjustment	(22,418)	10,909	(42,100)	-		(53,609)
Deferred tax liability	(334,024)	162,547	(245,465)	-		(416,942)
Net deferred tax liability	(299,900)	145,935	(192,122)	703		(345,384)

(*) Note 24 – The Company’s Share-based Compensation Plan

(1) The accumulated tax losses and the years in which they become statute-barred are as follow:

F-67 

2023 FINANCIAL STATEMENTS

NOTES

Tax loss - Year of origin	Nominal value	Year of prescription
2022	45,418	2027
2023	30,239	2028
	75,657

As of December 31, 2023 and 2022, the accumulated tax losses do not exceed their recoverable value.

The reconciliation between the income tax expense recognized in profit or loss and the amount that would result from applying the applicable tax rate to the accounting profit (loss) before taxes, is as follows:

	12.31.23	12.31.22	12.31.21
Income (loss) for the year before taxes	182,180	(8,211)	(34,635)
Applicable tax rate	35%	35%	35%
Result for the year at the tax rate	(63,763)	2,874	12,122
Gain (loss) on net monetary position	59,413	18,725	(20,368)
Adjustment effect on tax inflation	(128,994)	(68,289)	(42,293)
Non-taxable income	(38)	(67)	(327)
Difference between provision and tax return	(427)	570	1,358
Change in the income tax rate	-	-	(45,332)
Income tax expense	(133,809)	(46,187)	(94,840)

Note 32 | Tax liabilities

	12.31.23	12.31.22
Non-current
Current
Provincial, municipal and federal contributions and taxes	1,778	1,104
Tax withholdings	1,915	1,767
SUSS withholdings	149	181
Municipal taxes	797	1,050
Total current	4,639	4,102

Note 33 | Provisions

Included in non-current liabilities
	For contingencies
	12.31.23	12.31.22
At 12.31.22	17,293	24,150
Increases	6,767	8,165
Result from exposure to inflation for the year	(14,199)	(15,022)
At 12.31.23	9,861	17,293

Included in current liabilities
	For contingencies
	12.31.23	12.31.22
At 12.31.22	4,674	3,257
Increases	2,951	5,554
Decreases	(867)	(1,672)
Result from exposure to inflation for the year	(3,889)	(2,465)
At 12.31.23	2,869	4,674

F-68 

2023 FINANCIAL STATEMENTS

NOTES

Note 34 | Related-party transactions

The following transactions were carried out with related parties:

a. Expense

Company	Concept	12.31.23	12.31.22	12.31.21
EDELCOS	Technical advisory services on financial matters	(14,875)	(13,241)	(5,528)
SACME	Operation and oversight of the electric power transmission system	(633)	(735)	(1,921)
Andina PLC	Financial interest	(229)	(84)	-
Estudio Cuneo Libarona Abogados	Legal fees	(7)	(16)	-
Grieco Maria Teresa	Legal fees	(2)	-	-
		(15,746)	(14,076)	(7,449)

b. Key Management personnel’s remuneration

	12.31.23	12.31.22	12.31.21
Salaries	5,844	2,846	9,208

The balances with related parties are as follow:

c. Receivables and payables

	12.31.23	12.31.22
Other receivables - Non current
SACME	3	9
Trade payables
EDELCOS	(624)	(638)
Other payables
Andina PLC	(1,129)	(710)
SACME	(105)	118)
	(1,234)	(828)

The other receivables with related parties are not secured and do not accrue interest. No allowances have been recorded for these concepts in any of the periods covered by these financial statements.

According to IAS 24, paragraphs 25 and 26, the Company applies the exemption from the disclosure requirement of transactions with related parties when the counterpart is a governmental agency that has control, joint control or significant influence.

The agreements with related parties that were in effect throughout fiscal year 2023 are detailed below:

SACME

In the framework of the regulation of the Argentine electric power sector established by Law No. 24,065 and SEE Resolution No. 61/92, and after the awarding of the CABA and the Greater Buenos Aires distribution areas to edenor and Edesur S.A., the bidding terms and conditions of the privatization provided that both companies were to organize in equal parts SACME to operate the electric power supervision and control center of the transmission and sub-transmission system that feeds the market areas transferred to those companies.

F-69 

2023 FINANCIAL STATEMENTS

NOTES

The purpose of this company is to manage, supervise and control the operation of both the electric power generation, transmission and sub-transmission system in the CABA and Greater Buenos Aires and the interconnections with the Argentine Interconnection System, to represent Distribution Companies in the operational management before CAMMESA, and, in general, to carry out the necessary actions for the proper development of its activities.

The operating costs borne by the Company in fiscal year 2023 amounted to $ 633.

Agreement with EDELCOS

The agreement comprises the provision to the Company of technical advisory services especially on financial topics. It expires in December 2026, but may be extended if so agreed by the parties. In consideration of these services, the Company pays EDELCOS either an annual amount of $ 1,766 or the amount equivalent to 1.75% of the annual gross billing, whichever results in the higher amount, plus the related value added tax. Any of the parties may terminate the agreement at any time by giving 60 days’ notice, without having to comply with any further obligations or paying any indemnification to the other party.

As of December 31, 2023, the Company recorded charges for EDELCOS technical advisory services for a total of $ 14,875 relating to the services rendered in fiscal year 2023.

Note 35 |    Keeping of documentation

On August 14, 2014, the CNV issued General Resolution No. 629 which introduced changes to its regulations concerning the keeping and preservation of corporate and accounting books and commercial documentation. In this regard, it is informed that for keeping purposes the Company has sent its workpapers and non-sensitive information, whose periods for retention have not expired, to the warehouses of the firm Iron Mountain Argentina S.A., located at:

-        2396 Amancio Alcorta Av. – CABA

-        601 San Miguel de Tucumán St., Municipality of Carlos Spegazzini, Ezeiza, PBA

- 2450 Puente del Inca St., Municipality of Tristán Suárez, Ezeiza, PBA

The detail of the documentation stored outside the Company’s offices for keeping purposes, as well as the documentation referred to in Section 5 sub-section a.3) of Part I of Chapter V of Title II of the Regulations (Technical Rule No. 2,013, as amended) is available at the Company’s registered office.

Note 36 |    Shareholders’ Meetings

The Company’s Ordinary and Extraordinary Shareholders’ Meeting held on April 20, 2023 resolved, among other issues, the following:

- To approve the Company’s Annual Report and Financial Statements as of December 31, 2022.

- To allocate the $ 17,468 loss for the year ended December 31, 2022 (which at the purchasing power of the currency at December 31, 2023 amounts to $ 54,398) to the Unappropriated Retained Earnings account.

- To approve the actions taken by the Directors and Supervisory Committee members, together with their respective remunerations.

- To appoint the authorities and the external auditors for the current fiscal year.

- To approve the conversion of 355,945 Class C shares into Class B shares in the framework of the termination of the Employee Stock Ownership Program (Note 22).

F-70 

2023 FINANCIAL STATEMENTS

NOTES

Furthermore, the amendment to Sections Nos. 4, 13, 23 and 33 of the Bylaws, which had been approved by the Ordinary and Extraordinary Shareholders’ Meeting held on November 2, 2022 and by the ENRE by means of Resolution No. 243/2023 dated February 28, 2023, was registered with the IGJ on April 10, 2023.

Note 37 |    Events after the reporting year

The following are the events that occurred subsequent to December 31, 2023:

- Public Hearing – ENRE Resolution No. 2/2024, see Note 2.b.

- Amendment to both the seasonal reference prices and the values of the Company’s electricity rate schedules – SE Resolution No. 7/2024 and ENRE Resolution No. 102/2024, see Note 2.b.

- Issuance of new Class No. 3 and Class No. 4 Corporate Notes, Note 28.

- Legal action for difference in contribution rate to the Single Social Security System, Executive Order 814/2011, Note 8.

- Legal action for unconstitutionality of the TERI, Note 8.

NEIL BLEASDALE

Chairman

F-71