Central Puerto SA (CEPU) Risk Factors

In recent years, the Argentine financial system grew significantly with a marked increase in loans and private deposits, showing a recovery of credit activity. Although the financial system's deposits continue to grow in nominal terms, they are mostly short-term deposits and the sources of medium and long-term funding for financial institutions are currently limited. In 2020, although nominal private deposits in pesos increased 85.2% year-over-year (fueled by the growth of savings, current accounts with a 105.3% and 82.6% increase, respectively) and nominal time deposits increased approximately 86.7% year-over-year, such nominal increases did not match inflation for the period. Peso-denominated loans increased approximately 19.3% during 2020. During the same period, loans in foreign currency (composed mainly of corporate loans) evidenced a decrease of 49.3% at the end of 2020. In 2020, private and public deposits in U.S. dollars declined by 14.4%. Financial institutions are particularly subject to significant regulation from multiple regulatory authorities, all of whom may, among other things, establish limits on commissions and impose sanctions on the financial institutions. The lack of a stable regulatory framework, or changes to such regulatory framework by the government, could impose significant limitations on the activities of the financial institutions and could induce uncertainty with respect to the financial system stability. The persistence of the current economic crisis or the instability of one or more of the larger banks, public or private, could have a material adverse effect on the prospects for economic growth and political stability in Argentina, resulting in a loss of consumer confidence, lower disposable income and fewer financing alternatives for consumers. These conditions would have a material adverse effect on us by resulting in lower usage of our services, lower sales of devices and the possibility of a higher level of uncollectible accounts or increase the credit risk of the counterparties regarding the Company investments in local financial institutions. Exchange controls and restrictions on transfers abroad and capital inflows limit the availability of international credit.

In late December 2019 a notice of pneumonia originating from Wuhan, Hubei province (COVID-19, caused by a novel coronavirus) was reported to the World Health Organization, with cases soon confirmed in multiple provinces in China, as well as in other countries. On March 11, 2020, the World Health Organization characterized the COVID-19 as a pandemic. Several measures have been undertaken by the Argentine government and other governments around the globe, including the use of quarantine, screening at airports and other transport hubs, travel restrictions, suspension of visas, nation-wide lockdowns, closing of public and private institutions, suspension of sport events, restrictions to museums and tourist attractions and extension of holidays, among many others. However, the virus continues to spread globally and, as of the date of this annual report, has affected more than 192 countries and territories around the world, including Argentina. To date, the outbreak of the novel coronavirus has caused significant social, operational, economic and market disruption. The long-term effects to the global economy and the Company of epidemics and other public health crises, such as the on-going novel coronavirus crisis, are difficult to assess or predict, and may include a further decline in the market prices of our shares and ADSs, risks to employee health and safety, risks for the deployment of our services, reduction in the demand of energy, and delays or suspensions in the construction of our expansion projects, among others. The prolonged restrictive measures, including policies limiting the efficiency and effectiveness of our operations such as home office policies, put in place in order to control the outbreak of the novel coronavirus or any other outbreak of a contagious disease or other adverse public health development that may occur in the future, has had, and may continue to have, or may in the future have, a material and adverse effect on our business operations. It is unclear whether these challenges and uncertainties will be contained or resolved, and what effects they may have on the global political and economic conditions in the long term. Additionally, we cannot predict how the disease will continue to evolve in Argentina, including consequences of new outbreaks and new strains of coronavirus that have appeared, or the effectiveness of the vaccination campaign, nor anticipate what additional restrictions the Argentine government may impose. A sustained or prolonged coronavirus outbreak and the emergence of new strains of coronavirus for which current vaccines may be less effective, could exacerbate the factors described in this "Risk Factors" section and intensify the impact on our business and results of operations. On March 19, 2020, President Alberto Fernández issued Decree No. 297/2020, establishing a period of preventive and mandatory social isolation, or quarantine as a public health measure aimed at addressing the effects of the COVID-19 pandemic (the "Quarantine"). The decree imposed a nation-wide mandatory lockdown, initially until March 31, 2020, whereby only exceptional and essential activities and internal travel are allowed, deployment of security forces for the enforcement of lockdown. The mandatory lockdown ordered by Decree No. 297/2020, was effective between March 20 and March 31, 2020, inclusive, that was subsequently extended on several occasions until November 9, 2020, the date on which the measure of "social, preventive and obligatory distancing" ("DISPO") took effect in most of the country, although certain urban agglomerates, departments and parties in some provinces were maintained under the preventive and mandatory social isolation, in both cases until November 29, 2020. The DISPO period was accompanied by a series of relaxations to the originally imposed limitations, such as the circulation without the need of an enabling certificate between the areas subject to the DISPO, the performance of economic, industrial, commercial, or service activities, which have an operating protocol approved by the health authorities, and artistic and sporting activities under certain circumstances. As of the date of this annual report, different regions of Argentina have switched between the Quarantine and DISPO periods, depending on the epidemiological situation of each area. In addition, as a consequence of the worsening of the epidemiological situation in Argentina, as well as the large increase in the number of daily COVID-19 cases, the Executive Branch continues to tighten the measures required to tackle the rising in coronavirus cases. On April 8, 2021, by means of the Decree No. 235/2020, the Argentine Government established new general prevention measures focused on mitigating the spread of COVID-19. The prevention measures will be in place until April 30, 2021, inclusive. By means of Article 11 of the Decree, the following activities were suspended throughout the national territory during the entire duration of the Decree: (i) group travel for various purposes, and (ii) activities and social gatherings in private homes of more than 10 persons. In addition, the decree established a series of sanitary parameters to define which districts and departments of Argentina will qualify as "places of epidemiological and sanitary risk" and the suspension of the following activities in those regions during the entire term of the decree: (i) activities and social meetings in private homes; (ii) activities and social gatherings in outdoor public spaces of more than 20 people; (iii) the practice of sports in closed places where more than 10 people participate or that do not allow maintaining the minimum distance of 2 meters between participants, with certain exceptions; (iv) activities of casinos, bingos, discotheques and party halls; and (v) gastronomic premises between 11:00 p.m. and 6:00 a.m. the following day. In addition, the Decree established a new traffic restriction between midnight and 6:00 a.m. the following day in those places with high epidemiological and sanitary risk. On the other hand, the same decree provided for the extension until April 30, 2021 inclusive of the border closure provided for by Decree No. 274/20 (as extended and supplemented). On April 14, 2021, new measures were announced for the Metropolitan Area of Buenos Aires, among them, the restriction of traffic between 8:00 p.m. and 6:00 a.m., the suspension of classes and of recreational, social, cultural, sports and religious activities carried out in closed places. In line with this, on April 16, 2021, Decree No. 241/21 was published in the Official Gazette which established, among other issues, (i) to extend the suspension of the duty of attendance at the workplace for the persons covered by the terms of Resolution No. 207/20, extended by Resolution No. 296/20, and amended by Resolution No. 60/21 of the Ministry of Labor, Employment and Social Security; (ii) to provide for the suspension of on-site classes and non-school on-site educational activities at all levels and in all its modalities in the agglomerate of the Metropolitan Area of Buenos Aires (AMBA), from April 19 to April 30, 2021, inclusive; (iii) to provide for the suspension, during the term of the referred decree, of commercial centers and shopping malls, all sports, recreational, social, cultural and religious activities carried out in closed environments, commercial premises, except for the exceptions set forth in Article 20 of the decree, between 7:00 p.m. and 6:00 a.m., and all other activities carried out in closed environments, commercial premises, except for the exceptions set forth in Article 20 of the decree, between 7:00 p.m. and 6:00 a.m., gastronomic premises (restaurants, bars, etc. ), between 7:00 p.m. and 6:00 a.m. the following day, except for home delivery and pick-up at the establishment in nearby premises, while between 6:00 a.m. and 7:00 p.m., gastronomic establishments may only serve their customers in outdoor spaces; (iv) to provide that the public urban and interurban passenger transportation service may only be used by persons involved in the activities, services and situations included in the terms of Article 11 of Decree No. 125/21; and (v) to establish the restriction to circulate from 8:00 p.m. to 6:00 a.m. of the following day in the agglomerate of the AMBA. The Quarantine and related restrictive measures had and are further expected to have a deep impact in the Argentine economy, including drastic reduction in the demand and supply of goods and services, increase in the unemployment rate and poverty levels, businesses bankruptcies, disruption in the payment chain, among many others. Although the Argentine government has adopted measures intended to alleviate the situation (see "Item 4––Recent Developments- Measures Designed to Address the Covid-19 Outbreak"), such measures are expected to significantly increase the governments' fiscal deficit. If that increase in the deficit is financed with monetary emission, it is highly possible that it will lead to an increase in the rate of inflation and disruptions in the foreign exchange markets. Pursuant to Decree 297/2020, minimum shifts ensuring the operation and maintenance of electric energy generators were exempted from the Quarantine. Although our operations personnel was allowed to continue their activities under certain health and sanitary precautions, the rest of our staff continued working remotely. Initially, the construction of energy infrastructure, including our ongoing expansion projects, was not included as an exemption to the Quarantine. On April 7, 2020, the construction of private sector energy infrastructure was included as an essential activity, and consequently, after taking the necessary precautions, the construction resumed on April 9, 2020 for La Genoveva I, and on April 27, 2020 for Terminal 6-San Lorenzo. As an additional measure to contain the expansion of COVID-19, international travel (except for certain specific repatriation flights) was suspended for several months. As of the date of this annual report, reception of international flights from certain countries is restricted, in accordance with Administrative Decision No. 2252/20, extended by Administrative Decisions Nos. 2/21, 44/21, 155/21 and 219/21, which was also complemented by Administrative Decision No. 268/21, and Administrative Decision No. 342/21 until April 30, 2021. We have identified the following items where this crisis has and may have an impact in the Company: Operations – Power generation - Reduction in the electric energy dispatched. Due to the Quarantine, most of the businesses in Argentina, especially in the industrial sector, have not been able to continue operating normally. According to information from CAMMESA, at the beginning of the Quarantine the total electric energy demand had significantly declined. At the time, this reduction had an impact in the Company's termal energy generation, in particular our units with higher heat rate (less eficient) under the Energia Base Regulatory Framework - Increased delays in payments and/or risk of uncollectability from our private clients. Despite the fact that CAMMESA is paying its obligations, the reduced economic activity due to the Quarantine may also affect the cash flows of CAMMESA and of our private clients and it may increase the delays in their payments and the risk of uncollectabilty of private clients. (See "Item 3.D Risk Factors-Risks Relating to Argentina-We have, in the recent past, been unable to collect payments, or to collect them in a timely manner, from CAMMESA and other customers in the electric power sector"). Due to the COVID-19 pandemic crisis, we have experienced, and we expect to continue experiencing delays in certain payments from CAMMESA. For these delays, we received interests from CAMMESA. Payments related to PPAs under the Renovar Regulatory Framework have not suffered delays. See "-The novel coronavirus could have an adverse effect on our business operations and financial conditions."- Greater dependency of CAMMESA on subsidies from the Argentine government. CAMMESA's cash flows depend on (i) payments from electric energy distribution companies, and (ii) subsidies from the Argentine government. Due to the Law 27,132, tariffs that eligible end users pay to some public utilities under federal jurisdiction, including electric energy distribution companies, were frozen for 180 days until June 30, 2019 (See Item 4. Information of the Company- Recent Political and Economic Developments in Argentina). Furthermore, the Argentine government established a 180-day period, beginning on March 1, 2020, in which the suspension of the electric energy distribution service is not permitted, upon the beneficiary's failure to pay less than three consecutive invoices, from March 1, 2020. As a consequence, electric energy distribution companies may see a reduction in their collections from clients, which may reduce their payments to CAMMESA, which in turn, may increase CAMMESA's dependency on subsidies received from the Argentine government to pay for electric energy generation, including payments to electric energy generation companies, such as Central Puerto. - Personnel safeguard. We have set a protocol with multiple measures to protect the health of all our operations and maintenance personnel. Some of those measures include: a) the isolation of the teams that operate our different units, preventing contact between different teams; b) the avoidance of contact between personnel from different shifts; c) the use of extra protection, and additional sanitary measures; d) using virtual meetings; e) identifying key personnel in order to have the necessary back-up teams should a contingency arise and keeping all non-essential working remotely; f) drafting and publication of health and safety plans and/or protocols both for the plants in operation and works in development. These measures have been effective to protect our personnel, and at the date of these annual report, a low level of contagion has been registered within the Company's personnel. - Lack of necessary supplies/equipment, or delays in supplies. The Quarantine may also affect the provision of essential supplies. Although the provision of the necessary supplies is also considered an essential activity under the enacted emergency framework and we usually keep a stock of spare parts, we cannot assure you that the provision of the necessary supplies will not be affected. Furthermore, measures taken by foreign countries in which some of our supplies and spare parts for our units are produced, may also affect our stock of spare parts. Any delay in the provision of essential equipment or supplies may affect our operations. Projects under construction/development The COVID-19 outbreak has had an impact on the projects that were and are under construction as of the date of this annual report. Since the issuance of Administrative Decision 468/2020 abovementioned, the project construction activities were resumed. This required the implementation of health safety measures according to the requests established and recommended by health authorities. As a result, a procedure and a protocol were drafted, which must be complied with by the personnel, contractors and subcontractors. On February 21, 2020, Vestas Argentina S.A. ("Vestas") the supplier of the wind turbines of the La Genoveva I wind project, notified the Company that the COVID-19 outbreak affected its manufacturing activities worldwide, causing delays on the supply chain for the delivery of certain Chinese-origin manufacturing components required for the completion of the wind turbines. In its communication, Vestas did not specify the specific impact this situation may have on the agreed upon schedule. However, based on that communication, we reasonably expected delays on the project's completion. Therefore, we sent a notice to CAMMESA with the updates received from Vestas in accordance with the force majeure clauses of the PPA to avoid potential penalties should the project suffer unexpected and unforeseen delays. On April 7, 2020, CAMMESA acknowledged receipt of our notice and requested a report on the consequences that the force majeure events have had on the schedule.The Company has sent to CAMMESA several notices informing the impact this force majeure event had on the project and the measures taken within the COVID-19 protocol abovementioned, reaffirming its request to abstain from imposing sanctions for the delays, and requesting to obtain an extension in the commercial operation date of the wind farm. The main events impacting on the project execution schedule were the following: i) delays in the international manufacturing and delivery, ii) delays in the manufacturing and/or supply of local equipment, components and parts, iii) restrictions on the transport of material and components, iv) restrictions on the working methods due to compliance with COVID-19 health protocols that reduce the productivity of processes and tasks, and v) the borders lockdown that prevent foreign specialists from entering to conduct assembly or installation processes and for the start-up. In this regard, on June 10, 2020, the Secretariat of Energy ordered CAMMESSA to temporarily suspend the calculation of the terms set forth for the projects that had not obtained the commercial authorization, among which wind farm La Genoveva is included, for a maximum postponement term of six months from March 12 to September 12, 2020. Therefore, the committed commercial authorization of the wind farm was extended until November 22, 2020. Even though the Quarantine was lifted for private sector energy infrastructure construction on April 7, 2020, we have experienced delays on our project schedule. After taking the necessary precautions, the construction was resumed on April 9, 2020 for La Genoveva I. On November 21, 2020, La Genoveva I commenced full commercial operation and previously had two partial commissionings on September 11, 2020 and October 30, 2020 for 50.4 MW and 33.6 MW, respectively. The Quarantine also affected the construction of the Terminal 6-San Lorenzo thermal plant, which was suspended on March 20, 2020, scheduled to be completed in September 2020. After the Quarantine was lifted, we resumed activities on April 27, 2020 taking the necessary precautions. However, due to the precautionary measures mentioned above, we expected that the completion of the project was going to be delayed. Additionally, travel restrictions and national borders lockdown imposed by the Argentine Government, among others, delayed the arrival of necessary personnel for the project, some of which were expected to arrive from countries affected by the outbreak. Therefore, we sent a notice to CAMMESA informing about this situation to avoid potential penalties should the project suffer unexpected and unforeseen delays. We notified CAMMESA and the Energy Secretariat on the situation and requested: (i) the suspension of agreement terms as from March 20, 2020 and until the situation is normalized, and (ii) abstention of the imposision of any sanctions in case the Company cannot meet the agreed upon deadlines on the wholesale demand agreement entered into with CAMMESA mentioned in Note 22.7 of our Audited Consolidated Financial Statements due to force majeure reasons. In this sense, on June 10, 2020, the Secretariat of Energy ordered CAMMESSA to temporarily suspend the calculation of the terms set forth for certain that had not obtained the commercial authorization, among which the cogeneration Terminal 6 - San Lorenzo project is included, for a maximum term of six months, starting on March 12, 2020 and ending on September 12, 2020. Therefore, the committed commercial authorization of the thermal plant was extended until March 5, 2021. On July 15, 2020, we communicated the Secretariat of Energy and CAMMESA, that the temporary suspension was not sufficient to comply with the new terms under the wholesale demand agreement since the restrictions imposed by the Argentine Government to tackle COVID-19 hindered the work activities of the cogeneration unit Terminal 6 - San Lorenzo. On September 10, 2020, the Undersecretariat of Electrical Energy granted a new suspension of the terms for the commercial authorization of the projects starting on September 12, 2020 and ending on November 25, 2020, subject to certain requirements. We requested CAMMESA and the Secretariat of Energy the extension of the new commercial authorization of the project Terminal 6 - San Lorenzo until July 30, 2021. On November 21, 2020, the plant obtained partial commissioning of its gas turbine (269,5 MW) to operate with natural gas and sell energy under the spot market regulation (Res. 31/2020). The effects of the COVID-19 crisis pose challenges to our expansion plans for the Brigadier López plant and the development of the El Puesto solar farm, delaying the start of construction of these projects, not only because of the restrictions to the construction mentioned above, but also due to lower energy demand and difficulties to obtain the necessary financing for the projects in the current market situation. As of the date of this annual report, the continued impact of the COVID-19 crisis in the development of these projects is uncertain, and it may result in us not being able to construct or develop these projects. Delays or failure to develop these projects could result in economic penalties, an increase in our financial needs and could also cause our financial returns on new investments to be lower than expected, which could materially adversely affect our financial condition and results of operations. For further information on see "Item 3D. Risk Factors-Risks Relating to our Business- Factors beyond our control may affect or delay the completion of the awarded projects, or alter our plans for the expansion of our existing plants". In addition, the COVID-19 crisis may reduce the possibility of new expansion projects and opportunities, for which the company has purchased 3 gas turbines. Item 5.A Operating Results-Factors Affecting our Results from Operations-Expansion of Our Generating Capacity. Access to the Capital and Financial Markets Due to the Argentine sovereign debt restructuring ongoing process and to the outbreak of COVID-19, access to the capital and financial markets in Argentina and/or in foreign markets may also be substantially reduced. See "-Argentina's ability to obtain financing from international markets is limited, which could affect its capacity to implement reforms and sustain economic growth, and may negatively impact our financial condition or cash flows," any further deterioration of the current economic situation may result in a deterioration of the Company's finances, in a context of lack of access or substantial reduction of credit availability in the financial markets, which could affect our financial condition and results of operation. Natural gas distribution operating segment Additionally, the COVID-19 pandemic crisis may also affect the results from our natural gas distribution affiliates. Although such economic activity was exempt from the Quarantine, the economic downturn caused by this measure is expected to reduce volumes distributed to clients. Moreover, some measures adopted by the Argentine Government to mitigate the effects of the COVID-19 outbreak in the economy are also expected to affect Ecogas' financial performance, which had already been affected by the 180-day tariff freeze established by Law 27,132, which was in effect until June 30, 2019 (See Item 4. Information of the Company- Recent Political and Economic Developments in Argentina). The Argentine Government established a 180-day period, beginning on March 1, 2020, where the suspension of the natural gas service is not permitted, upon the beneficiary's failure to pay less than three consecutive invoices, from March 1, 2020. This measure is only applicable to certain users identified in the decree adopting it. This measure has resulted in, and may continue to result in, delays and/ or the uncollectability of payments from such clients." Furthermore, some of the clients may not have access to electronic payment platforms and may typically pay in cash, which may be an obstacle for their ability to pay the bills on time due to the mandatory Quarantine.That suspension period was subsequently extended until December 31, 2020. Moreover, tariff increases remain suspended as of the date of this annual report In the year ended December 31, 2019, IGCE (including a direct interest in DGCE) accounted for 11.80% of our consolidated net income (see Item 4.B. Business Overview-Our Affiliates- Ecogas Group - Inversora de Gas del Centro S.A. (IGCE)". Finally, any additional measure taken by Argentina or any foreign country to mitigate the effects of the COVID-19 crisis, may directly or indirectly affect our operations, projects under construction/development or our results of operation and financial condition. For further information see "Item 4.A.-Recent Developments-Measures Designed to Address the Covid-19 Outbreak".

Pursuant to the International Accounting Standard 29, Financial Reporting in Hyperinflationary Economies ("IAS 29"), the financial statements of entities whose functional currency is that of a hyperinflationary economy must be adjusted for the effects of changes in a general price index. IAS 29 does not prescribe when hyperinflation arises and the International Accounting Standards Board ("IASB") does not identify specific hyperinflationary jurisdictions. However, IAS 29 provides a series of non-exclusive guidelines that consist of (i) analyzing the behavior of the population, prices, interest rates and wages before the evolution of price indexes and the loss of the currency's purchasing power, and (ii) as a quantitative characteristic, verifying if the three-year cumulative inflation rate approaches or exceeds 100%. In June 2018, the International Practices Task Force of the Centre for Quality ("IPTF"), which monitors countries experiencing high inflation, categorized Argentina as a country with projected three-year cumulative inflation rate greater than 100%. In addition, certain qualitative macroeconomic factors provided under IAS 29 were also identified. Therefore, Argentine companies using IFRS, such as us, are required to apply IAS 29 to their financial statements for periods ending on and after July 1, 2018. Adjustments to reflect inflation, including tax indexation, such as those required by IAS 29, were originally prohibited pursuant to the Convertibility Law. In addition, Decree No. 664/03, issued by the Argentine Government, instructed regulatory authorities, such as the CNV, to accept only financial statements reported in constant currency. However, on December 4, 2018, Law 27,468 ("Law 27,468") abrogated Decree No. 664/03 and amended the Convertibility Law indicating that the prohibition of inflation adjustments no longer applies to financial statements submitted for regulatory purposes. Certain regulatory authorities, such as the CNV, now require that financial statements for periods ended on and after December 31, 2018 should be adjusted for inflation pursuant to IAS 29. As a result, our Audited Consolidated Financial Statements included in this annual report, including the figures for the previous periods (this fact not affecting the decisions taken on the financial information for such periods), and, unless otherwise stated, the financial information included elsewhere in this annual report, were restated to consider the changes in the general purchasing power of the functional currency of the Company (Argentine peso) pursuant to IAS 29 and General Resolution No. 777/2018 of the CNV. Accordingly, we have recognized a gain regarding the effect of adjustment by inflation of Ps 1,159 million for 2020 and a loss of Ps. 3,311 million and Ps.8,453 million in our financial statements for the years ended 2020, 2019, and 2018, respectively. See Note 2.1.2 to our financial statements. Law 27,468 also substituted the wholesale price index ("WPI") for the CPI as the index to benchmark tax indexation, and modified the standards for triggering the tax indexation procedure. In addition, Law 27,468 provides that during the first three years beginning on January 1, 2018, tax indexation will be required if the variation of the CPI exceeds 55% in 2018, 30% in 2019 and 15% in 2020. On December 23, 2019, the National Congress enacted Law No. 27,541 Ley de Solidaridad Social y Reactivación Productiva en el Marco de la Emergencia Pública (the "Solidarity Law"), which, among other measures amended the periods which the tax indexation should be allocated. According to the Solidarity Law, the positive or negative result generated by the application of the inflation adjustment corresponding to the first and second fiscal year beginning on January 1, 2019, shall be charged one sixth (1/6) in that fiscal year and the remaining five sixths (5/6), in equal parts, in the next five fiscal years. For 2020 and 2019, we recorded a net loss of Ps. 1,520 million and 505 million, respectively, in our Income Tax line item of our Statement of Income regarding the application of the above-mentioned tax inflation adjustment. We cannot predict the full future impact that any modifications in the application of the tax indexation procedure and related adjustments will have on our financial statements, or the effects on our effective tax rate or on our business, results of operations and financial condition.

The Antitrust Law No. 27,442 provides that any transactions involving the acquisition, transfer or control of another company's assets will be subject to the Autoridad Nacional de la Competencia ("Argentine Antitrust Authority") prior consent and approval in the event that the sum of the total turnover of all the companies involved exceeds the equivalent of one hundred million (100,000,000) "mobile units" (which value is actualized annualy in line with the IPC). The Argentine Antitrust Authority will determine whether any acquisition subject to its prior approval negatively impacts competitive conditions in the markets in which we compete or adversely affects consumers in these markets. Although we are not contemplating any business combination as of the date of this annual report, if the Argentine Antitrust Authority were to reject any business combination or if such authority were to take any action to impose conditions or performance commitments on us as part of the approval process for any business combination, it could adversely affect our financial condition and results of operations and prevent us from achieving the anticipated benefits of such acquisition.

Since the enactment of Resolution SE No. 95/13, issued by the former Secretariat of Electric Energy, as amended, our compensation has depended largely on the compensation determined by energy output and availability. This resolution was replaced in February 2017 by Resolution SEE No. 19/17, issued by Secretariat of Electric Energy, which in turn was replaced by the Resolution SRRyME No. 1/19. Furthermore, on February 27, 2020, the Secretary of Energy of the National Ministry of Production Development issued Resolution 31/20, which abrogated Resolution No. 1/19, reducing the remuneration scheme applicable from February 1, 2020 for Authorized Generators in the Wholesale Electricity Market, establishing Energía Base prices in Argentine pesos. We cannot assure you that further reductions of these tariffs will not occur in the future. See "Item 4.B. Business Overview-The Argentine Electric Power Sector-Remuneration Scheme-The Current Remuneration Scheme." Except for sales under contracts, revenues from energy production are calculated and paid by CAMMESA pursuant to a fixed and variable prices system arising from the Resolution 31/20, and set in Argentine pesos. See "Item 5.A. Operating Results-Factors Affecting Our Results of Operations-Our Revenues-The Energía Base" and "Item 3.D. Risk Factors-Risks Relating to the Electric Power Sector in Argentina-We have, in the recent past, been unable to collect payments, or to collect them in a timely manner, from CAMMESA and other customers in the electric power sector." The tariffs under the Energía Base had been increased in February, May and November 2017 pursuant to Resolution SEE No. 19/17. However, on March 1, 2019, pursuant to Resolution SRRyME No. 1/19 the prices for power capacity and energy under Energía Base were decreased. Further, on February 27, 2020, the Secretary of Energy of the National Ministry of Production Development issued Resolution 31/20, which abrogated Resolution No. 1/19, reducing the remuneration scheme applicable from February 1, 2020, for Authorized Generators in the Wholesale Electricity Market, establishing Energía Base prices in Argentine pesos. See "Item 4.B. Business Overview-The Argentine Electric Power Sector-Remuneration Scheme-The Current Remuneration Scheme." On April 8, 2020, the Secretary of Energy instructed CAMMESA to postpone until further notice the application of the mechanism for updating the prices of energy and capacity provided for in Annex VI of Resolution 31/20. Since the settlement of the transction due on March 2020, CAMMESA has not applied the aforementioned mechanism, which has caused and may continue to cause a material adverse effect on our business and results of operations. As a result of this system, our revenues are highly dependent on actions taken by regulatory authorities. The continued suspension of price update mechanisms, lack of regulated tariffs increases by the Argentine Government and/or delays to implement such increases in a timely manner could have a material adverse effect on our revenues and, as a result, our results of operations.

Our power generation units are at risk of mechanical or electrical failure and may experience periods of unavailability affecting our ability to generate electric power. For example, certain of our turbogenerators at the Puerto Complex, including generators 5, 6, 7 and 8, began operating in the 1960s and are, therefore, over 50 years old. Because of their age, these generators may face a higher risk of mechanical or electrical failure. Our combined cycle plant located in the Puerto Complex has suffered major failures in the past, for example in the rotor of one of the gas turbines and in the generator. From April 11th, 2020 through July 15th, 2020, our Combined Cycle located in Luján de Cuyo, Mendoza, ran out of service due to an explosion followed by fire in one of the main Transformers. Our two 60 MW steam turbines also located in Mendoza ran on limited capacity during 2020 due to mechanical failures in the boilers. These failures have adversely affected our results of operations.Any other unplanned unavailability of our generation facilities may adversely affect our financial condition or results of operations.

In the past, the Argentine Government has passed laws and regulations forcing privately owned companies to maintain certain wage levels and provide added benefits for their employees. Additionally, both public and private employers have been subject to strong pressure from the workforce and trade unions to grant salary increases and certain worker benefits. Labor relations in Argentina are governed by specific legislation, such as labor Law No. 20,744 and Collective Bargaining Law No. 14,250, which, among other things, dictate how salary and other labor negotiations are to be conducted. Every industrial or commercial activity is regulated by a specific collective bargaining agreement ("CBA") that groups companies together according to industry sectors and by trade unions. While the process of negotiation is standardized, each chamber of industrial or commercial activity separately negotiates the increases of salaries and labor benefits with the relevant trade union of such commercial or industrial activity. In addition, each company is entitled, regardless of union-negotiated mandatory salary increases, to give its employees additional merit increase or variable compensation scheme. Argentine employers, both in the public and private sectors, have experienced significant pressure from their employees and labor organizations to increase wages and to provide additional employee benefits. Due to the high levels of inflation, employees and labor organizations are demanding significant wage increases. In August 2018, the National Labor Ministry resolved to increase the minimum salary to Ps.12,500 in four stages: an increase (i) to Ps.10,700 in September 2018, (ii) to Ps.11,300 in December 2018, (iii) to Ps.11,900 in March 2019, and to 12,500 in June 2019. Through Decree No. 610/2019, a staggered increase of the minimum salary was approved as follows: (i) Ps.14,125 as of August 1, 2019; (ii) Ps.15,625 as of September 1, 2019; and (iii) Ps.16,875 as of October 1, 2019. Afterwards, on October 2020, minimum salary was raised by Resolution 4/2020 of the Ministry of Labor, Employment and Social Security, with a staggered increase of three stages: (i) to Ps. 18,900 as of October 2020, (ii) to Ps. 20,857 as of December 2020 and (iii) to Ps. 21,600 as of March 2021. In addition, the Argentine government has arranged various measures to mitigate the impact of inflation in wages. In December 2019, the Argentine government issued Decree No. 34/2019, which established that in case of dismissals without cause during six (6) months after the publication in the official gazette of such Decree, employees have the right to collect double indemnification, which was extended by Decree No. 39/2021 until 31 December, 2021. Decree No. 34/2019 was enacted due to the economical emergency and the increase of the unemployment, and its aim was to dissuade employers to dismiss personnel. This measure was further reinforced through Decree No. 329/2020, issued amid the COVID-19 pandemic crisis, by virtue of which dismissals without cause or with cause under the argument of force majeure or lack of/reduction of work not imputable to the employer were prohibited for 60 days (this last cause also applies for temporary suspensions), prohibition that was extended until April 25, 2021. Also, in January 2020, the Argentine Government issued Decree No. 14/2020 which established a general increase for all employees of Ps.3,000 in January 2020, and an additional amount of Ps.1,000 in February 2020 (total Ps.4,000 as from February 2020). Furthermore, through Decree No. 332/2020 dated April 2, 2020, the administration of Alberto Fernandez created the "Emergency Assistance Program for Labor and Production" for employers and workers affected by the health emergency, consisting of among other matters, a comprehensive unemployment benefit system. For further information related to this "Emergency Assistance Program for Labor and Production" please see "Item 4. Information of the Company - Recent Developments- Measures Designed to Address the Covid-19 Outbreak". In the future, the Argentine Government could take new measures requiring salary increases or additional benefits for workers, and the labor force and labor unions may apply pressure for such measures. Any such increase in wage or worker benefit could result in added costs and reduced results of operations for Argentine companies, including us. Such added costs could adversely affect our business, financial condition and result of operations.

The supply and price of natural gas and liquid fuel used in our thermal generation plants has been in the past, and may in the future be, affected by, among other things, the availability of natural gas and liquid fuel in Argentina, given the current shortage of natural gas supply, especially during the winter, and declining reserves in Argentina. In particular, many oil and gas fields in Argentina are mature and due to the current economic scenario have not been subject to significant investment into development and exploration activities and, therefore, reserves are likely to be depleted. CAMMESA is in charge of managing and supplying all fuels required to run our thermal plants. If in the future we were to become required to purchase our own natural gas or liquid fuel from third parties, we cannot assure you that we will be able to purchase natural gas or liquid fuel at prices that are fully reimbursable by CAMMESA and, even if CAMMESA accepted to reimburse us for such amounts, it may be uncertain when such reimbursements would occur. In addition, natural gas delivery depends on the infrastructure (including barge facilities, roadways and natural gas pipelines) available to serve each generation facility. As a result, our thermal plants are subject to the risks of disruptions or curtailments in the fuel delivery chain and infrastructure. Any such disruption or curtailment may result in the unavailability, or higher prices, of natural gas or liquid fuel. Moreover, if in the future we are required to purchase our own natural gas or liquid fuel from third parties at prices that are not fully reimbursable by CAMMESA, such situation may have a material adverse effect on our financial condition and results of operations. Resolution No. 70/2018 enabled generators to purchase fuel in the open market. However, since the enactment of Resolution No. 12/2019, the effectiveness of Section 8 of Resolution No. 95/2013 and Section 4 of Resolution No. 529/2014 was reinstated, centralizing fuel purchases through CAMMESA.