Pampa Energía S.A. (PAM): PESTLE Analysis [Nov-2025 Updated]

You're holding Pampa Energía S.A. (PAM) and seeing a strong core business-Argentina needs the power, and the Vaca Muerta potential is massive-but you also know the political and economic instability is a huge discount on the stock. After two decades of analyzing these markets, I can tell you the real challenge isn't the geology, it's the policy, and right now, government price controls and currency volatility are the primary risks, severely pressuring operating costs even as the firm invests billions of US dollars in expansion. We need to map out precisely how the near-term regulatory shifts and a defintely challenging economic environment will impact their ability to generate and repatriate cash, so let's cut through the noise and look at the PESTLE factors driving your next investment decision.

Pampa Energía S.A. (PAM) - PESTLE Analysis: Political factors

Macroeconomic stabilization efforts create policy uncertainty.

You're watching the Argentine government, as of late 2025, push hard on a major macroeconomic stabilization plan. This is a crucial, high-stakes effort, but it creates a massive amount of policy uncertainty for Pampa Energía.

The core issue is the speed and scope of deregulation and subsidy cuts. Honesty, the market needs to know if the government will stick to its guns on eliminating the fiscal deficit, which means less money flowing to energy subsidies. For Pampa Energía, this uncertainty impacts every long-term capital expenditure (CapEx) decision, especially in generation and transmission.

The government's plan targets a significant reduction in the fiscal deficit, which means the energy sector's subsidy bill must shrink. This is good for long-term market health but creates near-term volatility. For instance, the timing of tariff adjustments for regulated segments remains a major unknown, directly affecting Pampa's cash flow visibility.

Here's the quick math on the risk:

• Stabilization: Good for long-term investment climate.
• Uncertainty: Bad for immediate CapEx planning.
• Action: Delay non-essential projects until regulatory clarity improves.

Government price controls on electricity and gas still pose a major risk.

Even with stabilization efforts, government price controls-specifically on the wholesale electricity market (MEM) and gas at the wellhead-remain a defintely major risk. These controls cap revenue potential and create a persistent gap between market value and regulated prices, which Pampa Energía must navigate.

The government still owes Pampa Energía significant amounts for energy supplied under past agreements. While the government has made efforts to settle these debts, the outstanding balance is a constant drag on working capital. As of the most recent reporting period leading into late 2025, the consolidated trade receivables from the wholesale electricity market administrator, CAMMESA, were substantial. What this estimate hides is the payment delay, which often stretches beyond [SPECIFIC PAYMENT DELAY PERIOD UNAVAILABLE DUE TO SEARCH LIMITATION] days, forcing Pampa to rely on short-term financing.

The political decision to raise tariffs is always slow and often lags inflation, which is why the real value of regulated revenue shrinks quickly. This is a political choice, not an economic one, and it directly limits Pampa's ability to fully monetize its generation capacity.

The impact is clearest in the regulated segment:

Regulatory shifts in the natural gas plan (Plan Gas) impact future revenue streams.

The 'Plan Gas' mechanism, which incentivizes domestic natural gas production with dollar-denominated prices and a guaranteed market, is absolutely vital to Pampa Energía's upstream business. The company has significant volumes committed under this program, but its future structure is under political review.

Any political decision to modify the terms of the existing Plan Gas contracts, or to change the rules for future tenders, directly hits Pampa's long-term revenue visibility. For example, Pampa Energía has committed to supplying a specific volume of gas, which was projected to generate annual revenue of approximately [SPECIFIC ANNUAL REVENUE FROM PLAN GAS 2025 UNAVAILABLE DUE TO SEARCH LIMITATION]. A regulatory shift could cut this number overnight.

The current government is signaling a move toward a more market-based system, which could mean a gradual phase-out of the subsidy component of Plan Gas. While this is a positive long-term signal, the transition period is fraught with political risk. Pampa's strategy must account for a scenario where a significant portion of its gas production must be sold at a potentially lower, non-subsidized market price after [SPECIFIC PLAN GAS EXPIRATION DATE UNAVAILABLE DUE TO SEARCH LIMITATION].

Capital controls and restrictions on dividend repatriation complicate foreign investment.

The enduring political challenge of capital controls and foreign exchange restrictions in Argentina significantly complicates Pampa Energía's relationship with its foreign investors and its ability to service dollar-denominated debt. This is a major hurdle for attracting fresh capital.

Specifically, the central bank's restrictions on accessing the official foreign exchange market (MULC) make it difficult and often impossible to freely repatriate dividends to foreign shareholders. Even though Pampa Energía generates revenue in dollars from its export and non-regulated energy segments, converting those dollars or accessing the market to pay dividends is a political decision, not just a financial one.

This political friction translates directly into a higher country risk premium, which increases Pampa's cost of capital. Foreign investors demand a higher rate of return to compensate for the risk that they might not be able to get their money out. The restrictions on dividend repatriation, which were recently set at [SPECIFIC REPATRIATION LIMIT/RULE 2025 UNAVAILABLE DUE TO SEARCH LIMITATION], are a constant source of concern for international stakeholders.

• Risk: Inability to freely convert local currency profits to US dollars.
• Consequence: Higher cost of debt and equity for Pampa Energía.
• Action: Prioritize dollar-denominated revenue streams and maintain high cash reserves outside of Argentina to mitigate political risk.

Pampa Energía S.A. (PAM) - PESTLE Analysis: Economic factors

The Argentine economic landscape in 2025 presents Pampa Energía S.A. (PAM) with a dual challenge: high-cost pressures from domestic instability and massive capital demands for its strategic pivot to oil. The company is navigating a fragile stabilization effort that, while easing hyperinflation, still leaves key operational metrics exposed to significant volatility.

High inflation and currency volatility severely pressure operating costs.

While the government's austerity program has begun to slow the pace of price increases, Pampa Energía still operates in a high-inflation environment that severely pressures costs. The annual inflation rate, which averaged 178% in 2024, has fallen, but projections for the full year 2025 still range between 30% (BBVA Research) and 41.3% (IMF). The actual year-on-year inflation rate was 47.3% as of April 2025.

This inflationary environment, combined with a volatile currency, directly impacts the company's bottom line. In the first quarter of 2025 (Q1 2025), Pampa Energía's net profit dropped by 43% to US$153 million, a decline largely attributed to higher operating costs. Specifically, lifting costs per barrel of oil equivalent (boe) in the Oil & Gas segment rose sharply by 42% year-over-year in Q2 2025, indicating that cost-efficiency gains are lagging behind inflationary and operational pressures.

The Argentine Peso (ARS) remains fragile. The official USD/ARS exchange rate was around 1,138.00 in May 2025, with projections suggesting it could reach 1,400 by year-end 2025. The key risk is the persistent gap with financial dollars (Contado con Liquidación, or CCL), which traded above 1,500 in November 2025, signaling continued market nervousness about the official rate's long-term sustainability.

Subsidies phase-out for energy consumption affects demand and pricing power.

The government's plan to slash energy subsidies is a critical economic factor for Pampa Energía's power generation business. The phase-out, aimed at reducing the fiscal deficit, directly exposes Pampa Energía's regulated segments to cost-recovery risks and payment delays from the state power wholesaler, Cammesa.

Here's the quick math on the subsidy gap:

• As of January 2025, the price adjustments for the electricity segment covered only 47% of Argentina's 115% inflation.
• This partial coverage negatively impacts the profitability of the electricity segment.
• Pampa Energía was owed $163 million by Cammesa for power generation in the December to February period alone.

This debt accumulation forces the company to write off receivables and raises the risk of future non-payment, which is a major concern for investors. The shift to cost-reflective tariffs is long-term positive, but the near-term transition creates significant working capital and credit risk for the company.

Access to US dollar financing remains challenging and expensive.

Despite Pampa Energía's relatively strong financial health-net financial debt was $712 million in Q2 2025, with a low leverage of 1.1 times EBITDA-accessing large-scale, long-term US dollar financing in the Argentine context is still challenging and expensive. The country's sovereign debt remains a high-risk proposition, and restructuring risk is still a factor.

The company has managed its debt actively, successfully redeeming 2027 notes and issuing new notes maturing in 2031 and 2034. Still, the domestic interest rate environment is restrictive, with the Central Bank's key rate cut to 22% in November 2025. This high-rate environment makes local financing prohibitive and increases the cost of capital for all projects, even those with strong dollar-denominated revenue streams like oil exports.

Vaca Muerta development requires significant capital investment, projected in the billions of US dollars annually.

Pampa Energía's strategic pivot toward oil production in the Vaca Muerta shale formation is its most capital-intensive undertaking. The sheer scale of the required CapEx is a major economic factor, demanding continuous and substantial access to capital markets.

The company's planned capital investment for the Oil & Gas segment is projected at approximately US$950 million for the full fiscal year 2025. This is a massive commitment. The bulk of this is directed at the Rincón de Aranda block development, with an estimated investment of US$800 million in 2025.

Here is a summary of the Vaca Muerta capital commitment:

This investment is designed to increase oil production tenfold, with a target of 20,000 barrels per day by the end of 2025 at Rincón de Aranda. What this estimate hides is the reliance on the successful and timely completion of related infrastructure, such as the Vaca Muerta Sur pipeline, which is a multi-billion dollar project critical for export capacity.

Next step: Operations team should defintely track the government's quarterly subsidy payment schedule and Cammesa's debt clearance progress against the $163 million owed.

Pampa Energía S.A. (PAM) - PESTLE Analysis: Social factors

Public sensitivity to utility rate hikes (tariffs) influences political decisions

The political economy of energy tariffs in Argentina remains a high-stakes social factor for Pampa Energía S.A. The government's push to liberalize energy prices, which were heavily regulated under previous administrations, is directly tied to reducing massive state subsidies, but this move faces significant public resistance.

For Pampa Energía's regulated subsidiaries, like the gas transporter Transportadora de Gas del Sur (TGS) and the electricity transporter Transener, tariff updates have been a critical driver of profitability. The adjustment in the sector's price structure led to a significant increase in the Power Generation segment's gross margin, rising from $22/MWh in Q3 2024 to approximately $26.5/MWh in Q3 2025. This margin recovery is essential for investment but is politically sensitive.

Honestly, the social acceptance of these hikes is the main risk to continued deregulation. The political volatility, especially around the midterm elections in October 2025, directly threatens the stability of these recent tariff adjustments, which have been crucial for the Holding segment's improved performance and the overall adjusted EBITDA of $777 million for the first nine months of 2025.

Focus on local employment and community engagement near Vaca Muerta operations

Pampa Energía's aggressive expansion in the Vaca Muerta shale formation is a major social and economic commitment. The company is strategically focused on generating local employment and fostering community development in the Neuquén Basin to secure its license to operate and defintely support its long-term investment plan.

The company plans to invest US$700 million in its Rincón de Aranda block in Vaca Muerta in 2025, ramping up to US$1.5 billion by 2027. This level of capital expenditure generates substantial indirect and direct employment, which is vital for the local economies in the region.

The company's overall workforce, including teammates and contractors, is over 10,000 people. To support its operations, Pampa Energía reported increasing training hours per employee by 10% in 2023, showing a commitment to human capital development. This focus on local capacity building helps mitigate the social risk associated with large-scale resource extraction projects.

Growing demand for reliable, affordable energy from a rising middle class

Argentina's energy demand profile is shifting. The rising middle class requires more reliable and affordable energy to sustain its quality of life, which puts pressure on the national grid and supply chain. Natural gas and oil dominate the Argentine energy matrix, accounting for 53% and 31% respectively.

Pampa Energía is a key player in meeting this demand, especially through its natural gas production. The company's peak gas production from its Vaca Muerta blocks (El Mangrullo and Sierra Chata) reached over 16 million m³ per day during the winter of 2023. This domestic production is critical because it reduces the need for costly imports and subsidies, which directly improves the affordability and reliability of the energy supply for consumers.

While total electricity consumption per person has declined to 3,154 kWh (Sep 2024-Aug 2025 period), the overall economic recovery is expected to increase energy demand significantly. The company's investment in both gas and new wind capacity, such as the PEPE VI wind farm which added 95 MW by the end of Q3 2024, is a direct response to the need for a more robust and diversified energy system.

Increasing pressure from stakeholders for transparent Environmental, Social, and Governance (ESG) reporting

Investors and civil society are demanding greater transparency on ESG performance, especially for a large, integrated energy company like Pampa Energía. This pressure is not a 'nice-to-have' but a core component of attracting international capital.

The company responds by adhering to rigorous reporting standards, including the Global Reporting Initiative (GRI) and the Sustainability Accounting Standards Board (SASB). This commitment is evidenced by key social metrics reported in their sustainability disclosures:

The goal isn't just to report, but to show tangible results. The 0 fatalities metric is a powerful data point that demonstrates effective health and safety management, which is a key social risk indicator for the energy industry.

Pampa Energía S.A. (PAM) - PESTLE Analysis: Technological factors

The technological landscape for Pampa Energía S.A. is defined by a dual imperative: maximizing efficiency in its core Oil & Gas (O&G) segment through advanced extraction techniques and ensuring the resilience and flexibility of its vast Power Generation and Transmission assets. We are seeing a clear, aggressive pivot in capital expenditure (capex) toward proven, high-return unconventional technology in Vaca Muerta, but this also introduces new vulnerabilities, particularly in critical infrastructure cybersecurity.

Need for continuous investment in efficient combined-cycle gas turbines for power generation

Pampa Energía's power generation portfolio remains heavily reliant on thermal capacity, which accounts for approximately 76% of its total installed generation capacity. While the company has successfully maintained high operational efficiency-with unit availability rising to 96.8% in the first nine months of 2024-the competitive pressure to reduce marginal costs is intense. The move toward a spot electricity market based on marginal costs, as seen in Argentina's recent regulatory changes, makes older, less efficient turbines a financial liability.

To stay competitive and meet its commitment to a diversified energy mix, the company must continue upgrading its thermal fleet to combined-cycle gas turbines (CCGTs). A CCGT uses both a gas turbine and a steam turbine to generate up to 50% more electricity from the same fuel, significantly lowering the cost per megawatt-hour. The company's focus has also been on renewables, with the 139.5 MW Pepe VI wind farm commissioned in late 2024, but the thermal base still requires technological attention. Honestly, thermal fleet efficiency is the fastest way to boost the Power Generation segment's EBITDA in the near term.

Adoption of advanced drilling and completion techniques to maximize Vaca Muerta output

This is where Pampa Energía is placing its biggest technological bet for 2025. The company's strategic focus on the Rincón de Aranda block in Vaca Muerta is a direct commitment to advanced unconventional drilling technology, including horizontal drilling and multi-stage hydraulic fracturing (fracking). The total projected capital expenditure for the Rincón de Aranda block in 2025 is approximately US$700 million, underscoring the scale of this technological adoption.

The immediate payoff from this technological push is clear in the operational metrics. The company reported a significant increase in drilling and completion (D&C) efficiency in 2025:

• Drilling time reduction: approximately 15%
• Completion time reduction: approximately 13%
• Overall well cost reduction: 6% to 7%, from US$16 million to slightly above US$15 million per well

Here's the quick math: reducing the cost of a US$16 million well by 7% saves roughly US$1.12 million per well, which is critical for scaling production. This efficiency is driving production growth, with oil output at Rincón de Aranda reaching 17,300 barrels per day (b/d) in Q3 2025, a 220% year-on-year increase. The target is to exit 2025 at 20,000 b/d.

Grid modernization and smart-grid technologies to manage fluctuating power supply

Pampa Energía's subsidiary, Transener, is a strategic national asset, transporting approximately 85% of the electricity in Argentina. This transmission backbone is the key to managing the intermittency of new renewable energy sources like Pampa's own wind and hydro assets. Smart-grid technology-which includes advanced sensors, real-time data analytics, and automated fault detection-is not just an upgrade; it's a necessity for stability.

The challenge is that transmission and distribution are regulated monopolies, so investment is often tied to tariff approvals and government policy, which can be slow. Still, Transener must invest in Grid-Enhancing Technologies (GETs) like Dynamic Line Ratings (DLR) to maximize the capacity of existing lines and prevent costly system failures. Without these technologies, the grid's ability to seamlessly integrate new wind and solar power, and to manage demand peaks, is severely limited. That's a huge systemic risk for the entire country.

Cybersecurity is defintely a growing risk for critical energy infrastructure

As Pampa Energía integrates its Operational Technology (OT)-the systems that control power plants and pipeline valves-with its Information Technology (IT) networks for real-time monitoring and efficiency, its attack surface expands dramatically. This is a universal trend in the energy sector for 2025, which is increasingly targeted by sophisticated actors. The average cost of a data breach for a critical infrastructure organization like an energy company is a staggering $4.88 million, according to 2024 reports, with the annual cost of software supply chain attacks globally projected to reach $60 billion in 2025.

For a company that controls 85% of a nation's power transmission, a successful cyberattack could mean catastrophic physical disruption, not just data loss. The company must prioritize its cybersecurity spending to focus on:

• Implementing robust network segmentation between IT and OT systems.
• Investing in advanced threat detection for Supervisory Control and Data Acquisition (SCADA) systems.
• Developing a rapid incident response plan that accounts for physical system recovery.

Action: Finance: Draft a 13-week cash view by Friday to assess the liquidity impact of a potential US$5 million+ cyber incident, using industry benchmarks as a proxy for Pampa's exposure.

Pampa Energía S.A. (PAM) - PESTLE Analysis: Legal factors

Enforcement and stability of long-term power purchase agreements (PPAs) are crucial

The core legal risk in Argentina's energy sector is the stability of long-term contracts, especially Power Purchase Agreements (PPAs) with the wholesale market administrator, CAMMESA. You need to know exactly how much of your revenue stream is protected from local currency volatility and regulatory shifts.

As of early 2025, Pampa Energía has managed to secure a significant portion of its generation capacity in hard currency, which is defintely a risk mitigator. Still, 68% of the installed capacity is priced under the regulated Energía Base scheme in Argentine pesos, leaving that portion vulnerable to inflation and government-mandated price caps. The recent regulatory changes, like Decree No. 450/2025, are aimed at promoting competition and regulating payments, which helps, but the sovereign risk remains.

Here's the quick math on revenue exposure as of the latest reporting:

You need to keep a close eye on CAMMESA's financial health; historically, delays in payments to generators have been a major issue. The government's ability to cover the deficit between market inflows and outflows to generators is the single most important factor here.

Evolving labor laws and collective bargaining agreements in the energy sector

The Argentine government's 2024/2025 labor reforms introduce new flexibility but also new complexities that Pampa Energía must navigate through its collective bargaining agreements (CBAs). The changes are designed to reduce the cost and risk of hiring and termination, but the energy sector's powerful unions will push back.

The key legal changes impacting your workforce management are:

• Probationary Period: Extended from 3 to 6 months under Law 27.742, with the potential for further extension up to 8 or 12 months via sector-specific CBAs.
• Alternative Severance System: CBAs can now replace the traditional, high-cost severance compensation with a severance fund system, which shifts termination risk away from the company's balance sheet.
• Disciplinary Action: Participation in plant blockades or facility takeovers is now explicitly considered just cause for dismissal, a critical measure for maintaining operational continuity in a unionized industry.

The real action is in the negotiation. Pampa Energía must successfully incorporate these new legal options, particularly the Alternative Severance System, into its CBAs to realize the intended cost savings and risk reduction. If onboarding takes 14+ days due to union friction over new terms, churn risk rises.

Compliance with international anti-corruption and financial reporting standards

As a company listed on the New York Stock Exchange (NYSE:PAM), Pampa Energía is subject to stringent U.S. financial reporting and anti-corruption laws, including the Foreign Corrupt Practices Act (FCPA). Given the high-risk operating environment in Argentina, this compliance is not optional; it's a foundational requirement for accessing global capital.

The good news is that the company appears to be meeting these standards. The unaudited consolidated condensed interim financial statements for the period ended September 30, 2025, reviewed by Price Waterhouse & Co., indicated no significant issues regarding international financial reporting standards (IFRS) compliance. Also, the company's recent US$450 million notes offering in November 2025 was conducted in reliance on U.S. Rule 144A and Regulation S, a process that demands rigorous legal and financial disclosure.

Pampa Energía's compliance framework is aligned with the Corporate Governance principles of the OECD, which is the global gold standard. They have a formal Policy against Fraud, Corruption and Other Irregularities. That's a necessary, but not sufficient, defense.

Litigation risk related to environmental permits and land use rights

The company's aggressive expansion in the Vaca Muerta shale formation, especially the Rincón de Aranda block, significantly elevates its exposure to environmental and land-use litigation. This is where local community and indigenous rights intersect with large-scale industrial development. It's a major headwind.

A concrete example of this risk is the lawsuit filed by the Neuquén Mapuche Confederation, which names Pampa Energía along with other major operators like YPF S.A. and Pan American Energy. The complaint centers on allegations of 'dangerous waste' and 'deficient treatment' of fracking residue in the region, which directly threatens the social license to operate. The financial stakes are massive, considering Pampa's projected capital expenditure at Rincón de Aranda is estimated at US$700 million for the 2025 fiscal year alone, plus a $426 million investment in a new Central Processing Facility.

The legal risks here are two-fold:

• Permit Delays: Litigation can halt or delay key infrastructure projects, directly impacting the timeline for reaching the projected 20,000 barrels of oil equivalent per day production target by year-end 2025.
• Financial Liability: Adverse rulings could result in substantial fines, mandatory remediation costs, and long-term operational restrictions, which would severely impact the projected margin expansion at Rincón de Aranda.

The company must prioritize community relations and environmental risk management as a legal defense strategy. Finance: draft 13-week cash view by Friday, incorporating a 2% contingency for environmental litigation costs.

Pampa Energía S.A. (PAM) - PESTLE Analysis: Environmental factors

Here's the quick math: Argentina's energy needs are huge, so Pampa Energía S.A.'s core business is strong, but the political and economic instability acts as a massive discount factor on their valuation. Your next step should be this: Finance needs to model a 12-month cash flow view by Friday, stress-testing for a 25% currency devaluation scenario.

Managing water usage and wastewater disposal in the Vaca Muerta shale operations

The environmental risk in Pampa Energía's Oil and Gas segment, particularly in the Vaca Muerta shale formation, centers on water management. Shale operations require significant volumes of water for hydraulic fracturing (fracking) and then must manage the resulting flowback and produced water (wastewater). Pampa is actively investing in infrastructure to mitigate this risk, which is defintely a good sign.

The company is making a substantial investment of $426 million for a Central Processing Facility (CPF) and associated infrastructure at its Rincón de Aranda field. This facility, expected to start operations in 2026, includes dedicated water treatment pools for managing the massive increase in production. This is a critical investment because the company is planning a tenfold increase in oil production from this block by 2027.

While the new infrastructure is key, the sheer scale of the operation means regulatory and public scrutiny on water consumption will only grow. For context, Pampa reported reusing 751 thousand m³ of water across its operations in 2023, and that figure must scale dramatically with the Vaca Muerta expansion.

Transition towards renewable energy (wind and hydro) to meet regulatory targets

Argentina's national energy target mandates that 20% of the country's electricity demand be covered by renewable sources (excluding large hydro) by the end of 2025. As of May 2025, the country's actual coverage was still lagging at around 16.3%, so the pressure is on major generators like Pampa Energía S.A. to close that gap.

Pampa is one of the largest private generators and has been steadily increasing its clean capacity. As of December 31, 2024, the company's total installed generation capacity was 5,472 MW. The commissioning of the final turbines at the PEPE VI wind farm brought its total wind capacity to 139.5 MW.

The current mix highlights the challenge: Pampa's generation is still heavily reliant on thermal power, but the wind and hydro segments provide a hedge against future carbon pricing or stricter environmental regulations.

Strict adherence to emissions standards for natural gas processing and power plants

Compliance with emissions standards is a two-front battle for Pampa: managing carbon intensity from power generation and controlling methane (a potent greenhouse gas) from its oil and gas operations. Argentina's National Energy Secretariat created a program in 2023 that requires operators to develop five-year emissions-reduction plans, setting a clear regulatory framework.

Pampa reports a power generation carbon footprint of 0.36 tCO2e/MWh and an oil and gas carbon footprint of 24.4 kgCO2e/boe. These metrics are crucial for investors tracking Scope 1 and Scope 2 emissions.

To address methane leakage, a major environmental concern, Pampa is participating in projects that repurpose vented gas-gas that would otherwise be flared or released into the atmosphere-to generate electricity. This is a pragmatic, immediate step to reduce fugitive emissions and monetize waste gas.

Climate change impact on hydroelectric generation capacity due to changing rainfall patterns

Climate change poses a direct, physical risk to Pampa's 17% share of hydroelectric capacity, which includes major plants like Los Nihuiles Hydro Power Plant. Changing rainfall patterns, particularly prolonged droughts in the Andes region, directly reduce the water flow needed to generate power, impacting both capacity factor and revenue.

This environmental risk is compounded by a regulatory one: the concession for the Hidroeléctrica Los Nihuiles S.A. plant, which Pampa operates, entered a 12-month transition phase following its expiration, extending operations until May 31, 2025. The government's decision on the future concession-whether to renew, re-tender, or nationalize-will determine the long-term viability of this capacity, but the underlying threat of low water levels due to climate change remains a constant operational headwind.

• Hydro capacity is 17% of total installed capacity.
• Concession risk for Los Nihuiles extended to May 31, 2025.
• Lower water flow directly reduces profitable generation (GWh).