20-F 1 enia-20201231x20f.htm 20-F

UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

WASHINGTON, D.C. 20549

FORM 20-F

REGISTRATION STATEMENT PURSUANT TO SECTION 12(b) OR 12(g) OF THE SECURITIES EXCHANGE ACT OF 1934

OR

ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the fiscal year ended December 31, 2020

OR

TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the transition period from       to  

OR

SHELL COMPANY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

Date of event requiring this shell company report,

Commission file number: 001-12440

 

ENEL AMÉRICAS S.A.

 

(Exact name of Registrant as specified in its charter)

 

ENEL AMÉRICAS S.A.

 

(Translation of Registrant’s name into English)

 

CHILE

 

(Jurisdiction of incorporation or organization)

 

Santa Rosa 76, Santiago, Chile

 

(Address of principal executive offices)

 

Nicolás Billikopf, phone: (56-9) 9343-5500, nicolas.billikopf@enel.com, Av. Santa Rosa 76, Piso 15, Comuna de Santiago, Santiago, Chile

 

(Name, Telephone, E-mail, 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(s)

Name of Each Exchange on Which Registered

 

American Depositary Shares Representing Common Stock

ENIA

New York Stock Exchange

Common Stock, no par value *

*

New York Stock Exchange

US$ 600,000,000 4.00% Notes due October 25, 2026

ENIA26A

New York Stock Exchange

US$ 858,000 6.60% Notes due December 1, 2026

ENIA26

New York Stock Exchange

 

*

Listed, 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: None

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.

Shares of Common Stock:    76,086,311,036

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 Section 13 or 15(d) of the Securities Exchange Act of 1934.      Yes      No

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 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.

 

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.    

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 in Rule 12b-2 of the Exchange Act).      Yes      No


Enel Américas Simplified Organizational Structure (1)

As of the date of this Report


(1)Only principal operating subsidiaries are presented here. The percentage listed in the box for each of Enel Américas’ consolidated subsidiaries represents our economic interest in such subsidiary. Please refer to “Presentation of Information” for an explanation of the calculation of economic interest.
(2)As of December 31, 2020, Enel S.p.A. beneficially owned 65% of Enel Américas. Upon the effectiveness of the merger by incorporation of EGP Américas SpA into Enel Américas on April 1, 2021, Enel S.p.A.’s beneficial ownership interest in Enel Américas increased to 75.2%, and as a result of Enel S.p.A.’s tender offer launched on March 15, 2021 for up to 10% of Enel Américas’ then-outstanding shares of common stock (including shares represented by ADS), which expired on April 13, 2021, Enel S.p.A.’s beneficial ownership interest in Enel Américas increased to the current level of 82.3%.

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TABLE OF CONTENTS

    

Page

GLOSSARY

4

INTRODUCTION

10

PRESENTATION OF INFORMATION

11

FORWARD-LOOKING STATEMENTS

13

RECENT DEVELOPMENTS

14

PART I

Item 1.

Identity of Directors, Senior Management and Advisers

15

Item 2.

Offer Statistics and Expected Timetable

15

Item 3.

Key Information

15

Item 4.

Information on the Company

29

Item 4A.

Unresolved Staff Comments

111

0

Item 5.

Operating and Financial Review and Prospects

111

Item 6.

Directors, Senior Management and Employees

170

Item 7.

Major Shareholders and Related Party Transactions

178

Item 8.

Financial Information

181

Item 9.

The Offer and Listing

182

Item 10.

Additional Information

184

Item 11.

Quantitative and Qualitative Disclosures About Market Risk

200

Item 12.

Description of Securities Other Than Equity Securities

204

PART II

Item 13.

Defaults, Dividend Arrearages and Delinquencies

205

Item 14.

Material Modifications to the Rights of Security Holders and Use of Proceeds

205

Item 15.

Controls and Procedures

205

Item 16.

Reserved

206

Item 16A.

Audit Committee Financial Expert

206

Item 16B.

Code of Ethics

206

Item 16C.

Principal Accountant Fees and Services

207

Item 16D.

Exemptions from the Listing Standards for Audit Committees

208

Item 16E.

Purchases of Equity Securities by the Issuer and Affiliated Purchasers

208

Item 16F.

Change in Registrant’s Certifying Accountant

210

Item 16G.

Corporate Governance

210

Item 16H.

Mine Safety Disclosure

210

PART III

Item 17.

Financial Statements

211

Item 18.

Financial Statements

211

Item 19.

Exhibits

211

3


GLOSSARY

ADR

American Depositary Receipt

A certificate issued by our depositary that represents ADS, or American Depositary Shares.

ADS

American Depositary Share(s)

An equity interest in our company that is issued by Citibank, N.A., as the depositary, in respect of shares of our company held by the depositary. Each ADS represents 50 shares and ADS are traded on the New York Stock Exchange. In this Report, ADS is used in the singular and plural forms.

AFP

Administradora de Fondos de Pensiones

A legal entity that manages a Chilean pension fund.

ANEEL

Agência Nacional de Energia Elétrica

Brazilian governmental agency for electric energy.

BNDES

Banco Nacional de Desenvolvimento Econȏmico e Social

The National Bank for Economic and Social Development (“BNDES”) is the principal agent of development in Brazil, focusing on sustainable social and environmental development.

Brazilian MME

Ministério de Minas y Energia

Brazilian Ministry of Mines and Energy.

Cachoeira Dourada

Enel Green Power Cachoeira Dourada S.A.

Brazilian generation subsidiary owned by Enel Brasil. Formerly Centrais Elétricas Cachoeira Dourada S.A.

CAMMESA

Compañía Administradora del Mercado Mayorista Eléctrico S.A.

Argentine autonomous entity in charge of the Mercado Eléctrico Mayorista (Wholesale Electricity Market), or MEM. CAMMESA’s stockholders are generation, transmission, distribution companies, large users, and the Secretariat of Energy.

CCEE

Câmara de Comercialização de Energia Elétrica

Electricity Trading Chamber or Wholesale Clearing House

Chilean Stock Exchanges

Chilean Stock Exchanges

The two stock exchanges located in Chile: the Santiago Stock Exchange and the Electronic Stock Exchange.

Cien

Enel CIEN S.A.

Brazilian transmission subsidiary, wholly-owned by Enel Brasil. Formerly Companhia de Interconexão Energética S.A.

CND

Centro Nacional de Despacho

Colombian National Dispatch Center in charge of coordinating the efficient operation

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and dispatch of generation units to satisfy demand.

CNPE

Conselho Nacional de Politica Energética 

Brazilian national energy policy council in charge of advising the Brazilian President on energy policy.

CMF

Comisión para el Mercado Financiero

Chilean Financial Market Commission, the governmental authority that supervises the financial markets. Formerly the Chilean Superintendence of Securities and Insurance or SVS in its Spanish acronym.

CMSE

Comitê de Monitoramento do Setor Elétrico 

The Brazilian energy sector monitoring committee that evaluates the continuity and security of the energy supply across the country.

Codensa

Codensa S.A. E.S.P.

Colombian distribution subsidiary that operates mainly in Bogotá and whose voting power is controlled by us.

COES

Comité de Operación Económica del Sistema

Peruvian entity in charge of coordinating the efficient operation and dispatch of generation units to satisfy demand.

Colombian MME

Ministerio de Minas y Energía

Colombian Ministry of Mines and Energy.

Costanera

Enel Generación Costanera S.A.

A publicly held Argentine generation company controlled by us. Formerly Central Costanera S.A.

CREG

Comisión de Regulación de Energía y Gas

Colombian Commission for the Regulation of Energy and Gas.

CTM

Compañía de Transmisión del Mercosur S.A.

Argentine transmission company and a subsidiary of Enel Brasil.

Dock Sud

Central Dock Sud S.A.

Argentine generation subsidiary.

Edesur

Empresa Distribuidora del Sur S.A.

Argentine distribution subsidiary, with a concession area in the southern part of the Buenos Aires greater metropolitan area.

EGP Volta Grande

Enel Green Power Volta Grande S.A.

Brazilian generation subsidiary located in the State of Minas Gerais, in Brazil, owned by Enel Brasil.

El Chocón

Enel Generación El Chocón S.A.

Argentine generation company with two hydroelectric plants, El Chocón and Arroyito, both located in the Limay River, Argentina and our subsidiary. Formerly Hidroeléctrica El Chocón S.A.

5


Emgesa

Emgesa S.A. E.S.P.

Colombian generation subsidiary whose voting power is controlled by us.

Enel

Enel S.p.A.

Our Italian parent company with multinational operations in the power and gas markets, with a 65% and 82.3% beneficial ownership of Enel Américas as of December 31, 2020, and the date of this Report, respectively.

Enel Américas

Enel Américas S.A.

Our company, a publicly held limited liability stock corporation incorporated under the laws of the Republic of Chile, headquartered in Chile, with subsidiaries engaged primarily in the generation and distribution of electricity in Argentina, Brazil, Colombia, and Peru, and controlled by Enel. The registrant of this Report. Formerly known as Enersis S.A.

Enel Argentina

Enel Argentina S.A.

Argentine holding company subsidiary.

Enel Brasil

Enel Brasil S.A.

Brazilian holding company subsidiary. Formerly known as Endesa Brasil S.A.

Enel Distribution Ceara

Companhia Energética Do Ceará S.A.

A publicly held Brazilian distribution subsidiary operating in the state of Ceará controlled by Enel Brasil. Also commercially known as Enel Distribuição Ceará.

Enel Distribution Goias

CELG Distribuição S.A.

Brazilian distribution subsidiary that operates a concession in the state of Goias, owned by Enel Brasil. Also commercially known as Enel Distribuição Goiás.

Enel Distribution Peru

Enel Distribución Perú S.A.A.

A publicly held Peruvian distribution subsidiary, with a concession area in the northern part of Lima. Formerly Empresa de Distribución Eléctrica de Lima Norte S.A. or Edelnor.

Enel Distribution Rio

Ampla Energia e Serviços S.A.

A publicly held Brazilian distribution subsidiary operating in Rio de Janeiro, owned by Enel Brasil. Also commercially known as Enel Distribuição Rio.

Enel Distribution Sao Paulo

Eletropaulo Metropolitana Eletricidade de São Paulo S.A.

A publicly held Brazilian distribution subsidiary operating in Sao Paulo, owned by Enel Investimentos Sudeste S.A., a wholly-owned investment vehicle of Enel Brasil. Also commercially known as Enel Distribuição São Paulo.

6


Enel Generation Peru

Enel Generación Perú S.A.A.

A publicly held Peruvian generation subsidiary. Formerly Edegel S.A.A.

Enel Generation Piura

Enel Generación Piura S.A.

A publicly held Peruvian generation subsidiary. Formerly Empresa Eléctrica de Piura S.A. or EEPSA.

Enel Peru

Enel Perú S.A.C.

Peruvian holding company subsidiary.

Enel Sudeste

Enel Investimentos Sudeste S.A.

A former Brazilian investment holding company, owned by Enel Brasil, and parent company of Enel Distribution Sao Paulo. In 2019 Enel Sudeste was merged into Enel Distribution Sao Paulo.

Enel Trading Argentina

Enel Trading Argentina S.R.L.

Energy trading subsidiary with operations in Argentina. Formerly Central Comercializadora de Energía S.A. or CEMSA.

Enel X Brasil

Enel X Brasil S.A.

A Brazilian subsidiary engaged in developing, implementing, and selling products and services different from the sale of energy or energy distribution under concessions, and associated services in Brazil, owned by Enel Brasil.

Enel X Colombia

Enel X Colombia S.A.S.

A Colombian subsidiary engaged in developing, implementing, and selling products and services different from the sale of energy or energy distribution under concessions, and associated services in Colombia, owned by Codensa.

ENRE

Ente Nacional Regulador de la Electricidad

Argentine national regulatory authority for the energy sector.

FONINVEMEM

Fondo para Inversiones Necesarias que permitan Incrementar la Oferta de Energía Eléctrica en el Mercado Eléctrico Mayorista

Argentine fund created to increase electricity supply in the MEM.

Fortaleza

Central Geradora Termeletrica Fortaleza S.A.

Brazilian generation subsidiary that operates in the state of Ceará and is wholly-owned by Enel Brasil. Also commercially known as Enel Geração Fortaleza.

GEB

Grupo Energía Bogotá S.A.

Colombian state-owned financial and energy holding company, with investments in electricity generation, transmission, trading and distribution and natural gas transmission, distribution, and trading sectors. Formerly Empresa Energía de Bogotá S.A. or EEB.

7


IFRS

International Financial Reporting Standards

International Financial Reporting Standards as issued by the International Accounting Standards Board (IASB).

LNG

Liquefied Natural Gas.

Liquefied natural gas.

MADS

Ministerio de Ambiente y Desarrollo Sostenible

Colombian Ministry of Environment and Sustainable Development.

MEM

Mercado Eléctrico Mayorista

Wholesale Electricity Market. There are such markets in each of Argentina, Colombia, and Peru.

MINEM

Ministerio de Energia y Minas

Peruvian Ministry of Energy and Mines.

NIS

Sistema Interconectado Nacional

National interconnected electric system. There are such systems in each of Argentina, Brazil, and Colombia.

OEF

Obligación de Energía Firme

Colombian firm energy commitment of generators to guarantee energy in the long term.

ONS

Operador Nacional do Sistema Elétrico

National Electric System Operator. Brazilian non-profit private entity responsible for the planning and coordination of operations in interconnected systems.

Osinergmin

Organismo Supervisor de la Inversión en Energía y Minería

Energy and Mining Investment Supervisory Authority, the Peruvian regulatory electricity authority.

OSM

Ordinary Shareholders’ Meeting

Ordinary Shareholders’ Meeting

PPA

Power Purchase Agreement

Power Purchase Agreement

PLD

Preço de Liquidação das Diferenças

Settlement price for differences. It is the price assigned to sales and purchases of energy on the Brazilian spot market.

SAIDI

System Average Interruption Duration Index

Index of average duration of interruptions in the power supply.

SAIFI

System Average Interruption Frequency Index

Index of average frequency of interruptions in the power supply.

SEE

Secretaria de Energía Argentina

The Argentine Ministry of Energy and Mining manages the electricity industry through the Argentine Secretary of Energy.

SEIN

Sistema Eléctrico Interconectado Nacional

Peruvian national interconnected electricity system. 

8


SENACE

Servicio Nacional de Certificación Ambiental para las Inversiones Sostenibles 

Peruvian autonomous national environmental certification service for sustainable investments that reports to the Peruvian Ministry of the Environment.

TESA

Transportadora de Energía S.A.

Transmission company with operations in Argentina and a subsidiary of Enel Brasil, our subsidiary.

UF

Unidad de Fomento

Chilean inflation-indexed, Chilean peso-denominated monetary unit equivalent to Ch$ 29,070.33 as of December 31, 2020.

UPME

Unidad de Planificación Minero Energética

Colombian energy and mining planning unit responsible for planning the expansion of the generation and transmission systems.

UTA

Unidad Tributaria Anual

Chilean annual tax unit. One UTA equals 12 Unidades Tributarias Mensuales (“UTM”), a Chilean inflation-indexed monthly tax unit used to define fines, among other purposes. As of December 31, 2020, one UTM was equivalent to Ch$ 51,029, and one UTA was equal to Ch$ 612,348.

VAD

Valor Agregado de Distribución

Value-added from distribution of electricity.

XM

Expertos de Mercado S.A. E.S.P.

A subsidiary of Interconexión Eléctrica S.A. (“ISA”), a Colombian company that provides system management in real-time services in electrical, financial, and transportation sectors.

9


INTRODUCTION

As used in this Report on Form 20-F (“Report”), first-person personal pronouns such as “we,” “us” or “our” as well as “Enel Américas” and “the Company” refer to Enel Américas S.A. and our consolidated subsidiaries unless the context indicates otherwise. Unless otherwise noted, our interest in our principal subsidiaries and jointly controlled companies and associates is expressed in terms of our economic interest as of December 31, 2020.

We are a Chilean company engaged through our subsidiaries and jointly controlled companies in the electricity generation, transmission, and distribution businesses in Argentina, Brazil, Colombia, and Peru. We participate in the generation and transmission businesses mainly through our subsidiaries Costanera, Dock Sud, and El Chocón in Argentina; Cachoeira Dourada, Fortaleza, EGP Volta Grande, and Cien in Brazil; Emgesa in Colombia; and Enel Generation Peru and Enel Generation Piura in Peru. In the distribution business, our principal subsidiaries are Edesur in Argentina; Enel Distribution Ceara, Enel Distribution Rio, Enel Distribution Sao Paulo, and Enel Distribution Goias in Brazil; Codensa in Colombia; and Enel Distribution Peru in Peru. For additional information relating to our principal subsidiaries and associates, please see “Item 4. Information on the Company — C. Organizational Structure — Principal Subsidiaries and Affiliates.”

We are a publicly held limited liability stock corporation headquartered in Chile and organized on June 19, 1981, under the laws of the Republic of Chile. During 2016, we completed a corporate reorganization to separate our Chilean businesses from our non-Chilean businesses. As part of this process, the former Enersis S.A. changed its name to Enel Américas S.A. on December 1, 2016. For additional information relating to the company and the corporate reorganization completed in 2016, please see “Item 4. Information on the Company — A. History and Development of the Company — History” and “— The 2016 Reorganization.”

As of the date of this Report, Enel S.p.A. (“Enel”), an Italian energy company with multinational operations in the power and gas markets, owns a beneficial interest of 82.3% of us and is our ultimate controlling shareholder. For additional information relating to the Merger with EGP Americas, please see “Item 4. Information on the Company — A. History and Development of the Company — Merger with EGP Américas and Related Tender Offer.”

10


PRESENTATION OF INFORMATION

Financial Information

In this Report, unless otherwise specified, references to “U.S. dollars” or “US$” are to dollars of the United States of America (“United States”); references to “Ar$” or “Argentine pesos” are to the currency of Argentina; references to “R$,” or “reais” are to Brazilian reais, the currency of Brazil; references to “pesos” or “Ch$” are to Chilean pesos, the currency of Chile; references to “COP$” or “Colombian pesos” are to the currency of Colombia; references to “soles” are to Peruvian Soles, the currency of Peru; references to “EUR” are to Euro, the currency of the European Union and references to “UF” are to Unidades de Fomento. The UF is a Chilean inflation-indexed, peso-denominated monetary unit that is adjusted daily to reflect changes in the official Consumer Price Index (“CPI”) of the Chilean National Institute of Statistics (Instituto Nacional de Estadísticas or “INE”). The UF is adjusted in monthly cycles. Each day in the period beginning on the tenth day of the current month through the ninth day of the succeeding month, the nominal peso value of the UF is indexed to reflect a proportionate amount of the change in the Chilean CPI during the prior calendar month. As of December 31, 2020, one UF was equivalent to Ch$ 29,070.33. The U.S. dollar equivalent of one UF was US$ 40.89 as of December 31, 2020, using the Observed Exchange Rate reported by the Central Bank of Chile (Banco Central de Chile) as of December 31, 2020, of Ch$ 710.95 per US$ 1.00. The U.S. dollar observed exchange rate (dólar observado) (the “Observed Exchange Rate”), which is reported by the Central Bank of Chile and published daily on its webpage, is the weighted average exchange rate of the previous business day’s transactions in the Formal Exchange Market. Unless the context specifies otherwise, all amounts translated from Chilean pesos to U.S. dollars or vice versa, or from UF to Chilean pesos, have been carried out at the rates applicable as of December 31, 2020.

Since 2017, our functional currency has been the U.S. dollar, and therefore our consolidated financial statements and other financial information concerning us included in this Report are presented in U.S. dollars. The change of our functional currency was recorded as of January 1, 2017, by translating all items of our consolidated financial statements to the new functional currency, using the exchange rate of Ch$ 669.47 as of January 1, 2017. We also changed the presentation currency of our consolidated financial statements from the Chilean peso to the U.S. dollar. The change in the presentation currency was applied retrospectively as if the U.S. dollar had always been the presentation currency of the consolidated financial statements. The consolidated financial statements for the year ended December 31, 2016, were restated in U.S. dollars using the average exchange rate for each period. For further information about our functional currency, please refer to Note 2.8 of the Notes to our consolidated financial statements.

We have prepared our consolidated financial statements in accordance with International Financial Reporting Standards (“IFRS”), as issued by the International Accounting Standards Board (“IASB”). All our subsidiaries are integrated, and all their assets, liabilities, income, expenses, and cash flows are included in the consolidated financial statements after making the adjustments and eliminations related to intra-group transactions. Our interest in associated companies over which we exercise significant influence is included in our consolidated financial statements using the equity method. For detailed information regarding consolidated entities, jointly controlled entities, and associated companies, see Notes 2.4 and 2.5 of the Notes to our consolidated financial statements.

This Report may contain translations of Chilean peso amounts into U.S. dollars at specified rates. Unless otherwise indicated, the Chilean peso equivalent for information in U.S. dollars is based on the Observed Exchange Rate for December 31, 2020, as defined in “Item 3. Key Information — A. Selected Financial Data — Exchange Rates”. The Federal Reserve Bank of New York does not report a noon buying rate for Chilean pesos. No representation is made that the Chilean peso or U.S. dollar amounts disclosed in this Report could have been or could be converted into U.S. dollars or Chilean pesos at such rate or any other rate. See “Item 3. Key Information — A. Selected Financial Data — Exchange Rates.”

Technical Terms

References to “TW” are to terawatts (1012 watts or a trillion watts); references to “GW” and “GWh” are to gigawatts (109 watts or a billion watts) and gigawatt-hours, respectively; references to “MW” and “MWh” are to megawatts (106 watts or a million watts) and megawatt-hours, respectively; references to “kW” and “kWh” are to kilowatts (103 watts or a thousand watts) and kilowatt-hours, respectively; references to “kV” are to kilovolts, and references to “MVA” are to megavolt amperes. References to “BTU” and “MBTU” are to a British thermal unit and million British thermal units, respectively. A “BTU” is an energy unit equal to approximately 1,055 joules. References to “Hz” are to hertz, and references to “mtpa” are to metric tons per annum. Unless otherwise indicated, statistics provided in this

11


Report concerning the installed capacity of electricity generation facilities are expressed in MW. One TW equals 1,000 GW, one GW equals 1,000 MW, and one MW equals 1,000 kW. Starting in 2018, the installed capacity we present in this Report corresponds to the net installed capacity, which considers the MW that each power plant consumes for its operation. Prior to 2018, the installed capacity we present in this Report corresponds to the gross installed capacity, without considering the MW that each power plant consumes for its operation. Starting in 2020, the electricity sales we present in this Report correspond to gross energy sales. 2019 amounts have been updated to correspond to this new presentation, but 2018 amounts have not been updated to correspond to this new presentation. Beginning in 2020, in calculating the number of customers we consider all customers with a current contract in a given period (rather than only those customers with a current contract who were supplied with energy and billed for it in a given period). 2019 amounts have been updated to correspond to this new presentation, but 2018 amounts have not been updated to correspond to this new presentation.

Statistics relating to aggregate annual electricity production are expressed in GWh and based on a year of 8,760 hours, except for a leap year like 2020, which is based instead on 8,784 hours. Statistics relating to installed capacity and production of the electricity industry do not include electricity of self-generators.

Energy losses experienced by generation companies during transmission are calculated by subtracting the number of GWh of energy sold from the number of GWh of energy generated (excluding their energy consumption and losses on the part of the power plant) within a given period. Losses are expressed as a percentage of total energy generated.

Energy losses during distribution are calculated as the difference between total energy purchased (GWh of electricity demand, including own generation) and the energy sold excluding tolls and energy consumption not billed (also measured in GWh) within a given period. Distribution losses are expressed as a percentage of the total energy purchased. Losses in distribution arise from illegally tapped energy as well as technical losses.

Calculation of Economic Interest

In this report, references are made to the “economic interest” of Enel Américas in its related companies. We could have a direct and indirect interest in such companies. In circumstances in which we do not directly own an interest in a related company, our economic interest in such ultimate affiliated company is calculated by multiplying the percentage of economic interest in a directly held related company by the percentage of economic interest of any entity in the ownership chain of such affiliated company. For example, if we directly own a 6% equity stake in an affiliated company and 40% is directly held by our 60%-owned subsidiary, our economic interest in such associate would be 60% times 40% plus 6%, equal to 30%.

Rounding

Figures included in this Report have been rounded for ease of presentation. Due to rounding, the sums in tables do not always exactly equal the sums of the entries.

12


FORWARD-LOOKING STATEMENTS

This Report contains statements that are or may constitute forward-looking statements within the meaning of Section 27A of the Securities Act of 1933, as amended, and Section 21E of the Securities Exchange Act of 1934, as amended (the “Exchange Act”). These statements appear throughout this Report and include statements regarding our intent, belief, or current expectations, including but not limited to any statements concerning:

our capital investment program;

trends affecting our financial condition or results of operations;

our dividend policy;

the future impact of competition and regulation;

political and economic conditions in the countries in which our related companies or we operate or may operate in the future;

any statements preceded by, followed by, or that include the words “believes,” “expects,” “predicts,” “anticipates,” “intends,” “estimates,” “should,” “may,” or similar expressions; and

other statements contained or incorporated by reference in this Report regarding matters that are not historical facts.

Because such statements are subject to risks and uncertainties, actual results may differ materially from those expressed or implied by such forward-looking statements. Factors that could cause actual results to differ materially include but are not limited to:

demographic developments, political events, economic fluctuations, social unrest, public health crises and pandemics, and interventionist measures by authorities in the markets in South America in which we operate;

hydrology, droughts, flooding, and other weather conditions;

changes in the environmental regulations and the regulatory framework of the electricity industry in one or more of the countries in which we operate;

our ability to implement proposed capital expenditures, including our ability to arrange financing where required;

the nature and extent of future competition in our principal markets; and

the factors discussed below under “Risk Factors.”

You should not place undue reliance on such statements, which speak only as of the date that they were made. Our independent registered public accounting firm has not examined or compiled the forward-looking statements and, accordingly, does not provide any assurance concerning such statements. You should consider these cautionary statements together with any written or oral forward-looking statements that we may issue in the future. We do not undertake any obligation to release publicly any revisions to forward-looking statements contained in this Report to reflect later events or circumstances or the occurrence of unanticipated events, except as required by law.

For all these forward-looking statements, we claim the protection of the safe harbor for forward-looking statements contained in the Private Securities Litigation Reform Act of 1995.

13


RECENT DEVELOPMENTS

On April 1, 2021, we completed the acquisition of EGP Américas SpA, a wholly-owned subsidiary of Enel S.p.A., our controlling shareholder, through a merger of EGP Américas SpA with and into Enel Américas. Prior to the merger, EGP Américas SpA, a newly-formed company, held the renewable energy generation businesses in Central and South America (outside of Chile) previously held by Enel Green Power S.p.A. As a result of the merger, we have now strengthened our renewable energy generation business and diversified geographically through exposure to Costa Rica, Guatemala, and Panama, in addition to acquiring new assets in South American countries where we were already present. Enel S.p.A.’s ownership interest in us increased to 75.2% as of April 1, 2021.

On March 15, 2021, Enel S.p.A. launched dual Chilean and U.S. partial public tender offers to acquire shares and ADS of Enel Américas, representing 10% of our then-current share capital, for a cash purchase price of Ch$ 140 per share and the U.S. dollar equivalent of Ch$ 7,000 per ADS. The tender offers expired on April 13, 2021, and the shares and ADSs were accepted for purchase by Enel S.p.A. on April 16, 2021. As a result of the merger and the tender offers, Enel S.p.A. owns 82.3% of our share capital as of the date of this Report.

After giving effect to the issuance of new shares in connection with the merger, and as of the date of this Report, there are 107,281,698,561 shares of common stock outstanding. For additional information on the merger and the tender offers, please see “Item 4. Information on the Company — A. History and Development of the Company — History” and “— Merger with EGP Américas and Related Tender Offer.”

14


PART I

Item 1.    Identity of Directors, Senior Management and Advisers

Not applicable.

Item 2.    Offer Statistics and Expected Timetable

Not applicable.

Item 3.    Key Information

A.   Selected Financial Data.

The following selected consolidated financial data should be read in conjunction with our consolidated financial statements included in this Report. The selected consolidated financial data as of December 31, 2020 and 2019, and for the three years ended December 31, 2020, are derived from our audited consolidated financial statements included in this Report. The selected consolidated financial data as of December 31, 2018, 2017, and 2016, and for the years ended December 31, 2017, and 2016 are derived from our consolidated financial statements not included in this Report. Our consolidated financial statements were prepared in accordance with IFRS, as issued by the IASB.

Our consolidated financial statements are presented in U.S. dollars because of our functional currency’s change from Chilean pesos to U.S. dollars in 2017. The change of our functional currency was recorded as of January 1, 2017, by translating all items of our consolidated financial statements to the new functional currency, using the closing exchange rate at the date of exchange. We also changed the presentation currency of our consolidated financial statements from Chilean pesos to U.S. dollars. The change in the presentation currency was applied retrospectively as if the U.S. dollar had always been the consolidated financial statements’ presentation currency. The consolidated statement of financial position data as of December 31, 2016, was translated into U.S. dollars using the closing U.S. dollar Observed Exchange Rate (dólar observado) of Ch$ 669.47 per US$ 1.00. The consolidated statement of comprehensive income data for the year ended December 31, 2016, was translated into U.S. dollars using the average exchange rate of Ch$ 676.19 per US$ 1.00. For further information about our functional currency, please refer to Note 2.8 of the Notes to our consolidated financial statements The Observed Exchange Rate, which is reported and published daily on the Central Bank of Chile’s web page, corresponds to the weighted-average exchange rate of the previous business day’s transactions in the Formal Exchange Market. For more information concerning historical exchange rates, see “— Exchange Rates” below. The tables are expressed in millions of U.S. dollars, except for ratios, operating data, and data for shares and American Depositary Shares (“ADS”).

15


The following tables set forth our selected consolidated financial data for the years indicated and the operating data of our principal subsidiaries:

As of and for the year ended December 31,

    

2020

    

2019

    

2018

    

2017

    

2016

(US$ millions)

Consolidated Statement of Comprehensive Income Data

Revenues and other operating income

12,193

14,314

12,990

10,438

7,643

Operating costs(1)

(10,140)

(11,545)

(10,555)

(8,219)

(5,843)

Operating income from continuing operations

2,053

2,769

2,435

2,219

1,800

Financial results(2)

(313)

(378)

(333)

(582)

(439)

Other gains

5

14

1

5

12

Share of profit (loss) of associates and joint venture accounted for using the equity method

3

1

2

3

3

Income from continuing operations before income tax

1,748

2,406

2,105

1,646

1,376

Income tax expenses, continuing operations

(567)

(236)

(438)

(519)

(531)

Net Income from continuing operations

1,181

2,170

1,667

1,127

845

Profit after tax from discontinued operations

170

Net income

1,181

2,170

1,667

1,127

1,015

Net income attributable to the parent Company

825

1,614

1,201

709

566

Net income attributable to non-controlling interests

356

556

466

417

448

Basic and diluted earnings from continuing operations per average number of shares (US$ per share)

0.011

0.025

0.021

0.012

0.009

Basic and diluted earnings from continuing operations per average number of ADS (US$ per ADS)

0.542

1.233

1.045

0.617

0.453

Basic and diluted earnings from discontinued operations per average number of shares (US$ per share)

0.002

Basic and diluted earnings from discontinued operations per average number of ADS (US$ per ADS)

0.116

Total basic and diluted earnings per average number of shares (US$ per share)

0.011

0.025

0.021

0.012

0.009

Total basic and diluted earnings per average number of ADS (US$ per ADS)

0.542

1.233

1.045

0.617

0.453

Cash dividends per share (US$ per share)

0.011

0.008

0.006

0.005

0.007

Cash dividends per ADS (US$ per ADS)

0.530

0.419

0.309

0.249

0.332

Weighted average number of shares of common stock (millions)

76,086

65,481

57,453

57,453

49,769

Consolidated Statement of Financial Position Data

Total assets

26,934

29,776

27,396

20,169

16,851

Non-current liabilities

9,323

10,794

8,914

6,956

5,150

Equity attributable to the parent company

8,106

9,966

6,724

6,481

6,200

Equity attributable to non-controlling interests

2,228

2,280

2,108

1,798

1,680

Total equity

10,334

12,246

8,832

8,279

7,880

Capital stock(3)

9,763

9,784

6,763

6,763

6,904

Other Consolidated Financial Data

Capital expenditures (CAPEX)(4)

1,553

1,659

1,541

1,371

1,230

Depreciation, amortization and impairment losses(5)

1,100

1,225

923

728

630


(1)Operating expenses represent raw materials and consumables used, other work performed by the entity and capitalized, employee benefit expenses, depreciation and amortization expenses, impairment loss recognized in the period’s profit or loss, and other expenses.
(2)Financial results represent (+) financial income, (-) financial expenses, (+/-) foreign currency exchange differences, and net gains/losses from indexed assets and liabilities.
(3)Capital stock represents issued capital.
(4)CAPEX figures represent cash flows used to purchase property, plant, and equipment, and intangible assets for each year.
(5)Please refer to Note 31 of the Notes to our consolidated financial statements for further detail.

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As of and for the year ended December 31,

    

2020

    

2019

    

2018

    

2017

    

2016

OPERATING DATA OF PRINCIPAL SUBSIDIARIES(1)

Edesur (Argentina)

Electricity sold (GWh)

15,888

16,798

17,548

17,736

18,493

Number of customers (thousands)

2,508

2,490

2,530

2,529

2,505

Total energy losses (%)(2)

18.9

15.5

14.2

12.0

12.0

Enel Distribution Rio (Brazil)

Electricity sold (GWh)

11,228

11,568

11,019

11,091

11,181

Number of customers (thousands)

2,948

2,940

2,959

3,030

3,054

Total energy losses (%)(2)

22.1

22.5

21.0

20.4

19.4

Enel Distribution Ceara (Brazil)

Electricity sold (GWh)

11,866

12,197

11,843

11,522

11,628

Number of customers (thousands)

4,011

3,956

3,933

4,017

3,890

Total energy losses (%)(2)

15.9

14.0

13.9

13.6

12.5

Enel Distribution Goias (Brazil)

Electricity sold (GWh)

14,469

14,365

13,755

12,264

Number of customers (thousands)

3,207

3,114

3,027

2,928

Total energy losses (%)(2)

11.4

12.3

11.6

11.7

Enel Distribution Sao Paulo (Brazil)

Electricity sold (GWh)

40,350

43,148

24,693

Number of customers (thousands)

7,896

7,777

7,224

Total energy losses (%)(2)

10.6

9.6

9.5

Codensa (Colombia)

Electricity sold (GWh)

13,834

14,307

14,024

13,790

13,632

Number of customers (thousands)

3,615

3,527

3,439

3,340

3,248

Total energy losses (%)(2)

7.6

7.7

7.7

7.8

7.1

Enel Distribution Peru (Peru)

Electricity sold (GWh)

7,578

8,211

8,045

7,934

7,782

Number of customers (thousands)

1,456

1,434

1,423

1,397

1,367

Total energy losses (%)(2)

8.8

8.2

8.1

8.2

7.8

Enel Américas

Installed capacity in Argentina (MW)(3)

4,419

4,419

4,419

4,419

4,537

Installed capacity in Brazil (MW)(3)(4)

1,354

1,354

1,354

1,354

1,372

Installed capacity in Colombia (MW)(3)

3,506

3,506

3,499

3,467

3,509

Installed capacity in Peru (MW)(3)

1,990

1,987

1,985

1,979

2,026

Generation in Argentina (GWh)

13,901

12,974

13,949

14,825

13,124

Generation in Brazil (GWh)(4)

4,823

5,292

3,755

4,034

4,034

Generation in Colombia (GWh)

14,009

15,250

14,052

14,765

14,952

Generation in Peru (GWh)

7,722

8,244

8,106

7,430

8,698


(1)Some information may be different than reported in previous periods. For further details, please refer to “Item 4. Information on the Company — B. Business Overview. — Electricity Distribution Business.”
(2)Energy losses in distribution arise from illegally tapped energy and technical losses. They are calculated as the difference between total energy generated and purchased (GWh) and energy sold, excluding tolls and energy consumption not billed (GWh) within a given period. Losses are expressed as a percentage of the total energy purchased.
(3)Installed capacity figures may differ from previous years due to the fact that, starting in 2018, we began reporting the net installed capacity instead of the gross installed capacity.
(4)Since 2017, data includes Volta Grande hydroelectric plant’s capacity and generation due to its acquisition and consolidation since November 2017.

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Exchange Rates

Fluctuations in the exchange rate between the Chilean peso and the U.S. dollar will affect the U.S. dollar equivalent of the price in Chilean pesos of our shares of common stock on the Santiago Stock Exchange (Bolsa de Comercio de Santiago) and the Chilean Electronic Stock Exchange (Bolsa Electrónica de Chile). These fluctuations in the exchange rate affect the price of our ADS and the dividends we pay (see “Item 8. Financial Information — A. Consolidated Statements and Other Financial Information — Dividends”). Also, to the extent that significant financial liabilities are denominated in foreign currencies, fluctuations in the exchange rate may significantly impact our earnings.

For further details regarding fluctuation in the exchange rates between the U.S. dollar and the local currency in each of the countries in which we operate, please refer to “Item 5. Operating and Financial Review and Prospects — a. Operating Results. — 1. Discussion of Main Factors Affecting Operating Results and Financial Condition of the Company — d. Economic Conditions — Local Currency Exchange Rate.”

B.   Capitalization and Indebtedness.

Not applicable.

C.   Reasons for the Offer and Use of Proceeds.

Not applicable.

D.   Risk Factors.

Risk Related to Our Business

Our businesses depend heavily on hydrology and are affected by droughts, flooding, storms, ocean currents, and other inclement weather conditions.

Approximately 55% of our consolidated installed generation capacity in 2020 was hydroelectric. Accordingly, arid hydrological conditions could negatively affect our business, results of operations, and financial condition. Regional hydrological conditions have often been subject to two weather phenomena dealing with ocean currents - El Niño and La Niña - that influence rainfall and may result in drought or flooding, depending on the region affected. Droughts may affect our ability to dispatch energy from our hydroelectric facilities.

In the past, El Niño has affected Colombian hydrologic conditions, where 88% of our installed capacity is hydroelectric, leading to rainfall deficits, high temperatures, and higher energy prices. In March 2017, “El Niño Costero” in Peru led to unusually intensive rains that flooded the Santa Eulalia River, caused innumerable landslides and avalanches in the coastal basins, and resulted in the stoppage of several of our hydroelectric power plants, mainly Callahuanca (84 MW) and Moyopampa (69 MW). Each ocean current event is unique and, depending on its intensity and duration, the magnitude of the social and economic effects could be material.

Our distribution business is also affected by inclement weather, mainly in Argentina. With extreme temperatures, demand can increase significantly within a short period, affecting service and resulting in service outages that may result in fines. Depending on weather conditions, results obtained by our distribution business can vary from year to year.

Our operating expenses increase during drought periods when thermal power plants, which have higher operating costs relative to hydroelectric power plants, are dispatched more frequently. Depending on our commercial obligations, we may need to buy electricity at higher spot prices to comply with our contractual supply obligations. Beyond increasing operating costs, the cost of these electricity purchases may exceed our contracted electricity sale prices, thus potentially producing losses from those contracts. For further information concerning the effect of hydrology on our business and financial results, please refer to “Item 5. Operating and Financial Review and Prospects— A. Operating Results — 1. Discussion of Main Factors Affecting Operating Results and Financial Condition of the Company—a. Generation and Transmission Business.”

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Droughts also indirectly affect the operation of our thermal power plants, including our facilities that use natural gas, fuel oil, or coal, in the following manner:

Our thermal power plants require water for cooling, and droughts may reduce water availability and increase transportation costs. As a result, we may have to purchase water from agricultural areas that are also experiencing water shortages. These water purchases may increase our operating costs and require us to negotiate further with the local communities.

Thermal power plants generate emissions such as nitrogen oxide (NO), carbon dioxide (CO2), carbon monoxide (CO), sulfur dioxide (SO2), and particulate matter into the atmosphere. Therefore, greater use of thermal power plants during droughts generally increases the risk of producing higher greenhouse gas (GHG) emissions.

A full recovery from the drought affecting the regions where most of our hydroelectric power plants are located may last for an extended period, and new drought periods may recur in the future. Prolonged droughts may exacerbate the risks described above and have a further negative effect on our business, results of operations, and financial condition.

We depend on payments from our subsidiaries and associates to meet our payment obligations.

We rely on cash from dividends, loans, interest payments, capital reductions, and other distributions from our subsidiaries and equity affiliates to pay our obligations. Such payments and distributions are subject to legal constraints, such as dividend restrictions, fiduciary obligations, contractual limitations, and foreign exchange controls imposed by local authorities.

Historically, we have not always accessed some of our operating subsidiaries’ cash flows due to government regulations, strategic considerations, economic conditions, and credit restrictions. In the future, we may not always be able to immediately rely on cash flows from operating subsidiaries to repay our debt.

Dividend Limits and Other Legal Restrictions: Some of our subsidiaries are subject to legal reserve requirements and other restrictions on dividend payments. Other legal restrictions, such as foreign currency controls, may limit our subsidiaries and equity affiliates’ ability to pay dividends and make loan payments or other distributions to us. Their directors’ fiduciary duties to their minority shareholders may restrict the ability of any of our subsidiaries that are not wholly-owned to distribute cash to us. Furthermore, local authorities may force some of our subsidiaries, under applicable regulation, to reduce or eliminate dividend payments. These restrictions could impede our subsidiaries from distributing cash to us under certain circumstances.

Contractual Constraints: Distribution restrictions included in the credit agreements of our subsidiaries, including most of our subsidiaries in Brazil, may prevent dividends and other distributions to shareholders if they do not comply with specified financial ratios. Our credit agreements typically prohibit any distributions in the event of ongoing default.

Operating Results of Our Subsidiaries: Our subsidiaries and equity affiliates’ ability to pay dividends or make loan payments or other distributions to us is limited by their operating results. To the extent that any of our subsidiaries’ cash requirements exceed their available cash, they will not be able to make funds available to us.

The currency of any dividend paid by our subsidiaries is subject to depreciation in relation to our functional currency, which may adversely affect our ability to pay dividends to shareholders.

The situations described above could adversely affect our business, results of operations, and financial condition.

We are involved in litigation proceedings.

We are involved in various litigation proceedings that could result in unfavorable decisions or financial penalties against us. In Colombia, we exercise control over Emgesa and Codensa through shareholder agreements with Grupo Energía Bogotá S.A. (“GEB”). In October 2018, GEB initiated arbitration proceedings for alleged breach of the shareholder agreements concerning the failure to distribute 100% of the profits in 2016, 2017, and 2018 in Emgesa and Codensa and the breach of other provisions of the shareholders’ agreement, and also requested compensation for damages. The financial claim amounts to COP$ 1,876,417,133 thousand (US$ 548.3 million) plus interest. An adverse

19


ruling could set a precedent that would oblige us always to vote in favor of a 100% distribution of distributable profits, which in turn might not always be financially prudent.

Our financial condition or results of operations could be unfavorably affected if we are unsuccessful in defending litigations or other lawsuits and proceedings against us. Please see Note 35.3 of the Notes to our consolidated financial statements for further information on litigation proceedings.

Construction and operation of power plants may encounter significant delays, stoppages, cost overruns, and stakeholder opposition that may damage our reputation and potentially impair our goodwill with stakeholders.

Our power plant projects may be delayed in obtaining regulatory approvals or may face shortages and increases in the price of equipment, materials, or labor. They may be subject to construction delays, strikes, accidents, and human error. Any such event could negatively affect our business, results of operations, and financial condition.

Market conditions may change significantly between the approval and completion of a project, which, in some cases, may decrease a project’s profitability or render it impracticable. Deviations in market conditions, such as estimates of timing and expenditures, may lead to cost overruns and delays in project completion that widely exceed our initial forecasts. In turn, this may have a material adverse effect on our business, results of operations, and financial condition.

We may develop new projects in locations that are sometimes challenging in geographical topography, such as mountain slopes, jungles, or other areas with limited access. Additionally, given some projects’ locations, there may be additional inherent risks to archeological heritage sites. These factors may also lead to significant delays and cost overruns.

Our thermal power plants’ operation, especially those that are coal-fired, may affect our goodwill with stakeholders due to GHG emissions that could unfavorably affect the environment and nearby residents. Furthermore, outside stakeholders may influence the interests and perceptions of the local communities about the Company. If we fail to address appropriately all relevant stakeholders’ concerns, including environmental, social and governance criteria (“ESG”), we may face opposition, which could negatively affect our reputation, stall operations, or lead to litigation threats or actions. Our reputation is the foundation of our relationship with key stakeholders and other constituencies. If we do not effectively manage these sensitive issues, they could adversely affect our business, results of operations, and financial condition.

Damage to our reputation may exert considerable pressure on regulators, creditors, and other stakeholders, possibly leading to the abandonment of projects and operations. This damage could cause our share prices to drop and hinder our ability to attract and retain valuable employees. Any of these outcomes could result in an impairment of our goodwill with stakeholders.

Our long-term energy sales contracts are subject to fluctuations in the market prices of certain commodities, energy, and other factors.

We have exposure to fluctuations in certain commodity market prices that affect our long-term energy sales contracts. These contracts commit our subsidiaries to material obligations as selling parties and contain prices indexed to different commodities, exchange rates, inflation, and the market price of electricity. Unfavorable changes to these indices would reduce the rates we charge under these contracts, which could adversely affect our business, results of operations, and financial condition. In our distribution business, we also have economic exposure to fluctuations in energy prices.

We are subject to incremental risks in distribution markets that are becoming more liberalized.

In some countries, our distribution customers who meet the minimum and maximum demand requirements may freely choose unregulated tariffs. This flexibility may adversely affect our operating income. In some cases, customers may choose an alternative energy provider, which could adversely affect our business, results of operations, and financial condition.

20


Our electricity business is subject to risks arising from natural disasters, catastrophic accidents, and acts of vandalism or terrorism, which could unfavorably affect our operations, earnings, and cash flow.

Our primary facilities include power plants and transmission and distribution assets that are exposed to damage from catastrophic natural disasters, such as earthquakes and fires, human causes, as well as acts of vandalism, protests, riots, and terrorism. A catastrophic event could cause prolonged unavailability of our assets, disruptions in our business, significant decreases in revenues due to lower demand, or significant additional costs not covered by our business interruption insurance. There may be lags between a significant accident or catastrophic event and the final reimbursement from our insurance policies, which typically carry a deductible and are subject to per event policy maximum amounts.

In mid-October 2019, widespread street demonstrations and protests erupted in Santiago and quickly spread throughout Chile. These actions became commonplace and, at times, were accompanied by looting, arson, and vandalism. Violent confrontations between protesters and the police and armed forces resulted in a significant loss of human lives and serious injuries. Accumulated damage to public and private property amounted to billions of dollars. Damage to the country’s economy, prospects for growth, perception of risk, and immediate repercussions in unemployment and productivity loss were also significant. Our corporate headquarters in Santiago suffered a severe arson attack on October 18, 2019, resulting in the dislocation of our management and headquarters employees for an extended period. In a globalized and interconnected world, all the countries in which we operate are subject to this risk.

Any natural or human catastrophic disruption to our electricity assets in the countries in which we operate could significantly affect our results of operations and financial condition.

We are subject to financing risks, such as those associated with funding our new projects and capital expenditures or refinancing existing obligations.

As of December 31, 2020, our consolidated debt totaled US$ 6.1 billion, and our holding company debt in Chile totaled US$ 1.1 billion. As of December 31, 2020, we held US$ 601 million in SEC-registered bonds issued in the U.S. and had drawn bank debt under Senior Unsecured Revolving Credit Agreements in the aggregate amount of US$ 325 million, all governed under the laws of the State of New York.

Our debt agreements are subject to several of the following provisions, including (1) financial covenants, (2) affirmative and negative covenants, (3) events of default, (4) mandatory prepayments for contractual breaches, (5) change of control clauses for material mergers and divestments, and (6) bankruptcy and insolvency proceeding covenants, among others.

A significant portion of our financial indebtedness is subject to cross default provisions, which have varying definitions, criteria, materiality thresholds, and applicability concerning subsidiaries that could result in cross default. Our debt may also become immediately due and payable in cases involving bankruptcy or insolvency proceedings of a significant or material subsidiary. Likewise, some of our debtholders may decide to accelerate our debt in cross default events dealing with significant or material subsidiaries, among other potential covenant defaults.

We may be unable to refinance our debt or obtain such refinancing in terms acceptable to us. In the absence of such refinancing, we could be forced to liquidate assets at unfavorable prices to make payments due on our debt. Furthermore, we may be unable to sell our assets at opportune moments or sufficiently high prices to obtain proceeds that would enable us to make such payments.

We may also be unable to raise the necessary funds required to finish our projects under development or construction. Market conditions or unforeseen project costs prevailing when we need funds could compromise our ability to finance these projects and expenditures.

As of the date of this Report, Brazil is the country with our highest refinancing risk. As of December 31, 2020, the debt of our Brazilian subsidiaries amounted to US$ 2.5 billion while the debt of our Colombian subsidiaries amounted to US$ 1.7 billion.

Our inability to finance new projects or capital expenditures, refinance our existing debt, or comply with our covenants could negatively affect our results of operations and financial condition.

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If third-party electricity transmission facilities, gas pipeline infrastructure, or fuel supply contracts fail to provide us with adequate service, we may be unable to deliver the electricity we sell to our final customers.

We depend on transmission facilities owned and operated by other companies to deliver the electricity we sell. This dependence exposes us to several risks. If the transmission is disrupted, or its capacity is inadequate, we may be unable to sell and deliver our electricity. If a region’s power transmission infrastructure is inadequate, our recovery of sales costs and profits may be insufficient. If restrictive transmission price regulations are imposed, transmission companies may not have sufficient incentives to invest in expanding their infrastructure, which could unfavorably affect our results of operations and financial condition or affect our ability to deploy our portfolio of projects under development. The construction of new transmission lines may take longer than in the past, mainly because of sustainability, social, and environmental requirements that create uncertainties regarding project completion timing. As a result, in some of the countries in which we operate, renewable energy projects are being completed faster than new transmission projects, creating a backlog of electricity that can be transmitted through current transmission systems. In Argentina, for example, the lack of investment in transmission lines will reduce incentives for the development of renewable energy projects.

We also rely on pipelines to obtain natural gas, mainly in Peru, where more than 50% of our generation capacity is thermal. In recent years, the Peruvian system has occasionally faced gas and electricity shortages due to a lack of sufficient capacity in the pipeline and transmission lines, which led to higher spot prices. Depending on the facility type, our thermal generation power plants purchase gas, coal, diesel, and other fuels to produce electricity. Any contract breach or supply shortage may prevent our facilities from producing electricity on time.

We may be unable to reach satisfactory collective bargaining agreements with our unionized employees or retain key employees in labor conflict cases.

A large percentage of our employees are members of unions with which we have collective bargaining agreements that must be renewed regularly. Our business, results of operations, and financial condition could be unfavorably affected by a failure to reach a collective bargaining agreement with any labor union or by a deal with a labor union that contains terms we view as unfavorable. Laws in many of the countries in which we operate provide legal mechanisms for judicial authorities to impose a collective bargaining agreement if the parties cannot come to an agreement, which may materially increase our costs.

We employ many highly specialized employees. Specific actions such as strikes, walkouts, or work stoppages by these employees could negatively impact our business, results of operations, financial conditions, and reputation.

We may be unable to enter into suitable acquisitions or successfully integrate businesses that we acquire.

We review acquisition prospects that may increase our market coverage or provide synergies with our existing businesses on an ongoing basis. However, there can be no assurance that we will be able to identify and acquire suitable companies in the future. The acquisition and integration of independent companies that we do not control is generally a complicated, costly, and time-consuming process that requires significant efforts and expenditures. For example, as a result of the acquisition of Enel Distribution Sao Paulo in 2018, our leverage at the onset increased considerably due to the new debt for the purchase itself and the consolidation of Enel Distribution Sao Paulo’s existing debt.

Integrating acquired businesses may be difficult, expensive, time-consuming, and a strain on our resources and relationships with our employees and customers. Ultimately, these acquisitions may not be successful or achieve the expected benefits. Any delays or difficulties encountered in connection with acquisitions and the integration of their operations could have a material adverse effect on our business, results of operations, or financial condition.

For example, our integration with EGP Américas may be difficult and expensive. The merger with EGP Américas involves integrating a mature business, as is the case of our conventional energy business, with EGP Américas’ non-conventional renewable energy business. Our goal in integrating the operations is to increase the revenues and earnings of the combined businesses and, as a combined company, to improve our ability to satisfy our customers’ demands. In so doing, we may encounter substantial difficulties in integrating our operations and could incur high costs as a result of, among other things:

inconsistencies in standards, controls, procedures and policies, business cultures and compensation structures between EGP Américas and us and the need to implement, integrate and harmonize various business-specific

22


operating procedures and systems, as well as our financial, accounting, information, and other systems and those of EGP Américas;

diversion of management’s attention from their other responsibilities as a result of the need to deal with integration issues;

failure to retain our customers and suppliers and those of EGP Américas;

difficulties in achieving full utilization of our assets and resources and those of EGP Américas; and

complications in retaining key employees (who may depart because of issues relating to the uncertainty and difficulty of integration or general discontent) or efficiently managing the broader organization.

Under any of these circumstances, the business growth opportunities, revenue benefits, and other benefits anticipated by us to result from the completion of the merger with EGP Américas may not be achieved as expected. To the extent that we incur higher integration costs or achieve lower revenue benefits than expected, our results of operations and financial condition may suffer. The diversion of management attention and any difficulties encountered from this merger could increase costs or reduce our revenues, earnings, and operating results. Any delays encountered in the integration process could have an adverse effect on our revenues, expenses, operating results, and financial condition, which may adversely affect our securities’ value.

Interruption in or failure of our information technology, control, and communications systems or cyberattacks to or cybersecurity breaches of these systems could have a material adverse effect on our business, results of operations, and financial condition.

We operate in an industry that requires the continued operation of sophisticated information technology, control, and communications systems (“IT Systems”) and network infrastructure. We use our IT Systems and infrastructure to create, collect, use, disclose, store, dispose of, and otherwise process sensitive information, including company and customer data and personal information regarding customers, employees and their dependents, contractors, shareholders, and other individuals. IT Systems are critical to controlling and monitoring our power plants’ operations, maintaining generation and network performance, generating invoices to bill customers, achieving operating efficiencies, and meeting our service targets and standards in our generation business. The operation of our generation system is dependent not only on the physical interconnection of our facilities with the electricity network infrastructure but also on communications among the various parties connected to the network. The reliance on IT Systems to manage information and communication among those parties has increased significantly since the implementation of smart meters and intelligent grids in Brazil and Colombia.

Our generation facilities, IT Systems, and other infrastructure and the information processed in our IT Systems, could be affected by cybersecurity incidents, including those caused by human error. Our industry has begun to see an increased volume and sophistication of cybersecurity incidents from international activist organizations, nation-states, and individuals and are among the emerging risks identified in our planning process. Cybersecurity incidents could harm our business by limiting our generation capabilities, delaying our development and construction of new facilities or capital improvement projects to existing facilities, disrupting our customer operations, or exposing us to various events that could compromise our liability. Our business systems are part of an interconnected system. Therefore, a disruption caused by the impact of a cybersecurity incident in the electric transmission grid, network infrastructure, fuel sources, or our third-party service providers’ operations could also unfavorably affect our business.

Our business requires the collection and storage of personally identifiable information of our customers, employees, and shareholders, who expect that we will adequately protect the privacy of such information. Cybersecurity breaches may expose us to a risk of loss or misuse of confidential and proprietary information. Significant theft, loss, or fraudulent use of personally identifiable information may lead to high costs to notify and protect the impacted persons. It could cause us to become subject to significant litigation, losses, liability, fines, or penalties, any of which could materially and adversely affect our results of operations and reputation. We would eventually have to incur significant costs associated with governmental actions in response to such intrusions or strengthen our information and electronic control systems.

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The cybersecurity threat is dynamic, evolving, and increasing in sophistication, magnitude, and frequency. We may be unable to implement adequate preventive measures or accurately assess the likelihood of a cybersecurity incident. We are unable to quantify the potential impact of cybersecurity incidents on our business and reputation. These potential cybersecurity incidents and corresponding regulatory action could result in a material decrease in revenues and high additional costs, including penalties, third-party claims, repair costs, increased insurance expense, litigation costs, notification and remediation costs, security costs, and compliance costs.

Risk Related to Regulatory Matters

Governmental regulations may unfavorably affect our businesses, cause delays, impede the development of new projects, or increase the costs of operations and capital expenditures.

Our businesses and the tariffs we charge to our customers are subject to extensive regulation that may negatively affect our profitability. For example, governmental authorities in any of the countries where we operate may impose material rationing policies during droughts or prolonged failures of power facilities, which may adversely affect our business, results of operations, and financial condition.

Electricity regulations issued by governmental authorities in the countries where we operate may affect our generation companies’ ability to collect revenues sufficient to offset their operating costs, which could adversely affect our business, results of operations, and financial condition. Governmental authorities may also delay the distribution tariff review process, or tariff adjustments determined by regulatory authorities may be insufficient to pass on our costs to customers.

Our operating subsidiaries are also subject to environmental regulations that, among other things, require us to perform environmental impact studies on future projects and obtain construction and operating permits from local and national regulators. Governmental authorities may withhold or delay the approval of these permits until the completion of environmental impact studies. Therefore, their processing time may be longer than expected. Environmental regulations for existing and future generation capacity have become stricter and require increased capital investments. Any delay in meeting the required emission standards may constitute a violation of the environmental regulations. Failure to certify monitoring systems’ original implementation and ongoing emission standard requirements may result in significant penalties, sanctions, or legal claims for damages. We expect that more restrictive emission limits will be established in the future.

Changes to laws and regulations or governmental authorities’ interpretation of laws and regulations could result in delays or modifications to proposed projects, which could adversely affect our business, results of operations, and financial condition.

We are subject to potential business and financial risks resulting from climate change legislation and regulation to limit GHG emissions.

Future climate change legislation and regulation restricting or regulating GHG emissions could increase our operating costs and have a material adverse effect on our business, results of operations, and financial condition. The adoption and implementation of any international treaty, legislation, or regulation imposing new or additional reporting obligations or limiting emissions of GHGs from our operations could require us to incur additional costs to comply with such requirements and possibly require the reduction or limitation of GHG emissions associated with our operations. These higher compliance standards may involve additional costs to operate and maintain our equipment and facilities, install emission controls, or pay taxes and fees relating to GHG emissions, which could have a material adverse effect on our business, results of operations, and financial condition.

Our business and profitability could be unfavorably affected if water rights are denied, if water concessions are granted with limited duration, or if the cost of water rights is increased.

Each country’s respective authority grants us water rights for water supply from rivers, lakes, and reservoirs near our production facilities. In Colombia, water rights and water concessions are awarded for different periods for each of our power plants, in some cases for up to 50 years. However, these concessions may be revoked for specific reasons, including a progressive water decrease or depletion, and water for human consumption has priority over any other use. In Peru, the concessions are granted for indefinite periods but could be revoked due to scarcity or a decline in service

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quality. In Argentina, hydroelectric generators with a generation capacity exceeding 500 kW must obtain a concession to use public water sources for a determined or indefinite term.

Any limitations on our current water rights, additional water rights, or the current unlimited duration of water concessions could have a material adverse effect on our hydroelectric development projects and profitability.

Regulatory authorities may impose fines on our subsidiaries due to operational failures or breaches of regulations.

Our electricity businesses may be subject to regulatory fines for any breach of current regulations, including failures to supply energy, in the four countries where we operate. Local regulatory entities supervise our generation subsidiaries. We may be subject to fines when the regulator determines that the company is responsible for the operational failures that affect the regular energy supply to the system. Our subsidiaries may be required to pay fines or compensate customers if they cannot deliver electricity, even if such failures are not within their control, or when they do not meet environmental or other standards. Fines may also be associated with a breach of regulations.

In 2018, the Peruvian National Superintendence of Customs and Tax Administration (“SUNAT” in its Spanish acronym) fined Enel Generation Peru US$ 2.9 million after an audit of the Ad Valorem General Sales Tax and Municipal Promotion Tax on imports for 2008 and 2009. In 2020, the Brazilian governmental agency for electric energy (“ANEEL” in its Portuguese acronym) fined Enel Distribution Goias R$ 43.2 million due to flaws in technical procedures and commercial issues related to the quality of electricity supply and Enel Distribution Ceara and Enel Distribution Sao Paulo R$ 21 million and R$ 186 million respectively, in each case due to flaws in the registration of the respective company’s asset base. In 2020, the Argentine national regulatory authority for the energy sector (“ENRE” in its Spanish acronym) fined Edesur Ar$ 1.5 million for breaches of the public highway safety regime.

Risk Related to Countries in South America and Other Global Risks

Certain South American countries have been historically characterized by frequent and occasionally drastic economic interventionist measures by governmental authorities, including expropriations that may adversely affect our business and financial results.

Governmental authorities have altered monetary, credit, tariff, tax, and other policies to influence South American countries, including Argentina, Brazil, Colombia, and Peru. Even though we do not have electricity operations in Chile, our company is established under the laws of the Republic of Chile. It is also subject to changes in Chilean tax, labor, and monetary laws, among others. Other governmental actions in the South American countries in which we operate have also involved wage, price, and tariff rate controls and other interventionist measures, such as expropriation or nationalization.

If we do not meet minimum service and technical standards in the distribution business, we may lose our concessions. In some concession areas, such as those in Buenos Aires, Goiás, and Rio de Janeiro, it may be challenging to satisfy specific minimum standards that, if not met, empower regulators to revoke our concessions and reassign them to our competitors. For example, a loss of a concession by one of our significant subsidiaries could lead to a default of a debt obligation by such subsidiary, which could trigger a cross default, bankruptcy, or insolvency proceedings. Such events could have a material adverse effect on our contractual obligations under debt covenants.

For 2021, we expect tax reforms and amendments to the current tax laws in Colombia that will charge VAT tax on products that currently are tax-free, increase the income tax base on natural persons, and reduce or eliminate tax benefits. Changes in governmental and monetary policies regarding tariffs, exchange controls, regulations, and taxation could reduce our profitability. Inflation, devaluation, social instability, and other political, economic, diplomatic developments or crises, including governments’ response in the region to these circumstances, could also reduce our profitability.

South American economic fluctuations, political instability, and corruption scandals may affect our results of operations, financial condition, and the value of our securities.

All our operations are in South America. Accordingly, our consolidated revenues may be affected by the performance of South American economies. If local, regional, or worldwide economic trends adversely affect the economy of any of the countries in which we operate, our financial condition and results of operations could also be

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adversely affected. We operate in Argentina, Brazil, Colombia, and Peru, more volatile countries that at times have experienced political instability due to, among other things, corruption scandals involving several high-ranking government officials. South American financial and securities markets are influenced by economic and market conditions in other countries, which could unfavorably affect our securities’ value.

Also, the challenges arising from changes in economic conditions, regulatory policies, laws governing foreign trade, manufacturing, development and investment, and various crises in the countries in which we operate and other South American countries, either individually or in the aggregate, could severely affect the economies in these countries and our business, result of operations, and financial condition. For example, in December 2019, after a steep devaluation of the Argentine peso against the U.S. dollar, the Argentine government declared a public emergency. It enacted several emergency economic measures to stabilize the economy and resolve the resulting social crisis. In Peru, in November 2020, Congress removed President Vizcarra from office based on alleged corruption charges. Manuel Merino, the head of Congress, assumed the office as acting president, only to resign one week later, along with his entire cabinet, due to mass protests. Congress subsequently appointed Francisco Sagasti as the third president in one week. In Colombia, large demonstrations against the government took place in November and December 2019. Initially, the protests were organized by students, unions, and indigenous groups opposed to proposed changes to the Colombian pension and labor laws. The protests expanded rapidly to encompass economic inequality, corruption, possible austerity measures, and rising violence in the countryside. After several months of lockdown, protests resumed in October 2020 due to the Covid-19 pandemic, including a national strike demanding governmental reforms.

In Chile, widespread protests began in October 2019, resulting in a declaration of a state of emergency for a brief period, the introduction of several social and economic reforms. In October 2020, the government held a referendum to decide whether to create a new Chilean constitution and whether a popularly elected assembly or a combination of current legislators and a popularly elected assembly would draft the new constitution. Nearly 80% of voters approved the referendum for a new constitution and opted to have a popularly elected assembly draft the new constitution. Although we do not have operations in Chile, our management and headquarters are in Chile, and our common stock is traded on the Chilean Stock Exchanges. Demonstrations and civil unrest in the countries in which we operate and Chile may continue or worsen, which could negatively impact these countries’ economies and adversely affect our business, results of operations, financial condition, and value of our securities.

Insufficient cash flows from our subsidiaries located in these countries have resulted in their inability to meet debt obligations and the need to seek waivers to comply with some debt covenants. To a limited extent, these subsidiaries may require guarantees or other emergency measures from us as shareholders, especially those located in Brazil and Argentina. For further details regarding financial support provided to our Brazilian subsidiaries, please refer to “Item 7. Major Shareholders and Related Party Transactions — B. Related Party Transactions.”

Future adverse developments in these countries may impair our ability to execute our strategic plan, which could adversely affect our growth, results of operations, and financial condition.

A further deterioration of Argentina’s economic situation or further devaluation of the Argentine peso could have an adverse effect on our operations and profitability.

Since July 2018, Argentina has been considered a hyperinflationary economy according to IFRS accounting standards. A general price index was used to present the amounts related to our Argentine subsidiaries in our consolidated financial statements retrospectively to reflect the changes in the purchasing power of the Argentine peso under the provisions outlined in IAS 29, “Financial Reporting in Hyper-Inflationary Economies.” Non-monetary assets and liabilities were restated as of February 2003, the latest date in which an inflation adjustment for accounting purposes was applied in our Argentine subsidiaries. Our consolidated financial statements have not been restated to reflect the gain from the indexation of our Argentine subsidiaries’ non-monetary assets and liabilities before January 1, 2018. Such monetary gain up to that date was recognized as an adjustment to our retained earnings as of January 1, 2018 (please see Note 2.9 of the Notes to our consolidated financial statements).

The Argentine peso experienced one of the steepest devaluations against the U.S. dollar in 2019 and 2020, amounting to an annual depreciation of 37.1% and 28.8%, respectively. Further deterioration of Argentina’s economy, a continued devaluation of the Argentine peso against the U.S. dollar driven by hyperinflation, or the initial freezing and subsequent lowering of electricity distribution tariffs could adversely affect our results of operations and financial condition.

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We are subject to the adverse effects of worldwide pandemics.

An international public health crisis, such as the one attributable to the Covid-19 pandemic that began in December 2019, has led to high unemployment levels in all the countries in which we operate and has impacted the electricity demand, the financial markets, and the ability of our businesses to generate income. For the year ended December 31, 2020, our sales from energy distribution were 4.5% lower than in the same period of 2019, net production fell 3.1% as compared to the same period of 2019, and sales from energy generation decreased 7.7% as compared to the same period of 2019. Our collection rates fell 4.7% in Peru, 2.0% in Colombia, 1.9% in Argentina, , and 1.5% in Brazil as compared to the same period of 2019. We estimate that the impact on our net income caused by the Covid-19 pandemic stems from lower energy demand and increased uncollectible debts. For further information with respect to the pandemic effect on our business and financial results, please refer to “Item 5. Operating and Financial Review and Prospects — A. Operating Results”.

In March 2020, in response to the Covid-19 pandemic, governments in all the countries where we operate declared some form of a state of emergency recognized by their respective constitutions. These declarations granted each government various special powers, such as control over public spending, military use, license to close businesses and schools, and the ability to restrict border crossings and domestic travel through quarantines and other measures. Governments of the countries in which we operate took the following measures, among others, to preserve access to essential services and preserve business continuity:

In March 2020, Argentina enacted a rule to forbid companies providing essential services from cutting service due to non-payment for 180 days for low-income residential customers, small businesses, and companies providing other essential services, such as health facilities. In May 2020, the Argentine regulator issued a resolution to allow users who have reduced their demand 50% or more to suspend their payments or make them in 30 installments.

Brazil enacted a similar prohibition on the suspension of electricity supply due to non-payment for all residential customers and companies and facilities providing essential services. This measure was in effect from March to July 2020. In March 2020, ANEEL issued a regulation to grant loans to the distribution companies, commonly known as the “COVID Account,” aiming to ease financial distress and avoid tariff adjustments.

Colombia allowed low-income level 1 and 2 residential customers representing approximately 44% of the customer base to defer payment of monthly electricity bills for 36 months and level 3 and 4 residential customers representing approximately 40% of the customer base to defer payment of monthly electricity bills for 24 months, without penalty or risk of a cut in service.

Peru allowed 4.8 million vulnerable residential customers to prorate bills issued during March 2020 or bills that included any consumption during the emergency period for up to 24 installments, without interest, charges, or fees due to late payment. The government also established a subsidy to cover customers’ unpaid bills with monthly energy consumption of up to 125 kW from March to December 2020.

The private sector in these countries has voluntarily taken further measures, such as adopting telecommuting wherever possible and closing commercial offices. Many businesses, such as restaurants, retail stores, malls, and spaces for large gatherings, have temporarily closed, many by executive decree, and companies associated with travel, transportation, and tourism have been severely affected, and many went bankrupt.

Recent increases in infection rates may indicate a second wave of coronavirus infections in 2021. The South American countries in which we operate have not yet implemented a widespread vaccination program. Accordingly, if there is a resurgence of the Covid-19 pandemic and any vaccines that may be made available are insufficient to restrain the pandemic and similar outbreaks in the future, our business, results of operations and financial condition may be materially adversely affected.

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Political events or financial or other crises in any region worldwide can significantly impact the countries in which we operate and, consequently, may unfavorably affect our operations and liquidity.

The countries in which we operate are vulnerable to external shocks that could cause significant economic difficulties and affect growth. If any of these countries experience lower than expected economic growth or a recession, it is likely that consumer demand for electricity will decrease and that some of our customers may have difficulties paying their electric bills, possibly increasing our uncollectible accounts. Any of these situations could adversely affect our results of operations and financial condition.

Financial and political events in these countries and other parts of the world could also negatively affect our business. For example, since 2018, the U.S. and China have been involved in a trade war involving protectionist measures that increase volatility in financial markets worldwide due to the uncertainty of political decisions. Also, instability in the Middle East or any other major oil-producing region could result in higher fuel prices worldwide, which would increase the operating costs for our thermal generation power plants and unfavorably affect our results of operations and financial condition. An international financial crisis and its disruptive effects on the financial industry could negatively affect our ability to obtain new bank financings under the same historical terms and conditions that we have benefited from to date.

Political events or financial or other crises could also diminish our ability to access capital markets in the countries in which we operate and international capital markets as sources of liquidity or increase interest rates available to us. Reduced liquidity could negatively affect our capital expenditures, long-term investments and acquisitions, growth prospects, and dividend payout policy.

Foreign exchange risk may unfavorably affect our results and the U.S. dollar value of dividends payable to ADS holders.

Even though our functional currency is the U.S. dollar, our subsidiaries generate revenues in Argentine pesos, Peruvian nuevos soles, Brazilian reais, and Colombian pesos. We generally have been and will continue to be materially exposed to currency fluctuations in our local currencies against the U.S. dollar because of time lags and other limitations to pegging our tariff rates to the U.S. dollar. This exposure can substantially decrease the value of cash generated by our subsidiaries and the value of our dividends when translated into U.S. dollars if our local currencies experience a devaluation against the U.S. dollar. For example, the Argentine peso and Brazilian real devalued 28.8% and 22.4% against the U.S. dollar in 2020, respectively. Future volatility in the exchange rate of the currencies in which we receive revenues or incur expenditures may adversely affect our business, results of operations, and financial condition, especially when measured in U.S. dollars, the currency that affects our ADS holders.

Risk Related to Ownership of Our Shares and ADS

Our controlling shareholder may influence us and may have a strategic view for our development that differs from that of our minority shareholders.

Enel, our controlling shareholder, owns a beneficial interest of 82.3% of our share capital as of the date of this Report. Under Chilean corporate law, Enel has the power to determine the outcome of all material matters that require a simple majority of shareholders’ votes, such as the election of most of the seats on our board, and, subject to contractual and legal restrictions, the adoption of our dividend policy. In addition, since Enel has the power to determine the outcome of all material matters that require the affirmative vote of at least two-thirds of the outstanding common stock of the Company, our controlling shareholder exercises significant influence over our business strategy and operations. However, in some cases, its interests may differ from those of our minority shareholders. Certain conflicts of interest affecting Enel in these matters may be resolved in a manner that is different from the interests of our company or our minority shareholders.

The relative illiquidity and volatility of the Chilean securities market could unfavorably affect the price of our common stock and ADS.

Even though we do not have assets in Chile, our shares are traded on the Chilean Stock Exchanges because we are organized under the laws of the Republic of Chile and have our headquarters in Chile. Chilean securities markets are substantially smaller and have less liquidity than the major securities markets in the United States and other developed

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countries. The low liquidity of the Chilean market may impair shareholders’ ability to sell shares, or holders of ADS to sell shares of our common stock withdrawn from the ADS program, on the Chilean Stock Exchanges in the amount and at the desired price and time.

Lawsuits against us brought outside of the South American countries in which we operate, or complaints against us based on foreign legal concepts may be unsuccessful.

All our operations are located outside of the United States. All our directors and officers reside outside of the United States, and substantially all their assets are located outside the United States. If investors were to bring a lawsuit against our directors and officers in the United States, it may be difficult for them to effect service of legal process within the United States upon these persons. It may also be difficult to enforce judgments obtained in U.S. courts based on civil liability provisions of U.S. federal securities laws against them in U.S. or Chilean courts. There is also doubt about whether an action could be brought successfully in Chile for liability based solely on the civil liability provisions of U.S. federal securities laws.

We identified a material weakness in our internal controls over financial reporting, which, if not remediated, could result in material misstatements of our consolidated financial statements or cause us to fail to meet our periodic reporting obligations.

Our management assessed the effectiveness of its internal control over financial reporting as of December 31, 2020 based on criteria established in the framework “Internal Controls — Integrated Framework (2013)” issued by the Committee of Sponsoring Organizations of the Treadway Commission (COSO). Based on the assessment, we have identified a material weakness in our internal control over financial reporting related to our general information technology controls, including the design and implementation of access and change management controls. A material weakness is a deficiency, or a combination of deficiencies, in internal control over financial reporting such that there is a reasonable possibility that a material misstatement of our annual or interim financial statements will not be prevented or detected on a timely basis. As a result, our management has concluded that as of December 31, 2020, our internal control over financial reporting was not effective, although our consolidated financial statements included in this Annual Report on Form 20-F present fairly, in all material respects, our consolidated financial position, results of operations and cash flows as of the dates and for the periods presented. See “Item 15. Controls and Procedures.”

The material weakness will not be considered remediated until any applicable new or enhanced controls operate for a sufficient period and management has concluded through testing that these controls are operating effectively. As of the date of this Report, the material weakness with respect to our internal control over financial reporting has not been remediated.

Any failure, difficulties or delay in implementing and maintaining such remedial measures could (i) result in a material misstatement in our financial reporting or financial statements that would not be prevented or detected, (ii) cause us to fail to meet our reporting obligations under applicable securities laws or (iii) cause investors to lose confidence in our financial reporting or financial statements, the occurrence of any of which could materially and adversely affect our business, financial condition, cash flows, results of operations and the prices of our securities.

Item 4.    Information on the Company

A.   History and Development of the Company.

History

We are a publicly held limited liability stock corporation headquartered in Chile and organized on June 19, 1981, under the laws of the Republic of Chile. Since January 1983, we have been registered in Santiago with the Chilean Financial Market Commission (“CMF” in its Spanish acronym) under Registration No. 0175. We have also been registered with the SEC under the commission file number 001-12440 since October 19, 1993. Our full legal name is Enel Américas S.A., and we are also known commercially as “Enel Américas.” Our shares are listed and traded on the Chilean Stock Exchanges under the trading symbol “ENELAM.” Our ADS are listed and traded on the NYSE under the trading symbol “ENIA.”

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Our contact information in Chile is:

Contact Person:

Nicolás Billikopf

Street Address:

Av. Santa Rosa 76, Piso 15

Comuna de Santiago

Santiago, Chile

Email:

nicolas.billikopf@enel.com

Telephone:

(56-9) 9343-5500

Web site:

www.enelamericas.com

The information contained on or linked from our website is not included as part of, or incorporated by reference into, this Report. The SEC maintains a website that contains reports, proxy and information statements, and other information regarding issuers that file electronically with the SEC, such as our company, at www.sec.gov.

We are an electric utility company engaged in the generation, transmission, and distribution of electricity businesses in Argentina, Brazil, Colombia, and Peru through our subsidiaries and affiliates. As of December 31, 2020, we had 11,269 MW of net installed generation capacity and 25.6 million distribution customers. Our net installed generation capacity is comprised of 112 generation units in the four countries in which we operate, of which 55% are hydroelectric power plants. As of December 31, 2020, we had consolidated assets of US$ 26,934 million and operating revenues of US$ 12,193 million.

Since June 2009, our controlling shareholder has been the Italian company Enel SpA, which as of December 31, 2020 beneficially owned 65% of our shares and as of the date of this Report, beneficially owns 82.3% of our shares. Enel is a multinational power company and a leading integrated player in the global power, gas, and renewable energy markets. It is present in over 30 countries worldwide, producing energy with over 87 GW of installed capacity. Enel distributes electricity through a network of over 2.2 million kilometers. With more than 74 million business and household end users globally, Enel has the most extensive global customer base among its European peers. Enel’s renewables arm Enel Green Power is the world’s largest publicly owned renewable energy player, with over 47 GW of wind, solar, geothermal, and hydropower plants installed in Europe, the Americas, Africa, Asia, and Oceania.

We are one of the largest publicly listed companies in the electricity sector in South America. We have been known as Enel Américas since the 2016 Reorganization described further below. However, we trace our origins to Compañía Chilena de Electricidad Ltda. (“CCE” in its Spanish acronym), which was formed in 1921 as a result of the merger of Chilean Electric Tramway and Light Co., founded in 1889, and Compañía Nacional de Fuerza Eléctrica (“CONAFE” in its Spanish acronym), with operations dating back to 1919. Following the nationalization of the CCE in the 1970s, the Chilean electric utility sector was reorganized in the 1980s under the Chilean Electricity Law, known as the Decree with Force of Law No. 1 of 1982 (“DFL 1”). The CCE’s operations were divided into a generation company, AES Gener S.A. (“Gener”), an unrelated company, and two distribution companies, one with a concession in the Valparaíso Region, Chilquinta S.A., an unrelated company, and the other with a concession in the Santiago Metropolitan Region, Compañía Chilena Metropolitana de Distribución Eléctrica S.A. From 1982 to 1987, the Chilean electric utility sector went through a process of re-privatization. In August 1988, Compañía Chilena Metropolitana de Distribución Eléctrica S.A. changed its name to Enersis S.A. (“Enersis”), our predecessor. In the 1990s, Enersis diversified into electricity generation, transmission, and distribution sectors in five South American countries, including Chile. After the 2016 Reorganization (described below), we no longer hold electricity assets in Chile but instead have electricity generation, transmission, and distribution assets in Argentina, Brazil, Colombia, and Peru.

Enersis began international operations in 1992 with our participation in Edesur, a distribution company, and Costanera, a generation company, both in Argentina. In 1994, we expanded into Peru through our distribution company Edelnor (now Enel Distribution Peru), and in 1995, we acquired the electricity generation company Edegel (now Enel Generation Peru). Our presence in Brazil and Colombia began in 1996 through our Brazilian distributor, Ampla (now Enel Distribution Rio), and the Colombian generator, Codensa. In 1997, we acquired an interest in the Colombian generator Emgesa. We acquired the Brazilian distributor Coelce (now Enel Distribution Ceara) in 1998 and the Brazilian generator Fortaleza in the state of Ceará in 2002. In 2005, Enel Brasil was formed to control our electricity assets held in Brazil, including our distribution companies in Rio and Ceara, our generation companies, Fortaleza and Cachoeira Dourada, and a transmission business owned through Cien.

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During the 2000s, we increased our participation in some of our existing subsidiaries. In 2006, Empresa de Generación Termoeléctrica Ventanilla S.A., a Peruvian generation company that was owned by the Spanish electric utility, Endesa, S.A. (“Endesa Spain”) at the time, merged with and into Edegel, becoming a 457 MW thermoelectric generation company. In September 2007, we merged our generation subsidiaries in Colombia into our generation company Emgesa. As of December 31, 2020, we held a 48.5% economic and 56.4% voting interest in Emgesa and, under a shareholders’ agreement, we control and consolidate the company. For more information regarding the control and consolidation of Emgesa, see “Item 5. Operating and Financial Review and Prospects — A. Operating Results. — 1. Discussion of Main Factors Affecting Operating Results and Financial Condition of the Company.” In October 2009, Enel Generation Chile purchased an additional 29.4% of Enel Generation Peru, increasing our economic interest in that company from 19.8% to 37.5%, and we acquired an additional 24% of Enel Distribution Peru, increasing our economic interest in the company from 33.5% to 57.5%.

In March 2013, we completed a capital increase proposed by Endesa Spain, our parent company at the time, through in-kind contributions from all its equity interests in 25 companies in the five South American countries in which we operated. Minority shareholders had the right to contribute their proportional participation in cash. The capital increase was first offered to existing shareholders through a preemptive rights offering registered with the CMF and the U.S. SEC and subsequently through a follow-on offering. The total Ch$ 2,846 billion capital increase consisted of Ch$ 1,714 billion of in-kind contributions from Endesa Spain and Ch$ 1,132 billion in cash from minority shareholders (the “2013 capital increase”). Following the 2013 capital increase, we acquired additional interests in certain companies, directly or indirectly through our subsidiaries and undertook other reorganizations, including the following transactions:

In May 2014, we finalized a voluntary public offer to purchase our subsidiary Enel Distribution Ceara shares that we did not own. The investment amounted to Ch$ 133 billion (at that time), and we reached a 64.9% economic interest in Enel Distribution Ceara. Following the 2016 Reorganization, and as of December 31, 2019, we held a 74.1% economic interest in Enel Distribution Ceara.
In September 2014, we acquired the indirectly held shares that Inkia Americas Holdings Limited had in Generandes Peru S.A. (39.0% of the company), the controlling company of Enel Generation Peru. The total investment amounted to Ch$ 243 billion (US$ 413 million at that time), and we increased our economic interest in Enel Generation Peru by 21%, to 58.6%.
In February 2017, we acquired 94.8% of Celg Distribuição S.A. (now Enel Distribution Goias) in a tender process organized by the Brazilian Government through the national bank for economic and social development (“BNDES” in its Portuguese acronym). The offer amounted to R$ 2,187 million (US$ 640 million at that time). In May 2017, Enel Brasil acquired the remaining 5% of Enel Distribution Goias for R$ 82 million. As of December 31, 2019, we held a 99.9% economic interest in Enel Distribution Goias.
In September 2017, we were awarded the 30-year concession auctioned by the Brazilian regulator to operate Volta Grande, the 380 MW hydroelectric power plant located in the State of Minas Gerais. The power plant started commercial operations in 1974. It is comprised of four generation units with an installed capacity of 95 MW each. The tender amounted to R$ 1,419 million (US$ 445 million at that time), and the payment took place on November 30, 2017. To carry out this transaction, we fully subscribed and paid a cash capital increase in Enel Brasil, amounting to R$ 568 million (US$ 178 million). This capital increase was partially financed with the remaining proceeds of the 2013 capital increase.
On October 4, 2017, our wholly-owned subsidiary Enel Peru acquired a 7.5% stake of Enel Distribution Peru on the Lima Stock Exchange. This transaction amounted to 262 million soles. As a result, we increased our economic interest in Enel Distribution Peru to 83.2%.
On June 4, 2018, we completed a tender offer to acquire Enel Distribution Sao Paulo, Brazil’s biggest distribution company and among the largest distribution companies in South America. Enel Distribution Sao Paulo, with more than 7.2 million customers, operates in a concession area of 4,526 square kilometers. In the tender offer, we acquired 73.4% of the shares at R$ 45.22 per share. Until July 4, 2018, all remaining Enel Distribution Sao Paulo shareholders could sell their shares at the same tender offer price. In September 2018, we participated in a capital increase of Enel Distribution Sao Paulo. In November 2019, we carried out a tender offer of R$ 49.39 per share for the remaining 4% of Enel Distribution Sao Paulo’s common stock. Our

31


ownership of the company, as of the date of this Report, is 100%. The total investment to acquire the remaining 4.056% of Enel Distribution Sao Paulo was approximately US$ 2,270 million using the exchange rate at that time.
At an Extraordinary Shareholders’ Meeting (“ESM”) held on April 30, 2019, our shareholders approved a capital increase for an amount of US$ 3 billion. The capital increase was made through two preemptive rights periods in Chile for local shares and in the United States for ADRs. As a result, 18,633,669,520 new shares of our common stock, including in the form of ADRs, were subscribed and paid for by our existing shareholders and ADR holders representing 99.5% of the total new shares approved at the ESM, totaling US$ 3 billion, the largest cash-only capital increase in Chilean corporate history. The use of proceeds for the capital increase was to refinance the debt incurred in our acquisition of Enel Distribution Sao Paulo.

The 2016 Reorganization

During 2016, we completed a corporate reorganization to separate our Chilean businesses from our non-Chilean businesses (the “2016 Reorganization”).

The 2016 Reorganization involved the separation of the respective Chilean and non-Chilean electricity generation, transmission, and distribution businesses of Empresa Nacional de Electricidad S.A. (“Endesa Chile”), Chilectra and Enersis through a “demerger” under Chilean law and the subsequent distribution of the shares of the newly created entities to each company’s respective shareholders (collectively, the “Spin-Offs”). The “demerger,” or separation of the businesses, occurred on March 1, 2016. The Spin-Offs were effective in April 2016, with the creation and public listing of the shares of the newly incorporated entities: (i) Enersis Chile S.A. (“Enersis Chile”), which held the Chilean businesses of Enersis, (ii) Endesa Américas S.A. (“Endesa Américas”), which held the non-Chilean businesses of Endesa Chile, and (iii) Chilectra Américas S.A. (“Chilectra Américas”), which held the non-Chilean businesses of Chilectra.

The 2016 Reorganization also involved the merger of the companies holding the non-Chilean assets. The merger became effective on December 1, 2016, and merged Endesa Américas and Chilectra Américas with and into Enersis Américas, with the latter continuing as the surviving company. The merger combined the non-Chilean generation, transmission, and distribution businesses under a single holding company, contributed to the simplification of the group’s corporate structure, and provided benefits such as subsidiary cash leakage reduction, strategic interest alignment, and increased decision-making and operational efficiencies. As a consequence of the merger, we issued 9,232,202,625 new shares, of which 872,333,871 shares were deemed reacquired and held as treasury stock and were canceled as a result of the approval of the cancellation by the shareholders at the ESM held on April 27, 2017. As a result, our ultimate controlling shareholder, Enel, then owned 51.8% of our outstanding shares.

As part of the 2016 Reorganization process, Enersis changed its name to Enersis Américas S.A. on March 1, 2016, and subsequently to Enel Américas S.A. on December 1, 2016. On October 18, 2016, (i) Endesa Chile changed its name to Enel Generación Chile S.A.; (ii) Chilectra changed its name to Enel Distribución Chile S.A.; and (iii) Enersis Chile S.A. changed its name to Enel Chile S.A.

Enel X

In 2018, we formed Enel X Colombia S.A.S. (“Enel X Colombia”), a wholly-owned subsidiary of Codensa. The primary purpose of Enel X Colombia is to focus on public lighting tenders, supplementing the activities of Codensa. We also changed the name of Enel Soluçoes S.A., a wholly-owned subsidiary of Enel Brasil, to Enel X Brasil S.A. (“Enel X Brasil”). These companies will develop, implement, and sell products and services that incorporate innovation and cutting-edge technology and are different from selling energy or energy distribution and associated services. These Enel X companies expect to offer turnkey projects for municipalities and other public and governmental entities, industrial or residential customer appliances such as photovoltaic systems, heating ventilation air conditioning, led lighting, projects related to energy efficiency, and the development of public and private electric mobility, and charging infrastructure, in all cases including customers outside of our concession areas.

Merger with EGP Américas and Related Tender Offer

On September 21, 2020, the board of directors of Enel Américas unanimously resolved to initiate a merger process aimed at the acquisition by Enel Américas of EGP Américas SpA (“EGP Américas”) through a merger with and into

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Enel Américas (the “2021 Merger”). Immediately prior to the 2021 Merger, EGP Américas, a newly-formed company, would hold Enel Green Power S.p.A.’s renewable energy generation businesses in Central and South America other than Chile.

The 2021 Merger, which was effective as of April 1, 2021, fits our strategy considering the high priority of renewable energy in the region and our development plans. It allows the acceleration of Enel Américas’ positioning within the energy transition scenario. It also enables us to become the leading power utility in Central and South America in the generation and distribution of energy. As a result of the 2021 Merger, we have now strengthened our renewable energy generation business and diversified geographically through exposure to Costa Rica, Guatemala, and Panama, in addition to acquiring new assets in South American countries where we were already present.

In connection with the 2021 Merger, on December 17, 2020, Enel delivered to Enel Américas a letter stating that it would launch a voluntary partial public tender offer for the acquisition of shares and ADS of Enel Américas representing up to a maximum of 10% of the then-current share capital of Enel Américas. The offering price for the shares in the tender offer would be Ch$ 140 per share and Ch$ 7,000 per ADS (paid in U.S. dollars), which was above the then-current market prices of the shares and ADS and the withdrawal rights price of Ch$ 109.79 per share (the “2021 Tender Offer”). The 2021 Tender Offer was introduced as an alternative to the statutory merger dissenters’ withdrawal rights in response to concerns raised by certain minority shareholders that the statutory merger dissenters’ withdrawal rights may not be adequate. The 2021 Tender Offer was designed to allow shareholders to participate in the 2021 Merger but receive cash for a portion of their ownership interest in Enel Américas, at a fixed cash value significantly higher than the price of Ch$ 109.79 per share offered under Chilean law to dissenting shareholders who exercised their withdrawal rights in connection with the 2021 Merger.

On December 18, 2020, an ESM was held to vote on the 2021 Merger. The transaction was approved by 80% of the total shares. As a result, on April 1, 2021, after the fulfillment of all conditions precedent, we (i) acquired all the assets and liabilities of EGP Américas; (ii) continued with its rights and obligations; (iii) amended our bylaws, including by eliminating the 65% limitation on maximum shareholder concentration that was in place prior to the 2021 Merger; and (iv) carried out a capital increase valued at US$ 6 billion through the issuance of new common shares that would be fully subscribed and paid for by the incorporation of the assets of EGP Américas into Enel Américas.

In connection with the 2021 Merger, 31,195,387,525 shares were issued in Enel Américas on April 1, 2021, and Enel’s beneficial ownership interest in Enel Américas increased to 75.2%. After giving effect to the issuance of new shares in connection with the 2021 Merger, and as of the date of this Report, there are 107,281,698,561 shares of common stock outstanding.

The 2021 Tender Offer was launched on March 15, 2021, and the tender offer period ended on April 13, 2021. In total, 20,194,895,308 shares (including 1,872,063,500 shares represented by 37,441,270 ADSs) were validly tendered and not properly withdrawn pursuant to the 2021 Tender Offer, resulting in a proration factor of approximately 37.7%. As a result of applying the proration factor, Enel accepted for purchase 6,903,312,254 shares and 14,104,937 ADSs, representing an additional 705,246,850 shares in the 2021 Tender Offer.

Enel, our controlling shareholder, owned a beneficial interest of 65% of our share capital as of December 31, 2020, and now owns a beneficial interest of 82.3% of our share capital as of the date of this Report. Enel’s control increased in 2021 as a result of the 2021 Merger and the 2021 Tender Offer.

Capital Investments, Capital Expenditures, and Divestitures

We coordinate our overall financial strategy, including the terms and conditions of loans and intercompany advances entered into by our subsidiaries, to optimize debt and liquidity management. Generally, our operating subsidiaries independently plan capital expenditures financed by internally generated funds or direct financings. One of our goals is to focus on investments that will provide long-term benefits, such as energy loss reduction projects. Although we have considered how these investments will be financed as part of our budget process, we have not committed to any particular financing structure, and investments will depend on the prevailing market conditions when the cash flows are needed.

Our investment plan is flexible enough to adapt to changing circumstances by giving different priorities to each project following expected profitability and strategic fit, including sustainability considerations. We are currently

33


focused on making investments (i) on behalf of the distribution business related to network reliability, capacity improvement, and new technology developments such as smart meters, (ii) for maintenance of our distribution network and generation plants, (iii) in studies required to develop other potential generation and distribution projects, and (iv) in the development of new businesses. For further detail regarding these projects, please see “Item 4. Information on the Company — D. Property, Plant and Equipment — Projects Under Development.”

The table below sets forth the capital expenditures incurred in 2020, 2019, and 2018:

    

2020

    

2019

    

2018

Capital expenditures(1)

1,553

1,659

1,541


(1)Capital expenditures figures listed in this table represent cash flow used to purchase property, plant, and equipment, and intangible assets for each year.

In the past, this table estimated such capital expenditures for the following three years. As a result of the material corporate change resulting from the 2021 Merger, the Company’s management needs to reevaluate forward-looking capital expenditures.

Please refer to “Item 4. Information on the Company — D. Property, Plant and Equipment. — Project Investments” and “Item 5. Operating and Financial Review and Prospects — F. Tabular Disclosure of Contractual Obligations” for further information.

Capital Expenditures in 2020, 2019, and 2018

A critical part of our capital expenditures is related to non-discretionary investments that include maintenance of existing installed capacity to increase the quality and operation standards of our facilities. During 2020, our investments in our generation units amounted to: US$ 86 million in Colombia, for the Termozipa Battery Energy Storage System project and maintenance and life extension projects executed in the rest of the Colombian power plants; US$ 52 million in Peru for the Ventanilla Battery Energy Storage System projects and maintenance works in the Matucana, Huinco, and Malacas power plants; US$ 36 million in Argentina for the wastewater treatment system in the Costanera power plant and maintenance works in Dock Sud; and US$ 20 million in Brazil. Our investments in our distribution segment amounted to US$ 740 million in Brazil, US$ 385 million in Colombia, US$ 127 million in Peru, and US$ 103 million in Argentina and were focused on reducing energy losses, increasing new connections, and maintaining our distribution networks. We plan to continue expanding our services, increasing the connections available to end customers, and reducing energy losses to improve efficiency and profitability.

During 2019, we invested US$ 226 million in the maintenance of our generation units, of which US$ 108 million was invested in Colombia, US$ 49 million was invested in Peru, US$41 million was invested in Argentina, and US$ 28 million was invested in Brazil. In our distribution segment we invested US$ 1,418 million, which was mainly used to maintain our existing networks and reduce energy losses, and was allocated as follows: US$ 761 million in Brazil, US$ 306 million in Colombia, US$ 187 million in Argentina, and US$ 164 million in Peru.

During 2018, the focus of our capital expenditures in the generation business was on Emgesa and in Peru. With regard to Emgesa, we started improving our thermal power plant, Termozipa, to reduce its environmental impact and extend its useful life. The environmental upgrade aims to achieve the best environmental standards for gas emissions among coal-fired power plants in Latin America. In Peru, we focused on reconstructing our hydroelectric power plants affected by the heavy rains at the beginning of 2017, which damaged the Callahuanca and Moyopampa power plants. We also invested in maintenance activities and modernization of civil works and hydraulic units in Peru.

Projects in progress will be financed with resources provided by external financing and internally generated funds.

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B.   Business Overview.

We are a publicly held limited liability stock corporation headquartered in Chile, with consolidated operations in Argentina, Brazil, Colombia, and Peru. Our core businesses are electricity generation, transmission, and distribution.

The table below presents our revenues by reportable segments and by operating segments within such reportable segments.

Year ended December 31,

    

2020

    

2019

    

2018

    

Change 2020 vs. 2019

(in millions of US$)

(in %)

Generation and Transmission Business in Argentina

231

436

328

(47.1)

Costanera

113

214

163

(47.2)

El Chocón

49

72

67

(32.6)

Dock Sud

66

147

95

(54.9)

Other

3

3

3

Generation and Transmission Business in Brazil

1,106

778

854

42.2

Cachoeira Dourada

812

494

540

64.4

Fortaleza

187

310

212

(39.6)

Cien

53

70

83

(24.7)

EGP Volta Grande

62

107

82

(41.7)

Other

(8)

(203)

(63)

96.1

Generation and Transmission Business in Colombia

1,159

1,247

1,259

(7.0)

Emgesa

1,159

1,247

1,259

(7.0)

Generation and Transmission Business in Peru

505

596

596

(15.3)

Enel Generation Peru

446

519

522

(14.1)

Enel Generation Piura

64

82

78

(22.1)

Other

(5)

(5)

(4)

Total Generation and Transmission Business reportable segment

3,001

3,057

3,037

(1.8)

Distribution Business in Argentina

801

1,347

1,190

(40.5)

Edesur

801

1,347

1,190

(40.5)

Distribution Business in Brazil

6,735

8,154

6,922

(17.4)

Enel Distribution Rio

1,221

1,515

1,511

(19.4)

Enel Distribution Ceara

1,142

1,373

1,411

(16.8)

Enel Distribution Goias

1,392

1,545

1,542

(9.9)

Enel Distribution Sao Paulo

2,980

3,721

2,459

(19.9)

Distribution Business in Colombia

1,547

1,665

1,714

(7.1)

Codensa

1,547

1,665

1,714

(7.1)

Distribution Business in Peru

887

950

913

(6.7)

Enel Distribution Peru

887

950

913

(6.7)

Total Distribution Business reportable segment

9,970

12,116

10,739

(17.7)

Less: Consolidation adjustments and non-core activities

(778)

(859)

(786)

9.4

Total Revenues

12,193

14,314

12,990

(14.8)

For further information related to our revenues and total income, see “Item 5. Operating and Financial Review and Prospects — A. Operating Results” and Note 27 of the Notes to our consolidated financial statements.

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Electricity Generation Business

In 2020, our consolidated electricity sales were 66,996 GWh, and our electricity production was 40,455 GWh, an 8% decrease and a 3% decrease, respectively, compared to 2019. Our total installed capacity in 2020 was 11,269 MW, a 0.02% increase compared to 2019.

In 2019, our consolidated electricity sales were 72,553 GWh, and our electricity production was 41,760 GWh, an 11% increase and a 5% increase, respectively, compared to 2018. Our total installed capacity in 2019 was 11,267 MW, a 0.1% increase compared to 2018.

The following tables summarize the operating data relating to our electricity generation:

Year ended December 31,

    

2020

    

2019

    

2018

Argentina

Number of generating units(1)

29

29

29

Installed capacity (MW)(2)

4,419

4,419

4,419

Electricity generation (GWh)

13,901

12,974

13,949

Energy sales (GWh)

13,903

12,976

13,952

Brazil

Number of generating units(1)

17

17

17

Installed capacity (MW)(2)

1,354

1,354

1,354

Electricity generation (GWh)

4,823

5,292

3,755

Energy sales (GWh)

25,296

30,002

22,236

Colombia

Number of generating units(1)

36

36

36

Installed capacity (MW)(2)

3,506

3,506

3,499

Electricity generation (GWh)

14,009

15,250

14,052

Energy sales (GWh)

17,539

18,376

18,544

Peru

Number of generating units(1)

30

30

30

Installed capacity (MW)(2)

1,990

1,987

1,985

Electricity generation (GWh)

7,722

8,244

8,106

Energy sales (GWh)

10,258

11,199

10,597

Total

Number of generating units(1)

112

112

112

Installed capacity (MW)(2)

11,269

11,267

11,257

Electricity generation (GWh)

40,455

41,760

39,863

Energy sales (GWh)

66,996

72,553

65,329


(1)For details on generation facilities, see “Item 4. Information on the Company — D. Property, Plant, and Equipment — Property, Plant, and Equipment of Generating Companies.”
(2)Total installed capacity is the maximum capacity (MW) under specific technical conditions and characteristics. In most cases, installed capacity is confirmed by satisfaction guarantee tests performed by equipment suppliers. Figures may differ from installed capacity declared to governmental authorities and customers in each country, according to criteria defined by such authorities and relevant contracts.

In the electricity industry, it is common to divide the business into hydroelectric and thermoelectric generation because each type of generation has significantly different variable costs. Thermoelectric generation requires fuel purchase, which generally leads to higher variable costs than hydroelectric generation from reservoirs or rivers, which typically has immaterial variable costs. Of our total consolidated generation in 2020, 62.1% was from hydroelectric sources, and 37.9% was from thermal sources.

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The following table summarizes our consolidated generation by type of energy:

CONSOLIDATED GENERATION BY TYPE OF ENERGY (GWh)

Year ended December 31,

2020

2019

2018

    

Generation

    

%

    

Generation

    

%

    

Generation

    

%

Hydroelectric

25,143

62.1

25,604

61.3

23,690

59.4

Thermal

15,313

37.9

16,155

38.7

16,173

40.6

Total generation

40,456

100.0

41,760

100.0

39,863

100.0

In the countries where we operate, the potential for contracting electricity is related to electricity demand. Customers identified as small volume regulated customers, including residential customers, are subject to government-regulated electricity tariffs and must purchase electricity directly from a distribution company. These distribution companies, which purchase large amounts of electricity for small volume residential customers, generally enter into contractual agreements with generators at a regulated tariff price. Those identified as large volume industrial customers also enter into contractual agreements with energy suppliers. However, such large volume industrial customers are not subject to the regulated tariff price. Instead, these customers are allowed to negotiate the energy price with generators based on the required service characteristics. Finally, the pool market, where energy is typically sold at the spot price, is not carried out through contracted pricing.

We break down our sales to customers by using the two following criteria:

The first criterion corresponds to regulated and unregulated customers. Regulated customers are distribution companies that mainly serve residential customers. Unregulated customers may freely negotiate the electricity price with generators or may purchase electricity in the pool market at the spot price. The classification of regulated customers differs from one country to another.

The second criterion corresponds to contracted and non-contracted sales. This method is useful because it provides us a uniform way to compare the customers for each country. Contracted sales are defined uniformly throughout.

Specific energy consumption limits (measured in GWh) for regulated and unregulated customers are country-specific. Moreover, regulatory frameworks often require that regulated distribution companies have contracts to support their commitments to small volume customers and determine which customers can purchase energy in electricity pool markets.

Energy purchases and transportation costs are the principal variable costs involved in the electricity generation business, in addition to the direct variable cost of generating hydroelectric or thermal electricity, such as fuel costs. Our thermal generation increases during relatively low rainfall periods, typically resulting in higher fuel costs. Under drought conditions, the electricity we have contractually agreed to provide may exceed the amount of electricity we can generate, requiring us to purchase electricity in the pool market at spot prices to satisfy our contractual commitments. The cost of these purchases at spot prices may, under certain circumstances, exceed the price at which we sell electricity under contracts and, therefore, may result in a loss. We attempt to minimize the effects of poor hydrological conditions on our operations in any year by limiting our contractual sales requirements to a quantity that does not exceed the estimated production in a dry year. To determine the estimated production in a dry year, we consider the available statistical information concerning rainfall, hydrological levels, and critical reservoirs’ capacity. In addition to limiting contracted sales, we may adopt other strategies, including installing temporary thermal capacity, negotiating lower consumption levels with unregulated customers, negotiating with other water users, and including pass-through cost clauses in contracts with customers. (For further details about hydrological conditions and their effects on our business, please refer to “Item 5. Operating and Financial Review and Prospects — A. Operating Results. — 1. Discussion of Main Factors Affecting Operating Results and Financial Condition of the Company — a. Generation and Transmission Business.”

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Seasonality

While our core businesses are subject to weather patterns, only extreme events such as prolonged droughts, rather than seasonal weather variations, may adversely affect our generation capacity and materially affect our operating results and financial condition.

The generation business in the countries where we operate is affected by seasonal changes throughout the year. The months with the most precipitation in Argentina are typically May through August, with snowmelts generally occurring between October and December. In Brazil, due to tropical weather, rainfall is mostly concentrated in summer from November through May, and it is the lightest during the winter. The months with the most precipitation in our operating area in Colombia are typically April,  May, October, and November. The months with the most precipitation in Peru are generally November through March.

When there is more precipitation, hydroelectric generating facilities can accumulate additional water for generation. Our reservoirs’ increased level allows us to generate more electricity with hydroelectric power plants during the months when marginal electricity costs are lower.

In general, hydrological conditions such as droughts and insufficient rainfall may adversely affect our generation capacity. For example, severe prolonged drought conditions or reduced rainfall levels in the countries in which we operate caused by the El Niño phenomenon minimizes the amount of water accumulated in reservoirs, thereby curtailing our hydroelectric generation capacity. Hydroelectric generation may be substituted with thermal generation (natural gas, liquefied natural gas, coal, or diesel) and energy purchases on the spot market to mitigate hydrological risk. Both could result in higher costs to meet our obligations under contracts with regulated and unregulated customers.

Operations in Argentina

We participate in electricity generation in Argentina through our subsidiaries Costanera, El Chocón, and Dock Sud. As of December 31, 2020, we had 29 power units with a total net installed capacity of 4,419 MW in Argentina, representing 10.5% of the Argentine National Interconnected System’s (“Argentine NIS”) installed capacity in 2020.

Costanera owns 11 thermal units, with a total net installed capacity of 2,210 MW, El Chocón owns nine hydroelectric units and four diesel engines, with a total net installed capacity of 1,362 MW, and Dock Sud owns five thermal units with an aggregate net installed capacity of 847 MW.

Our Argentine subsidiaries have stakes in three additional companies: Termoeléctrica Manuel Belgrano S.A., Termoeléctrica San Martín S.A., and Central Vuelta de Obligado S.A. (Vuelta de Obligado). These companies were formed to construct three generation facilities for a fund called “FONINVEMEM,” whose purpose is to increase electricity capacity and generation within the Argentine wholesale electricity market. By December 2020, these units’ total aggregate capacity was 2,456 MW (823 MW from Manuel Belgrano, 823 MW from San Martín, and 810 MW from Vuelta de Obligado).

Our total generation in Argentina amounted to 13,901 GWh in 2020. According to the entity in charge of the wholesale electricity market (“CAMMESA” in its Spanish acronym), our generation market share was approximately 11% of Argentina’s total electricity production during 2020.

Our hydroelectric generation in Argentina accounted for over 20.6% of our total generation in Argentina in 2020, reaching 2,860 GWh, an increase of 14% compared to 2019, while our thermal generation in Argentina accounted for 79.4% of our total generation in 2020, reaching 11,041 GWh, an increase of 5.5% compared to 2019, in each case mainly due to exports to the Brazilian energy market during 2020.

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Our generation by type and subsidiary in Argentina is shown in the following table:

ELECTRICITY GENERATION IN ARGENTINA (GWh)

Year ended December 31,

2020

2019

2018

    

Generation

    

%

    

Generation

    

%

    

Generation

    

%

Hydroelectric generation (El Chocón)

2,860

20.6

2,509

19.3

2,859

20.5

Thermal generation (Costanera and Dock Sud)(1)

11,041

79.4

10,464

80.7

11,090

79.5

Total generation

13,901

100.0

12,974

100.0

13,949

100.0


(1)Includes diesel engines from El Chocón

The following table sets forth our electricity generation and purchases in Argentina:

ELECTRICITY GENERATION AND PURCHASES IN ARGENTINA (GWh)

Year ended December 31,

2020

2019

2018

    

(GWh)

    

%

    

(GWh)

    

%

    

(GWh)

    

%

Electricity generation

13,901

99.98

12,974

99.98

13,949

100.0

Electricity purchases

2

0.02

2

0.02

3

0.0

Total(1)

13,903

100.0

12,976

100.0

13,952

100.0


(1)Electricity generation and electricity purchases may differ from total electricity sales because of transmission losses, the power plants’ own consumption, and technical losses.

The distribution of our electricity sales in Argentina by subsidiary is shown in the following table:

ELECTRICITY SALES BY SUBSIDIARY IN ARGENTINA (GWh)

Year ended December 31,

    

2020

    

2019

    

2018

Costanera

6,518

6,210

7,101

El Chocón

2,924

2,528

2,901

Dock Sud

4,461

4,238

3,951

Total

13,903

12,976

13,952

For the year ended December 31, 2020, Costanera did not have contracts with unregulated customers or distribution companies and sold all of its electricity to the pool market during the year. For the year ended December 31, 2020, El Chocón had six contracts with unregulated customers and no contracts with distribution companies. For the year ended December 31, 2020, Dock Sud did not have any contracts with regulated customers or distribution companies and sold all of its electricity to the pool market during the year.

The electricity demand throughout the Argentine NIS decreased by 1.2% during 2020. The total electricity demand was 127,314 GWh in 2020, 128,867 GWh in 2019, and 132,925 GWh in 2018. Our Argentine subsidiaries compete with all the major power plants connected to the Argentine NIS.

According to the installed capacity reported by CAMMESA, in its monthly report as of December 2020, our primary competitors in Argentina are: (1) the state-controlled company Enarsa (with an installed capacity of 1,362 MW), (2) the nuclear unit “NASA” (with an installed capacity of 1,755 MW), and (3) the hydroelectric units Yacyretá and Salto Grande (with an aggregate installed capacity of 4,045 MW).

The leading private competitors are AES Group, Sociedad Argentina de Energía S.A. (“Sadesa”), and Pampa Energía. The AES Group has ten power plants connected to the Argentine NIS with a total net installed capacity of 4,224 MW. Sadesa owns approximately 3,899 MW of installed capacity, the most significant of which are Piedra del Águila (with an installed capacity of 1,400 MW) and Central Puerto (a thermal facility with 1,777 MW of installed

39


capacity). Pampa Energía, with a total installed capacity of 3,871 MW, competes with us with seven power plants, of which 938 MW is hydroelectric, and 2,631 MW is thermal.

Operations in Brazil

We participate in electricity generation in Brazil through our subsidiaries Cachoeira Dourada, Fortaleza, and EGP Volta Grande.

As of December 31, 2020, we had a total net installed capacity of 1,354 MW in Brazil, representing 1% of the Brazilian system’s total net installed capacity.

Cachoeira Dourada is a hydroelectric company consisting of three generation units with a total net installed capacity of 655 MW, located in Midwest Brazil.

Fortaleza owns a combined-cycle plant with ten generation units that use natural gas, with a total net installed capacity of 319 MW. The plant is located 50 kilometers from the capital of the state of Ceará and began commercial operations in 2003. Since January 2010, Fortaleza has received natural gas from the Pecem regasification terminal, an unrelated company. In 2019, our thermal generation increased after a decrease in 2018, caused by a legal dispute in connection with our gas supply contract with Petrobras, a gas supplier. On August 28, 2020, Petrobras and Fortaleza reached an agreement to settle the existing claims. However, a final judicial ruling is pending, as Petrobras and Fortaleza have requested that the judicial claims be settled without a judgment on the merits. From January to August 2020, there was an injunction in place that required Petrobras to provide the gas supply. Now that Petrobras and Fortaleza have reached an agreement to settle the claims, the contract will be enforced and will remain in effect until 2023. See Note 35.3 of the Notes to our consolidated financial statements for further information. In 2020, our thermal generation decreased because the ONS established lower dispatch energy levels for thermal generators in order to ensure adequate supply at reasonable costs.

EGP Volta Grande is a hydroelectric company consisting of four generation units with a total net installed capacity of 380 MW, located in southeast Brazil. EGP Volta Grande was purchased by our subsidiary Enel Brasil on November 30, 2017.

Our hydroelectric generation increased by 11% in 2020 compared to 2019 due to favorable hydrological conditions.

Our generation by type and subsidiary in Brazil is shown in the following table:

ELECTRICITY GENERATION IN BRAZIL (GWh)

Year ended December 31,

2020

2019

2018

    

Generation

    

%

    

Generation

    

%

    

Generation

    

%

Hydroelectric generation (Cachoeira Dourada and EGP Volta Grande)

4,611

95.6

4,164

78.7

3,219

85.7

Thermal generation (Fortaleza)(1)

212

4.4

1,128

21.3

537

14.3

Total

4,823

100.0

5,292

100.0

3,755

100.0


(1)In 2018, our thermal generation decreased due to a legal dispute about the gas supply contract with Petrobras (gas supplier). Petrobras ceased the supply of gas to Fortaleza. In 2020, our thermal generation decreased because the ONS defined lower dispatch energy levels by thermal generators to ensure adequate supply at reasonable costs.

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The following table sets forth our electricity generation and purchases in Brazil:

ELECTRICITY GENERATION AND PURCHASES IN BRAZIL (GWh)