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Pampa Energia (PAM)

Document and Entity Information

Document and Entity Information12 Months Ended
Dec. 31, 2017shares
Document And Entity Information
Entity Registrant NamePampa Energy Inc.
Entity Central Index Key1469395
Document Type20-F
Document Period End DateDec. 31,
2017
Amendment Flagfalse
Current Fiscal Year End Date--12-31
Is Entity a Well-known Seasoned Issuer?Yes
Is Entity a Voluntary Filer?No
Is Entity's Reporting Status Current?Yes
Entity Filer CategoryLarge Accelerated Filer
Entity Common Stock, Shares Outstanding2,080,190,514
Document Fiscal Period FocusFY
Document Fiscal Year Focus2017

CONSOLIDATED STATEMENT OF FINAN

CONSOLIDATED STATEMENT OF FINANCIAL POSITION - ARS ($) $ in MillionsDec. 31, 2017Dec. 31, 2016
NON CURRENT ASSETS
Investments in joint ventures $ 4,930 $ 3,699
Investments in associates824 787
Property, plant and equipment41,214 41,001
Intangible assets1,586 2,103
Other assets2 13
Financial assets at fair value through profit and loss150 742
Financial assets at amortized cost0 62
Deferred tax assets1,306 1,232
Trade and other receivables5,042 4,469
Total non current assets55,054 54,108
CURRENT ASSETS
Other assets0 1
Inventories2,326 3,360
Financial assets at fair value through profit and loss14,613 4,188
Financial assets at amortized cost25 23
Derivative financial instruments4 13
Trade and other receivables19,145 14,144
Cash and cash equivalents799 1,421
Total current assets36,912 23,150
Assets classified as held for sale12,501 19
Total assets104,467 77,277
SHAREHOLDERS´ EQUITY
Share capital2,080 1,938
Share premium5,818 4,828
Treasury shares3 0
Treasury shares cost(72)0
Legal reserve300 232
Voluntary reserve5,146 3,862
Other reserves140 135
Retained earnings (Acumulated losses)3,243 (11)
Other comprehensive income252 70
Equity attributable to owners of the company16,910 11,054
Non-controlling interest3,202 3,020
Total equity20,112 14,074
NON CURRENT LIABILITIES
Trade and other payables6,404 5,336
Borrowings37,126 15,286
Deferred revenue195 200
Salaries and social security payable120 94
Defined benefit plans992 921
Deferred tax liabilities1,526 3,796
Income tax and minimum notional income tax provision863 934
Taxes payables366 306
Provisions4,435 6,267
Total non current liabilities52,027 33,140
CURRENT LIABILITIES
Trade and other payables18,052 12,867
Borrowings5,840 10,686
Deferred revenue3 1
Salaries and social security payable2,154 1,745
Defined benefit plans121 112
Income tax and minimum notional income tax provision943 1,454
Taxes payables1,965 2,392
Derivative financial instruments82 0
Provisions798 806
Total current liabilities29,958 30,063
Liabilities associated to assets classified as held for sale2,370 0
Total liabilities84,355 63,203
Total liabilities and equity $ 104,467 $ 77,277

CONSOLIDATED STATEMENT OF COMPR

CONSOLIDATED STATEMENT OF COMPREHENSIVE INCOME (LOSS) - ARS ($) $ in Millions12 Months Ended
Dec. 31, 2017Dec. 31, 2016Dec. 31, 2015
Statement of comprehensive income [abstract]
Revenue $ 50,347 $ 25,110 $ 7,106
Cost of sales(34,427)(20,153)(7,038)
Gross profit15,920 4,957 68
Selling expenses(2,904)(2,132)(973)
Administrative expenses(4,905)(3,628)(1,221)
Exploration expenses(44)(94)(3)
Other operating income3,388 4,164 6,517
Other operating expenses(2,951)(1,876)(769)
Reversal of impairment of property, plant and equipment461 0 25
Reversal of impairment of intangible assets82 0 0
Share of profit of joint ventures1,064 105 9
Share of profit (loss) from associates44 7 (10)
Income from the sale of subsidiaries and financial assets0 480 0
Operating income10,155 1,983 3,643
Finance income1,432 849 331
Finance costs(5,112)(4,277)(1,257)
Other financial results(2,266)(80)1,719
Financial results, net(5,946)(3,508)793
Profit (loss) before income tax4,209 (1,525)4,436
Income tax and minimum notional income tax1,367 1,201 (587)
Profit (Loss) of the year from continuing operations5,576 (324)3,849
Profit of the year from discontinued operations94 72 0
Profit (loss) of the year5,670 (252)3,849
Other comprehensive income (loss) items that will not be reclassified to profit or loss
Remeasurements related to defined benefit plans1 (30)(1)
Income tax0 10 0
Share of (loss) income from joint ventures(6)(5)1
Other comprehensive income (loss) Items that may be reclassified to profit or loss
Exchange differences on translation(93)(15)0
Income tax0 (12)0
Other comprehensive income of the year from continuing operations, net of tax(98)(52)0
Other comprehensive income of the year from discontinued operations603 249 0
Total comprehensive income (loss) of the year6,175 (55)3,849
Total income (loss) of the year attributable to:
Owners of the company4,606 (11)3,065
Non - controlling interest1,064 (241)784
Total income (loss) of the year5,670 (252)3,849
Total income (loss) of the year attributable to owners of the company:
Continuing operations4,623 (93)3,065
Discontinued operations(17)82 0
Total income (loss) of the year attributable to owners of the company4,606 (11)3,065
Total comprehensive income (loss) of the year attributable to:
Owners of the company4,788 90 3,066
Non - controlling interest1,387 (145)783
Total comprehensive income (loss) of the year6,175 (55)3,849
Total comprehensive income (loss) of the year attributable to owners of the company:
Continuing operations4,522 (142)3,066
Discontinued operations266 232 0
Total comprehensive income (loss) of the year attributable to owners of the company $ 4,788 $ 90 $ 3,066
Earnings per share attributable to the equity holders of the company during the year
Basic and diluted earnings (loss) per share from continuing operations $ 2.3455 $ (0.0536) $ 2.2760
Basic and diluted (loss) earnings per share from discontinued operations(0.0086)0.0472 .0000
Total basic and diluted earnings (loss) per share $ 2.3369 $ (0.0063) $ 2.2760

CONSOLIDATED STATEMENT OF CHANG

CONSOLIDATED STATEMENT OF CHANGES IN EQUITY - ARS ($) $ in MillionsShare capitalShare premiumTreasury sharesTreasury shares costLegal reserveReserve for directors’ optionsVoluntary reserveOther reservesOther comprehensive income / (loss) for the yearRetained earnings (Accumulated losses)SubtotalNon-controlling interestTotal
Beginning balance at Dec. 31, 2014 $ 1,314 $ 228 $ 0 $ 0 $ 14 $ 266 $ 272 $ 115 [1] $ (32) $ 743 $ 2,920 $ 633 $ 3,553
Constitution of legal reserve - Shareholders’ meeting37 (37)0 0
Constitution of voluntary reserve - Shareholders’ meeting706 (706)0 0
Issuance of shares on exercise of stock options382 883 (266)999 999
Dividends attributables to non-controlling interest(26)(26)
Sale of interest in subsidiaries5 [1]5 1 6
Acquisition of own shares0
Profit (loss) of the year3,065 3,065 784 3,849
Other comprehensive income / (loss) for the year1 1 (1)0
Ending balance at Dec. 31, 20151,696 1,111 0 0 51 0 978 120 [1](31)3,065 6,990 1,391 8,381
Constitution of legal reserve - Shareholders’ meeting153 (153)0 0
Constitution of voluntary reserve - Shareholders’ meeting2,912 (2,912)0 0
Recomposition of legal reserve - Shareholders’ meeting28 (28)0 0
Dividends attributables to non-controlling interest(82)(82)
Acquisition of subsidiaries7,869 7,869
Sale of interest in subsidiaries3 [1]3 1 4
Public offer for the acquisition of subsidiaries' shares141 1,387 1,528 (4,260)(2,732)
Acquisition of own shares0
Merger with subsidiaries101 2,330 2,431 (1,764)667
Stock compensation plans12 12 10 22
Profit (loss) of the year(11)(11)(241)(252)
Other comprehensive income / (loss) for the year101 101 96 197
Ending balance at Dec. 31, 20161,938 4,828 0 0 232 0 3,862 135 [1]70 (11)11,054 3,020 14,074
Beginning balance at Dec. 31, 20161,938 4,828 0 0 232 0 3,862 135 [1]70 (11)11,054 3,020 14,074
Constitution of legal reserve - Shareholders’ meeting68 (68)0 0
Constitution of voluntary reserve - Shareholders’ meeting1,284 (1,284)0 0
Dividends attributables to non-controlling interest(88)(88)
Acquisition of own shares(3)3 (72)(72)0 (72)
Merger with subsidiaries145 976 1,121 (1,121)0
Stock compensation plans14 5 19 4 23
Profit (loss) of the year4,606 4,606 1,064 5,670
Other comprehensive income / (loss) for the year182 182 323 505
Ending balance at Dec. 31, 2017 $ 2,080 $ 5,818 $ 3 $ (72) $ 300 $ 0 $ 5,146 $ 140 [1] $ 252 $ 3,243 $ 16,910 $ 3,202 $ 20,112
[1]Includes the result of operations with non-controlling interests that not representing a loss of control and reserves for stock-based compensation plans.

CONSOLIDATED STATEMENT OF CASH

CONSOLIDATED STATEMENT OF CASH FLOWS - ARS ($) $ in Millions12 Months Ended
Dec. 31, 2017Dec. 31, 2016Dec. 31, 2015
Cash flows from operating activities:
Total profit (loss) for the year from continuing operations $ 5,576 $ (324) $ 3,849
Total profit (loss) for the year from discontinued operations94 72 0
Adjustments to reconcile net profit (loss) to cash flows generated by operating activities:
Income tax and minimum notional income tax(1,367)(1,201)587
Accrued interest3,590 3,345 877
Depreciations and amortizations3,421 2,201 720
Constitution of allowances, net182 235 121
Constitution of provisions, net360 450 228
Share of (loss) profit of joint ventures and associates(1,108)(112)1
Accrual of defined benefit plans318 232 122
Net exchange differences3,558 1,099 566
Result from measurement at present value181 97 (23)
Changes in the fair value of financial instruments(1,446)(1,100)(2,244)
Results from property, plant and equipment sale and decreases37 85 9
Reversal of impairment of property, plant and equipment and intangible assets(543)0 (25)
Income from the sale of investments in subsidiaries0 (480)0
Recognition of income - provisional remedies - CAMMESA Note MEyM No. 2016-044847230 (1,126)0
Higher costs recognition - SE Resolution No. 250/13 and subsequent Notes0 (82)(551)
Income recognition on account of the RTI - Res. SE No. 32/150 (419)(496)
Gain from cancellation of TGS Loan0 0 (215)
Income recognition for arbitral proceedings0 0 (75)
Dividends received(33)(6)(4)
Compensation agreements645 502 223
Other financial results22 49 10
Onerous contract (Ship or pay)90 (150)0
Other54 (42)105
Changes in operating assets and liabilities:
Increase in trade receivables and other receivables(3,676)(3,495)(988)
(Increase) decrease in inventories(480)40 (90)
Increase in trade payables and other payables1,047 3,531 1,312
Increase in deferred income0 47 45
Increase in salaries and social security payable312 409 179
Decrease in defined benefit plans(100)(87)(36)
(Decrease) increase in tax payables(75)989 103
(Decrease) increase in provisions(1,198)232 (34)
Income tax and minimum notional income tax paid(1,284)(438)(121)
Constitution of guarantees of derivative financial instruments0 (214)0
Proceeds from derivative financial instruments560 57 185
Funds obtained from PUREE (SE Res. No. 1037/07)0 0 26
Net cash generated by operating activities from discontinued operations1,979 1,549 0
Net cash generated by operating activities10,716 5,945 4,366
Cash flows from investing activities:
Payment for property, plant and equipment(10,725)(6,244)(4,798)
Payment for financial assets(11,706)(221)(3,506)
Acquisition of intangible assets0 (29)0
Payment for companies' acquisitions0 (9,145)0
Proceeds from property, plant and equipment sale0 1,151 0
Proceeds from financial assets' sale and amortization9,272 3,650 2,282
Proceeds from sales of subsidiaries328 305 0
Dividends received40 64 4
Proceeds from loans22 6 1
(Subscription) recovery of investment funds, net(5,340)(107)(1,391)
Proceeds from the recovery of guarantee deposits0 0 293
Net cash used in investing activities from discontinued operations(1,176)(661)0
Net cash used in investing activities(19,285)(11,231)(7,115)
Cash flows from financing activities:
Proceeds from borrowings27,567 19,244 4,793
Payment of borrowings(16,150)(6,813)(2,281)
Payment of borrowings' interests(2,469)(1,519)(733)
Payment for acquisition of own shares(72)0 0
Capital contributions received0 0 999
Payment for the public offer for the acquisiton of subsidiaries' shares0 (3,233)0
Payments of dividends from subsidiaries to third parties(44)(37)(26)
Repayment of own debt(28)(893)(121)
Proceeds from sales of shares in subsidiaries0 3 6
Proceeds from salaries mutuum0 0 215
Net cash used in financing activities from discontinued operations(719)(922)0
Net cash generated by financing activities8,085 5,830 2,852
(Decrease) increase in cash and cash equivalents(484)544 103
Cash and cash equivalents at the beginning of the year1,421 517 335
Exchange difference generated by cash and cash equivalents23 360 79
Cash and cash equivalents classified as held for sale(161)0 0
(Decrease) increase in cash and cash equivalents(484)544 103
Cash and cash equivalents at the end of the year799 1,421 517
Significant non-cash transactions from continued operations:
Acquisition of property, plant and equipment through an increase in trade payables(2,418)(537)(989)
Borrowing costs capitalized in property, plant and equipment(369)(419)(434)
Decrease in borrowings through offsetting with trade receivables(4)(242)(92)
Increase in asset retirement obligation provision(9)(158)(27)
(Constitution) Recovery of guarantee of derivative financial instruments, net through the delivery of financial assets at fair value through profit or loss459 95 (138)
Outstanding receivable for the sale of interests in subsidiaries and financial assets0 (1,200)0
Decrease of loans through the delivery of subsidiaries’ shares0 (1,179)0
Decrease in loans through compensation with other credits0 (1,951)0
Property, Plant and Equipment decrease due to Transactional Agreement0 0 236
Offsetting of loans through the delivery of rights over arbitral actions0 0 (308)
Amounts received from CAMMESA through FOCEDE for investment loan0 0 724
Increase from offsetting of PUREE-related liability against receivables (SE Res. No. 250/13, subsequent Notes and SE Res. 32/15)0 0 11
Increase from offsetting of liability with CAMMESA for electricity purchases against receivables (SE Res. No. 250/13, subsequent Notes and SE Res. 32/15)0 0 158
Decrease from offseting of other liabilities with CAMMESA from loans for consumption (Mutuums) granted for higher salary costs against receivables (SE Resolution 32/15)0 0 (496)
Collection of other credits through the delivery of government bonds0 502 0
Significant non-cash transactions from discontinued operations:
Acquisition of property, plant and equipment through an increase in trade payables(9)(39)0
Decrease (increase) in asset retirement obligation provision306 (204)0
Receivable for property, plant and equipment sale, pending of collection $ 364 $ 0 $ 0

1. GENERAL INFORMATION AND GROU

1. GENERAL INFORMATION AND GROUP STRUCTURE12 Months Ended
Dec. 31, 2017
General Information And Group Structure
GENERAL INFORMATION AND GROUP STRUCTURE1.1 General information The Company is the largest fully
integrated power company in Argentina and, directly and through its subsidiaries, it participates in the electricity and oil and
gas value chains. In the generation segment, the Company
has a 3,756 MW installed capacity, which represents approximately 10.3% of Argentina’s installed capacity, and is the third
largest independent generator in the country. Additionally, the Company is currently undergoing a process to expand its capacity
by 598 MW. In the electricity distribution
segment, the Company has a controlling interest in Edenor, the largest electricity distributor in Argentina, which has 3 million
customers and a concession area covering the Northern part of the City of Buenos Aires and Northwestern Zone of Greater Buenos
Aires. In the oil and gas segment, the
Company is one of the leading oil and natural gas producers in Argentina, with operations in 16 production areas and 9 exploratory
areas and an average annual production level for the year 2017 (without considering the production of the
Medanito-La Pampa area for the benefit of PEPASA) Due to the divestment mentioned in Note 1.5.2, certain assets
from de segment and the liabilities associated have been classified as held for sale. In the refining and distribution
segment, the Company owns the Dr. Ricardo Eliçabe Refinery in the City of Bahía Blanca, which has a 30,200 barrels/day
capacity, and has a 28.5% interest in Refinor (owner of a refinery located in the Province of Salta, and 81 gas stations in
Northern Argentina). Furthermore, the Company sells fuels through a network of 250 gas stations located in the center and south
of the country, and the Dock Sud and Caleta Paula Terminals. Additionally, the Company produces lubricants in its Avellaneda industrial
plant. Due to the divestment mentioned in Note 1.5.1, certain assets from de segment and the liabilities
associated have been classified as held for sale. In the petrochemicals segment, the
Company has three high-complexity plants producing a wide variety of petrochemical products, including styrenics and synthetic
rubber, and holding a large market share. Finally, through its holding and
others segment, the Company participates in the electricity and gas transportation businesses, conducts financial investment transactions
and maintains investments in complementary businesses. In the transmission business, the Company jointly controls Citelec, which
has a controlling interest in Transener, a company engaged in the operation and maintenance of a 20,718 km high-voltage electricity
transmission network in Argentina with an 85% share in the Argentine electricity transmission market. In the gas transportation
business, the Company jointly controls CIESA, which has a controlling interest in TGS, a company holding a concession for the transportation
of natural gas with 9,184 km of gas pipelines in the center, west and south of Argentina, and which is also engaged in the processing
and sale of natural gas liquids through the Cerri Complex 1.2. Acquisition of PPSL’s
Capital stock On May 13, 2016, Petrobras Internacional
Braspetro B.V. (“Petrobras Holland”), a subsidiary of Petróleo Brasileiro S.A. (“Petrobras Brazil”)
and the Company executed a share purchase agreement for the acquisition by the Company of the whole capital stock of PPSL, which
holds 67.1933% of the capital stock and voting rights in Petrobras (respectively, the “Share Purchase Agreement” and
the “Transaction”). As part of the Transaction and the purchase price, the Company acquired a Petrobras Holland credit
with PPSL (the “PPSL Credit”) for an amount to US$ 80 million. On July 27, 2016, the Transaction
was closed upon the meeting of all applicable conditions precedent. On November 21, 2016, the parties agreed on certain adjustments
to the Transaction’s final price, which was set at US$900 million, financed as follows: a) cash from the Company US$
278 million; b) syndicated loan US$ 271 million c) funds obtained from the sale of TGS US$ 161 million; d) YPF financing US$ 140
million; and e) EMES financing US$ 50 million. The following operations were completed
after the closing of the Transaction:
(i) On October 27, 2017, an affiliate of Petrobras Brazil acquired 33.6% of all rights and obligations in the concession over the Neuquén River area for an amount of US$ 72 million, and 100% of the rights and obligations pursuant to the Operating Agreement entered into by Petrobras, Bolivia branch, and YPF Bolivia regarding the Colpa and Caranda areas in Bolivia for a negative value of US$ 20 million.
(ii) On October 14, 2017, YPF acquired of Petrobras 33.33% of all rights and obligations in the concession over the Río Neuquén area for the amount of US$ 72 million and the 80% interest in the concession on 1.2.1 Fair value of the acquisition The following table details the
fair value of the transferred consideration, the fair values of the acquired assets, the assumed liabilities and the non-controlling
interest corresponding to PPSL’s acquisitions as at July 27, 2016 (in millions of Argentine Pesos):
Purchase price allocation
Cash payment 13,362
Total consideration transferred 13,362
Investments in joint ventures 3,407 (a)
Investments in associates 777 (b)
Financial assets at amortized cost 21,801 (c)
Intangible assets 224 (d)
Financial assets at fair value through profit and loss 653 (b)
Financial assets at amortized cost 315
Trade and other receivables 7,256 (e)
Inventories 3,072
Cash and cash equivalents 4,384
Non current assets classified as held for sale 3,405
Trade and other payables (4,324)
Borrowings (7,434)
Salaries and social security payable (383)
Defined benefit plans (484)
Deferred tax liabilities (4,096)
Taxes payables (859)
Provisions (5,793) (f)
Liabilities associated with assets classified as held for sale (240)
Income tax and minimum notional income tax provision (1,444)
Non-controlling interest (7,869) (g)
Goodwill 994 (h)
Total purchase price allocation 13,362
(a) Interests in joint ventures
(b) Interests in associates:
- Interests in mixed companies in Venezuela Since the acquisition of
PPSL entailed a change in Petrobras’ indirect parent company, the written authorization by the Venezuelan Government required
by section 6.3 of the timely executed Conversion Contracts should be obtained. Given that as of the date of the acquisition of
PPSL, the authorizations regarding the change of indirect control by the Government of Venezuela were not obtained, and considering
the fact that the contracts of mixed companies provide the mandatory transfer of the shares for these cases, the Company has determined
market value for its investment as of the date of acquisition was zero, considering: i) the monetary and fiscal policies implemented
by the Venezuelan government together with the significant drop in international oil prices since 2014 that have eroded the ability
of the mixed companies to efficiently operate the producing fields that resulted in increasing losses and reduction of equity in
those investments, and ii) that there is very unlikely to acquire these assets in a stand-alone transaction, as conversion contracts
establish that the transfer of direct control of the shares without obtaining prior approval of Venezuelan Government, implies
that such participation is considered finished and all of the shares shall be transferred without any consideration in exchange
for those shares. As of the issuance of these financial statements, the Company has not obtained the above-mentioned authorizations;
however the Company is working on the requirements of the Government of Venezuela´s authorities, including the presentation
of development and remediation plans for the respective areas.
- Other associates and other investments classified as financial asset at fair value through profit and loss
(c) Property, plant and equipment:
- Mining Property:
- Other Property, plant and equipment
(d) Intangible Assets Useful life was based on
the amount and the moment on which the Company expects to derive economic benefits. It was assigned an average useful life of five
years based, among other factors, on the contractual agreements, consumers’ behaviors and economic factors associated with
the combined companies.
(e) Acquired Receivables
(f) Contingent Liabilities In March 2017, and as a result
of the Company’s adherence to the regularization regime (moratorium) regarding certain identified liabilities (see detail
in Note 43), which granted certain benefits consisting of the forgiveness of tax fines and a reduction of compensatory interest,
a payment obligation in the amount of $ 171 million was generated in favor of Petrobras Brasil as contingent consideration
under the share purchase agreement on account of the acquisition of Petrobras paid in April 18, 2017.
(g) Non-controlling interest in Petrobras
(h) Goodwill The Company has incurred in transaction
expenses associated with the acquisition of PPSL, the mandatory tender offer and voluntary public offer for the exchange of Petrobras’shares
in the amount of $ 305 million during the fiscal year ended December 31, 2016, mainly corresponding to fees and advisory
services included in Administrative Expenses in the Statement of Comprehensive Income. As a result of the acquisition of
PPSL, the Company paid $ 13,362 million, which net of cash and cash equivalent acquired of $ 4,384, results in a net cash flow
of $ 8,978, which is disclosed in the line “Payment for companies’ acquisitions” in statement of cash flow within
investment activities. 1.2.2 Mandatory tender offer
and voluntary public offer for the exchange of Petrobras’shares (the “offers”) Pursuant to the provisions of Sections
87 and following provisions of Capital Market Act No. 26,831 and Section II, Chapter II, Title III of the CNV provisions on mandatory
tender offers on account of changes of control and acquisition of significant indirect interests, on May 20, 2016 the Company's
Board of Directors resolved to make a tender offer for the acquisition of the 662,445,264 Petrobras’ shares held by the investing
public, which represent 32.81% of the capital stock and voting rights in Petrobras (the “Cash Acquisition Offer”),
subject to the Transaction Close and the approval of the Cash Acquisition Offer by the CNV and the SEC. Furthermore, the Board
of Directors decided to launch a voluntary public offer for the exchange of Petrobras’ shares, (the “Exchange Offer”)
subject to the same conditions applicable to the Cash Acquisition Offer to avoid a higher use of cash or greater financial indebtedness
to meet the Cash Acquisition Offer. The authorization to make the Offer
to Petrobras’ minority shareholders at a price per share of US$ 0.6825 which, converted into pesos at the official exchange
rate at the Transaction’s closing date, amounts to $ 10.3735, was granted through an ordinance issued by the CNV’s
Board of Directors on September 22, 2016 and Resolution No. 18,243 issued by the CNV on September 28, 2016 (approving the issuance
of Pampa Shares). On October 3, 2016, the Company requested the SEC to expedite the effectiveness of the International Tender Offer,
which was granted on October 6, 2016 and finishing on November 14, 2016. On November 22 and 23, 2016 the
Offers were completed with the following results:
(i) In the domestic tranche, 365,532,273 Petrobras’ common shares were submitted, out of which 311,669,706 shares opted for the Cash Acquisition Offer at a price of $ 10.3735 per share, which entailed a $ 3,233.1 million disbursement; and 53,862,567 shares were exchanged for the Company’s common shares at a 0.5253 ratio, which entailed the issuance of 28,294,006 new Company common shares. (ii)
In the international tranche, 21,388,145 Petrobras’ ADRs were submitted to the Exchange Offer and were exchanged for
ADSs of the Company at a 0.2101 ratio, which entailed the issuance of 4,493,649 ADSs of the Company, equivalent
to 112,341,232 shares of the Company. As
a result of the Offers, the Company has increased its direct and indirect interests in Petrobras to 90.4%. 1.3. Sale of participations 1.3.1. Sale and swap of indirect
interest in TGS On July 18, 2016, the Company executed
an agreement with Grupo Inversor Petroquímica S.L. (members of the GIP Group, headed by the Sielecki family), WST S.A. and
PCT L.L.C. (members of the Werthein group) (jointly, the “Purchasers”) for the sale of 25.5% indirect interest in TGS
(through PEPCA, owner of a 10% equity interest in CIESA and through other subsidiaries rightholders as the only beneficiary of
the trust that owns 40% equity interest in CIESA, the “interest in TGS”) for a base price of US$ 241 million,
subject to certain adjustments resulting from PEPCA’s financial position at the closing of the transaction. As part of the conditions for the
closing of the transaction, the Purchasers agreed to assume the risk in case the necessary regulatory approvals are not obtained.
Furthermore, and subject to the closing of the acquisition of PPSL, the Company acquired an option, valid until February 2017,
to swap the rights as sole beneficiary of the CIESA Trust in exchange of the shares of PHA, which holds 25% of CIESA and 15% of
CIESA’s shares, both of which are owned by Petrobras Argentina. (the “Exchange”). On July 27, 2016 the transaction was perfected
and the economic impact of the transaction reached to a gain of approximately $ 480 million. On January 11, 2017, the CNDC approved
the acquisition by the Company of 40% of CIESA’s capital stock, an interest that had been acquired by the Company through
CIESA’s financial debt swap executed on July, 2012 and 100% of PEPCA shares acquired on March, 2011. On January 17, 2017, the exchange
whereby the Purchasers transferred to PHA their capacity as beneficiaries and trustees of the trust holding 40% of CIESA's capital
stock and voting rights, and the Company and PHA transferred to the Purchasers shares representing 40% of CIESA’s capital
stock and voting rights, was perfected; the Group thus keeping a 10% direct interest in CIESA's capital stock and voting rights.
The Exchange was approved by ENARGAS on December 29, 2016. The Purchasers and the Company’s direct and indirect interests
in TGS remain unaltered as a result of the Exchange. Furthermore, on this same date the
Purchasers paid the balance of the purchase price for a total amount of US$ 80 million plus applicable interest. 1.3.2. Sale of interest in Greenwind With the purpose of incorporating into
the project a strategic partner contributing part of the investments necessary for the development of the Corti Wind Farm, on March
10, 2017, CTLL and PP entered into an agreement with Valdatana Servicios y Gestiones S.L.U., an entity which later changed its
name to Viento Solutions S.L. for the sale of 50% of Greenwind’s capital stock and rights for a total amount of US$ 11.2 million. As a result of the transaction, the Company
has deconsolidated Greenwind's assets and liabilities and presents its interest in the joint venture based on the equity method
of accounting. 1.4. Corporate reorganization The corporate reorganizations mentioned
below are carried out in order to obtain important benefits for the Company and all its corporate group, as it will allow for enhanced
operating efficiency; an optimized use of available resources; the leveraging of technical, administrative and financial structures;
and the implementation of converging policies, strategies and goals. Furthermore, the high complementarity between the participating
companies will be leveraged, thus reducing costs resulting from the duplication and overlapping of operating and administrative
structures. This reorganization was perfected
by means of a merger through absorption process, under the terms of tax neutrality pursuant to articles
77 and following of the Income Tax Law, The Absorbing Company and the Absorbed
Companies are currently performing the necessary procedures before the applicable entities in order to obtain the authorizations,
registrations and recordings necessary for the Absorbing Company to operate as the continuing company in the merger. Notwithstanding
that, in view of the need to request and obtain a large number of authorizations, registrations and recordings which must be granted
by several national, provincial and municipal entities and the impossibility to obtain such approvals on a simultaneous basis,
some absorbed companies will exceptionally continue operating and performing certain activities on behalf and at the expense of
the Absorbing Company with the sole purpose of not hindering their course of business until all authorizations, registrations and
recordings are finally obtained. 1.4.1. 2016 Reorganization: On August 10, 2016, the Company
and Petrobras’ Board of Directors resolved to instruct both managements to initiate all necessary tasks and procedures to
merge Pampa Energía, as acquiring company, with Petrobras, as acquired company Furthermore, the management of both
companies considered it appropriate that under such merger, two Petrobras’ subsidiaries should be incorporated as absorbed
companies: PEISA (95% through a direct interest and 5% through an indirect interest) and Albares (100% direct interest). The merger was effective as of November
1, 2016, date on which the transfer to the absorbing company of all the rights and obligations, assets and liabilities of Petrobras,
PEISA and Albares became effective, all of which subject to the corresponding corporate approvals under the applicable law and
the registration with the Registry of Commerce of the merger and the dissolution without liquidation of the absorbed companies. Pursuant to the PMC approved by
the Board of Directors of the participating companies
(i) each Petrobras’ minority shareholder will receive 0.5253 common shares of the Company with a face value of $ 1 each and each granting the right to one vote for each share it held before the merger.
(ii) each minority holder of Petrobras’ ADRs will receive 0.2101 ADSs of the Company for each Petrobras’ ADR it held before the merger. As regards
PEISA and Albares, as Petrobras holds 100% of the capital stock of such companies, no capital stock increase will be necessary
and, consequently, there will be no exchange ratio for the shares of these companies. On February
16, 2017, the Extraordinary General Meetings of Shareholders approved the merger of Pampa Energía —as acquiring company—
with Petrobras, PEISA and Albares —as acquired companies— in agreement with the terms of the PMC. On April 19, 2017,
the final merger agreement was entered into. Once the exchange
of shares is perfected, the Company will issue 101,873,741 common shares with a face value of $ 1 each and each granting
the right to one vote and, after the merger through absorption is effected, the Company’s capital stock will be made up of
1,938,368,431 common shares. Pursuant to the provisions of Chapter
X of the CNV provisions, the Company has filed a merger authorization proceeding before this entity and obtained from the CNV its
authorization to publish the merger prospectus On February
26, 2018, the CNV notified the Company that, under the proceeding investigating the sale of Petrobras Argentina’s shares
held by FGS-ANSES in the MTO, Federal Criminal and Correctional Court No. 11, Clerk’s Office No. 22, ordered it to refrain
from adopting any measures and/or final resolution on the merits of the case without the prior approval by this Court, where the
Company’s corporate reorganization case is being heard. It is worth highlighting that this proceeding does not deal with
the merger but with the voluntary participation of shareholder FGS-ANSES in Petrobras Argentina's cash purchase offer under the
MTO that the Company was forced to launch when it indirectly acquired 67.1933% of Petrobras Argentina's capital stock. The reorganization
process took place after the MTO and was completely independent from it, and FGS-ANSES did not take part in it since, at that time,
it was not a Petrobras Argentina’s shareholder. The delay in the registration of the merger
directly affects approximately 6,250 domestic and foreign shareholders of Petrobras Argentina that are awaiting the share exchange
which will take place after the registration of the merger. Therefore, the Company understands that
the above-mentioned judicial proceeding is completely unrelated to the merger and has not exercised any influence on it, and will
continue promoting the measures necessary to obtain the registration of the merger. 1.4.2. 2017 Reorganization: On June 26, 2017, the Board of Directors
instructed the Company’s Management to start the proceedings allowing to evaluate the benefits of a merger through absorption
process between the Company, as absorbing company, and certain companies of the group, as absorbed companies. On September 22, 2017, the Company’s
Board of Directors informed that the companies which will take part in these merger will be the Company, as absorbing company,
and BLL, CTG, CTLL, EG3 Red, INDISA, INNISA, IPB, PP II and PEPASA, as absorbed companies. The merger became effective on October
1, 2017, date as from which the transfer of the absorbed companies’ equity to the absorbing company became effective and,
therefore, all their rights and obligations, assets and liabilities will become incorporated into the absorbing company’s
equity, all of which subject to the corresponding corporate approvals under the applicable law and the registration with the Public
Registry of Commerce of the merger and the dissolution without liquidation of the absorbed companies. Except for PEPASA, CTG, INNISA and INDISA,
companies with third parties’ shareholding, there was no exchange ratio for the other companies subject-matter of the merger
as the Company directly and/or indirectly held 100% of the capital stock of such companies. Since PEPASA and the Company’s assets
are subject to the public offering system and listed in ByMA, the Board of Directors decided to propose to the Shareholders’
Meeting an exchange ratio based on the volume-weighted average price of the Company and PEPASA’s shares traded over the last
six months, determined retroactively as from the Board meeting’s date on September 22, 2017, with a resulting exchange ratio
of 2,2699 common shares with a face value of $ 1 each and each granting the right to one vote for each PEPASA common share in book-entry
form with a face value of $ 1 and granting the right to one vote. Pursuant to the CPF approved on December,
21, 2017 by the Board of Directors of the participating companies
(i) each PEPASA’ minority shareholder will receive 2,2699 common shares of the Company with a face value of $ 1 each and each granting the right to one vote for each share it held before the merger;
(ii) each INNISA’ minority shareholder will receive 0,2644 common shares of the Company with a face value of $ 1 each and each granting the right to one vote for each share it held before the merger;
(iii) each INDISA’ minority shareholder will receive 0,1832 common shares of the Company with a face value of $ 1 each and each granting the right to one vote for each share it held before the merger;
(iv) each CTG’ minority shareholder will receive 0,6079 common shares of the Company with a face value of $ 1 each and each granting the right to one vote for each share it held before the merger. Once the exchange
of shares is perfected, the Company will issue 144.322.083 common shares with a face value of $ 1 each and each granting the
right to one vote and, after the merger through absorption is effected, the Company’s capital stock will be made up of 2.080.190.514
common shares. The Company has recognized the effects of this exchange under Shareholders’ Equity in the Consolidated Statement
of Changes in Shareholders’ Equity. As of the
issuance of these financial statements, the CNV’s authorization to the publication of the merger prospectus, the approval
of the merger by each company’s shareholders’ meetings and the registration of the merger with the applicable controlling
authorities are still pending. 1.4.3.
Merger of Subsidiaries The merger's effective date detailed
below 1.4.3.1. CTLL, EASA and IEASA On December 7 and 22, 2016, the
Board of Directors of CTLL, EASA and IEASA resolved to initiate all necessary tasks and procedures for the merger through absorption
among CTLL, as absorbing company, and EASA and IEASA, as absorbed companies. In analyzing this reorganization,
EASA’s management concluded that, in order for the process to be viable, it was necessary to capitalize the debt EASA held
with holders of Series A and B Discount Corporate Bonds issued on July 19, 2006 and maturing in 2021. On March 27, 2017 EASA’s
Extraordinary General Meeting of Shareholders resolved to capitalize such CBs, which was accepted by PISA in its capacity as sole
holder. Pursuant to Board Resolution No.
347 passed on August 11, 2017, the ENRE resolved, by a majority of votes, to reject the request for merger authorization submitted
by EDENOR and EASA, and these companies appealed this resolution timely and in due form on considering that it did not conform
to law. On December 26, 2017 EASA was served notice of MEyM Resolution No. 501 upholding the filed appeal, revoking ENRE’s
Board of Directors’ Resolution No. 347 and sustaining the merger authorization request. On January 18, 2018, the shareholders’
meetings of the intervening companies approved the merger and on February 19, 2018, the merger final agreement was entered into. As of the issuance of these financial
statements, the merger is pending registration with the Public Registry, to which effect the intervening companies are filing all
applicable presentations with the corresponding bodies. 1.4.3.2. PACOSA and WEBSA On December 7, 2016, the Boards
of Directors of PACOSA and WEBSA resolved to begin all necessary tasks and procedures for the merger through absorption between
PACOSA, as absorbing company, and WEBSA as absorbed company. On March 7, 2017, the shareholders’
meetings of the intervening companies approved the merger, and on May 30, 2017 the merger final agreement was entered into. As of the issuance of these financial
statements, the merger is pending registration with the Public Registry, to which effect the intervening companies are filing all
applicable presentations with the corresponding bodies. 1.5. Assets classified as held for sale,
related liabilities and discontinued operations 1.5.1. Sale of assets in the Refining
and Distribution segment On December 7, 2017, the Company executed
with Trafigura Ventures B.V and Trafigura Argentina S.A. an agreement for the sale of certain assets in the Company’s refining
and distribution segment based on the conviction that the oil refining and distribution business calls for a larger scale to attain
sustainability. The closing of the transaction, which is subject to the meeting of certain conditions precedent, such
as respective government approvals The assets subject-matter of the transaction
are as follows: (i) the Ricardo Eliçabe refinery; (ii) the Avellaneda lubricants plant; (iii) the Caleta Paula reception and
dispatch plant; and (iv) the network of gas stations currently operated under Petrobras branding. The Dock Sud storage facility is excluded
from the sale, as well as the Company's investment in Refinería del Norte S.A. The transaction
price comprises US $ 90 million in cash that includes the usual working capital of the business, which will be adjusted when the
transaction is completed and an additional amount financed that will be determined at the close of the transaction, according to
the methodology established in the contract. Pursuant
to the foregoing, as of December 31, 2017, assets and liabilities subject to this transaction have been classified as held for
sale, and the results for affected operations have been disclosed under “Discontinued Operations” in the consolidated
statement of comprehensive income and in the consolidated statement of cash flows. As this business has been acquired through the
acquisition of PPSL, financial information reflects the effect of consolidation from July 27, 2016 when de acquisition was consummated.
it involved the recognition of an impairment of Intangible assets and Property,
plant and equipment in the amount of $ 1.5.2. Sale of PELSA shares and certain
oil areas On January 16, 2018, the Company agreed
to sell to Vista Oil & Gas S.A.B. de C.V. (“Vista”) its direct 58.88% interest in PELSA and its direct interests
in the Entre Lomas, Bajada del Palo, Agua Amarga and Medanito-Jagüel de los Machos blocks, in line with the Company's strategy
to focus its investments and human resources both on the expansion of its power generation installed capacity and on the exploration
and production of natural gas, placing a special focus on the development and exploitation of unconventional gas reserves, as well
as to continue investing on the development of its utility concessions. The sale price amounts to US$ 360 million.
The closing of the transaction is subject to the meeting of certain conditions precedent, including approval by shareholders meeting
of Vista. The Company expects that it will represent earnings before taxes in the amount of approximately $ 1.400 million,
which will be adjusted at the time of closing the transaction. Consequently, as of December 31, 2017,
assets and liabilities subject to this transaction have been classified as held for sale, and the results for affected operations
have been disclosed under “Discontinued Operations” in the consolidated Statement of comprehensive income and in the
consolidated statement of cash flows. As this business has been acquired through the acquisition of
PPSL, financial information reflects the effect of consolidation from July 27, 2016 when de acquisition was consummated. The consolidated statement
of comprehensive income related to discontinued operations is presented below: As of December 31, 2017:
Oil and gas Refining y distribution Eliminations Total
Revenue 5,972 16,795 (6,890) 15,877
Cost of sales (4,840) (14,256) 6,906 (12,190)
Gross profit 1,132 2,539 16 3,687
Selling expenses (182) (1,957) - (2,139)
Administrative expenses (127) (80) - (207)
Exploration expenses (19) - - (19)
Other operating income 377 223 - 600
Other operating expenses (181) (110) - (291)
Impairment of non current assets classified as held for sale - (687) - (687)
Operating income (loss) 1,000 (72) 16 944
Finance income 22 15 - 37
Finance expenses - (16) - (16)
Other financial results (239) (14) - (253)
Financial results, net (217) (15) - (232)
Income (loss) before income tax 783 (87) 16 712
-
Income tax and minimum notional income tax (662) 44 - (618)
Profit (loss) of the year for discontinued operations 121 (43) 16 94
Other comprehensive income
Items that will not be reclassified to profit or loss
Remeasurements related to defined benefit plans (7) 17 - 10
Income tax (174) (6) - (180)
Items that may be reclassified to profit or loss -
Exchange differences on translation 773 - - 773
Other comprehensive income of the year for discontinued operations 592 11 - 603
Total comprehensive income (loss) of the year for discontinued operations 713 (32) 16 697
Oil and gas Refining y distribution Eliminations Total
Total income (loss) of the year for discontinued operations attributable to:
Owners of the company 10 (43) 16 (17)
Non - controlling interest 111 - - 111
121 (43) 16 94
Total comprehensive income (loss) of the year for discontinued operations attributable to:
Owners of the company 282 (32) 16 266
Non - controlling interest 431 - - 431
713 (32) 16 697 As of December 31, 2016:
Oil and gas Refining y distribution Eliminations Total
Revenue 2,456 6,550 (2,821) 6,185
Cost of sales (1,941) (5,973) 2,931 (4,983)
Gross profit 515 577 110 1,202
Selling expenses (63) (757) - (820)
Administrative expenses (25) (23) - (48)
Exploration expenses (41) - - (41)
Other operating income 235 459 (377) 317
Other operating expenses (656) (98) 377 (377)
Operating income (35) 158 110 233
Finance income 38 6 - 44
Finance expenses (10) (9) - (19)
Other financial results (43) (40) - (83)
Financial results, net (15) (43) - (58)
Income (loss) before income tax (50) 115 110 175
Income tax and minimum notional income tax (24) (40) (39) (103)
Profit (loss) of the year for discontinued operations (74) 75 71 72
Other comprehensive income
Items that will not be reclassified to profit or loss
Remeasurements related to defined benefit plans (62) 14 - (48)
Income tax 22 (5) - 17
Items that may be reclassified to profit or loss -
Exchange difference

2. REGULATORY FRAMEWORK

2. REGULATORY FRAMEWORK12 Months Ended
Dec. 31, 2017
Regulatory Framework
REGULATORY FRAMEWORK2.1 Generation 2.1.1 Emergency in the National Electricity
Sector On December 16, 2015, the National Government
issued Executive Order No. 134/2015 declaring the state of emergency in the electrical sector until December 31, 2017 and
instructing the MEyM to adopt the necessary measures applicable to the generation, transmission and distribution business in order
to upgrade the quality and safety of the supply and to secure the provision of the electricity public service under proper economic
and technical conditions. 2.1.2. Generation units The Company’s revenues from the electric
power generation activity come from: i) sales to the Spot market pursuant to the provisions applicable within the WEM administered
by CAMMESA (SEE Resolutions No. 22/2016 and 19/2017); ii) sales contracts with large users within the MAT (Resolutions No. 1,281/2006
and No. 281/2017); and iii) supply agreements with CAMMESA (Resolutions No. 220/2007, 21/2016, 420/2017 and Renovar Programs).
Furthermore, energy not committed under sales contracts with large users within the MAT and with CAMMESA will be remunerated at
the Spot market. The Company’s generating units are
detailed below: In operation:
Generator Generating unit Tecnology Power Applicable regime
CTG GUEMTG01 TG 101 MW Energy Plus Res. N° 1281/06 and SEE Resoluion N° 19/2017 (1)
CTG GUEMTV11 TV ≤100 MW SE Resolutions No. 22/2016 and 19/2017
CTG GUEMTV12 TV ≤100 MW SE Resolutions No. 22/2016 and 19/2017
CTG GUEMTV13 TV >100 MW SE Resolutions No. 22/2016 and 19/2017
Piquirenda PIQIDI 01-10 MG 30 MW SE Resolution No. 220/2007 (1)
CPB BBLATV29 TV >100 MW SE Resolutions No. 22/2016 and 19/2017
CPB BBLATV30 TV >100 MW SE Resolutions No. 22/2016 and 19/2017
CT Ing. White BBLMD01-06 MG 100 MW SEE Resolution No. 21/2016 (1)
CTLL LDLATG01 TG >50 MW SE Resolutions No. 22/2016 and 19/2017
CTLL LDLATG02 TG >50 MW SE Resolutions No. 22/2016 and 19/2017
CTLL LDLATG03 TG >50 MW SE Resolutions No. 22/2016 and 19/2017
CTLL LDLATG04 TG 105 MW SEE Res. 220/2007 (75%), SEE Res. 22/2016 and 19/2017 (25%)
CTLL LDLATG05 TG 105 MW SEE Resolution No. 21/2016 (1)
CTLL LDLATV01 TV 180 MW SE Resolution No. 220/2007 (1)
CTGEBA GEBATG01/TG02/TV01 CC >150 MW SE Resolutions No. 22/2016 and 19/2017
CTGEBA GEBATG03 TG 164 MW Energy Plus Res. N° 1281/06
HIDISA AGUA DEL TORO HI HI – Media 120<P≤300 SE Resolutions No. 22/2016 and 19/2017
HIDISA EL TIGRE HI Renewable ≤ 50 SE Resolutions No. 22/2016 and 19/2017
HIDISA LOS REYUNOS HI HI – Media 120<P≤300 SE Resolutions No. 22/2016 and 19/2017
HINISA NIHUIL I HI HI – Small 50<P≤120 SE Resolutions No. 22/2016 and 19/2017 (2)
HINISA NIHUIL II HI HI – Small 50<P≤120 SE Resolutions No. 22/2016 and 19/2017 (2)
HINISA NIHUIL III HI HI – Small 50<P≤120 SE Resolutions No. 22/2016 and 19/2017 (2)
HPPL PPL1HI HI HI – Media 120<P≤300 SE Resolutions No. 22/2016 and 19/2017
HPPL PPL2HI HI HI – Media 120<P≤300 SE Resolutions No. 22/2016 and 19/2017
HPPL PPL3HI HI HI – Media 120<P≤300 SE Resolutions No. 22/2016 and 19/2017
Ecoenergía CERITV01 TV 15 MW Energy Plus Res. N° 1281/06 (1)
CT Parque Pilar PILBD01-06 MG 100 MW SEE Resolution No. 21/2016 (1) (1) (2) In construction:
Generator Generating unit Tecnology Applicable regime
CTLL MG 15 MW SE Resolution No. 19/2017
Greenwind Wind 100 MW Renovar
CTGEBA CC 383 MW Resolution No. 420/2017 2.1.3 Generation remuneration schemes 2.1.3.1. SE Resolution No. 22/2016 On March 22, 2013, the SE issued
Resolution No. 95/13 introducing a new general-scope remuneration scheme superseding the applicable remuneration scheme previously
in force for the whole electric generation activity, with the exception of power plants the energy and/or power capacity of which
are sold under the Energy Plus modality and under supply agreements with CAMMESA. On March 30, 2016, the SE issued
Resolution No. 22/2016, which provided for a retroactive updating —as from the economic transactions for the month of February,
2016— of the remuneration values for fixed costs, variable costs and maintenance remunerations. The remuneration scheme comprises
the following items:
i. Fixed Costs Remuneration: it considers and remunerates Power Capacity
Made Available in power remuneration hours (HRP). The method for calculating the remuneration will be variable based on the Recorded
Availability (“RA”) and the Historical Availability (“HA”), with prices ranging from US$84.3 to US$299.2/MW-hrp,
depending on the technology and scale.
ii. Variable Cost Remunerations: the calculation methodology will be based
on the total power generated by each type of fuel, with prices ranging from $36.7 to $81.1MWh, depending on the technology, scale
and type of fuel.
iii. Additional Remuneration: part of this remuneration is settled directly
to the generator and another part will be allocated to “new infrastructural projects in the electric sectors”, which
will be defined by the SE through a trust. The SE established the trust funding mechanisms. The price was ranged from $5.9 to $84.2 MWh,
depending on the technology, scale and destination.
iv. Maintenance Remuneration: the methodology will be based on the total
generated power. The remuneration is implemented through LVFVDs and was destined exclusively to the financing of major maintenance
works, subject to the SE approval. The price will range from $16 to $45.1/MWh, depending on the technology and the scale.
v. Incentives to “Production” and “Operating Efficiency”:
they consist of an increase in the remuneration for variable costs upon the meeting of certain conditions.
vi. 2015-2018 FONINVEMEM Resources: they consist of a specific contribution
allocated to projects approved or to be approved by the SE under such regime. Specific contributions do not create acquired rights
for the generator and, in case of breach of construction and/or supply agreements, they may be reassigned by the SE. Prices will
range between $6.3 and $15.8/MWh, depending on the technology and scale.
vii. 2015-2018 FONINVEMEM Direct Remuneration: it consists of the recognition
of an additional remuneration for units installed under the 2015-2018 FONINVEMEM scheme equivalent to 50% of the Direct Additional
Remuneration. The term for the recognition of such remuneration will begin with the unit’s commercial commissioning and extend
for a term not exceeding 10 years. 2.1.3.2. SEE Resolution No. 19/2017: On February 2, 2017, the SEE issued Resolution
No. 19/2017, which supersedes the remuneration scheme set forth by Resolution No. 22/2016 and establishes guidelines for the remuneration
to generation plants as from the commercial transaction corresponding to February 1, 2017. The Resolution provides for remunerative
items based on technology and scale, establishing US$-denominated prices payable in pesos by applying BCRA’s exchange rate
effective on the last business day of the month of the applicable economic transaction, whereas the transaction’s maturity
will be that provided for in CAMMESA’s procedures. 2.1.3.2.1. Remuneration for Available Power Capacity Thermal Power Generators The Resolution provides for a minimum
remuneration for power capacity based on technology and scale and allows generating, co-generating and self-generating agents owning
conventional thermal power stations to offer Guaranteed Availability Commitments for the energy and power capacity generated by
their units not committed under the Energy Plus modality or under the WEM’s supply agreement with CAMMESA. Availability Commitments for each unit
should be declared for a term of three years, together with information for the Summer Seasonal Programming (except for 2017, where
information may be submitted within the term for the winter seasonal period), with the possibility to offer different availability
values for the summer and winter six-month periods. The committed thermal generators’
remuneration for power capacity will be proportional to their compliance. The Minimum Remuneration applies to generators
with no availability commitments, with prices ranging from US$3,050 to US$5,700/MW-month, depending on the technology and scale. The Base Remuneration applies to generators
with availability commitments, with a price of US$ 6,000/MW-month during the May-October 2017 period, and US$ 7,000/MW-month
as from November 2017. The Additional Remuneration is a remuneration
for the additional available power capacity aiming to encourage availability commitments for the periods with a higher system demand.
CAMMESA will define a monthly thermal generation goal for the set of qualified generators on a bi-monthly basis, and will call
for additional power capacity availability offers with prices not exceeding the additional price. The additional price amounts
to US$ 1,000/MW-month between May and October, 2017, and to US$2,000/MW-month as from November 2017. Hydroelectric Generators In the case of hydroelectric power plants,
a base remuneration and an additional remuneration for power capacity were established. Power capacity availability is determined
independently of the reservoir level, the contributions made, or the expenses incurred. Furthermore, in the case of pumping hydroelectric
power plants, the following is considered to calculate availability: i) the operation as turbine at all hours within the period,
and ii) the availability as pump at off-peak hours every day and on non-business days. The base remuneration is determined by
the actual power capacity plus that under programmed and/or agreed maintenance, with prices ranging from US$2,000 to US$8,000/MW-month,
depending on the scale and type of power plant. Similarly to the provisions of Resolution
No. 22/2016, in the case of hydroelectric power plants maintaining control structures on river courses and not having an associated
power plant, a 1.20 factor will be applied to the plant at the headwaters. The additional remuneration applies to
power plants of any scale for their actual availability and based on the applicable period, with prices ranging from US$0 to US$500/MW-month
between May and October 2017, and US$500 or US$1,000/MW-month as from November 2017 for pumping or conventional hydroelectric power
plants, respectively. As from November 2017, the allocation and
collection of 50% of the additional remuneration will be conditional upon: i) the generator taking out insurance, to CAMMESA’s
satisfaction, to cover for major incidents on critical equipment, and ii) the progressive updating of the plant’s control
systems pursuant to an investment plan to be submitted based on criteria to be defined by the SEE. Other technologies The remuneration is made up of a base price
of US$7.5/MWh and an additional price of US$17.5/MWh, which are associated with the availability of the installed equipment with
an operating permanence longer than 12 months as from the beginning of the summer seasonal programming. 2.1.3.2.2 Remuneration for Generated and Operated Energy The remuneration for Generated Energy is
applied on the real generation The remuneration for Operated Energy applies
to the integration of hourly power capacities for the period, and is valued at US$2.0/MWh for any type of fuel. In the case of hydroelectric plants, prices
for Generated and Operated Energy are remunerated 2.1.3.2.3 Additional Remuneration for Efficiency The “Efficiency” incentive
consists of the acknowledgment of an additional remuneration equivalent to the remuneration for the generated energy by the percentage
difference between the actual consumption and the reference consumption determined for each unit and fuel type. This comparison
will be made on a quarterly basis. In the case of higher consumptions, the general remuneration will not be affected. 2.1.3.2.4 Additional Remuneration for Low-Use Thermal Generators The Resolution provides for an additional
remuneration for low-use thermal generators having frequent startups based on the monthly generated energy for a price of US$2.6/MWh
multiplied by the usage/startup factor. The usage factor is based on the Rated
Power Use Factor recorded during the last rolling year, which will have a 0.5 value for thermal units with a usage factor lower
than 30% and a 1.0 value for units with a usage factor lower than 15%. In all other cases, the factor will equal 0. The startup factor is established based
on startups recorded during the last rolling year for issues associated with the economic dispatch made by CAMMESA. It will have
a 0.0 value for units with up to 74 startups, a 0.1 value for units recording between 75 and 149 startups, and a 0.2 value for
units recording more than 150 startups. In all other cases, the factor will equal 0. 2.1.3.2.5 Repayment of Overhauls Financing (applicable to thermal
and hydroelectric generators) The Resolution abrogates the Maintenance
Remuneration and provides that, as regards the repayment of outstanding loans applicable to thermal and hydroelectric generators,
credits already accrued and/or committed to the cancellation of such maintenance works will be applied first. The balance will
be repaid by discounting US$1/MWh for the energy generated until the total cancellation of the financing. 2.1.4 Energy Plus - Resolution SE No.
1281/2006 With the purpose of encouraging
new generation works, in 2006 the SE approved Resolution No. 1281/2006 establishing a specific regime which would allow newly installed
generation sold to a certain category of Large Users to be remunerated at higher prices. To such effect, it established certain
restrictions on the sale of electricity and implemented the Energy Plus service, which consists of the offer of additional generation
availability by the generating agents. These measures imply that:
- Hydroelectric and thermal generators without fuel contracts are not
allowed to execute any new contract.
- LU300s will only be allowed to contract their energy demand in the
MAT for the electrical consumption corresponding to 2005 (Base Demand) with the thermoelectric plants existing in the WEM.
- New energy used by LU300s in excess of the Base Demand will be contracted
at a price between the parties (Energy Plus).
- New agents joining the system must contract a maximum 50% of their
demand under the Energy Plus service.
- New generation plants included within the Energy Plus service must
have fuel supply and transportation contracts in place. Under this regime, the Company,
through its power plants Central Térmica Güemes, EcoEnergía and Genelba, sells its energy and power capacity under
the Energy Plus service to different large users within the WEM, which should support their plus demand under this scheme. The
power capacity to be sold under this scheme amounts to 280 MW. If a generator cannot meet the power
demand by an Energy Plus customer, it should purchase that power in the market at the operating marginal cost. The Company has
Power Availability agreements in force with other generators, whereby it can purchase power from other generators to support its
contracts in case of unavailability. In turn, the Company also acts as
a selling party supporting other Energy Plus generators in case their equipment is unavailable. These agreements are ranked with
a lower priority than Energy Plus contracts and relate to surplus energy (energy committed to the Energy Plus contracts but not
demanded by clients). Lastly, both the energy delivered to the
Spot market and the available power capacity not committed under effective Energy Plus agreements in each period will be remunerated
pursuant to the provisions of Resolution No. 19/2017. 2.1.5 SE Resolution No. 220/2007 - WEM
Supply Agreements (“Agreement Res.220”) Aiming to encourage new investments to
increase the generation offer, the SE passed Resolution No. 220/2007, which empowers CAMMESA to enter into Agreement with WEM Generating
Agents for the energy produced with new equipment. These will be long-term agreements and the price payable by CAMMESA should compensate
the investments made by the agent at a rate of return to be accepted by the SE. Under this regulation, the Company, through
its subsidiaries CTP and CTLL power plants, has executed Agreement Res.220. On May 3, 2011, CTP was commissioned for
service. On July 15, 2011, this company executed a Agreement Res.220 as from such date, totality of the power and produced energy
generated is sold pursuant to the provisions of such agreement. On November 1, 2011, CAMMESA declared the
commercial commissioning of CTLL’s Steam Turbine unit and the combined cycle started to operate on a commercial basis. Part
of the totality By last, The economic impact as of the new remuneration
amounted to $ 198 million, which was disclosed under Revenues from sales in the Statement of Comprehensive Income. 2.1.6 SE Resolution No. 21/2016 As a result of the state of emergency in
the national electricity sector, the SEE issued Resolution No. 21/2016 calling for parties interested in offering new thermal power
generation capacity with the commitment to making it available through the WEM for the following periods: i) 2016/2017 summer;
ii) 2017 winter, and iii) 2017/2018 summer. The terms of the call were established
in SE Note No. 161/2016. The conditions applicable to the generation capacity to be offered included the following: i) the
plant should have a minimum 40 MW power capacity; ii) each generating unit should have a minimum 10 MW power capacity;
and iii) the equipment should have dual fuel consumption capacity (with certain exceptions). Successful bidders will enter into a wholesale
power purchase agreement with CAMMESA for a term of 10 years. The remuneration will be made up of the available power capacity
price plus the variable non-fuel cost for the delivered energy and the fuel cost (if offered), less penalties and fuel surpluses.
Power capacity surpluses are remunerated pursuant to SEE Resolution No. 19/2017. For further information on the projects
conducted under this resolution, see Note 46. 2.1.7 SEE Resolution No. 420/2017 Pursuant to SEE Resolution No. 420/2017,
SEE Resolution No. 287/2017 launched a call for bids to all parties interested in developing projects for co-generation and the
closing to combined cycles over existing equipment, with no limits on the power capacity to be installed. The projects should have
low specific consumption (lower than 1,680 kcal/kWh with natural gas and 1,820 kcal/kWh with alternative liquid fuels). It is a condition that the new capacity
should not exceed the existing electric power transmission capacity; otherwise, the cost of the necessary extensions will be borne
by the bidder. Awarded projects will be remunerated under
a Wholesale Power Purchase Agreement for a term of 15 years. The remuneration will be made up of the available power capacity price
plus the variable non-fuel cost for the delivered power and the fuel cost (if offered), less penalties and fuel surpluses. Power
capacity surpluses are remunerated pursuant to Resolution No. 19-E/2017. For further information on the projects
conducted under this resolution, see Note 46. Additionally, the Act provides for several
measures promoting the construction of projects for the generation of energy from renewable sources, including tax benefits (advance
VAT reimbursement, accelerated depreciation of the income tax, import duty exemptions, etc.) and the creation of a fund for the
development of renewable energies destined, among other objectives, to the granting of loans and capital contributions for the
financing of such projects. The tax benefits quota for 2016, set by Executive Order No. 882/2016, amounted to US$ 1,700 million.
If it is not allocated in full, the balance will be automatically carried forward to the following year. Renovar Programs In order to meet the objectives set by
Act No. 26,190 and Act No. 27.191, the MEyM called for open rounds for the hiring of electric power from renewable sources (RenovAr
Programs, Rounds 1, 1.5 and 2). These calls aimed to assign power capacity contracts from different technologies (wind and solar
energy, biomass, biogas and small hydraulic developments with a capacity of up to 50 MW). Successful bidders will enter into renewable
electric power supply agreements for the sale of a committed annual electric power block for a term of 20 years. For further information on the projects
conducted under this resolution, see Note 46. SEE Resolution No. 281/2017 Renewable
Energy Term Market The MEyM passed Resolution No. 281/2017,
which regulated the Renewable MAT This regime aims to set the conditions for large users within the WEM and WEM distributing agents’
large users comprised within Section 9 of Act No. 27,191 to meet their demand supply obligation from renewable sources through
the individual purchase within the MAT of electric power from renewable sources, or self-generation from renewable sources. Furthermore, it regulates the conditions
applicable to projects for the generation, self-generation and co-generation of electric power from renewable sources. Specifically,
the Registry of Renewable Electric Power Generation Projects (“RENPER”) was created for the registration of such projects. Projects destined to the supply of electric
power from renewable sources under the Renewable MAT may be covered by other remuneration mechanisms, such as the agreements under
the Renovar rounds. Surplus energy exceeding will be marketed under the Spot Market and remunerated pursuant to SEE Resolution
No. 19-E/2017. Finally, the contracts executed under the
Renewable MAT Regime will be administered and managed in accordance with the WEM procedures. The contractual terms, life, allocation
priorities, prices and other conditions, notwithstanding the maximum price set forth in Section 9 of Act No. 27,191, may be freely
agreed between the parties, although the committed electricity volumes will be limited by the electric power from renewable sources
produced by the generator or supplied by other generators or suppliers with which it has purchase agreements in place. On January 29, 2018, the Company was assigned
a 28 MW priority for the “de la Bahía” wind farm project and a 50 MW priority for the “Corti”
wind farm project, which will allow it to guarantee the dispatch from both wind farms For further information on the projects
conducted under this resolution, see Note 46.
2.2 Transmission On September 28, 2016, ENRE Resolution
No. 524/16 approved the program applicable to the RTI for Electric Power Transmission during 2016, which contemplated the entry
into force of the resulting tariff scheme as from February 2017. On December 26, 2016, Transener and Transba
executed a new agreement with the SEE and the ENRE under the commitments stipulated in the Memorandum of Understanding for the
Update of the High-Voltage Electric Power Transmission Utility, effective until January 31, 2017 or the entry into force of the
new tariff scheme resulting from the RTI, whichever occurs first and under the commitments stipulated in the Memorandum of Understanding
for the Update of the High-Voltage Electric Power Transmission Contract for Regional Distribution in the Province of Buenos Aires,
effective until January 31, 2017 or the entry into force of the new tariff scheme resulting from the RTI, whichever occurs first. Pursuant to this agreement, and in order
for Transener and Transba to have sufficient and necessary resources to support its ordinary operations and perform all other tasks
necessary to secure the proper operation and functioning of the electric power transmission system under concession, the SEE (i)
recognized credit claims in favor of Transener and Transba in the amount of $ 603 million and $ 152 million, respectively,
on account of cost variations during the December 1, 2015-July 31, 2016 period, and (ii) determined credit claims for increased
costs in favor of Transener in the amount of $ 900 million and $ 363 million, respectively, for the August 1, 2016-January
31, 2017 period. To such effects, on March 14, 2017, Transener executed with CAMMESA a Loan and Receivables Assignment Agreement,
which was settled through the assignment of the above-mentioned recognized and ascertained credit claims. Additionally, the Agreement
provided for an “Investment Plan” for the October 2016-March 2017 period in the approximate amount of $ 299 million
and $ 121 million, respectively. On June 19, 2017, CAMMESA made its final
disbursement under the Loan Agreement executed with Transener and Transba, thus offsetting all credits recognized under the Instrumental
Agreement, the Renewal Agreement and its Addendum, as well as the Agreement executed on December 26, 2016. As of the closing of fiscal year 2017,
Transener and Transba have recorded income resulting from the recognition of cost variations by the SEE and ENRE for up to the
amounts collected through the executed Loan Agreements. Consequently, Transener has disclosed revenues from sales in the amount
of $ 398 million and $ 1,062 million, and earned interest for $ 14 million and $ 105 million for the fiscal
years ended on December 31, 2017 and 2016, respectively. Likewise, Transba has disclosed revenues from sales in the amount of $ 66 million
and $ 452 million, and earned interest for $ 1 million and $ 22 million for the same fiscal years, respectively.
Liabilities arising from disbursements collected up to the amount of the recognized credit claims for increased costs under the
Instrumental Agreement and the Renewal Agreement have been settled through the assignment of such credit claims. Pursuant to Resolution No. 524/2016, which
establishes the program applicable to the RTI for Electric Power Transmission during 2016, on January 31, 2017, the ENRE issued
Resolutions No. 66/17 and No. 73/17, which set the tariffs in force for the 2017/2021 five-year period, which resulted in an annual
amount of $3,274 million and $1,499 million at the exchange rate effective as of February 2017 for Transener and Transba, respectively.
These resolutions provide for an investment plan for the 2017/2021 five-year period in the amounts of $3,336 million and $2,251
million for Transener and Transba, respectively. Furthermore, the ENRE established the mechanism
for adjusting the remuneration, the service quality and penalties system, the reward system and the investment plan to be executed
by both companies during such period. Due to the differences among the several
tariff proposals submitted under the Full Tariff Review process initiated by the ENRE, on April 7 and 21, 2017, Transener and Transba,
respectively, filed a Motion for Reconsideration and Appeal against ENRE Resolutions No. 66/2017, 84/2017, 139/2017, 73/17, 88/17
and 138/17, whereby the ENRE approved the tariff system applicable to Transener and Transba, respectively, for the 2017/2021 period. On October 31, 2017, ENRE Resolutions No.
516/2017 and 517/17 were notified, whereby the ENRE partially upheld the Motions for Reconsideration filed against ENRE Resolutions
No. 66/17 and 73/17 by Transener and Transba S.A., respectively. These resolutions provide for a new tariff
scheme applicable to Transener and Transba retroactively to February 2017, with annual regulated revenues in the amount of $ 3,534 million
and $1,604 million, respectively. On December 15, 2017, the ENRE issued Resolutions
No. 627/17 and No. 628/17 establishing a new tariff scheme resulting from the tariff update defined by the RTI and effective as
from August 2017, with Transener and Transba’s annual regulated revenues amounting to $ 3,933 million and $ 1,771 million,
respectively.
2.3 Energy distribution 2.3.1. General Edenor is subject to the regulatory
framework provided under Law No. 24,065, the Concession Agreement, and the regulations issued by the ENRE. The ENRE is empowered to approve
and control tariffs, and control the quality levels of the technical product and service, the commercial service and the compliance
with public safety regulations, as provided for in the Concession Agreement. If the Distribution Company fails to comply with the
obligations assumed, the ENRE may apply the penalties stipulated in the Concession Agreement. The Distribution Company’s
obligations are, among others, to make the necessary investments and carry out the necessary maintenance works in order to ensure
that the quality levels established for the provision of the service in the concession area will be complied with and that electricity
supply and availability will be sufficient to meet the demand in due time, securing the sources of supply. If Edenor repeatedly fails to comply
with the obligations assumed in the Concession Agreement, the grantor of the concession will be entitled to foreclose on the collateral
granted by the majority shareholders by means of the pledge of the Class A shares and sell them in a Public Bid. This, however,
will not affect the continuity of the Holder of the concession. Furthermore, the Concession Agreement
may be rescinded in the event of the Distribution Company’s undergoing bankruptcy proceedings. Additionally, if the Grantor
of the Concession fails to discharge his obligations in such a manner that the Distribution Company is prevented from providing
the Service or the Service is severely affected on a permanent basis, the Distribution Company may request, after demanding the
regularization of such situation in a term of 90 days, that the agreement be rescinded. At the date of issuance of these financial
statements, there have been no events of non-compliance by Edenor that could be regarded as included within the scope of this situation. 2.3.2 Electricity rate situation 2.3.2.1. Adjustment Agreement entered into
between Edenor S.A. and the Federal Government On September 21, 2005, Edenor S.A.
entered into an Adjustment Agreement within the framework of the process of renegotiation of the Concession Agreement set forth
in Law No. 25,561 and supplementary regulations, which was ratified on February 13, 2006. The Adjustment Agreement provides for the following:
i) the implementation of a Temporary Tariff Structure effective as from
November 1, 2005, including a 23% average increase in the distribution margin, which may not result in an increase in the average
rate of more than 15%, and an additional 5% average increase in the VAD, allocated to certain specified capital expenditures;
ii) the requirement that during the term of said temporary tariff structure,
dividend payment be subject to the approval of the regulatory authority;
iii) the establishment of a “Social Tariff” for the needy and
the levels of quality of the service to be rendered;
iv) the suspension of the claims and legal actions filed by Edenor and
its shareholders in national or foreign courts due to the effects caused by the Economic Emergency Law;
v) the carrying out of an RTI which will result in a new tariff structure
that will go into effect on a gradual basis and remain in effect for the following 5 years. In accordance with the provisions of
Law No. 24,065, the ENRE will be in charge of such review;
vi) the implementation of a minimum investment plan in the electric network
for an amount of $ 178.8 million to be fulfilled by Edenor during 2006, plus an additional investment of $ 25.5 million should
it be required;
vii) the adjustment of the penalties imposed by the ENRE that are payable
to customers by way of discounts, which were notified by such regulatory agency prior to January 6, 2002 as well as of those
that have been notified, or whose cause or origin has arisen in the period between January 6, 2002 and the date on which the Adjustment
Agreement goes into effect through the date on which they are effectively paid, using, for such purpose, the average increase recorded
in the Company’s own distribution costs as a result of the increases and adjustments granted at each date;
viii) the waiver of the penalties imposed by the ENRE that are payable to the Federal Government,
which have been notified, or their cause or origin has arisen in the period between January 6, 2002 and the date on which
the Adjustment Agreement goes into effect; The payment term of the penalties
imposed by the ENRE, which are described in paragraph vii) above, is 180 days after the approval of the RTI in 14 semiannual installments.
Those discounts have been early made as from December 2015. Said agreement was ratified by the
PEN by means of Executive Order No. 1,957/06, signed by the President of Argentina on December 28, 2006 and published in the Official
Gazette on January 8, 2007. The aforementioned agreement stipulated the terms and conditions that, upon compliance with the other
procedures required by the regulations, would be the fundamental basis of the Comprehensive Renegotiation

3. BASIS OF PRESENTATION

3. BASIS OF PRESENTATION12 Months Ended
Dec. 31, 2017
Basis Of Presentation
BASIS OF PRESENTATIONThese consolidated financial statements
have been prepared in accordance with IFRS issued by IASB. These consolidated financial statements
have been approved for issue by the Board of Directors dated March 8, 2018. Significant accounting policies
adopted in the preparation of these financial statements are described in Note 4, which have been consistently applied in these
financial statements. These accounting policies have been
applied consistently by all Group companies. Comparative
information Certain reclassifications have been made
to those financial statements to keep the consistency in the presentation with the amounts of the current year. The recognition of income –
provisional remedies –CAMMESA Note MEyM No. 2016-0448473, the income recognition on account of the RTI - SE Resolution No.
32/15 and the higher costs recognition - SE Resolution No. 250/13 and subsequent Notes, for a total amount of $ 1,627 million and
$ 5,576 million, for 2016 and 2015, respectively, are shown under Other operating income. T The results of operations with non-controlling
interests not representing a loss of control and reserves for stock-based compensation plans are disclosed under “Other reserves”,
rather than under “Share premium and other reserves” as previously disclosed. T As a result of the
divestments mentioned in Note 1.5, the Company has classified certain assets from Refining and Distribution and Oil and Gas segments
as held for sale, classifying their results and cash flows as discontinued operations.

4. ACCOUNTING POLICIES

4. ACCOUNTING POLICIES12 Months Ended
Dec. 31, 2017
Accounting Policies
ACCOUNTING POLICIESThe main accounting policies used in the preparation of these
financial statements are explained below. Unless otherwise stated, these accounting policies have been consistently applied in
all the years presented.
4.1 New accounting standards, amendments and interpretations issued by the IASB effective as of
December 31, 2017 and adopted by the Company The Group has applied the following
standards and/or amendments for the first time for their annual reporting period commencing January 1, 2017 - Amendments to IAS 7 "Statement
of cash flows", - Amendments to IAS 12 “Income
taxes”, y - Amendments to IFRS 12 “Disclosures
of interests in other entities” (within improvements to IFRSs – 2014-2016 Cycle) The adoption of these modifications
did not have any impact on the Company’s operating results or financial position. Additional information is disclosed
in Notes 6 and 20 as a result of the application of disclosure requirements on changes in liabilities arising from financing activities
and the clarification of the scope of the standard related to entity’s interest classified as held for sale in accordance
with IFRS 5 was considered in Note 1, as a result, summarised financial information was not disclosed as it is not required.
4.2 New accounting standards, amendments and interpretations issued by the IASB which are not yet
effective and have not been early adopted by the Company - IFRS 15 “Revenue from Contracts
with Customers", issued in May 2014 and later in September 2015, effected date was amended for applying to annual period beginning
on or after January 1, 2018. The standard addresses the principles for recognizing revenues and establishes the requirements for
reporting about the nature, amount, timing an uncertainty of revenue and cash flows arising from contracts with customers. The
basic principle implies the recognition of revenue that represent the transfer of goods or services to customers at an amount that
reflects the consideration the entity expects to be entitled in exchange for those goods or services. The Company will elect to apply
IFRS 15 only to contracts that are not completed at the date of initial application, recognizing the cumulative effect of the application
as an adjustment to the opening balance of retained earnings as of January 1, 2018. Management has assessed the effects
of applying IFRS 15 on the group’s financial statements regarding not completed contracts as of January 1, 2018. As a result
of this assessment, the Company has not identified any differences associated with performance obligations identification or price
allocation methodology which could affect the timing of future revenue recognition forward. Finally, no contract assets or contract
liabilities to be separately presented under IFRS 15 have been identified. - IFRS 9 “Financial Instruments”:
was amended in July 2014. This amended version covers all the phases of the IASB project to replace IAS 39 “Financial Instruments:
Recognition and Measurement”. These phases are the classification and measurement of instruments, impairment and hedging.
This version adds a new impairment model based on expected losses and some minor modifications to the classification and measurement
of financial assets. This new version supersedes all previous versions of IFRS 9 and is effective for periods starting as from
January 1, 2018. The Company has adopted the first phase of IFRS 9 as of the transition date. The Company will apply IFRS 9 amended
retrospectively from January 1, 2018 with the practical expedients permitted under the standard, and comparative periods will not
be restated. Pampa has reviewed its financial
assets currently measured and classified at fair value through profit and loss or at amortized cost and has concluded that satisfy
conditions to maintain classification; hence, IFRS 9’s modifications are not expected to affect the classification and measurement
of financial assets. Regarding the new hedge accounting
model which, in general terms, allows more hedge relationships might be eligible for hedge accounting, in order to align the accounting
with the related risk management practices, Pampa has not opted for the designation of any hedge relationships as of the issuance
of these financial statements and it does not expect to make such designation; consequently, it does not expect any modifications
resulting from the application of IFRS 9. As regards the new impairment model
based on expected credit losses rather than incurred credit losses, based on the assessments conducted as of the issuance of these
financial statements, Pampa expects an approximate 13% increase in the allowances for trade receivables and for other receivables - IFRS 16 “Leases”: issued
in January 2016 and replaces the current guidance in IAS 17. It defines a lease as a contract, or part of a contract, that conveys
the right to use an asset (the underlying asset) for a period of time in exchange for consideration. Under this standard, lessees
have to recognize a lease liability reflecting future lease payments and a ‘right-of-use asset’ for lease contracts.
This is a significant change compared to IAS 17 under which lessees were required to make a distinction between a finance lease
(on balance sheet) and an operating lease (off balance sheet). IFRS 16 contains an optional exemption for lessees in case of short-term
leases and leases for which the underlying asset is of low value assets. The IFRS 16 is effective for annual periods beginning
on or after 1 January 2019. The Company is currently analyzing the impact of its application. - IFRS 2 “Share based payments”:
amended in June 2016 to clarify the measurement basis for cash-settled share-based payments and the accounting for modifications
that change an award from cash-settled to equity-settled. It also introduces an exception to IFRS 2 principles by requiring an
award to be treated as if it was wholly equity-settled, where an employer is obliged to withhold an amount for the employee’s
tax obligation associated with a share-based payment and pay that amount to the tax authority. It is effective for annual periods
beginning on or after January 1, 2018. The Company estimates that these amendments will not have an impact on the Company’s
operating results or financial position. - IFRIC 22 “Foreign Currency Transactions
and Advance Consideration”: issued in December 2016. The interpretation addresses how to determine the date of the transaction
for the purpose of determining the exchange rate to use on initial recognition of the related asset, expense or income related
to an entity that has received or paid an advance consideration in a foreign currency. The date of the transaction is the date
on which an entity initially recognizes the non-monetary asset or non-monetary liability arising from the payment or receipt of
advance consideration. It is effective for annual periods beginning on January 1, 2018. The Company estimates that this interpretation
will not have an impact on the Company’s operating results or financial position. - Improvements to IFRSs –
2014-2016 Cycle: amendments issued in December 2016 that are effective for periods beginning on or after January 1, 2018. The Company
estimates that these amendments will not have an impact on the Company’s operating results or financial position. - - - IFRS 9 "Financial instruments":
application guidance modified in October 2017, in relation to the classification of financial assets in the case of contractual
terms that change the timing or amount of contractual cash flows to determine whether the cash flows that could arise due to that
contractual term are solely payments of principal and interest on the principal amount. It is effective for annual periods beginning
on or after January 1, 2019, early adoption is permitted. The Company is analyzing the impact of its application, however, it estimates
that it will not have any impact on the Company´s results of operations or financial position. - IAS 28 "Investments in associates
and joint ventures": amended in October 2017. Clarifies IFRS 9 applies to other financial instruments in an associate or joint
venture to which the equity method is not applied. It is applicable to annual periods beginning on or after January 1, 2019, early
adoption is permitted. The Company is analyzing the impact of its application, however, it estimates that it will not any impact
on the Company’s results of operations or financial position. - Improvements to IFRSs –
2015-2017 Cycle: amendments issued in December 2017 that are effective for periods beginning on or after January 1, 2019. The Company
estimates that these amendments will not have an impact on the Company’s operating results or financial position.
4.3 Principles of consolidation and equity accounting 4.3.1 Subsidiaries Subsidiaries are all entities over
which the Group has control. The Group controls an entity when the Group is exposed to, or has rights to, variable returns from
its involvement with the entity and has the ability to affect those returns through its power to direct the activities of the entity.
Subsidiaries are fully consolidated from the date on which control is transferred to the Group. They are deconsolidated from the
date that control ceases. The acquisition method of accounting
is used to account for business combinations by the group (see Note 4.3.5 below). Intercompany transactions, balances
and unrealized gains on transactions between Group companies are eliminated. Unrealized losses are also eliminated unless the transaction
provides evidence of an impairment of the transferred asset. Accounting policies of subsidiaries have been changed where necessary
to ensure consistency with the policies adopted by the Group. Since the functional currency of
some subsidiaries is different from the functional currency of the Company, exchange gains or losses arise from intercompany operations.
Those exchange results are included in “Financial results” in the Consolidated Statement of Comprehensive Income. Non-controlling interests in the
results and equity of subsidiaries are shown separately in the Consolidated Statement of Comprehensive Income, Consolidated Statement
of Changes in Equity and Consolidated Statement of Financial Position respectively. 4.3.2 Associates Associates are all entities over
which the group has significant influence but not control or joint control. This is generally the case where the Group holds between
20% and 50% of the voting rights. Investments in associates are accounted for using the equity method of accounting (see Note 4.3.4
below), after initially being recognized at cost. 4.3.3. Joint arrangements Under IFRS 11 “ Joint Arrangements” Joint operations The Company recognizes its direct
right to the assets, liabilities, revenues and expenses of joint operations and its share of any jointly held or incurred assets,
liabilities, revenues and expenses. These have been incorporated in the financial statements under the appropriate headings. Joint ventures Interests in joint ventures are
accounted for using the equity method (see Note 4.3.4 below), after initially being recognized at cost in the Consolidated Statement
of Financial Position. 4.3.4. Equity Method Under the equity method of accounting,
the investments are initially recognized at cost and adjusted thereafter to recognize the Group’s share of the post-acquisition
profits or losses of the investee in profit or loss, and the Group’s share of movements in other comprehensive income of
the investee in other comprehensive income. Dividends received or receivable from associates and joint ventures are recognized
as a reduction in the carrying amount of the investment. When the Group’s share of
losses in an equity-accounted investment equals or exceeds its interest in the entity, together with any long-term interests that,
in substance, form part of the net investment, the Group does not recognize further losses, unless it has incurred obligations
or made payments on behalf of the other entity. Unrealized gains on transactions
between the Group and its associates and joint ventures are eliminated to the extent of the group’s interest in these entities.
Unrealized losses are also eliminated unless the transaction provides evidence of an impairment of the asset transferred. Accounting
policies of equity accounted investees have been changed where necessary to ensure consistency with the policies adopted by the
group. The carrying amount of equity accounted
investments is tested for impairment in accordance with the policy described below in Note 4.8. 4.3.5 Business combinations The acquisition method of accounting
is used to account for all business combinations, regardless of whether equity instruments or other assets are acquired. The consideration
transferred for the acquisitions comprises:
i) the fair value of the transferred assets,
ii) the liabilities incurred to the former owners of the acquired business,
iii) the equity interests issued by the group,
iv) the fair value of any asset or liability resulting from a contingent
consideration arrangement, and
v) the fair value of any pre-existing equity interest in the subsidiary.
Identifiable assets acquired and
liabilities and contingent liabilities assumed in a business combination are measured initially at their fair values at the acquisition
date. The group recognises any non-controlling interest in the acquired entity on an acquisition-by-acquisition basis either at
fair value or at the non-controlling interest’s proportionate share of the acquired entity’s net identifiable assets. Acquisition-related costs are expensed
as incurred. The value of the goodwill represents the excess of: Where settlement of any part of
cash consideration is deferred, the amounts payable in the future are discounted to their present value as at the date of exchange.
The discount rate used is the entity’s incremental borrowing rate, being the rate at which a similar borrowing could be obtained
from an independent financier under comparable terms and conditions. Contingent consideration is classified
either as equity or a financial liability. Amounts classified as a financial liability are subsequently remeasured to fair value
with changes in fair value recognised in profit or loss. If the business combination is achieved
in stages, the acquisition date carrying value of the acquirer’s previously held equity interest in the acquiree is remeasured
to fair value at the acquisition date. Any gains or losses arising from such remeasurement are recognised in profit or loss. The
Group has up to 12 months to finalize the accounting for a business combination. Where the accounting for a business combination
is not complete by the end of the year in which the business combination occurred, the Group reports provisional amounts. 4.3.6. Changes in ownership interests The group treats transactions with
non-controlling interests that do not result in a loss of control as transactions with equity owners of the group. A change in
ownership interest results in an adjustment between the carrying amounts of the controlling and non-controlling interests to reflect
their relative interests in the subsidiary. Any difference between the amount of the adjustment to non-controlling interests and
any consideration paid or received is recognized in “Other reserves” within equity attributable to owners of the Company. When the Group ceases to consolidate
or equity account for an investment because of a loss of control, joint control or significant influence, any retained interest
in the entity is remeasured to its fair value with the change in carrying amount recognized in profit or loss. This fair value
becomes the initial carrying amount for the purposes of subsequently accounting for the retained interest as an associate, joint
venture or financial asset. In addition, any amounts previously recognized in other comprehensive income in respect of that entity
are accounted for as if the Group had directly disposed of the related assets or liabilities. This may mean that amounts previously
recognised in other comprehensive income are reclassified to profit or loss. If the ownership interest in a
joint venture or an associate is reduced but joint control or significant influence is retained, only a proportionate share of
the amounts previously recognized in other comprehensive income are reclassified to profit or loss where appropriate.
4.4 Segment reporting Operating segments are reported
in a manner consistent with the internal reporting provided to the Executive committee. The Executive committee, is the
highest decision-making authority, is the person responsible for allocating resources and setting the performance of the entity’s
operating segments, and has been identified as the person/ body executing the Company’s strategic decisions. In segmentation the Company considers
transactions with third parties and intercompany operations, which are done on internal transfer pricing based on market prices
for each product. In the aggregation of segments,
the Company has primarily considered the nature of the regulatory framework of the Energy Industry in Argentina and product integration
in the Company’s production process.
4.5 Property, plant and equipment Property, Plant and Equipment is
measured following the cost model. It is recognized at cost less depreciation a less any accumulated impairment. Subsequent costs are included in
the asset’s carrying amount or recognised as a separate asset, as appropriate, only when it is probable that future economic
benefits associated with the item will flow to the group and the cost of the item can be measured reliably. The carrying amount
of any component accounted for as a separate asset is derecognised when replaced. All other repairs and maintenance are charged
to profit or loss during the reporting period in which they are incurred. The cost of work in progress whose
construction will extend over time includes, if applicable, the computation of financial costs accrued on loans granted by third
parties and other pre-production costs, net of any income obtained from the sale of commercially valuable production during the
launching period. Works in progress are valued according
to their degree of progress. Works in progress are recorded at cost, less any loss due to impairment, if applicable. The depreciation methods and periods
used by the group are described below. Assets’ residual values and
useful lives are reviewed, and adjusted if appropriate, at the end of each year. An asset’s carrying amount is written down
immediately to its recoverable amount if the asset´s carrying amount is greater than its estimated recoverable amount. Gains and losses on disposals are determined
by comparing the proceeds with the carrying amount.
4.5.1 Depreciation methods and useful lives The group depreciates productive
wells, machinery and camps in the oil and gas production areas according to the units of production method, by applying the ratio
of oil and gas produced to estimated proved developed oil and gas reserves. The acquisition cost of property with proved reserves
is depreciated by applying the ratio of oil and gas produced to estimated proved oil and gas reserves. Acquisition costs related
to properties with unproved reserves is valued at cost with recoverability periodically assessed on the basis of geological and
engineering estimates of possible and probable reserves that are expected to be proved over the life of each concession. Machinery and generation equipment
(including any significant identifiable component) are depreciated under the unit of production method. The group´s remaining items
of property, plant and equipment (including any significant identifiable component) are depreciated by the straight-line method
based on estimated useful lives, as detailed below:
Buildings: 50 years
Substations: 35 years
High voltage lines: 40 - 45 years
Medium voltage lines: 35 - 45 years
Low voltage lines: 30 - 40 years
Transformer centrals: 25 - 35 years
Meters: 25 years
Vehicles: 5 years
Furniture, fittings and communication equipment: 5- 20 years
Computer equipment and software: 3 years
Tools: 10 years
Gas Plant and Pipeline: 20 years The depreciation method is
reviewed, and adjusted if appropriate, at the end of each year.
4.6 Intangible assets
4.6.1 Goodwill Goodwill is the result of the acquisition
of subsidiaries. Goodwill represents the excess of the acquisition cost over the fair value of the equity interest in the acquired
entity held by the company on the net identifiable assets acquired at the date of acquisition. For the purpose of impairment testing,
goodwill acquired in a business combination is allocated from the acquisition date to each of the acquirer’s cash-generating
units or group of CGUs that are expected to benefit from the synergies of the combination. Each unit or group of units that goodwill
is allocated represents the lowest level within the entity at which the goodwill is monitored for internal management purposes.
4.6.2 Concession arrangements Concession arrangements corresponding
to Edenor and hydroelectric generation plants Diamante and Nihuiles are not under the scope of the guidelines of IFRIC 12 “Service
Concession Arrangements”. These concession agreements meet the criteria
set forth by the IFRSs for capitalization and are amortized following the straight-line method based on each asset’s useful
life, which corresponds to the life of each concession agreement. The concession agreement of Edenor, has
a remaining life of 71 years, while the HIDISA and HINISA has a life of 22 years.
4.6.3 Identified intangible assets in acquired investments Corresponds to intangible assets
identified at the moment of the acquisition of companies. Identified assets meet the criteria established in IFRS for capitalization
and are amortized by the straight-line method according to the useful life of each asset, considering the estimated way in which
the benefits produced by the asset will be consumed. As of December 31, 2016, corresponds
to the commercial contracts identified in the Refining and distribution segment with an average useful life of five years based,
among other factors, on contractual agreements, consumer behavior and economic factors related to companies Combined.
4.7 Assets for oil and gas exploration The Company uses the successful
efforts method of accounting for its oil and gas exploration and production activities. This method involves the capitalization
of: (i) the cost of acquiring properties in oil and gas exploration and production areas; (ii) the cost of drilling and equipping
exploratory wells that result in the discovery of commercially recoverable reserves; (iii) the cost of drilling and equipping development
wells, and (iv) the estimated asset retirement obligations. According to the successful efforts
method of accounting, exploration costs, excluding exploratory well costs, are expensed during the period in which they are incurred.
Drilling costs of exploratory wells are capitalized until it is determined that proved reserves exists and they justify the commercial
development. If reserves are not found, such drilling costs are expensed. Occasionally, an exploratory well may determine the existence
of oil and gas reserves but they cannot be classified as proved when drilling is complete. In those cases, such costs continue
to be capitalized insofar as the well has allowed determining the existence of sufficient reserves to warrant its completion as
a production well and the Company is making sufficient progress in evaluating the economic and operating feasibility of the project. The initial estimated asset retirement
obligations in hydrocarbons areas, discounted at a risk adjusted rate, are capitalized in the cost of the assets and depreciated
using the units of production method. Additionally, a liability at the estimated value of the discounted amounts payable is recognized.
Changes in the measurement of asset retirement obligations that result from changes in the estimated timing, amount of the outflow
of resources required to settle the obligation, or the discount rate, are added to, or deducted from, the cost of the related
asset. If a decrease in the liability exceeds the carrying amount of the asset, the excess is recognized immediately in profit
or loss.
4.8 Impairment of non-financial assets Intangible assets that have an indefinite
useful life and goodwill are not subject to amortization and are tested annually for impairment, or more frequently if events or
changes in circumstances indicate that they might be impaired. Other assets are tested for impairment whenever events or changes
in circumstances indicate that the carrying amount may not be recoverable. An impairment loss is recognized for the amount by which
the asset´s carrying amount exceeds its recoverable amount. The recoverable amount is the higher of an asset´s fair value
less costs of disposal and value in use. For the purpose of assessing impairment, assets are grouped at the lowest levels for which
there are separately identifiable cash flows which are largely independent of the cash inflows from other assets or groups of assets
(cash generating units or CGUs). Non-financial assets, other than goodwill, that have been impaired are reviewed for possible reversal
of the impairment at the end of each reporting period.
4.9 Foreign currency translation 4.9.1 Functional and presentation currency Information included in the financial
statements is measured in the functional and presentation currency of the Company, which is the currency of the primary economic
environment in which the entity operates. The functional currency is Argentine peso, which is the Group’s presentation currency. IAS 29 "Financial
reporting in hyperinflationary economies" requires for financial statements of an entity whose functional currency is the
currency of a hyperinflationary economy, whether they are based on a historical cost approach or a current cost approach, to
be stated in terms of the measuring unit current at the end of the reporting year. In general terms, by applying to
non-monetary items the change in a general price index from the date of acquisition or the date of revaluation, as
appropriate, to the end of the reporting period. In order to conclude about the existence of a hyperinflationary economy, the
standard mentions certain indications to consider including a cumulative rate of inflation in three years that approaches or
exceeds 100%. Despite the high inflation rates in Argentina, in recent years, considering that the INDEC WPI official
publication was suspended from November to December 2015; the existence of other qualitative and quantitative indicators,
such as the program established by the Argentine Central Bank to foster monetary stability aiming to induce a systematic and
sustainable low inflation rate; and that the market has evidenced a downard trend in inflation rates during 2017, there is
not enough evidence to conclude Argentina qualifies as a hyperinflationary economy pursuant to the criteria set forth in IAS
29 and accordingly, we have not restated financial information. Although the conditions necessary
to qualify Argentine economy as hyperinflationary in accordance with the provisions of IAS 29 have not been met, and considering
professional and regulatory limitations for the preparation of adjusted financial statements as of December 31, 2017, certain
macroeconomic variables affecting the Company's business, such as wage costs and purchase prices, have experienced significant
annual variations, and as a result should be considered in the evaluation and interpretation of the financial position and results
presented by the Company in these financial statements. 4.9.2 Transaction and balances Foreign currency transactions are
translated into the functional currency using the exchange rates as of at the date of the transaction. Foreign exchange gain and
loss resulting from the settlement of any transaction and from the translation at year-end exchange rates of monetary assets and
liabilities denominated in foreign currencies are recognized in the income statement, unless they have been capitalized. The exchange rates used are as follows:
buying rate for monetary assets, selling rate for monetary liabilities, average rate at the end of the year for balances with related
parties, and transactional exchange rate for foreign currency transactions. 4.9.3 Group companies Results and financial position of
subsidiaries and associates that have a different functional currency from the presentation currency are translated into the presentation
currency as follows:
- assets and liabilities are translated using the closing exchange rate;
- gains and losses are translated using the exchange rates prevailing
at the date of the transactions. The results from the remeasurement
process into the functional currency are recorded in line “Financial results” of the Consolidated Statement of Income. The results from the remeasurement
process into the functional currency to presentation currency transactions are recognized in “Other Comprehensive Income”.
When an investment is sold or disposed of, in whole or in part, the related differences are recognized in the Consolidated Statement
of Income as part of the gain/loss on the sale or disposal.
4.10 . Financial assets
4.10.1 Classification 4.10.1.1 Financial assets at amortized
cost Financial assets are classified and measured
at amortized cost only if the following criteria have been met:
i. the objective of the Group’s business model is to hold the asset
to collect the contractual cash flows;
ii. the contractual terms, on specified dates, have cash flows that are
solely payments of principal and interest on the outstanding principal. 4.10.1.2 Financial assets at fair value If any of the above mentioned criteria
has not been met, the financial asset is classified and measured at fair value through profit or loss. All equity investments are measured
at fair value. For equity investments that are not held for trading, the Group can irrevocably choose at the moment of the initial
recognition to present changes in fair value through other comprehensive income. The decision of the Group was recognizing changes
in fair value through profit or loss. 4.10.2 Recognition and measurement At initial recognition, the Group
measures a financial asset at its fair value plus, in the case of a financial asset not at fair value through profit or loss, transaction
costs that are directly attributable to the acquisition of the financial asset. A gain or loss on a debt investment that
is subsequently measured at fair value and is not part of a hedging relationship is recognized in profit or loss. A gain or loss
on a debt investment that is subsequently measured at amortized cost and is not part of a hedging relationship is recognized in
profit or loss when the financial asset is derecognized or impaired and through the amortization process using the effective interest
rate method. The Group subsequently measures
all equity investments at fair value. When the Group elects to present the changes in fair value in other comprehensive income,
such changes cannot be reclassified to profit or loss. Dividends from such investments continue to be recognized in profit or loss
as long as they represent a return on investment. The Company reclassifies financial
assets if and only if its business model to manage financial assets is changed. 4.10.3 Impairment of financial assets Financial assets at amortized cost The Company assesses at each reporting
date whether there is objective evidence that a financial asset or group of financial assets is impaired and if so, an impairment
charge is recorded in the income statement. The amount of the impairment loss
is measured as the difference between the asset’s carrying amount and the present value of estimated future cash flows (excluding
future credit losses that have not been incurred) discounted at the financial asset’s original effective interest rate. If
the financial asset has a variable interest rate, the discount rate for the calculation of the impairment loss is the currently
effective interest rate under the contract. As a practical expedient, the Group may measure impairment on the basis of an instrument’s
fair value using an observable market price. If, in a subsequent period, the
amount of the impairment loss decreases and the decrease can be related objectively to an event occurring after the impairment
was recognized, the reversal of the previously recognized impai

5. CRITICAL ACCOUNTING ESTIMATE

5. CRITICAL ACCOUNTING ESTIMATES AND JUDGMENTS12 Months Ended
Dec. 31, 2017
Critical Accounting Estimates And Judgments
CRITICAL ACCOUNTING ESTIMATES AND JUDGMENTSThe preparation of financial statements
requires the Company’s Management to make future estimates and assessments, to apply critical judgment and to establish assumptions
affecting the application of accounting policies and the amounts of disclosed assets and liabilities, income and expenses. The applied estimates and accounting
judgments are evaluated on a continuous basis and are based on past experiences and other reasonable factors under the existing
circumstances. Actual future results might differ from the estimates and evaluations made at the date of preparation of these consolidated
financial statements. The estimates which have a significant risk of producing adjustments on the amounts of the assets and liabilities
during the following year are detailed below: 5.1 Impairment of non-financial
assets Non-financial assets, including
identifiable intangible assets, are reviewed for impairment at the lowest level for which there are separately identifiable cash
flows (CGU). For this purpose, each asset group with independent cash flows, each subsidiary, associate and each jointly controlled
company has been considered a single CGU, as all of their assets jointly contribute to the generation of cash inflows, which are
derived from a single service or product; thus cash inflows cannot be attributed to individual assets. In order to evaluate if there is
evidence that a CGU could be affected, both external and internal sources of information are analyzed. Specific facts and circumstances
are considered, which generally include the discount rate used in the estimates of the future cash flows of each CGU and the business
condition as regards economic and market factors, such as the cost of raw materials, oil and gas, the regulatory framework for
the energy industry (mainly the RTI / CMM and recognition of expected prices), the projected capital investments and the evolution
of the energy demand. The value in use of each CGU is
estimated on the basis of the present value of future net cash flows that these units will generate. The Company Management uses
approved budgets up to one year as the base for cash flow projections that are latter extrapolated into a term consistent with
the assets’ remaining useful life, taking into consideration the appropriate discount rates. Discount rates used to discount
future net cash flows is WACC, for each asset or CGU a specific WACC was determined which considered the business segment and the
country conditions where the operations are performed. In order to calculate the fair value less the costs to sale, the Company
Management uses the estimated value of the future cash flows that a market participant could generate from the appropriate CGU,
and deducts the necessary costs to carry out the sale of the corresponding CGU. The Company Management is required
to make judgments at the moment of the future cash flow estimation. The actual cash flows and the values may differ significantly
from the expected future cash flows and the related values obtained through discount techniques. 5.1.1 Impairment of property, plant and
equipment and intangible assets associated with the subsidiary Edenor As of December 31, 2011, the Company
has recorded impairment losses for property, plant and equipment and intangible assets associated with its investment in Edenor
resulting from the assessment of their recoverable value. Depreciation losses totaled up $ 648 million before income tax. As of the date of issuance of
these financial statements, Pampa has assessed all factors included in IAS 36 and considers
that the effective implementation of the comprehensive tariff review process that implied increases in the applicable rates
by Edenor during 2017 represents an indication that the impairment losses recognized in prior years may no longer exist.
For this reason, Edenor has prepared its projections for the sole purpose of analyzing the recoverability of the
impairment recorded by the Company Cash flows are prepared on the basis
of estimates concerning the future performance of certain variables that are sensitive to the determination of the recoverable
amount, measured as the value in use, among which the following can be noted: (i) nature, opportunity and modality of electricity
rate increases and/or cost adjustment recognition; (ii) demand for electricity projections; (iii) evolution of the costs to be
incurred; (iv) investment needs in accordance with the service quality levels required by the regulatory authority, and (v) macroeconomic
variables, such as growth rates, inflation rates and foreign currency exchange rates. Edenor has elaborated its projections
as from the implementation of ENRE Resolution No. 63/17, which established the new tariff schemes applicable as from February 1,
2017, that fixed Edenor's remuneration and the tariff adjustment mechanism for the next 5 years (Note
2.3). Given that the main variable is the electricity rate, and such rate is supported by the approved electricity rate schedule,
Edenor has prepared only one scenario, considering the most pessimistic situation when estimating the variables with greater impact
(Resolution of regulatory matters) and its best estimate for the other variables with lower incidence. In order to determine the scenario
mentioned in the preceding paragraph, Edenor has considered the following:
i. Nature, opportunity, and modality of electricity rate increases and
/ or cost adjustments recognition: Electricity rate increases as resolved in the RTI process;
ii. Settlement of regulatory liabilities: Edenor has considered to use
the final surplus of its annual cash flows until these liabilities are settled;
iii. Electricity demand growth: 3% per year;
iv. Development of costs to be incurred: mainly based on the expected
level of inflation;
v. Investments for infrastructure maintenance: in accordance with the
service quality levels required by the regulator in the RTI;
vi. Inflation rate;
vii. Exchange rate.
viii. The discount rate (WACC) in pesos varies for each year of the projection.
For the first 5 years, the average of these rates is 23%. As a result of the gradual restructuring
of Edenor's economic-financial situation detailed in Note 41, the Company has reversed the impairment losses recognized in previous
years and has recorded a gain of $ 461 million in property, plant and equipment net of depreciation expense and a gain of $ 82
million in intangible assets, net of depreciation expense, before income tax. 5.1.2 Impairment of goodwill As a result of the acquisition of
PPSL, the Company has recognized a goodwill of $ 994 million that has been allocated, for the purpose of impairment testing, to
the oil and gas business segment regarding future synergies of combined business and assembled workforce. For the purpose to determine the
value in use of the segment, the Company prepared the cash flows on the basis of estimates concerning proved oil and gas reserves
(developed and to be developed) and probable reserves, according to the reports of oil and gas reserves prepared by the Company
and the projection period was determined based on the end of the respective concession contracts. In addition, the Company has
made estimates concerning the future performance of certain variables that are sensitive to the determination of the recoverable
amount, among which are: (i) reserve levels and production; (ii) sales price evolution; (iii) operating costs evolution; (iv) investment
needs and; (V) macroeconomic variables such as inflation rates, foreign currency exchange rate. The WACC discount rate in U.S.
dollars used amounted to 10.8% As a result of the oil and gas business
segment impairment test, the Company concluded that the assets in the oil and gas segment, considered as a whole do not exceed
the recoverable value, measured as the value in use as of December 31, 2017. 5.2 Current and deferred Income
tax / Minimum notional income tax The Company Management has to regularly
assess the positions stated in the tax returns as regards those situations where the applicable tax regulations are subject to
interpretation and, if necessary, establish provisions according to the estimated amount that the Company will have to pay to the
tax authorities. When the final tax result of these items differs from the amounts initially acknowledged, those differences will
have an effect on the income tax and on the deferred tax provisions in the fiscal year when such determination is made. There are many transactions and
calculations for which the ultimate tax determination is uncertain. The Company recognizes liabilities for eventual tax claims
based on estimates of whether additional taxes will be due in the future. Deferred tax assets are reviewed
at each reporting date and reduced in accordance with the probability that the sufficient taxable base will be available to allow
for the total or partial recovery of these assets. Deferred tax assets and liabilities are not discounted. In assessing the realization
of deferred tax assets, Management considers that it is likely that a portion or all of the deferred tax assets will not be realized.
The ultimate realization of deferred tax assets depends on the generation of future taxable income in the periods in which these
temporary differences become deductible. To make this assessment, Management takes into consideration the scheduled reversal of
deferred tax liabilities, the projections of future taxable income and tax planning strategies. As a result of the recoverability analysis
performed, as of December 31, 2016, the Company and certain subsidiaries have derecognized the liability related to the application
of the provisions of the “Hermitage” decision to the determination of the minimum notional income tax liability. This
has been applied to all periods in which the Company had evidenced tax losses, and resulted in the recognition of income for $
123 and $ 88 million disclosed under the lines “Income tax and minimum notional income tax” and “Financial expense”
within the Consolidated Statement of Comprehensive of Income / (Loss), respectively, as the tax credit had not been previously
recognized. To such effect, the Company has used the
following grounds:
a) several previous cases within the Group where Courts has ruled in
favor of the Company’s allegation according to the criterion established by the “Hermitage” decision;
b) the completion of tax audits for periods in which certain subsidiaries
of the Group have applied the criterion established by the “Hermitage” ruling;
c) and lastly, the abrogation of the tax pursuant to Section 76 of Act
No. 27,260 (Tax Transparency) for fiscal years beginning as from January 1, 2019, which evidences the Treasury's position on the
continuation of proceedings as the one brought against the Company. Additionally, the Company has recognized
an income of $ 23 million for the recognition of the tax credit for minimum notional income tax paid in previous years. The
Company considers it is probable that it will generate future taxable income to use this tax credits within the statutory limitation
period, as a result of corporate reorganizations described. 5.3 Contingencies The Company is subject to various
claims, lawsuits and other legal proceedings that arise during the ordinary course of its business. The Company’s liabilities
with respect to such claims, lawsuits and other legal proceedings cannot be estimated with certainty. Periodically, the Company
reviews the status of each contingency and assesses potential financial liability, applying the criteria indicated in Note 4.24,
for which elaborates the estimates mainly with the assistance of legal advisors, based on information available to the Management
at financial statements date, and taking into account our litigation and resolution/settlement strategies. Contingencies include outstanding
lawsuits or claims for possible damages to third parties in the ordinary course of the Company’s business, as well as third
party claims arising from disputes concerning the interpretation of legislation. The Company evaluates whether there
would be additional expenses directly associated to the ultimate resolution of each contingency, which will be included in the
provision if they may be reasonably estimated. However, if the Company´s Management
estimates are not correct, current provisions might be inadequate and could have an adverse effect on the Company’s results
of operations, financial position and cash flows. 5.4 Asset retirement obligations Asset retirement obligations after
completion of operations require the Company’s Management to estimate the number of wells, long-term well abandonment costs
and the time remaining until abandonment. Technology, costs and political, environmental and safety considerations constantly change
and may result in differences between actual future costs and estimates. Asset retirement obligations estimates
are adjusted when it is justified by changes in the evaluation criteria or at least once a year. 5.5 Allowance for doubtful accounts The Group is exposed to losses for
uncollectible receivables. The Company Management estimates the final collectability of the accounts receivable. The allowance for doubtful accounts
is assessed based on the historical level of both the balances written off as an expense and the default balances. In the case
of the distribution of energy segment, a delinquent balance comprises all such debt arising from the bills for electricity consumption
that remain unpaid 7 working days after their due dates for small-demand (tariff 1) customers, for medium and large-demand (tariff
2 and 3) customers. Edenor´s Management records an allowance applying an uncollectibility rate for each customer category,
based on the historical comparison of collections made against the default balances of each customer category. In order to estimate collections
related to the energy generation segment we mainly consider the ability of CAMMESA to meet its payment obligations to generators,
and the resolutions issued by SE, which allow the Company to collect its credits with CAMMESA through different mechanisms. Additionally, Management analyzes
the allowance for uncollectible receivables of the remaining accounts receivables of the segment based on an individual analysis
of recoverability of receivables of the WEM debtors. Future adjustments to the allowance
may be necessary if future economic conditions differ substantially from the assumptions used in the assessment for each year. 5.6 Actuarial assumptions in
defined benefit plans Actuarial commitments with defined
benefit plans to employees are recognized as liabilities in the statement of financial position based on actuarial estimates revised
annually by an independent actuary, using the projected unit credit method. The present value of pension plan
obligations depends on multiple factors that are determined according to actuarial estimates which are revised annually by an independent
actuary, net of the fair value of the plan assets, when applicable. For this purpose, certain assumptions are used including the
discount rate and wage growth rate assumptions. 5.7 ENRE Penalties and discounts Edenor considers its applicable
accounting policy for the recognition of ENRE penalties and discounts critical because it depends on penalizable events, which
are valued on the basis of management best estimate of the expenditure required to settle the present obligation at the date of
these financial statements. The balances of ENRE penalties and discounts are adjusted in accordance with the regulatory framework
applicable thereto and have been estimated based on Edenor’s estimate of the outcome of the RTI process described in Note
2.3. 5.8 Revenue recognition In the distribution of energy business
segment, revenue is recognized on an accrual basis upon delivery to customers, which includes the estimated amount of unbilled
distribution of electricity at the end of each year. We consider our accounting policy for the recognition of estimated revenue
critical because it depends on the amount of electricity effectively delivered to customers which is valued on the basis of applicable
tariffs. Unbilled revenue is classified as current trade receivables. In the oil and gas business segment,
the fair value of the consideration receivable corresponding to revenues from gas sales to Distributors is recognized based on
the volume of gas delivered and the price established by the SE (in accordance with applicable resolutions). 5.9 Oil and gas reserves Reserves mean oil and gas volumes
(in m3 of oil equivalent) that are economically producible, in the areas where the Company operates or has a (direct or indirect)
interest and over which the Company has exploitation rights, including oil and gas volumes related to those service agreements
under which the Company has no ownership rights on the reserves or the hydrocarbons obtained and those estimated to be produced
for the contracting company under service contracts. There are numerous uncertainties
in estimating proved reserves and future production profiles, development costs and prices, including several factors beyond the
producer’s control. Reserve engineering is a subjective process of estimating underground accumulations involving a certain
degree of uncertainty. Reserves estimates depend on the quality of the available engineering and geological data as of the estimation
date and on the interpretation and judgment thereof. Reserve estimates are adjusted when
so justified by changes in the evaluation criteria or at least once a year. These reserve estimates are based on the reports of
oil and gas consulting professionals. The Company uses the information
obtained from the calculation of reserves in the determination of depreciation of assets used in the areas of oil and gas, as well
as assessing the recoverability of these assets (Notes 4.7 and 4.8). 5.10 Environmental remediation The costs incurred to limit, neutralize
or prevent environmental pollution are only capitalized if at least one of the following conditions is met: (a) such costs relate
to improvements in safety; (b) the risk of environmental pollution is prevented or limited; or (c) the costs are incurred to prepare
the assets for sale and the book value (which considers those costs) of such assets does not exceed their respective recoverable
value. Liabilities related to future remediation
costs are recorded when, on the basis of environmental assessments, such liabilities are probable to materialize, and costs can
be reasonably estimated. The actual recognition and amount of these provisions are generally based on the Company’s commitment
to an action plan, such as an approved remediation plan or the sale or disposal of an asset. The provision is recognized on the
basis that a future remediation commitment will be required. The Company measures liabilities
based on its best estimation of present value of future costs, using currently available technology and applying current environmental
laws and regulations as well as the Company’s own internal environmental policies. 5.11 Business Combinations The acquisition method involves the measurement
at fair value of the identifiable assets acquired and the liabilities assumed in the business combination at the acquisition date. For the purpose to determine the
fair value of identifiable assets, the Company uses the valuation approach considered the most representative for each asset. These
include the i) income approach, through indirect cash flows (net present value of expected future cash flows) or through the multi-period
excess earnings method, ii) cost approach (replacement value of the good adjusted for loss due to physical deterioration, functional
and economic obsolescence) and iii) market approach through comparable transactions method. Likewise, in order to determine the fair
value of liabilities assumed, the Company’s Management considers the probability of cash outflows that will be required for
each contingency, and elaborates the estimates with assistance of legal advisors, based on the information available and taking
into account the strategy of litigation and resolution / liquidation. Management critical judgment is required
in selecting the approach to be used and estimating future cash flows. Actual cash flows and values ​​may differ significantly
from the expected future cash flows and related values ​​obtained through the mentioned valuation techniques.

6. FINANCIAL RISK MANAGEMENT

6. FINANCIAL RISK MANAGEMENT12 Months Ended
Dec. 31, 2017
Financial Risk Management
FINANCIAL RISK MANAGEMENT6.1 Financial Risk Factors The Company’s activities are
subject to several financial risks: market risk (including the exchange rate risk, the interest rate risk and the price risk),
credit risk and liquidity risk. Financial risk management is encompassed
within the Company’s global policies, there is an integrated risk management methodology, where the focus is not placed on
the individual risks of the business units’ operations, but there is rather a wider perspective focused on monitoring risks
affecting the whole portfolio. The Company’s risk management strategy seeks to achieve a balance between profitability targets
and risk exposure levels. Financial risks are those derived from financial instruments the Company is exposed to during or at the
closing of each fiscal year. The Company uses derivative instruments to hedge certain risks when it deems it necessary according
to its risk management internal policies. Financial risk management is controlled
by the Financial Department, which identifies, evaluates and covers financial risks. Risk management systems and policies are reviewed
on a regular basis to reflect changes in market conditions and the Company’s activities, and have been applied consistently
during the periods comprised in these financial statements. This section includes a description of the main risks and uncertainties
which may adversely affect the Company’s strategy, performance, operational results and financial position. 6.1.1
Market risks Foreign exchange risk The Company’s financial situation
and the results of its operations are sensitive to variations in the exchange rate between the Argentine peso and other currencies,
primarily with respect to U.S. dollar. In some cases, the Company may use derivative financial instruments to mitigate associated
exchange rate risks. The Company collects a meaningful
portion of its revenues in Argentine pesos pursuant to prices which are indexed to the U.S. dollar, mainly revenues resulting from:
i) the sale of energy (Supply Agreements under ES Resolution No. 220/07, Energy Plus contracts and generators’ revenues under
ES Resolution No. 19-E/17) and ii) the sale of gas and crude oil. Furthermore, a significant portion
of the Company’s financial debt (approximately 85%) is denominated in U.S. dollars, against a 66% at the closing of the previous
fiscal year. It should be pointed out that this increase is mainly due to the issuance of Class 1 Corporate Bonds during January
2017. Additionally, the Company has made
several investment commitments, mainly projects to increase its thermal generation capacity and projects for the generation of
energy from renewable sources, most of which are denominated in foreign currency, which exposes the Company to a risk of loss resulting
from the devaluation of the Argentine peso. In the Distribution segment, the
subsidiary Edenor collects revenues in pesos pursuant to regulated tariffs which are not indexed to the U.S. dollar, whereas a
significant portion of its existing financial debt is denominated in that currency, which exposes the Company to a risk of loss
resulting from a devaluation of the Argentine peso. Edenor can manage this risk through the execution of forward contracts denominated
in foreign currency. As of the end of 2017 year, Edenor has not hedged its exposure to the US dollar. Edenor does not currently
hedge its exposure to currency risk. Therefore, any devaluation of the peso could significantly increase its debt service burden,
which, in turn, could have a substantial adverse effect on its financial and cash position (including its ability to repay its
Corporate Notes) and the results of its operations. During 2017, U.S. Dollar currency
appreciated by approximately 18%. The following table shows the Company’s
exposure to the exchange rate risk for financial assets and liabilities denominated in a currency different from the Company’s
functional currency.
Type Amount of foreign currency Exchange rate (1) Total Total
ASSETS
NON CURRENT ASSETS
Financial instruments
Financial assets at amortized cost
Third parties US$ - - - 1
Other receivables
Related parties US$ 42.4 18.599 789 733
Third parties US$ 62.7 18.549 1,163 934
Financial assets at fair value through profit and loss
Third parties US$ - - - 513
Total non current assets 1,952 2,181
CURRENT ASSETS
Financial instruments
Financial assets at fair value through profit and loss
Third parties US$ 263.0 18.549 4,879 678
Derivative financial instruments
Third parties US$ 0.2 18.549 4 -
Trade and other receivables
Related parties US$ 10.2 18.599 189 106
Third parties US$ 246.0 18.549 4,563 4,464
EUR - - - 1
VEF - - - 2
Cash and cash equivalents US$ 21.8 18.549 404 1,087
EUR 0.3 22.283 7 2
Total current assets 10,046 6,340
Non Financial instruments
Non current assets classified as held for sale US$ 39.0 18.549 723 19
Total assets 12,721 8,540
Type Amount of foreign currency Exchange rate (1) Total Total
LIABILITIES
NON CURRENT LIABILITIES
Financial instruments
Trade and other payables
Third parties US$ 6.7 18.649 125 -
Borrowings
Related parties US$ 0.8 18.599 14 16
Third parties US$ 1,737.5 18.649 32,403 11,737
Non financial instruments
Provisions
Related parties US$ - - - 366
Third parties US$ 89.1 18.649 1,662 2,378
Total non current liabilities 34,204 14,497
CURRENT LIABILITIES
Financial instruments
Trade and other payables
Related parties US$ 2.2 18.599 40 95
Third parties US$ 249.4 18.649 4,651 3,447
EUR 22.4 22.450 502 57
CHF 0.6 19.168 12 -
SEK 21.0 2.280 48 6
VEF - - - 5
Borrowings
Third parties US$ 213.4 18.649 3,979 5,398
Non financial instruments
Salaries and social security payable
Third parties US$ 0.1 18.649 3 1
Taxes payables
Third parties US$ 1.0 18.649 19 11
Provisions
Related parties US$ 21.3 18.599 396 394
Third parties US$ 15.0 18.649 280 307
Total current liabilities 9,930 9,721
Liabilities associated to assets classified as held for sale US$ 68.9 18.649 1,285 -
Total liabilities 45,419 24,218
Net Position Liability (32,698) (15,678) (1)
The Company estimates that provided
all other variables remain constant, a 10% revaluation/(devaluation) of U.S.Dollar as compared to the Argentine peso would generate
in absolute values an increase or decrease of $ 3,215 million and $ 1,647 million in the 2017 and 2016 fiscal years, respectively.
The Group´s exposure to other foreign currency movements is not material. Price risk The Company’s financial instruments
are not significantly exposed to hydrocarbon international price risks on account of the current regulatory, economic, governmental
and other policies in force, gas domestic prices are not directly affected in the short-term due to variations in the international
market. Additionally, the Company’s
investments in financial assets classified as “at fair value through profit or loss” are sensitive to the risk of changes
in the market prices resulting from uncertainties as to the future value of such financial assets. The Company estimates that provided
all other variables remain constant, a 10% revaluation/(devaluation) of each market price would generate the following increase/(decrease)
in the fiscal year’s income/(loss) in relation to financial assets at fair value through profit and loss detailed in Note
12 to these financial statements:
Increase (decrease) of the result for the year
Financial assets 12.31.2017 12.31.2016
Shares 15 15
Government securities 502 158
Investment funds 959 319
Corporate bonds - 1
Variation of the result of the year 1,476 493 Cash flow and fair value interest
rate risk The management of the interest rate risk
seeks to reduce financial costs and limit the Company’s exposure to interest rate increases. Indebtedness at variable rates exposes
the Company to the interest rate risk on its cash flows due to the possible volatility they may experience, as it happened from
2014 to 2016. Indebtedness at fixed rates exposes the Company to the interest rate risk on the fair value of its liabilities, since
they may be considerably higher than variable rates. As of December 31, 2017, approximately 13.7% of the indebtedness was subject
to variable interest rates, mainly denominated in pesos at the Private Badlar rate plus an applicable margin. Approximately 63%
of the indebtedness at variable rates is denominated in pesos. The rest of the Company’s indebtedness subject to variable
interest rates is denominated in U.S. dollar, based on Libor rate plus an applicable margin. The Company seeks to mitigate its
interest-rate risk exposure through the analysis and evaluation of (i) the different liquidity sources available in the financial
and capital market, both domestic and (if available) international; (ii) interest rates alternatives (fixed or variable), currencies
and terms available for companies in a similar sector, industry and risk than the Company; (iii) the availability, access and cost
of interest-rate hedge agreements. On doing this, the Company evaluates the impact on profits or losses resulting from each strategy
over the obligations representing the main interest-bearing positions. In the case of fixed rates and in
view of the market’s current conditions, the Company considers that the risk of a significant decrease in interest rates
is low and, therefore, does not foresee a substantial risk in its indebtedness at fixed rates. As of the date of issuance of these
financial statements, the Company is not exposed to a significant risk of variable interest rate increases since most of the financial
debt is subject to fixed rate. In the fiscal years ended December
31, 2017 and 2016, the Company did not use derivative financial instruments to mitigate risks associated with fluctuations in
interest rates. The following chart shows the breakdown
of the Company’s borrowings classified by interest rate and the currency in which they are denominated:
12.31.2017 12.31.2016
Fixed interest rate:
Argentinian pesos 2,270 2,729
U.S dollar 33,769 14,305
Subtotal loans granted at a fixed interest rate 36,039 17,034
Floating interest rates:
Argentinian pesos 3,603 5,808
U.S dollar 2,108 2,479
Subtotal loans granted at a floating interest rate 5,711 8,287
Non-interest accrual
U.S dollar 697 284
Argentinian pesos 519 367
Subtotal non-interest accrual 1,216 651
Total borrowings 42,966 25,972 Based on the conducted simulations,
and provided all other variables remain constant, a 10% increase/decrease in variable interest rates would generate the following
(decrease)/increase in the fiscal year's results of $ 107 million. 6.1.2
Credit risk The Company establishes individual
credit limits according to the limits defined by the Board of Directors and approved by the Financial Department based on internal
or external ratings. The Company makes constant credit assessments on its customers’ financial capacity, which minimizes
the potential risk for bad debt losses. The credit risk represents the exposure
to possible losses resulting from the breach by commercial or financial counterparties of their obligations taken on with the Company.
This risk stems mainly from economic and financial factors or a possible counterparty default. The credit risk is associated with
the Company’s commercial activity through customer trade receivables, as well as available funds and deposits in banking
and financial institutions. The Company, in its ordinary course
of business and in accordance with its credit policies, grants credits to a large customer base, mainly large sectors of the industry,
including service station operators, refineries, exporters, petrochemical companies, natural gas distributors, electricity large
users and electricity distributors. The Company has established an allowance
for doubtful accounts. This allowance represents the best estimate by the Company of possible losses associated with trade receivables. As of December 31, 2017, the Company’s
trade receivables, without considering Edenor, totaled 9,453 million, out of which 70% are short-term receivables and the remaining
30% are classified as non-current and correspond mainly to CAMMESA (national company responsible for purchasing electric power
from generators and selling it to distributors). With the exception of CAMMESA, which represents approximately 38% of all trade
receivables, the Company does not have a significant credit risk concentration, as this exposure is distributed among a large number
of customers and other counterparties. No other client has a meaningful percentage of the total amount of these receivables. The impossibility by CAMMESA to
pay these receivables may have a substantially adverse effect on cash income and, consequently, on the result of operations and
financial situation which, in turn, may adversely affect the Company’s repayment capacity. The credit risk of liquid funds
and other financial investments is limited since the counterparties are high credit quality banking institutions. If there are
no independent risk ratings, the risk control area evaluates the customer’s creditworthiness, based on past experiences and
other factors. In the case of Edenor, delinquent
trade receivables increased from $ 659 million as of December 31, 2016 to $ 1,041 million as of December 31, 2017, mainly due to
the tariff increase during the fiscal year (Note 2.3). As of December 31, 2017 and 2016, a provision in the amount of $ 459
million and $ 260 million, respectively, has been set aside for such delinquent receivables. One of the significant items of
delinquent balances is that related to the receivable amounts with Municipalities, in respect of which Edenor either applies different
offsetting mechanisms against municipal taxes it collects on behalf of the municipalities, or implements debt refinancing plans,
with the aim of reducing them. Furthermore, and taking into account
that in fiscal year 2016 the ENRE prevented Edenor from suspending the electricity supply to customers with delinquent balances,
Edenor’s actions to reduce the impact of delinquency were limited. Therefore, at the date of issuance of these financial
statements Edenor’s Board of Directors is analyzing the plans of action it will implement in order to reinforce the activities
aimed at reducing delinquent balances. Additionally, it is important to
point out that in fiscal year 2016 it was possible to collect more than 50% of the delinquent receivables existing as of December
31, 2015. Finally, and with regard to the
electricity supplied to low-income areas and shantytowns, as stipulated in the Adjustment Agreement (Note 2.3), in fiscal year
2016 Edenor received payments for a total of $ 65 million, which represents 89% of the outstanding balance as of December 31, 2015.
Past experience shows that these balances have always been collected. As of December 31, 2017 and 2016,
financial statements included allowances for $ 260 million and $ 79 million, respectively. Failure to collect receivables in the
future may have an adverse effect on Edenor's financial situation and operating results which, in turn, may negatively impact its
capacity to repay loans, including the cancellation of its Corporate Bonds. Additionally, our Natural Gas Promotion
Program compensation depends on the Argentine Government's ability and willingness to pay. Before the Government authorized the
issuance of dollar-denominated sovereign bonds to cancel outstanding debts under the Program, the Company suffered a significant
delay in the collection of the Compensation. Afterwards, during June and July, 2016, Petrobras and PEPASA received BONAR 2020 bonds
for a face value of US$ 34.3 million and US$ 29.5 million as compensation owed as at December 2015. During 2017 the collection
of the compensations by the Company were delayed again. We may not guarantee that the Company will be able to properly collect
the offered compensations, which might give rise to a claim to the Argentine Government. 6.1.3
Liquidity risk The liquidity risk is associated
with the Company’s capacity to finance its commitments and conduct its business plans with stable financial sources, as well
as with the indebtedness level and the financial debt maturities profile. The cash flow projection is made by the Financial Department. The Company management supervises
updated projections on liquidity requirements to guarantee the sufficiency of cash and liquid financial instruments to meet operating
needs while keeping at all times a sufficient margin for unused credit facilities. In this way, the aim is that the Company does
not breach indebtedness levels or the Covenants, if applicable, of any credit facility. Those projections take into consideration
the Company’s debt financing plans, the meeting of the covenants and, if applicable, the external regulatory or legal requirements
such as, for example, restrictions on the use of foreign currency. Excess cash and balances above working
capital management requirements are managed by the Company’s Treasury Department, which invests them in term deposits, mutual
funds and marketable securities, selecting instruments having proper currencies and maturities, and an adequate credit quality
and liquidity to provide a sufficient margin as determined in the previously mentioned projections. The Company keeps its sources of
financing diversified between banks and the capital market, and it is exposed to the refinancing risk at maturity. The determination of the Company’s
liquidity index for fiscal years ended December 31, 2017 and 2016 is detailed below:
12.31.2017 12.31.2016
Current assets 36,912 23,150
Current liabilities 29,958 30,063
Index 1.23 0.77 The following table includes an
analysis of the Company financial liabilities, grouped according to their maturity dates and considering the period remaining
until their contractual maturity date from the date of the financial statements. Derivative financial liabilities
are included in the analysis if their contractual maturities are essential for the understanding of the cash flow calendar. The
amounts shown in the table are the contractual undiscounted cash flows.
As of December 31, 2017 Trade and other payables Borrowings Total
Less than three months 12,041 13,936 25,977
Three months to one year 6,004 12,938 18,942
One to two years 221 4,166 4,387
Two to five years 122 16,624 16,746
More than five years - 30,239 30,239
Without established term 6,068 6,071 12,139
Total 24,456 83,974 108,430
As of December 31, 2016 Trade and other payables Borrowings Total
Less than three months 8,799 1,088 9,887
Three months to one year 4,068 10,995 15,063
One to two years 311 2,548 2,859
Two to five years 118 6,312 6,430
More than five years - 12,080 12,080
Without established term 4,907 - 4,907
Total 18,203 33,023 51,226 6.2 Capital risk management
On managing capital, the Company
aims to safeguard its capacity to continue operating as an on-going business with the purpose of generating return for its shareholders
and benefits to other stakeholders, and keeping an optimal capital structure to reduce the cost of capital. To keep or adjust its capital structure,
the Company may adjust the amount of the dividends paid to its shareholders, reimburse capital to its shareholders, issue new shares,
conduct stock repurchase programs or sell assets to reduce its debt. In line with industry practices,
the Company monitors its capital based on the leverage ratio. This ratio is calculated by dividing the net debt by the total capital.
The net debt equals the total indebtedness (including current and non-current indebtedness) minus cash and cash equivalents and
current financial assets at fair value through profit and loss. The total capital corresponds to the shareholders’ equity
as shown in the statement of financial position, plus the net debt. Financial leverage ratios as at
December 31, 2017 and 2016 were as follows:
12.31.2017 12.31.2016
Total borrowings 42,966 25,972
Less: cash and cash equivalents, and financial assets at fair value through profit and loss (15,412) (5,609)
Net debt 27,554 20,363
Total capital attributable to owners 44,464 31,417
Leverage ratio 61.97% 64.82% 6.3 Regulatory risk factors Pursuant to caption C of Section
37 of the Edenor’s Concession Agreement, the Grantor of the Concession may, without prejudice to other rights to which he
is entitled thereunder, foreclose on the collateral granted by Edenor when the cumulative value of the penalties imposed to Edenor
in the previous one-year period exceeds 20% of its annual billing, net of taxes and rates. Edenor’s Management evaluates
the development of this indicator on an annual basis. 6.4 Fair value of financial Instruments
The Company classifies the fair
value measurements of financial instruments using a fair value hierarchy, which reflects the relevance of the variables used to
perform those measurements. The fair value hierarchy has the following levels:
- Level 1: quoted prices (not adjusted) for identical assets or liabilities
in active markets.
- Level 2: data different from the quoted prices included in Level 1
observable for the asset or liability, either directly (i.e. prices) or indirectly (i.e. derived from prices).
- Level 3: Asset or liability data based on information that cannot
be observed in the market (i.e., unobservable data). The following table shows the Company’s financial assets
and liabilities measured at fair value as of December 31, 2017 and 2016:
As of December 31, 2017 Level 1 Level 2 Level 3 Total
Assets
Financial assets at fair value through
Government securities 5,024 - - 5,024
Shares - - 150 150
Investment funds 9,589 - - 9,589
Derivative financial instruments - 4 - 4
Other receivables 590 - - 590
Total assets 15,203 4 150 15,357
Liabilities
Derivative financial instruments - 82 - 82
Total liabilities - 82 - 82
As of December 31, 2016 Level 1 Level 2 Level 3 Total
Assets
Financial assets at fair value through
Corporate securities 12 - - 12
Government securities 1,576 - - 1,576
Trust - - 150 150
Investment funds 3,189 - - 3,189
Other 3 - - 3
Cash and cash equivalents
Investment funds 61 - - 61
Derivative financial instruments - 13 - 13
Other receivables 29 - - 29
Total assets 4,870 13 150 5,033 The value of the financial instruments
negotiated in active markets is based on the market quoted prices as of the date of these consolidated financial statements. A
market is considered active when the quoted prices are regularly available through a stock exchange, broker, sector-specific institution
or regulatory body, and those prices reflect regular and current market transactions between parties that act in conditions of
mutual independence. The market quotation price used for the financial assets held by the Company is the current offer price. These
instruments are included in level 1. The fair value of financial instruments
that are not negotiated in active markets is determined using valuation techniques. These valuation techniques maximize the use
of market observable information, when available, and rely as little as possible on specific estimates of the Company. If all significant
variables to establish the fair value of a financial instrument can be observed, the instrument is included in level 2. If one or more variables used to
determine the fair value cannot be observed in the market, the financial instrument is included in level 3. The techniques used for the measurement
of assets at fair value with changes in income, classified as Level 2 and 3, are detailed below: - Derivative Financial Instruments:
calculated from variations between market prices at the closing date of the year, and the amount at the time of the contract. - Shares: they were determined based
on Income approach through the Indirect Cash Flow method (net present value of expected future cash flows) and the discount rates
used were estimated taking the Weighted Average Cost of Capital (“WAAC”) rate as a parameter.

7. INVESTMENTS IN SUBSIDIARIES

7. INVESTMENTS IN SUBSIDIARIES12 Months Ended
Dec. 31, 2017
Investments In Subsidiaries
INVESTMENTS IN SUBSIDIARIES7.1
Subsidiaries information Unless otherwise indicated, the
capital stock of the subsidiaries consists of common shares, each granting the right to one vote. The country of the registered
office is also the principal place where the subsidiary develops its activities.
12.31.2017 12.31.2016
Company Country Main activity Direct and indirect participation % Direct and indirect participation %
BLL (1) Argentina Winemaking - 100.00%
Corod Argentina Oil 100.00% 100.00%
CPB Energía S.A. Argentina Oil 100.00% -
CTG (1) Argentina Generation - 90.42%
CTLL (1) Argentina Generation - 100.00%
Ecuador TLC S.A. Ecuador Oil 100.00% 100.00%
Edenor Argentina Distribution of energy 51.54% 51.54%
Eg3 Red (1) Argentina Distribution - 100.00%
Enecor S.A. Argentina Transportation of electricity 69.99% 69.99%
IEASA (2) Argentina Investment - 100.00%
INDISA (1) Argentina Investment - 91.60%
INNISA (1) Argentina Investment - 90.27%
HIDISA Argentina Generation 61.00% 61.00%
HINISA Argentina Generation 52.04% 52.04%
IPB (1) Argentina Investment - 100.00%
PACOSA (3) Argentina Distributor 100.00% 100.00%
PBI Bolivia Investment 100.00% 100.00%
PELSA (4) Argentina Oil 58.88% 58.88%
Petrobras Energía Colombia Gran Cayman Colombia Oil 100.00% 100.00%
Petrobras Energía México Mexico Oil - 100.00%
Petrobras Energía Ecuador Gran Cayman Investment 100.00% 100.00%
Petrobras Energía Operaciones Ecuador Ecuador Oil 100.00% 100.00%
PEPASA (1) Argentina Oil - 49.54%
Petrolera San Carlos S.A. Venezuela Oil 100.00% 100.00%
PHA Spain Investment 100.00% 100.00%
PISA Uruguay Investment 100.00% 100.00%
PP Argentina Investment 100.00% 100.00%
PP II (1) Argentina Investment - 100.00%
PPSL Spain Investment 100.00% 100.00%
TGU Uruguay Gas transportation 100.00% 100.00%
Transelec Argentina Investment 100.00% 100.00%
WEBSA (3) Argentina Distributor - 100.00% (1)
See Note 1.4.1. (2)
See Note 1.4.3.1. (3)
See Note 1.4.3.2. (4)
See Note 1.5.2. 7.2. Summarised financial information for each subsidiary
that has significant non-controlling interest Non-controlling interests in subsidiaries
are not significant for the Company, except for Edenor with 51.54% equity interest and PELSA with 58.88% equity interest, consolidated
as from July 27, 2016. Edenor The subsidiary is registered in
Argentina, which is also the place where it develops its activities.
i. Summary statement of financial position
12.31.2017 12.31.2016
Non Current
Total non current assets 16,042 12,311
Borrowings 4,192 2,770
Other non current liabilities 7,511 6,238
Total non current liabilities 11,703 9,008
Current
Cash and cash equivalents 83 259
Other current assets 9,180 6,363
Total current assets 9,263 6,622
Borrowings 71 54
Other current liabilities 12,470 9,509
Total current liabilities 12,541 9,563
Total equity 1,061 362
Non-controlling interest 514 175
ii. Summary statement of comprehensive income (loss)
12.31.2017 12.31.2016 12.31.2015
Revenue 24,340 13,080 3,802
Depreciation (430) (352) (281)
Interest income 273 197 96
Interest expense (1,541) (1,442) (430)
Profit (loss) for the year before tax 1,123 (1,932) 1,326
Income tax (441) 743 (184)
Profit (loss) for the year 682 (1,189) 1,142
Other comprehensive loss 9 5 (2)
Total comprehensive (loss) profit of the year 691 (1,184) 1,140
Income (loss) of the year attributable to non-controlling interest 331 (576) 553
Other comprehensive income of the year attributable to non-controlling interest 4 2 (1)
Comprehensive income (loss) of the year attributable to non-controlling interest 335 (574) 552
iii. Summary statement of cash flow
12.31.2017 12.31.2016 12.31.2015
Net cash generated by operating activities 3,283 2,931 3,217
Net cash used in investing activities (4,046) (2,373) (3,103)
Net cash generated by (used in) financing activities 587 (493) (173)
(Decrease) Increase in cash and cash equivalents (176) 65 (59)
Cash and cash equivalents at the beginning of the year 259 129 179
Exchange difference generated by cash - 65 9
Cash and cash equivalents at the end of the year 83 259 129 PELSA
i. Summary statement of financial position
12.31.2017 12.31.2016
Non Current
Total non current assets 5,081 4,896
Other non current liabilities 954 1,012
Total non current liabilities 954 1,012
Current
Cash and cash equivalents 162 77
Other current assets 1,727 1,154
Total current assets 1,889 1,231
Other current liabilities 599 630
Total current liabilities 599 630
Total equity 5,417 4,485
Non-controlling interest 2,227 1,844
ii. Summary statement of comprehensive income (loss)
12.31.2017 12.31.2016 (1)
Revenue 3,321 1,155
Depreciation (1,017) (413)
Interest income 22 13
Income (loss) for the year / period before tax 278 (3)
Income tax (8) (41)
Income (loss) for the year / period 270 (44)
Other comprehensive income 769 228
Total comprehensive profit of the year / period 1,039 184
Income (loss) of the year attributable to non-controlling interest 111 (18)
Other comprehensive income of the year attributable to non-controlling interest 316 94
Comprehensive income (loss) of the year attributable to non-controlling interest 427 76
(1) The information reflects the effect of consolidation of Petrobras Argentina as from July 27, 2016
when the Acquisition was consummated.
iii. Summary statement of cash flow
12.31.2017 12.31.2016 (1)
Net cash generated by operating activities 543 332
Net cash used in investing activities (362) (234)
Net cash generated by financing activities (108) (108)
Increase (Decrease) in cash and cash equivalents 73 (10)
Cash and cash equivalents at the beginning 77 121
Exchange difference generated by cash and cash equivalents 12 (34)
Cash and cash equivalents at the end of the year 162 77
(1) The information reflects the effect of consolidation of Petrobras Argentina as from July 27, 2016
when the Acquisition was consummated. PEPASA
i. Summary statement of comprehensive income (loss)
09.30.2017 (1) 12.31.2016 12.31.2015
Revenue 2,894 2,839 943
Depreciation (661) (867) (276)
Interest income 22 1 12
Interest expense (188) (712) (382)
Profit for the year before tax 1,277 816 515
Income tax (411) (288) (164)
Profit for the period / year 866 528 351
Comprehensive income of the period/year attributable to non-controlling interest 437 266 177
(1) The information reflects the effect of consolidation until September 30, 2017 when the PEPASA
has merged with Pampa.
ii. Summary statement of cash flow
09.30.2017 (1) 12.31.2016 12.31.2015
Net cash generated by operating activities 565 1,659 461
Net cash generated by (used in) investing activities 1,209 (2,476) (1,187)
Net cash (used in) generated by financing activities (1,961) 994 706
(Decrease) Increase in cash and cash equivalents (187) 177 (20)
Cash and cash equivalents at the beginning of the year 226 40 51
Exchange difference generated by cash 4 9 9
Cash and cash equivalents at the end of the period/year 43 226 40
(1) The information reflects the effect of consolidation until September 30, 2017 when the PEPASA
has merged with Pampa.

8. INVESTMENTS IN JOINT VENTURE

8. INVESTMENTS IN JOINT VENTURES12 Months Ended
Dec. 31, 2017
Investments In Joint Ventures
INVESTMENTS IN JOINT VENTURESThe following table presents the
main activity and information from the financial statements used for the valuation, and percentages of participation in joint
ventures:
Information about the issuer
Main activity Date Share capital Profit (loss) of the year Equity Direct and indirect participation %
CIESA (1) Investment 12.31.2017 639 1,356 2,900 50%
Citelec (2) Investment 12.31.2017 555 1,201 1,505 50%
Greenwind (3) Generation 12.31.2017 5 (104) 222 50% (1) therefore, the Company has an indirect participation of 25.50% in TGS. (2) (3) The details of the balances of investments
in joint ventures is as follows:
12.31.2017 12.31.2016
CIESA 4,048 3,532
Citelec 757 167
Greenwind 125 -
4,930 3,699 The following tables show the breakdown of the result from investments
in joint ventures:
12.31.2017 12.31.2016 12.31.2015
CIESA 518 125 -
Citelec 596 (20) 9
Greenwind (50) - -
1,064 105 9 The evolution of investments in joint ventures is as follows:
12.31.2017 12.31.2016 12.31.2015
At the beginning of the year 3,699 224 227
Reclassifications (1) 175 - -
Increase for subsidiaries acquisition (2) - 3,407 -
Other decreases (2) (32) (14)
Share of profit 1,064 105 9
Share capital increase - - 1
Other comprehensive (loss) income (6) (5) 1
At the end of the year 4,930 3,699 224 (1)
(2) Corresponds to the incorporation of the interest in CIESA (Note
1.3.1).

9. INVESTMENTS IN ASSOCIATES

9. INVESTMENTS IN ASSOCIATES12 Months Ended
Dec. 31, 2017
Investments In Associates
INVESTMENTS IN ASSOCIATESThe following table presents the
main activity and information from the financial statements used for valuation and percentages of participation in associates:
Information about the issuer
Main activity Date Share capital Profit (loss) of the period / year Equity Direct participation %
Refinor Refinery 09.30.2017 92 (10) 980 28.50%
Oldeval Transport of hydrocarbons 12.31.2017 110 216 657 23.10% The detail of the balances of the
investments in associates is as follows:
12.31.2017 12.31.2016
Refinor 602 602
Oldelval 221 184
Other 1 1
824 787 The following tables show the breakdown of the result from
investments in associates:
12.31.2017 12.31.2016 12.31.2015
Oldelval 44 11 -
Refinor - (1) -
CIESA - (3) (10)
44 7 (10) The evolution of investments in
associates is as follows:
Note 12.31.2017 12.31.2016 12.31.2015
At the beginning of the year 787 123 133
Dividends 30 (7) (4) -
Increase for subsidiaries acquisition - 777 -
Decreases on disposal of investment in subsidiary - (116) -
Share of profit (loss) 44 7 (10)
At the end of the year 824 787 123 Other interest in Associates Interests in mixed companies
in Venezuela Interests in Petroritupano S.A.
(22%), Petrowayú S.A. (36%), Petroven-Bras S.A. (34.49%) and Petrokariña S.A. (34.49%), companies organized as a result
of the migration of operating agreements regulating the exploitation in Venezuela of the Oritupano Leona, La Concepción, Acema
and Mata areas, respectively, were incorporated with the purchase of PPSL’s capital stock for a zero market value as of the
acquisition date (see detail in Note 1.2.1). Pampa has not recognized any share
in the additional losses from these investments as it has not incurred any legal or implicit obligations or made any payments in
the name of these mixed companies as from the acquisition date. Additionally, under the agreements
migration process, in 2006 the Venezuelan Government recognized in favor of the participating Company an interest-free severable
and transferable credit in the amount of US$ 88.5 million which may be used to pay acquisition bonds under any new mixed
company projects for the development of oil exploration and production activities, or licenses for the development of gas exploration
and production operations in Venezuela. Since no projects have been undertaken for its use, negotiations for its transfer to third
parties have been unsuccessful, and there are no other foreseen application alternatives, the Company keeps this credit valued
at zero. Mixed companies should sell to PDVSA
all liquid hydrocarbons produced in the delimited area and the associated natural gas (if stipulated in the agreement), pursuant
to a price formula based on international benchmarks such as BRENT. Investment in Oleoductos de Crudos
Pesados (OCP) The Company has an 11.42% equity
interest in OCP, an oil pipeline in Ecuador that has a transportation capacity of 450,000 barrels/day. OCP has negative equity as a result
of certain tax assessments in favor of the Government of Ecuador in issues where OCP and the Ecuadorian Treasury have differences
in interpretation. However, and since the Company has not made any capital contributions or financial assistance commitments to
OCP, this shareholding has been valued at zero.

10. PROPERTY, PLANT AND EQUIPME

10. PROPERTY, PLANT AND EQUIPMENT12 Months Ended
Dec. 31, 2017
Property, plant and equipment [abstract]
PROPERTY, PLANT AND EQUIPMENTOriginal values
Type of good At the beginning Translation effect Increase for subsidiaries acquisition Reversal of impairment Increases Decreases Transfers (1) Reclassification to assets classified as held At the end
Land 1,193 - - - 54 (582) 12 (323) 354
Buildings 2,090 1 - - - (18) 239 (238) 2,074
Equipment and machinery 9,000 17 - - 41 (27) 4,046 (913) 12,164
High, medium and low voltage lines 4,586 - - 304 - (20) 1,076 - 5,946
Substations 1,729 - - 85 - - 464 - 2,278
Transforming chamber and platforms 1,040 - - 64 - (2) 281 - 1,383
Meters 943 - - 170 - - 64 - 1,177
Wells 10,522 872 - - 295 (425) 3,017 (7,718) 6,563
Mining property 5,033 81 - - 220 - - (1,566) 3,768
Vehicles 296 2 - - 74 (6) 2 (21) 347
Furniture and fixtures and software equipment 287 7 - - 229 (4) 65 (67) 517
Communication equipments 93 - - - - - 1 (1) 93
Materials and spare parts 628 3 - - 298 (83) (330) (60) 456
Refining and distribution industrial complex 873 - - - - (12) 77 (790) 148
Petrochemical industrial complex 756 - - - - - 169 - 925
Work in progress 6,560 23 - - 12,647 10 (8,355) (320) 10,565
Advances to suppliers 786 - - - 1,131 (274) (911) - 732
Other goods 12 - - - - - - - 12
Total at 12.31.2017 46,427 1,006 - 623 14,989 (1,443) (83) (12,017) 49,502
Total at 12.31.2016 17,334 286 21,801 - 8,440 (1,273) 1 - 46,589
(1) Includes the transfer of materials and spare parts to the item "Inventories" of the current
asset.
Depreciation Net book values
Type of good At the beginning Decreases Translation effect For the year (1) Reversal of impairment Reclassification to assets classified as held At the end At the end At 12.31.2016
Land - - - - - - - 354 1,193
Buildings (177) 15 - (109) - 22 (249) 1,825 1,913
Equipment and machinery (1,090) 16 (2) (1,238) - 211 (2,103) 10,061 7,910
High, medium and low voltage lines (778) 13 - (163) (91) - (1,019) 4,927 3,808
Substations (318) - - (58) (27) - (403) 1,875 1,411
Transforming chamber and platforms (191) - - (39) (18) - (248) 1,135 849
Meters (306) - - (47) (26) - (379) 798 637
Wells (1,665) - (180) (2,374) - 2,006 (2,213) 4,350 8,857
Mining property (630) - (18) (898) - 362 (1,184) 2,584 4,403
Vehicles (122) 5 (1) (65) - 8 (175) 172 174
Furniture and fixtures and software equipment (23) 1 (3) (137) - 32 (130) 387 264
Communication equipments (39) - - (4) - - (43) 50 54
Materials and spare parts (18) 47 - (8) - - 21 477 610
Refining and distribution industrial complex (36) 11 - (74) - 83 (16) 132 837
Petrochemical industrial complex (27) - - (113) - - (140) 785 729
Work in progress - - - - - - - 10,565 6,560
Advances to suppliers - - - - - - - 732 786
Other goods (6) - - (1) - - (7) 5 6
Total at 12.31.2017 (5,426) 108 (204) (5,328) (162) 2,724 (8,288) 41,214
Total at 12.31.2016 (2,825) 302 - (2,976) - - (5,499) 41,001
(1) Includes $ 1,940 million and $ 803 million corresponding to discontinued operations,
for 2017 and 2016, respectively. Borrowing costs capitalized in the book
value of property, plant and equipment during the year ended December 31, 2017 and 2016 amounted to $ 589 million and $ 303 million
respectively. Labor costs capitalized in the book value
of property, plant and equipment during the year ended December 31, 2017 and 2016 amounted to $ 369 and $ 419 million respectively.

11. INTANGIBLE ASSETS

11. INTANGIBLE ASSETS12 Months Ended
Dec. 31, 2017
Intangible Assets
INTANGIBLE ASSETSOriginal values
Type of good At the beginning Increase for subsidiaries acquisition (1) Reversal of impairment Increase Decrease Reclassification to assets held for sale
At the end
Concession agreements 951 - 96 - - - 1,047
Goodwill 999 - - - - (311) 688
Intangibles identified in acquisitions of companies 416 - - - (54) (206) 156
Others 14 - - - - (14) -
Total at 12.31.2017 2,380 - 96 - (54) (531) 1,891
Total at 12.31.2016 965 1,297 - 118 - - 2,380
(1) Includes the increase of intangible assets related to the purchase of PPSL in the amount of $
1,218 million.
Amortization
Type of good At the beginning For the year (1) Reversal of impairment Decrease Reclassification to assets held for sale At the end
Concession agreements (249) (27) (14) - - (290)
Goodwill - - - - - -
Intangibles identified in acquisitions of companies (28) (44) - - 57 (15)
Others - (1) - - 1 -
Total at 12.31.2017 (277) (72) (14) - 58 (305)
Total at 12.31.2016 (231) (46) - - - (277)
(1) Includes $ 39 million and $ 18 million corresponding to discontinued operations,
for 2017 and 2016, respectively.
Net book values
Type of good At the end At 12.31.2016
Concession agreements 757 702
Goodwill 688 999
Intangibles identified in acquisitions of companies 141 388
Others - 14
Total at 12.31.2017 1,586
Total at 12.31.2016 2,103

12. FINANCIAL ASSETS AT FAIR VA

12. FINANCIAL ASSETS AT FAIR VALUE THROUGH PROFIT AND LOSS12 Months Ended
Dec. 31, 2017
Financial Assets At Fair Value Through Profit And Loss
FINANCIAL ASSETS AT FAIR VALUE THROUGH PROFIT AND LOSS12.31.2017 12.31.2016
Non current
Shares 150 150
Government bonds - 592
Total non current 150 742
Current
Government bonds 5,024 984
Corporate bonds - 12
Investment funds 9,589 3,189
Other - 3
Total current 14,613 4,188

13. FINANCIAL ASSETS AT AMORTIZ

13. FINANCIAL ASSETS AT AMORTIZED COST12 Months Ended
Dec. 31, 2017
Financial Assets At Amortized Cost
FINANCIAL ASSETS AT AMORTIZED COST12.31.2017 12.31.2016
Non current
Government securities - 44
Corporate securities - 1
Financial Trustee - Gasoducto Sur Work - 17
Total non current - 62
Current
Government securities 11 2
Financial Trustee - Gasoducto Sur Work 14 21
Total current 25 23

14. DEFERRED TAX ASSETS AND LIA

14. DEFERRED TAX ASSETS AND LIABILITIES, INCOME TAX AND MINIMUM NOTIONAL INCOME TAX12 Months Ended
Dec. 31, 2017
Deferred Tax Assets And Liabilities Income Tax And Minimum Notional Income Tax
DEFERRED TAX ASSETS AND LIABILITIES, INCOME TAX AND MINIMUM NOTIONAL INCOME TAXThe composition of the deferred tax assets and liabilities is
as follows:
12.31.2016 Reclassification to held for sale Profit (loss) (1) Other comprehensive income (loss) (2) 12.31.2017
Tax loss-carryforwards 942 - 694 - 1,636
Trade and other receivables 194 (5) (70) - 119
Financial assets at fair value through profit and loss - - 12 - 12
Trade and other payables 1,124 - 58 - 1,182
Defined benefit plans 361 (56) (41) (4) 260
Provisions 1,722 (306) (674) - 742
Taxes payable 224 - (55) - 169
Liabilities associated to assets classified as held for sale - 367 - - 367
Other 126 - (81) - 45
Deferred tax asset 4,693 - (157) (4) 4,532
Property, plant and equipment (4,624) 841 2,083 - (1,700)
Investments in companies (1,329) - 222 (176) (1,283)
Intangible assets (294) - 221 - (73)
Trade and other receivables (851) - 176 - (675)
Financial assets at fair value through profit and loss (95) - 46 - (49)
Borrowings (61) - (75) - (136)
Assets classified as held for sale - (841) - - (841)
Other (3) - 8 - 5
Deferred tax liabilities (7,257) - 2,681 (176) (4,752)
(1) Includes a loss of $ 618 million corresponding to discontinued operations.
(2) Includes a loss of $ 180 million corresponding to discontinued operations.
12.31.2015 Increase for subsidiaries acquisition Profit (loss) (1) Other comprehensive income (loss) (2) 12.31.2016
Tax loss-carryforwards 32 - 910 - 942
Trade and other receivables 53 89 52 - 194
Financial assets at fair value through profit and loss 8 - (8) - -
Trade and other payables 333 - 791 - 1,124
Defined benefit plans 109 170 55 27 361
Provisions 134 1,372 216 - 1,722
Taxes payable 49 379 (192) (12) 224
Other 23 112 (9) - 126
Deferred tax asset 741 2,122 1,815 15 4,693
Property, plant and equipment (710) (4,477) 563 - (4,624)
Share of profit from joint ventures and associates - (1,281) (48) - (1,329)
Intangible assets (229) (74) 9 - (294)
Trade and other receivables (266) (269) (316) - (851)
Financial assets at fair value through profit and loss (49) (53) 7 - (95)
Borrowings (25) (43) 7 - (61)
Other (2) (21) 20 - (3)
Deferred tax liabilities (1,281) (6,218) 242 - (7,257)
(1) Includes a loss of $ 103 million corresponding to discontinued operations .
(2) Includes a gain of $ 17 million corresponding to discontinued operations. Deferred tax assets and liabilities are offset in the following
cases: a) when there is a legally enforceable right to offset tax assets and liabilities; and b) when deferred income tax charges
are associated with the same fiscal authority. The following amounts, determined after their adequate offset, are disclosed in
the statement of financial position:
12.31.2017 12.31.2016
Deferred tax asset 1,306 1,232
Deferred tax liabilities (1,526) (3,796)
Deferred tax liabilities, net (220) (2,564) The breakdown of income tax charge is:
12.31.2017 12.31.2016 12.31.2015
Current tax 1,385 1,021 370
Deferred tax (2,524) (2,057) 163
Direct charges for income tax 79 - -
Difference in the estimate of previous fiscal year income tax and the income return (307) (5) -
Other comprehensive (loss) income - (15) -
Minimum notional tax - (145) 54
Total income tax expense (gain) (1,367) (1,201) 587 Below is a reconciliation between income
tax expense and the amount resulting from application of the tax rate on the income before taxes:
Note 12.31.2017 12.31.2016 12.31.2015
Profit (loss) before tax 4,209 (1,525) 4,436
Current tax rate 35% 35% 35%
Result at the tax rate 1,473 (534) 1,553
Share of profit of joint ventures and associates (208) (39) -
Non-taxable results (1,347) (731) (1,045)
Non-deductible cost 194 - -
Non-deductible provisions 121 123 12
Other 9 131 (2)
Effect of tax rate change in deferred tax 48 (449) - -
Minimum notional income tax credit - (145) 54
Difference in the estimate of previous fiscal year income tax and the income tax statement (447) 13 45
Deferred tax not previously recognized (714) 17 (282)
Deferred tax assets not recognized 1 (36) 252
Total income tax expense (gain) (1,367) (1,201) 587 As of December 31, 2017 and 2016
consolidated accumulated tax losses amount to $ 5,548 million and $ 4,283 million, respectively, which may be offset, pursuant
to the applicable tax laws, with tax profits corresponding to future fiscal years, at the tax rate
that is estimated to apply
Fiscal year generation Fiscal year prescription 12.31.2017 12.31.2016
2012 2017 - 167
2013 2018 1 115
2014 2019 1 153
2015 2020 10 252
2016 2021 684 942
2017 2022 940 -
1,636 1,629
Unrecognized deferred assets - (687)
Recognized Tax loss-carryforwards 1,636 942 Due to the uncertainty on whether future
tax income may or may not absorb all deferred tax assets, as of December 31, 2016 the Company and some subsidiaries had not recorded
deferred assets resulting from tax-loss carry-forwards accrued for a total amount of $ 687 million.

15. TRADE AND OTHER RECEIVABLES

15. TRADE AND OTHER RECEIVABLES12 Months Ended
Dec. 31, 2017
Trade and other receivables [abstract]
TRADE AND OTHER RECEIVABLESNote 12.31.2017 12.31.2016
Non Current
CAMMESA Receivable (1) 2,868 2,286
Other 6 6
Trade receivables, net 2,874 2,292
Tax credits 163 533
Allowance for tax credits (14) (105)
Related parties 36 794 740
Prepaid expenses 20 26
Financial credit 37 44
Guarantee deposits 92 80
Contractual receivables in Ecuador 42 998 850
Receivable for sale of property, plant and equipment 67 -
Other 11 9
Other receivables, net 2,168 2,177
Total non current 5,042 4,469
Current
Receivables from energy distribution sales 6,115 4,138
Receivables from MAT 436 311
CAMMESA 2,887 1,501
CAMMESA Receivable (1) 421 519
Receivables from oil and gas sales 769 1,038
Receivables from refinery and distribution sales 958 949
Receivables from petrochemistry sales 924 744
Related parties 36 170 108
Other 136 25
Allowance for doubtful accounts (557) (429)
Trade receivables, net 12,259 8,904
Note 12.31.2017 12.31.2016
Tax credits 1,290 415
Advances to suppliers 11 24
Advances to employees 25 17
Related parties 36 215 98
Prepaid expenses 69 121
Receivables for non-electrical activities 218 143
Financial credit 83 126
Receivable for the sale of interests in subsidiaries and financial instruments - 1,263
Guarantee deposits 1,053 941
Natural Gas Surplus Injection Promotion Program (2) 2,592 1,582
Insurance to recover 202 -
Expenses to be recovered 371 314
Receivables from arbitral proceedings 388 -
Other 528 343
Allowance for other receivables (159) (147)
Other receivables, net 6,886 5,240
Total current 19,145 14,144
(1) As of December 31, 2017 and 2016, the Company and its generation subsidiaries
hold receivables from CAMMESA which, at nominal value and together with accrued interest, amount to a total $ 4,508 million
and $ 3,798 million, with an estimated recoverable value of $ 3,289 million and $ 2,805 million, respectively.
These receivables are made up as follows:
a. LVFVDs pursuant to SE Resolution No. 406/2003 for the 2004-2006 period.
They have been assigned to FONINVEMEM in the amount of $ 68 million and $ 74 million including interest, and their estimated recoverable
value amounts to $ 66 million and $ 71 million, respectively.
b. LVFVDs pursuant to SE Resolution No. 406/2003 for the 2008-2013 period
and the Trust under SE Resolution No. 95/2013 for the 2013-2016 period in the amount of $ 4,028 million and $ 3,232 million including
interest, which estimated recoverable value amounts to $ 2,827 million and $ 2,242 million, respectively. As of December 31, 2017
and 2016, $ 1,445 and $ 1,159 million, including interest, have been allocated to the “2014 Agreement for the Increase
of Thermal Generation Availability”, which estimated recoverable value amounts to $ 1,445 million and $ 1,050 million,
respectively.
c. LVFVDs for Maintenance Remuneration in the amount of $ 396 million
and $ 492 million, respectively, to finance the overhauls previously authorized by the SE. They are valued at their nominal
value plus accrued interest and, if applicable, they are netted from partial advances received under CAMMESA financing.
(2) As of December 31, corresponds to balances pending collection for
compensations under the IR and IE Programs for the April 2016-December 2017 period. Due to the short-term nature of the current
trade and other receivables, their carrying amount is considered to be the same as their fair value. For the non-current trade
and other receivables, the fair values are also not significantly different to their carrying amounts. At December 31, 2017 and 2016, trade receivables
that were past due amounted to $ 1,606 million and $ 2,766 million, respectively, which were due and net for an allowance for doubtful
accounts of $ 605 million, and $ 429 million respectively. The ageing analysis of these trade receivables is as follows:
12.31.2017 12.31.2016
Less than three months 878 2,432
Three to six months 450 135
Six to nine months 22 37
From nine to twelve months 301 161
Up to twelve months 2 1
Total expired trade receivables 1,653 2,766 The movements in the allowance for the impairment of trade
receivables are as follows:
12.31.2017 12.31.2016
At the beginning 429 88
Allowance for impairment 289 252
Decreases (45) (30)
Reversal of unused amounts (1) (23)
Reclassification to assets held for sale (115) -
Increases for purchases of subsidiaries - 142
At the end of the year 557 429 As of the date of these financial statements,
the maximum exposure to credit risk corresponds to the carrying amount of each class of receivables. On the basis of the change in an assumption,
while holding all other assumptions constant, a 5% increase / decrease in the estimated trade receivables’ uncollectibility
rate would result in $ 21 million decrease / increase in fiscal year’s results. The movements in the allowance for the
impairment of other receivables are as follows:
12.31.2017 12.31.2016
At the beginning 252 314
Allowance for impairment 33 49
Decreases (15) (9)
Decreases for deconsolidation - (3)
Reversal of unused amounts (97) (180)
Increase for subsidiaries acquisition - 81
At the end of the year 173 252

16. INVENTORIES

16. INVENTORIES12 Months Ended
Dec. 31, 2017
Inventories Abstract
INVENTORIES12.31.2017 12.31.2016
Materials and spare parts 1,514 1,336
Advances to suppliers 143 103
In process and finished products 640 1,496
Stock crude oil 29 425
Total 2,326 3,360

17. CASH AND CASH EQUIVALENTS

17. CASH AND CASH EQUIVALENTS12 Months Ended
Dec. 31, 2017
Cash and cash equivalents [abstract]
CASH AND CASH EQUIVALENTS12.31.2017 12.31.2016
Cash 30 16
Banks 327 1,308
Investment funds - 61
Time deposits 442 36
Total 799 1,421

18. SHARE CAPITAL

18. SHARE CAPITAL12 Months Ended
Dec. 31, 2017
Share Capital
SHARE CAPITALAs of December 31, 2017, the Company´s
share capital consisted of 2,080,190,514 common shares with a face value of $ 1 each and each granting the right to one vote,
of which 1,836,494.69 shares are issued and 101,873,741 and 144,322,083 of shares to be issued once perfected the 2016 and 2017
Reorganizations, respectively. As of December 31, 2017, the Company holds
2,500,000 treasury shares (Note 45). Publicly traded shares The Company’s shares are listed for
trading on Buenos Aires Stock Exchange, forming part of the Merval Index. Also, on August 5, 2009, the SEC authorized
the Company for the registration of ADSs representing 25 common shares each. On October 9, 2009, the Company started to market
its ADSs on the NYSE. The listing of the ADSs with the NYSE is
part of the Company’s strategic plan to increase its liquidity and the volume of its shares.

19. TRADE AND OTHER PAYABLES

19. TRADE AND OTHER PAYABLES12 Months Ended
Dec. 31, 2017
Trade and other payables [abstract]
TRADE AND OTHER PAYABLESNon Current 12.31.2017 12.31.2016
Customer contributions 80 98
Funding contributions for substations 60 52
Customer guarantees 101 83
Trade payables 241 233
ENRE Penalties and discounts 3,886 3,477
Loans (mutuums) with CAMMESA 1,885 1,347
Compensation agreements 124 -
Liability with FOTAE 190 173
Payment agreement with ENRE 73 106
Other 5 -
Other payables 6,163 5,103
Total non current 6,404 5,336
Current Note 12.31.2017 12.31.2016
Suppliers 8,687 5,705
CAMMESA 7,595 5,470
Customer contributions 19 46
Discounts to customers 37 37
Funding contributions substations 8 22
Customer advances 205 384
Customer guarantees 1 15
Related parties 36 80 181
Other 12 6
Trade payables 16,644 11,866
ENRE Penalties and discounts 288 56
Related parties 36 12 14
Advances for works to be executed 14 14
Compensation agreements 562 708
Payment agreements with ENRE 63 60
Other creditors 205 55
Other 264 94
Other payables 1,408 1,001
Total current 18,052 12,867 Due to the short-term nature of the current
payables and other payables, their carrying amount is considered to be the same as their fair value. For the majority of the non-current
payables and other payables, the fair values are also not significantly different to their carrying amounts The fair values of non-current customer
contributions as of December 31, 2017 and 2016 amount to $ 90 million and $ 96 million, respectively. The fair values are determined
based on estimated discounted cash flows in accordance with a market rate for this type of transactions. This fair value is classified
as level 3. The book value of the compensation agreements
approximates their fair value given the valuation characteristics (Note 4.18).

20. BORROWINGS

20. BORROWINGS12 Months Ended
Dec. 31, 2017
Statement 781Abstract
BORROWINGSNon Current Note 12.31.2017 12.31.2016
Financial borrowings 5,950 691
Corporate bonds 27,764 12,158
CAMMESA financing 3,398 2,421
Related parties 36 14 16
37,126 15,286
Current
Bank overdrafts - 846
Financial borrowings 5,097 7,539
Corporate bonds 739 2,246
CAMMESA financing - 34
Related parties 36 4 21
5,840 10,686 The maturities of the Company’s
borrowings (excluding finance lease liabilities) and its exposure to interest rates are as follow:
Fixed rate 12.31.2017 12.31.2016
Less than one year 4,667 5,335
One to two years 550 536
Two to five years 7,509 580
Up to five years 23,313 10,583
36,039 17,034
Floating rates
Less than one year 594 4,918
One to two years 610 207
Two to five years 2,561 3,162
Up to five years 1,946 -
5,711 8,287
Non interest accrues
Less than one year 579 433
One to two years - (5)
Two to five years 530 223
Up to five years 107 -
1,216 651 The movements
in the borrowings are as follows:
12.31.2017 12.31.2016
At the beginning 25,972 7,993
Proceeds from borrowings 26,892 18,367
Payment of borrowings (16,150) (6,813)
Accrued interest 3,252 2,715
Payment of borrowings' interests (2,469) (1,519)
Net foreign currency exchange difference 5,150 1,761
Increase for subsidiaries acquisition - 7,434
Costs capitalized in property, plant and equipment 329 244
Decrease through shares of subsidiaries (1) - (1,179)
Decrease through offsetting with other credits (2) - (1,951)
Decrease through offsetting with trade receivables (4) (242)
Repurchase and redemption of corporate bonds (28) (893)
Other financial results 22 55
At the end of the year 42,966 25,972
(1) Corresponding to US$ 77.4 million related to EMES financing.
(2) Corresponding to US$ 123 million (comprised of US$ 120 million of
principal plus US$ 3 million of interests) related to YPF financing. As of December 31, 2017 and 2016, the fair
values of the Company’s non-current borrowings (Corporate Bonds) amount approximately to $ 30,611 million and $14,108 million,
respectively. Such values were calculated on the basis of the determined market price of the Company’s corporate notes at
the end of each year (fair value level 1 and 2). The carrying amounts of short-term borrowings
approximate their fair value due to their short-term maturity. Financial borrowings and CAMMESA financing
approximate their fair value as they are subjected to a variable rate. The other long-term borrowings were measured
at amortized cost, which does not differ significantly from its fair value. During the years ended December 31, 2017
and 2016, the Company and its subsidiaries acquired and/or redeem its own corporate bonds or corporate bonds of various subsidiaries
at their respective market value for a total face value of US$ 15.1 million and US$ 13.8 million, respectively. Due to these debt-repurchase
and/or redemptions, the Company and its subsidiaries recorded a loss of $ 4 million in the year ended December 31, 2016, disclosed
under the line “Result from repurchase of corporate bonds” within Other financial results. As of the date of issuance of these financial
statements, the Company is in compliance with the covenants established in its indebtedness. 20.1. Details of borrowings:
Type of instrument Company Currency Residual value Interest Rate Expiration Book value as of 12.31.17
Corporate bonds :
2022 CB Edenor US$ 172 Fixed 10% 2022 3,321
Class 4 CB PAMPA US$ 34 Fixed 6% 10/30/2020 638
Class E CB PAMPA ARS 575 Variable Badlar 11/13/2020 590
Class A CB PAMPA ARS 282 Variable Badlar 10/5/2018 297
T Series CB PAMPA (1) US$ 500 Fixed 7% 7/21/2023 9,491
Class 1 CB PAMPA (2) US$ 750 Fixed 8% 1/24/2027 14,184
28,521
Regulatory :
CAMMESA 2014 Agreement PAMPA ARS 855 Variable CAMMESA (4) 1,572
CAMMESA Mapro PAMPA ARS 140 Variable CAMMESA (3) 193
CAMMESA Mapro CPB ARS 1,088 Variable CAMMESA (3) 1,633
3,398
Financial loans :
PAMPA U$S 352 Fixed Between 2,9% and 7,5% Feb-2018 to May-2021 6,628
PAMPA U$S 63 Variable 6% + Libor Sep-2018 to May-2024 1,164
PAMPA ARS 2,270 Fixed Between 22% y 22,25% Aug-2018 to Oct-2019 2,314
Edenor U$S 50 Fixed Libor + 4,27% 10/11/2020 941
11,047
42,966
Type of instrument Company Currency Residual value Amount repurchased Interest Rate Expiration Book value as of 12.31.16
Corporate bonds :
CB at Par EASA USD 4 2 Fixed 5% 12/16/2017 27
Discount CB EASA USD 130 130 Fixed 9% 12/16/2021 -
2022 CB Edenor USD 172 - Fixed 10% 10/25/2022 2,823
2017 CB Edenor USD 15 15 Fixed 11% 10/09/2017 -
Class 7 CB CTG ARS 173 - Variable Badlar + 3,5% 02/12/2018 179
Class 8 CB CTG USD 1 - Fixed 7% 08/12/2020 22
Class 3 CB CTLL ARS 51 - Variable Badlar + 5% 10/30/2017 53
Class 4 CB CTLL USD 30 - Fixed 6% 10/30/2020 543
Class C CB CTLL ARS 258 - Fixed/Vble. Badlar + 4,5% and 27,75% 05/06/2017 267
Class E CB CTLL ARS 575 - Variable Badlar 11/13/2020 589
Class A CB CTLL ARS 282 - Variable Badlar 10/05/2018 297
Class II CB PEPASA ARS 525 - Variable Badlar 06/06/2017 532
Class VII CB PEPASA ARS 310 - Variable Badlar + 5% 08/03/2017 322
Class VIII CB PEPASA ARS 403 - Variable Badlar + 4% 06/22/2017 402
STV 14 PEPASA ARS 296 - Variable Badlar + 5,9% 04/14/2017 311
T Series CB PAMPA (1) USD 500 - Fixed 7% 07/21/2023 8,074
14,441
Type of instrument Company Currency Residual value Amount repurchased Interest Rate Expiration Book value as of 12.31.16
Regulatory :
CAMMESA 2014 Agreement CTLL ARS 736 - Variable CAMMESA (4) 1,154
CAMMESA Mapro CTLL ARS 337 - Variable CAMMESA (3) 102
CAMMESA Mapro CPB ARS 1,211 - Variable CAMMESA (3) 1,199
2,455
Syndicated Lons :
PAMPA ARS 993 - Fixed 28% 07/26/2017 999
PAMPA ARS 963 - Variable Badcor + 3% 07/26/2017 970
PAMPA USD 141 - Variable Libor + 7% 07/26/2017 2,236
PAMPA ARS 142 - Fixed 30% 02/26/2019 142
4,347
Financial loans :
PEPASA USD 153 - Fixed Between 5% and 8% Aug-2017 to Feb-2018 2,436
PAMPA USD 25 - Fixed Between 2,9% and 7,5% Apr-2017 to Dec-2017 398
CTLL USD 15 - Variable Libor + 4,5% 09/26/2018 239
CTLL USD 19 - Fixed 8% 06/30/2018 305
CTLL ARS 500 - Fixed 20% 11/11/2017 505
3,883
Adelantos en cuenta corriente :
PAMPA ARS - - 846
25,972
(1) On July 14, 2016, Petrobras issued the Series T Notes, for a total
amount of US $ 500 million, part of which was used to cancel the Series S in its entirety, thus fulfilling the previous condition
for the closing of the acquisition of PPSL.
(2) On January 24, 2017, the Company issued Class 1 Corporate Bonds for
a face value of U$S 750 million with an issuance price of 99.136%. Funds derived from the issuance of these CBs will be destined
to investing in physical assets located in Argentina; financing working capital in Argentina; refinancing liabilities and/or making
capital contributions in controlled companies or affiliates to use funds for the above-mentioned purposes.
(3) Corresponds to the mutual contracts entered into with CAMMESA to finance
major maintenance works related to the different generation units approved by the SE. The financing will be amortized in 36 monthly
and consecutive installments as from the completion of the works, this term could be extended by 12 months. Maintenance Remuneration
will be used to cancel the financing granted. As a result of the entry into force of the new remuneration scheme (Resolution SE
No. 19-E /17), the Maintenance Remuneration was discontinued and it was defined that the balance of the financing will be repayable
through the discount of US $ 1 / MWh for the energy generated until its total cancellation.
(4) On December 1, 2014, CTLL and CAMMESA signed a Financing and Assignment
of Loan Agreement in order to finance the works of the 2014 Agreement Project (see Note 47.1). The financing will be canceled,
at Pampa option, through a payment in cash or through offsetting with CAMMESA receivables of the Company and other subsidiaries,
36 months as from the month following the commercial commissioning of the last generating unit making up the Projects. 20.2. Financing for the acquisition
of PPSL and the Offers 20.2.1. Syndicated Loan On July 26, 2016, the Company entered into
a syndicated loan agreement with domestic and foreign financial entities for an initial equivalent amount of US$ 750 million,
later reduced to US$ 600 million for the use of the proceeds from the sale of its indirect interests in TGS. The syndicated loan was guaranteed until
its cancellation with a pledge in first degree of privilege over the direct or indirect participation of the Company in PPSL and
Petrobras, and after the sale of certain assets to YPF, over the participation in IEASA. The Syndicated
Loan was canceled in its entirety during the first quarter of 2017. 20.2.2. EMES Financing On May 11, 2016, EMES, an investment vehicle
with the participation of the main officers of the Company and other international investors, entered into an agreement pursuant
to which EMES granted a loan in the amount of US$ 50 million to the Company, which was used to partially pay the purchase price
to the transaction. Before the expiration of the Exchange Offer
or the merger between the Company and Petrobras, the Company would have to cancel the total amount owed under the EMES Loan, and
EMES would have to accept the delivery of part of the acquired PPSL Credit equivalent to the amount resulting from assessing the
market value of the number of Petrobras’ ADRs which, if participating in the Exchange Offer or merger, would entitle EMES
to receive the number of ADRs from the Company resulting from dividing the loan principal by the average market price per ADR of
the Company at the NYSE on the 30 business days before the Share Purchase Agreement execution date. The execution of the EMES Financing was
a condition precedent requested by the Syndicated Loan's creditors. The EMES Financing was approved by the Audit Committee and
the Company's Board of Directors and is in full compliance with Argentine laws and regulations. On October 25, the Company and EMES agreed
to cancel the loan with the partial assignment of the principal of the PPSL credit for an amount of US$ 77.4 million. On November
1, 2016, PPSL canceled its debt with EMES through the delivery of 11,090,286 Petrobras’ ADRs. 20.2.3. YPF Financing On May 13, 2016, the Company executed a
credit agreement with YPF under which YPF undertook to grant a loan to the Company in the amount of US$ 140 million,
which were destined by the Company to partially finance the Transaction. To guarantee the performance of its obligations under
this financing, the Company granted a pledge on PEPASA’s shares held by it, which represent approximately 49% of PEPASA’s
capital stock and voting rights. On October 14, 2016, the Company pre-paid
US$ 20 million of the YPF Financing. As of December 31, 2016, the outstanding
balance of the loan was offset with the receivable for the price balance owed by YPF to Petrobras under the agreements for the
transfer of Río Neuquén and Aguada de la Arena consortiums. On March 9, 2017, the Board Directors resolved
to approve the cancellation by YPF of the price balance payable for the transfer to YPF of the participations in Río Neuquén
and Aguada de la Arena areas, through the assignment of the loan the Company held with YPF, since Pampa and Petrobras were undergoing
a merger process, and the Company has taken on the management of Petrobras pursuant to the decision made by the Shareholders’
Meeting dated February 16, 2017. Furthermore, the Board of Directors agreed that Pampa, in its capacity as assigned debtor, should
replace YPF. Finally, the parties agreed on the repayment of the due balances under the described terms and conditions. 20.3 Global Corporate Bonds Program
The Company has the following programs
in place: (i) a simple CBs Program (non-convertible into shares) for a maximum amount of US$500 million, which was authorized by
CNV Resolution No. 17,162, effective until August 15, 2018; and (ii) a simple or convertible CBs Program for up to US$ 2,000 million,
which was authorized by CNV Resolution No. 18,426, effective until December 29, 2021. The Company’s Shareholders’
Meeting held on April 7, 2017 approved the issuance of CBs convertible into common shares and American Depositary Shares (“ADRs”)
for a face value of US$ 500 million subject to certain conditions, mainly regarding the Company’s ADR price. On January 16, 2018, the Company
informed the CNV that, following the sales transactions in the refining and distribution segment (Note 1.5.1) and of certain oil
assets (Note 1.5.2), the resulting fund inflow would allow the Company to afford the defined strategic investments. Therefore,
the issuance of corporate bonds convertible into shares is not deemed necessary. 20.4 Guarantees on loans On September 27, 2017, Greenwind entered
into a loan agreement with Corporación Interamericana de Inversiones, Banco Interamericano de Desarrollo, Banco Santander,
and Industrial and Commercial Bank of China Limited (ICBC) Dubai Branch in the amount of US$ 104 million, which will be used
to finance the construction, operation and maintenance of the 100 MW wind farm currently being developed in Bahía Blanca,
Province of Buenos Aires. The facility will have a nine-year term
as from its execution date and will be repaid in 14 six-monthly consecutive installments, the first one becoming due on May
15, 2020. Pampa granted a bond for the whole facility’s
principal to guarantee the operation. On October 20 and November 13, 2017, Greenwind collected
the entire financing. 20.5 TGS Financing On October 6, 2011, TGS granted the Company
a borrowing/financing amounting to US$ 26 million to make the payment necessary to acquire the rights to control, suspend
and waive Enron Creditors Recovery Corp. and Ponderosa Assets LLP against the Republic of Argentina before the International Centre
for Settlement of Investment Disputes of the World Bank (”CIADI”) (the “Arbitration Proceeding”) pursuant
to the Call Option Agreement entered into between the Company, Inversiones Argentina II and GEB Corp. (the “ICSID Contract”). After several postponements and ammendments,
the parties agreed that the financing will be paid at maturity or in advance through the full and unconditional assignment to TGS
of all PESA’s rights and obligations under the ICSID Agreement in case, on or before the maturity date: (a) TGS has received
a 20% increase on its tariff chart and that increase remains effective pursuant to the Transitory Agreement approved by Order No.
1918/09 of the National Executive Branch, or (b) the following has been granted to TGS and remains effective: (x) the tariff adjustment
set forth in the Agreement initialized by TGS and approved by its Board of Directors on October 5, 2011, or (y) any other compensatory
system implemented through any tariff review system or mechanism hereinafter replacing those currently in force under Economic
Emergency Law No. 25,561 of the Republic of Argentina and having an equivalent economic effect on TGS. During September 2015, the condition stipulated
in the loan agreement granted by TGS has been met, which required its compulsory cancellation through the full and unconditional
assignment of all the ownership rights and liabilities held by the Company under the Arbitration Proceeding. On October 7, 2015, all rights under the
Arbitration Proceeding were assigned to a trust formed abroad to TGS and consequently, on that date the effects of the transaction
were recognized according to the following breakdown:
Loan principal balance 244
Interest and taxes 80
Total TGS loan 324
Rights over arbitration proceedings (109)
Gain from discharge / cancellation of TGS loan 215

21. DEFERRED REVENUE

21. DEFERRED REVENUE12 Months Ended
Dec. 31, 2017
Deferred Revenue
DEFERRED REVENUE12.31.2017 12.31.2016
Non current
Customer contributions not subject to repayment 195 200
Total non current 195 200
Current
Customer contributions not subject to repayment 3 1
Total current 3 1

22. SALARIES AND SOCIAL SECURIT

22. SALARIES AND SOCIAL SECURITY PAYABLE12 Months Ended
Dec. 31, 2017
Salaries And Social Security Payable
SALARIES AND SOCIAL SECURITY PAYABLE12.31.2017 12.31.2016
Non current
Seniority - based bonus 116 89
Early retirements payable 4 5
Total non current 120 94
Current
Salaries and social security contributions 579 419
Provision for vacations 671 617
Provision for gratifications and annual bonus for efficiency 899 705
Early retirements payable 5 4
Total current 2,154 1,745

23. INCOME TAX AND MINIMUM PRES

23. INCOME TAX AND MINIMUM PRESUME TAX LIABILITY12 Months Ended
Dec. 31, 2017
Income Tax And Minimum Presume Tax Liability
INCOME TAX AND MINIMUM PRESUME TAX LIABILITY12.31.2017 12.31.2016
Non current
Income tax, net of withholdings and advances 848 837
Minimum notional income tax, net of withholdings and advances 15 97
Total non current 863 934
Current
Income tax, net of withholdings and advances 880 1,451
Minimum notional income tax, net of withholdings and advances 63 3
Total current 943 1,454

24. DEFINED BENEFITS PLANS

24. DEFINED BENEFITS PLANS12 Months Ended
Dec. 31, 2017
Defined Benefits Plans
DEFINED BENEFITS PLANSThe main characteristics of benefit
plans granted to Company employees are detailed below.
a) Indemnity plan
b) Compensatory plan
c) Collective agreements As of December 31, 2017 and 2016,
the most relevant actuarial information corresponding to the described benefit plans is the following:
12.31.2017
Present value of the obligation Fair value of plan assets Net liability at the end of the year
Liabilities at the beginning 1,188 (155) 1,033
Items classified in profit or loss (1)
Current services cost 58 - 58
Cost for interest 280 (23) 257
Cost for past service 28 - 28
Items classified in other comprehensive
Actuarial losses (gains) (2) (21) 10 (11)
Exchange differences on translation 32 (16) 16
Benefit payments (105) 7 (98)
Contributions paid - (7) (7)
Reclassification to liabilities associated to assets classified as held for sale (268) 105 (163)
At the end 1,192 (79) 1,113
(1) Includes $ 25 million corresponding to discontinued operations .
(2) Includes $ 10 million corresponding to discontinued operations.
12.31.2016 12.31.2015
Present value of the obligation Present value of assets Net liability at the end of the year Present value of the obligation
Liabilities at the beginning 310 - 310 223
Items classified in profit or loss (1)
Current services cost 42 - 42 36
Cost for interest 208 (13) 195 86
Items classified in other comprehensive
Actuarial losses (gains) (2) 73 5 78 1
Benefit payments (76) 2 (74) (36)
Contributions paid - (2) (2) -
Increase for subsidiaries acquisition 631 (147) 484 -
At the end 1,188 (155) 1,033 310
(1) Includes a loss of $ 5 million corresponding to discontinued operations for 2016 .
(2) Includes $ 9 million corresponding to discontinued operations for 2016. As of December 31, 2017, net liability
by type of plan, is as follows: a) 177 million corresponding to Indemnity plan; b) 274 million corresponding to Compensatory plan
and c) 662 million corresponding to Collective agreements. As of December 31, 2016, net liability
by type of plan, is as follows: a) 157 million corresponding to Indemnity plan; b) 270 million corresponding to Compensatory plan
and c) 606 million corresponding to Collective agreements. Estimated expected benefits payments for
the next ten years are shown below. The amounts in the table represent the undiscounted cash flows and therefore do not reconcile
to the obligations recorded at the end of the year.
12.31.2017
Less than one year 121
One to two years 84
Two to three years 74
Three to four years 89
Four to five years 81
Six to ten years 377 Significant actuarial assumptions
used were as follows:
12.31.2017 12.31.2016 12.31.2015
Discount rate 4% 5% 6%
Salaries increase 1% 1% 2%
Average inflation 15% 21% 32% The following sensitivity analysis
shows the effect of a variation in the discount rate and salaries increase on the obligation amount:
12.31.2017
Discount rate: 4%
Obligation 1,298
Variation 106
10%
Discount rate: 6%
Obligation 1,102
Variation (90)
(8%)
Salaries increase: 0%
Obligation 1,126
Variation (66)
(6%)
Salaries increase: 2%
Obligation 1,269
Variation 77
7% The sensitivity analyses are based
on a change in an assumption while holding all other assumptions constant. In practice, this is unlikely to occur, and changes
in some of the assumptions may be correlated. Therefore, the presented analysis may not be representative of the actual change
in the defined benefit obligation. The methods and types of assumptions used in preparing the sensitivity analysis did not change
compared to the prior period.

25. TAX LIABILITIES

25. TAX LIABILITIES12 Months Ended
Dec. 31, 2017
Tax Liabilities
TAX LIABILITIES12.31.2017 12.31.2016
Non current
Value added tax 219 287
Sales tax 17 9
Payment plans 130 10
Total non current 366 306
Current
Value added tax 526 840
Municipal, provincial and national contributions 398 377
Payment plans 61 3
Municipal taxes 69 58
Tax withholdings to be deposited 195 381
Stamp tax payable 10 10
Royalties 138 165
Extraordinary Canon 553 527
Sales tax - 14
Other 15 17
Total current 1,965 2,392

26. PROVISIONS

26. PROVISIONS12 Months Ended
Dec. 31, 2017
Provisions [abstract]
PROVISIONSNote 12.31.2017 12.31.2016
Non Current
Provisions for contingencies 3,468 3,977
Asset retirement obligation 918 1,719
Environmental remediation 15 174
Onerous contract (Ship or pay) 42 - 366
Other provisions 34 31
4,435 6,267
Current
Provisions for contingencies 129 94
Asset retirement obligation 152 143
Environmental remediation 127 175
Onerous contract (Ship or pay) 42 389 394
798 806
12.31.2017
For contingencies Asset retirement obligation For environmental remediation
At the beginning of the year 4,071 1,862 349
Increases 980 634 98
Reclassification (209) (16) 16
Decreases (881) (166) (135)
Reclassification to liabilities associated to assets classified as held for sale - (875) (184)
Reversal of unused amounts (364) (369) (2)
At the end of the year 3,597 1,070 142
12.31.2016
For contingencies Asset retirement obligation For environmental remediation
At the beginning of the year 335 49 -
Increases 472 629 210
Increases for purchases of subsidiaries 3,333 1,210 235
Decreases (69) (26) (96)
At the end of the year 4,071 1,862 349
12.31.2015
For contingencies Asset retirement obligation
At the beginning of the year 141 3
Increases 228 46
Decreases (34) -
At the end of the year 335 49 26.1 Provision for Environmental
remediation The Company is subject to extensive
environmental regulations in Argentina and in the other countries in which it operates. The Company’s management believes
that its current operations are in compliance with applicable environmental requirements, as currently interpreted and enforced,
including regulatory remediation commitments assumed. The Company undertakes environmental impact studies for new projects and
investments and, to date, environmental requirements and restrictions imposed on these new projects have not had any material adverse
impact on Pampa Energía’s business. The Company has performed a sensitivity
analysis relating to the discount rate. The 1% increase or decrease in the discount rate would not have a significant impact on
the Company’s results of operations.
26.2 Provision for well plugging and abandonment In accordance with the regulations
applicable in the countries where the Company (directly or indirectly through subsidiaries) performs oil and gas exploration and
production activities, the Company must incur costs associated with well plugging and abandonment. The Company has not pledged
any assets for the purpose of settling such obligations. The Company has performed a sensitivity
analysis relating to the discount rate. The 1% increase or decrease in the discount rate would not have a significant impact on
the Company’s results of operations.
26.3 Provision for legal proceedings The Company (directly or indirectly
through subsidiaries) is a party to several commercial, tax and labor proceedings and claims that arise in the ordinary course
of its business. In determining a proper level of provision, the Company has considered its best estimate mainly with the assistance
of legal and tax advisors. The determination of estimates may
change in the future due to new developments or unknown facts at the time of evaluation of the provision. As a consequence, the
adverse resolution of the evaluated proceedings and claims could exceed the established provision.

27. REVENUE

27. REVENUE12 Months Ended
Dec. 31, 2017
Revenue [abstract]
REVENUE12.31.2017 12.31.2016 12.31.2015
Sales of energy to the Spot Market 5,546 2,411 1,050
Sales of energy by contract 3,965 2,187 1,357
Other sales 49 11 11
Generation subtotal 9,560 4,609 2,418
Energy sales 24,170 12,952 3,721
Right of use of poles 131 99 76
Connection and reconnection charges 38 19 5
Other sales - 9 -
Distribution subtotal 24,339 13,079 3,802
Oil, Gas and liquid sales 8,271 4,746 848
Other sales 560 117 -
Oil and gas subtotal 8,831 4,863 848
Administrative services sales 383 50 37
Other sales 5 2 1
Holding and others subtotal 388 52 38
Petrochemicals sales 7,229 2,507 -
Petrochemicals subtotal 7,229 2,507 -
Total revenue 50,347 25,110 7,106

28. COST OF SALES

28. COST OF SALES12 Months Ended
Dec. 31, 2017
Cost Of Sales
COST OF SALES12.31.2017 12.31.2016 12.31.2015
Inventories at the beginning of the year 3,360 225 136
Plus: Charges for the year
Incorporation of inventories for acquisition of companies - 3,072 -
Purchases of inventories, energy and gas 19,649 9,110 2,496
Salaries and social security charges 4,659 3,450 2,196
Benefits to personnel 164 77 36
Accrual of defined benefit plans 169 134 97
Fees and compensation for services 1,948 1,125 586
Property, plant and equipment depreciations 3,222 2,068 641
Intangible assets amortization 33 28 29
Transport of energy 79 11 16
Consumption of materials 645 390 297
Penalties (1) 269 2,377 260
Maintenance 422 366 128
Canons and Royalties 1,295 602 139
Environmental control 64 33 -
Rental and insurance 264 174 79
Surveillance and security 141 95 53
Taxes, rates and contributions 67 45 25
Communications 45 36 15
Water consumption 25 14 9
Other 233 81 25
Subtotal 33,393 23,288 7,127
Less: Inventories at the end of the year (2,326) (3,360) (225)
Total cost of sales 34,427 20,153 7,038
(1) Includes $ 414 million of recover by penalties (Note 2.3)

29. SELLING EXPENSES

29. SELLING EXPENSES12 Months Ended
Dec. 31, 2017
Selling Expenses
SELLING EXPENSES12.31.2017 12.31.2016 12.31.2015
Salaries and social security charges 618 482 311
Accrual of defined benefit plans 14 13 12
Fees and compensation for services 593 496 333
Compensation agreements 132 157 74
Property, plant and equipment depreciations 56 50 35
Taxes, rates and contributions 696 343 95
Communications 177 129 59
Penalties 266 182 24
Doubtful accounts 254 235 27
Transport 85 29 -
Other 13 16 3
Total selling expenses 2,904 2,132 973

30. ADMINISTRATIVE EXPENSES

30. ADMINISTRATIVE EXPENSES12 Months Ended
Dec. 31, 2017
Administrative Expenses
ADMINISTRATIVE EXPENSES12.31.2017 12.31.2016 12.31.2015
Salaries
and social security charges 1,953 1,517 527
Benefits
to the personnel 140 53 16
Accrual of defined benefit
plans 135 85 13
Fees
and compensation for services 1,338 1,222 294
Compensation
agreements 468 236 101
Directors'
and Syndicates' fees 95 65 44
Property,
plant and equipment depreciations 110 55 15
Consumption
of materials 61 38 23
Maintenance 60 33 3
Transport
and per diem 44 25 6
Rental and insurance 138 115 77
Surveillance
and security 94 51 26
Taxes,
rates and contributions 102 37 45
Communications 48 30 9
Institutional advertising
and promotion 56 29 1
Other 63 37 21
Total
administrative expenses 4,905 3,628 1,221

31. EXPLORATION EXPENSES

31. EXPLORATION EXPENSES12 Months Ended
Dec. 31, 2017
Exploration Expenses
EXPLORATION EXPENSES12.31.2017 12.31.2016 12.31.2015
Geological and geophysical expenses 17 18 -
Decrease in unproductive wells 27 76 3
Total exploration expenses 44 94 3

32. OTHER OPERATING INCOME AND

32. OTHER OPERATING INCOME AND EXPENSES12 Months Ended
Dec. 31, 2017
Other Operating Income And Expenses
OTHER OPERATING INCOME AND EXPENSESOther operating income Note 12.31.2017 12.31.2016 12.31.2015
Recovery of expenses 1 48 7
Recovery of doubtful accounts 86 29 1
Surplus Gas Injection Compensation 2,340 2,037 547
Commissions on municipal tax collections 32 21 15
Services to third parties 190 109 54
Profit for property, plant and equipment sale 5 91 -
Dividends received 33 6 4
Recognition of income - provisional remedies Note MEyM No 2016-04484723 - 1,126 -
Income recognition on account of the RTI - SE Res. No. 32/15 - 419 5,025
Higher costs recognition - SE Res. No. 250/13 and subsequent Notes - 82 551
Onerous contract (Ship or pay) 42 - 150 -
Reversal of contingencies provision 521 5 -
Gain from cancellation of TGS Loan - - 215
Other 180 41 98
Total other operating income 3,388 4,164 6,517
Other operating expenses
Provision for contingencies (881) (455) (228)
Decrease in property, plant and equipment (15) (51) (6)
Allowance for uncollectible tax credits (14) (29) (95)
Net expense for technical functions - (18) (13)
Tax on bank transactions (817) (473) (176)
Other expenses FOCEDE - (15) (60)
Cost for services provided to third parties (39) (32) (52)
Compensation agreements (45) (109) (48)
Donations and contributions (38) (17) (7)
Institutional relationships (65) (44) (18)
Extraordinary Canon (314) (366) -
Contingent consideration 1.2.1 (171) - -
Onerous contract (Ship or Pay) (90) - -
Other (462) (267) (66)
Total other operating expenses (2,951) (1,876) (769)

33. FINANCIAL RESULTS

33. FINANCIAL RESULTS12 Months Ended
Dec. 31, 2017
Financial Results
FINANCIAL RESULTSFinance income 12.31.2017 12.31.2016 12.31.2015
Commercial interest 986 677 239
Financial interest 334 67 61
Other interest 112 105 31
Total finance income 1,432 849 331
Finance expenses
Commercial interest (1,030) (1,021) (194)
Fiscal interest (260) (76) (75)
Financial interest (1) (3,714) (3,083) (937)
Other interest (5) (3) (2)
Taxes and bank commissions (78) (36) (33)
Other financial expenses (25) (58) (16)
Total financial expenses (5,112) (4,277) (1,257)
Other financial results
Foreign currency exchange difference, net (3,558) (1,099) (566)
Result from repurchase of Corporate Bonds - (4) 10
Changes in the fair value of financial instruments 1,471 1,120 2,271
Discounted value measurement (141) (65) 23
Asset retirement obligation (40) (32) (19)
Other financial results 2 - -
Total other financial results (2,266) (80) 1,719
Total financial results, net (5,946) (3,508) 793 (1)

34. EARNING (LOSS) PER SHARE

34. EARNING (LOSS) PER SHARE12 Months Ended
Dec. 31, 2017
Earning Loss Per Share
EARNING (LOSS) PER SHAREa) Basic Basic earnings (loss) per share are calculated
by dividing the result attributable to the Company’s equity interest holders by the weighted average of outstanding common
shares during the year.
b) Diluted Diluted earnings (loss) per share
are calculated by adjusting the weighted average of outstanding common shares to reflect the conversion of all dilutive potential
common shares. Potential common shares will be
deemed dilutive only when their conversion into common shares may reduce the earnings per share or increase losses per share of
the continuing business. Potential common shares will be deemed anti-dilutive when their conversion into common shares may result
in an increase in the earnings per share or a decrease in the losses per share of the continuing operations. The calculation of diluted earnings
(loss) per share does not entail a conversion, the exercise or another issuance of shares which may have an anti-dilutive effect
on the losses per share, or where the option exercise price is higher than the average price of ordinary shares during the period,
no dilutive effect is recorded, being the diluted earning (loss) per share equal to the basic. As of December 31, 2017 and 2016,
the Company does not hold any significant potential dilutive shares, therefore there are no differences with the basic earnings
(loss) per share.
12.31.2017 12.31.2016 12.31.2015
Earning (loss) for continuing operations attributable to the equity holders of the Company 4,623 (93) 3,065
Weighted average amount of outstanding shares 1,971 1,736 1,347
Basic and diluted earnings (loss) per share for continuing operations 2.3455 (0.0536) 2.2760
(Loss) Earning for discontinued operations attributable to the equity holders of the Company (17) 82 -
Weighted average amount of outstanding shares 1,971 1,736 1,347
Basic and diluted (loss) earnings per share for (0.0086) 0.0472 -
Earning (loss) attributable to the equity holders of the Company 4,606 (11) 3,065
Weighted average amount of outstanding shares 1,971 1,736 1,347
Basic and diluted earnings (loss) per share 2.3369 (0.0063) 2.2760

35. SEGMENT INFORMATION

35. SEGMENT INFORMATION12 Months Ended
Dec. 31, 2017
Segment Information
SEGMENT INFORMATIONThe Company is an integrated energy company
in Argentina, which participates in the various segments of the electricity sector, in the exploration and production of gas and
oil, in petrochemicals and in the refining and distribution of fuels. Through its own activities, subsidiaries
and share holdings in joint ventures, and based on the business nature, customer portfolio and risks involved, we were able to
identify the following business segments: Generation Distribution of Energy Oil and Gas results corresponding
to the divestment mentioned in Note 1.5.2 as discontinued operations Refining and Distribution results
corresponding to the divestment mentioned in Note 1.5.1 as discontinued operations Petrochemicals Holding and Other Business The Company manages its operating
segment based on its individual net results.
Consolidated profit and loss information as of December 31, 2017 Generation Distribution Oil and gas Refining and Petrochemicals Holding and others Eliminations Consolidated
Revenue 9,560 24,339 8,831 - 7,229 388 - 50,347
Intersegment sales 37 - 1,810 - - 36 (1,883) -
Cost of sales (5,358) (17,667) (6,581) - (6,655) (3) 1,837 (34,427)
Gross profit (loss) 4,239 6,672 4,060 - 574 421 (46) 15,920
Selling expenses (94) (2,079) (455) - (290) - 14 (2,904)
Administrative expenses (357) (1,444) (975) - (74) (2,095) 40 (4,905)
Exploration expenses - - (44) - - - - (44)
Other operating income 420 97 2,522 - 64 289 (4) 3,388
Other operating expenses (149) (758) (776) - (571) (697) - (2,951)
Reversal of impairment of property, plant and equipment - 461 - - - - - 461
Reversal of impairment of intangible assets - 82 - - - - - 82
Share of profit (loss) from joint ventures (50) - - - - 1,114 - 1,064
Share of profit from associates - - 44 - - - - 44
Operating profit (loss) 4,009 3,031 4,376 - (297) (968) 4 10,155
Finance income 881 272 96 - 10 214 (41) 1,432
Finance expenses (932) (1,595) (245) - - (2,381) 41 (5,112)
Other financial results 55 (9) (193) - 11 (2,130) - (2,266)
Financial results, net 4 (1,332) (342) - 21 (4,297) - (5,946)
Profit (loss) before income tax 4,013 1,699 4,034 - (276) (5,265) 4 4,209
Income tax and minimum notional income tax 85 (417) (389) - - 2,088 - 1,367
Profit (loss) for the year from continuing operations 4,098 1,282 3,645 - (276) (3,177) 4 5,576
Profit (loss) for the year from the discontinued operations - - 121 (43) - - 16 94
Profit (loss) for the year 4,098 1,282 3,766 (43) (276) (3,177) 20 5,670
Depreciation and amortization 845 443 1,956 - 117 60 - 3,421
Consolidated profit and loss information as of December 31, 2017 Generation Distribution Oil and gas Refining and Petrochemicals Holding and others Eliminations Consolidated
Total profit (loss) attributable to:
Owners of the Company 3,890 951 3,241 (43) (276) (3,177) 20 4,606
Non - controlling interest 208 331 525 - - - - 1,064
Consolidated statement of financial position as of December 31, 2017
Assets 22,833 26,149 22,116 5,887 3,161 29,449 (5,128) 104,467
Liabilities 7,635 24,460 10,446 3,599 2,406 40,948 (5,139) 84,355
Additional consolidated information as of December 31, 2017
Increases in property, plant and equipment 6,277 4,137 4,195 154 110 116 - 14,989
Consolidated profit and loss information as of December 31, 2016 Generation Distribution Oil and gas Refining and Petrochemicals Holding and others Eliminations Consolidated
Revenue 4,609 13,079 4,863 - 2,507 52 - 25,110
Intersegment sales 15 - 716 - - 28 (759) -
Cost of sales (2,726) (12,220) (3,737) - (2,207) (3) 740 (20,153)
Gross profit (loss) 1,898 859 1,842 - 300 77 (19) 4,957
Selling expenses (65) (1,618) (334) - (110) (5) - (2,132)
Administrative expenses (392) (1,171) (632) - (15) (1,446) 28 (3,628)
Exploration expenses - - (94) - - - - (94)
Other operating income 55 1,718 1,892 - - 560 (61) 4,164
Other operating expenses (104) (465) (826) - (263) (282) 64 (1,876)
Share of loss from joint ventures - - - - - 105 - 105
Share of profit (loss) from associates - - 11 (1) - (3) - 7
Income from the sale of subsidiaries and financial assets - - - - - 480 - 480
Operating profit (loss) 1,392 (677) 1,859 (1) (88) (514) 12 1,983
Finance income 600 206 103 - 2 105 (167) 849
Finance expenses (750) (1,645) (730) - - (1,320) 168 (4,277)
Other financial results 228 (360) 22 - (3) 35 (2) (80)
Financial results, net 78 (1,799) (605) - (1) (1,180) (1) (3,508)
Profit (loss) before income tax 1,470 (2,476) 1,254 (1) (89) (1,694) 11 (1,525)
Income tax and minimum notional income tax (317) 753 (305) - - 1,070 - 1,201
Profit (loss) for the year from continuing operations 1,153 (1,723) 949 (1) (89) (624) 11 (324)
Profit for the year from discontinued operations - - (74) 75 - - 71 72
Profit (loss) for the year 1,153 (1,723) 875 74 (89) (624) 82 (252)
Depreciation and amortization 378 364 1,398 - 35 26 - 2,201
Consolidated profit and loss information as of December 31, 2016 Generation Distribution Oil and gas Refining and Petrochemicals Holding and others Eliminations Consolidated
Total profit (loss) attributable to:
Owners of the Company 1,045 (1,147) 627 74 (89) (603) 82 (11)
Non - controlling interest 108 (576) 248 - - (21) - (241)
Consolidated statement of financial position as of December 31,2016
Assets 19,577 17,219 19,414 6,259 2,812 19,494 (7,498) 77,277
Liabilities 8,632 18,856 11,662 3,267 2,401 25,883 (7,498) 63,203
Additional consolidated information as of December 31, 2016
Increases in property, plant and equipment 2,378 2,703 3,051 165 58 85 - 8,440
Increases in intangible assets 108 - 994 224 - - - 1,326
Consolidated profit and loss information at December 31, 2015 Generation Distribution Oil and gas Holding Eliminations Consolidated
Revenue 2,418 3,802 848 38 - 7,106
Intersegment sales - - 96 16 (112) -
Cost of sales (1,282) (5,189) (660) (3) 96 (7,038)
Gross profit (loss) 1,136 (1,387) 284 51 (16) 68
Selling expenses (24) (833) (116) - - (973)
Administrative expenses (262) (697) (150) (128) 16 (1,221)
Exploration expenses - - (3) - - (3)
Other operating income 91 5,656 552 218 - 6,517
Other operating expenses (79) (599) (82) (9) - (769)
Reversal of impairment of property, plant and equipment 25 - - - - 25
Share of profit in joint ventures - - - 9 - 9
Share of loss in associates - - - (10) - (10)
Operating profit 887 2,140 485 131 - 3,643
Finance income 295 96 1 26 (87) 331
Finance expenses (358) (577) (389) (20) 87 (1,257)
Other financial results (82) (870) 419 2,252 - 1,719
Financial results, net (145) (1,351) 31 2,258 - 793
Profit before income tax 742 789 516 2,389 - 4,436
Income tax and minimum notional income tax (192) (176) (164) (55) - (587)
Profit for the year 550 613 352 2,334 - 3,849
Depreciation and amortization 149 295 276 - - 720
Consolidated profit and loss information at December 31, 2015 Generation Distribution Oil and gas Holding Eliminations Consolidated
Total profit attributable to:
Owners of the Company 497 59 175 2,334 - 3,065
Non - controlling interest 53 554 177 - - 784
Consolidated statement of financial position as of December 31, 2015
Assets 8,051 11,737 3,970 6,563 (1,171) 29,150
Liabilities 5,956 11,673 3,361 950 (1,171) 20,769
Additional consolidated information as of December 31, 2015
Increases of property, plant and equipment 1,516 2,518 2,214 - - 6,248 Accounting criteria used by the
subsidiaries to measure results, assets and liabilities of the segments is consistent with that used in the consolidated financial
statements. Transactions between different segments are conducted under market conditions. Assets and liabilities are allocated
based on the segment’s activity.

36. RELATED PARTIES_ TRANSACTIO

36. RELATED PARTIES´ TRANSACTIONS12 Months Ended
Dec. 31, 2017
Related Parties Transactions
RELATED PARTIES´ TRANSACTIONSa) Sales of goods and services
12.31.2017 12.31.2016 12.31.2015
Joint ventures:
Transener (1) 28 15 15
TGS (2) 527 254 -
Associates and other related parties:
CYCSA - 14 2
TGS (2) - - 40
Refinor (3) 126 45 -
Oldelval 4 1 -
685 329 57
(1) Corresponds to advisory services in technical assistance.
(2) Corresponds to advisory services in technical assistance and gas and
refined products sales.
(3) Corresponds to oil sales.
b) Purchases of goods and services
12.31.2017 12.31.2016 12.31.2015
Joint ventures:
Transener (7) (10) (5)
TGS (1) (197) (132) -
SACME (47) (35) (27)
Associates and other related parties:
Origenes Vida (13) (6) -
TGS (1) - - (3)
Refinor (2) (393) (117) -
Oldelval (3) (74) (31) -
(731) (331) (35)
(1) Corresponds to natural gas transportation services.
(2) Corresponds to purchase of refined products.
(3) Corresponds to oil transportation services.
c) Fees for services
12.31.2017 12.31.2016 12.31.2015
Associates and other related parties:
Salaverri, Dellatorre, Burgio & Wetzler (16) (23) (1)
(16) (23) (1) Corresponds
to fees for legal advice.
d) Other operating income
12.31.2017 12.31.2016 12.31.2015
Associates and other related parties:
TGS - - 215
CYCSA - - 6
OCP - 150 -
- 150 221 Corresponds to onerous contract (Ship or Pay).
e) Other operating expenses
12.31.2017 12.31.2016 12.31.2015
Associates and other related parties:
OCP (1) (90) - -
Foundation (2) (35) (13) (3)
(125) (13) (3) (1)
Corresponds to onerous contract (Ship or Pay). (2)
Corresponds to donations.
f) Finance income
12.31.2017 12.31.2016 12.31.2015
Joint ventures:
TGS 65 24 -
65 24 - Corresponds to finance leases.
g) Finance expenses
12.31.2017 12.31.2016 12.31.2015
Associates and other related parties:
TGS - - (12)
Orígenes Retiro (6) (7) -
Grupo EMES (1) - (417) -
(6) (424) (12)
(1) Note 20.
h) Corporate Bonds transactions Purchase of Corporate Bonds
12.31.2017 12.31.2016 12.31.2015
Associates and other related parties:
Orígenes Retiro - 666 -
- 666 - Sale of Corporate Bonds
12.31.2017 12.31.2016 12.31.2015
Associates and other related parties:
Orígenes Retiro - 590 -
- 590 - i)
Dividends received
12.31.2017 12.31.2016 12.31.2015
Associates and other related parties:
CIESA - 4 -
Oldelval 7 - -
TJSM 8 3 -
TMB 10 3 -
25 10 - j)
Payment of dividends
Associates and other related parties: 12.31.2017 12.31.2016 12.31.2015
EMESA (44) - -
APCO Oil (44) (45) -
Ultracore - (3) -
(88) (48) -
k) Key management personnel remuneration The total remuneration to executive directors
accrued during the year ended December 31, 2017, 2016 and 2015 amounts to $ 740 million ($ 95 million in Directors' and Sindycs'
fees and $ 645 in the accrual of the Company-Value Compensation, EBDA Compensation and Stock-based Compensation Plans, of
which $ 510 million correspond to compensation based on shares of
which $ 406 million correspond to compensation based on shares
l) Balances with related parties:
As of December 31, 2017 Trade receivables Other receivables
Current Non Current Current
Joint ventures:
Transener 5 - -
TGS 129 789 75
Greenwind - - 127
SACME - 5 -
Associates and other related parties:
Ultracore - - 10
Refinor 10 - -
SACDE 25 - 2
Other 1 - 1
170 794 215
As of December 31, 2017 Trade payables Other payables Borrowings Provisions
Current Current Non Current Current Current
Joint ventures:
TGS 17 - - - -
SACME - 5 - - -
Associates and other related parties:
Orígenes Seguro de vida - - - 2 -
Orígenes Retiro - - 14 2 -
OCP - - - - 389
Refinor 53 - - - -
Oldelval 9 - - - -
Other - 7 - - -
80 12 14 4 389 According
to paragraphs 25 and 26 of IAS 24, Edenor applied the disclosure exemption in relation to related party transactions with a governmental
agency that has control, joint control or significant influence. As of December 31, 2017, ANSES holds Edenor's Notes due 2022
amounting to $ 317 million.
As of December 31, 2016 Trade receivables Other receivables
Current Non Current Current
Joint ventures:
Transener 10 - -
TGS 90 733 88
SACME - 7 1
Associates and other related parties:
Ultracore - - 4
Refinor 6 - 4
Oldelval 1 - -
Other 1 - 1
108 740 98
As of December 31, 2016 Trade payables Other payables Borrowings Provisions
Current Current Non Current Current Non Current Current
Joint ventures:
Transener 9 - - - - -
TGS 116 - - - - -
SACME - 5 - - - -
Associates and other related parties:
Orígenes Retiro - - 16 21 - -
OCP - - - - 366 394
UTE Apache - 5 - - - -
Refinor 32 - - - - -
Oldelval 22 - - - - -
Other 2 4 - - - -
181 14 16 21 366 394

37. FINANCIAL INSTRUMENTS

37. FINANCIAL INSTRUMENTS12 Months Ended
Dec. 31, 2017
Financial Instruments
FINANCIAL INSTRUMENTSThe following chart presents financial
instruments by category:
As of December 31, 2017 Financial assets/liabilities at amortized cost Financial assets/liabilities at fair value through profit and loss Subtotal financial assets/liabilities Non financial assets/liabilities Total
Assets
Trade receivables and other receivables 21,512 590 22,102 2,085 24,187
Financial assets at amortized cost
Government securities 11 - 11 - 11
Trusts 14 - 14 - 14
Financial assets at fair value through profit
Government securities - 5,024 5,024 - 5,024
Shares - 150 150 - 150
Investment funds - 9,589 9,589 - 9,589
Derivative financial instruments - 4 4 - 4
Cash and cash equivalents 799 - 799 - 799
Total 22,336 15,357 37,693 2,085 39,778
Liabilities
Trade and other liabilities 18,142 1,885 20,027 4,429 24,456
Borrowings 42,966 - 42,966 - 42,966
Derivative financial instruments - 82 82 - 82
Total 61,108 1,967 63,075 4,429 67,504
As of December 31, 2016 Financial assets/liabilities at amortized cost Financial assets/liabilities at fair value through profit and loss Subtotal financial assets/liabilities Non financial assets/liabilities Total
Assets
Trade receivables and other receivables 17,553 29 17,582 1,031 18,613
Financial assets at amortized cost
Government securities 46 - 46 - 46
Corporate securities 1 - 1 - 1
Trusts 38 - 38 - 38
Financial assets at fair value through profit and loss
Government securities - 1,576 1,576 - 1,576
Corporate securities - 12 12 - 12
Shares - 150 150 - 150
Investment funds - 3,189 3,189 - 3,189
Derivative financial instruments - 13 13 - 13
Cash and cash equivalents 1,360 61 1,421 - 1,421
Total 18,998 5,030 24,028 1,031 25,059
Liabilities
Trade and other liabilities 13,016 1,347 14,363 3,840 18,203
Borrowings 25,972 - 25,972 - 25,972
Total 38,988 1,347 40,335 3,840 44,175 The categories of financial instruments
have been determined according to IFRS 9. The income, expenses, gains and
losses derived from each of the financial instrument categories are indicated below:
As of December 31, 2017 Financial assets/liabilities at amortized cost Financial assets/liabilities at fair value through profit and loss Subtotal financial assets/liabilities Non Financial assets/ liabilities Total
Interest income 1,277 155 1,432 - 1,432
Interest expense (4,767) - (4,767) (242) (5,009)
Foreign exchange, net (4,353) 1,115 (3,238) (320) (3,558)
Results from financial instruments at fair value - 1,471 1,471 - 1,471
Other financial results (245) - (245) (37) (282)
Total (8,088) 2,741 (5,347) (599) (5,946)
As of December 31, 2016 Financial assets/liabilities at amortized cost Financial assets/liabilities at fair value through profit and loss Subtotal financial assets/liabilities Non Financial assets/ liabilities Total
Interest income 845 4 849 - 849
Interest expense (3,700) (417) (4,117) (66) (4,183)
Foreign exchange, net (1,369) 250 (1,119) 20 (1,099)
Results from financial instruments at fair value - 1,120 1,120 - 1,120
Other financial results (166) 3 (163) (32) (195)
Total (4,390) 960 (3,430) (78) (3,508)
As of December 31, 2015 Financial assets/liabilities at amortized cost Financial assets/liabilities at fair value through profit and loss Subtotal financial assets/liabilities Non Financial assets/ liabilities Total
Interest income 327 4 331 - 331
Interest expense (1,137) - (1,137) (71) (1,208)
Foreign exchange, net (1,027) 461 (566) - (566)
Results from financial instruments at fair value - 2,271 2,271 - 2,271
Other financial results (17) 1 (16) (19) (35)
Total (1,854) 2,737 883 (90) 793

38. CONTINGENCIES

38. CONTINGENCIES12 Months Ended
Dec. 31, 2017
Contingencies
CONTINGENCIES38.1. Actions brought against the
Company 38.1.1 Distribution of energy segment 38.1.1.1 Legal action brought by “Consumidores
Financieros Asociación civil para su defensa”. Purpose: 1) Reimbursement
of the Value Added Tax (VAT) percentage paid alleged on the illegally “widened” taxable basis due to the incorporation
of the FNEE. Distribution companies, the defendants, had not paid this tax when CAMMESA invoiced them the electricity purchased
for distribution purposes. 2) Reimbursement
of part of the administrative surcharge on “second due date”, in those cases in which payment was made within the time
period authorized for such second deadline (14 days) but without distinguishing the effective day of payment. 3) Application
of the “borrowing rate” in case of customer delay in complying with payment obligation, in accordance with the provisions
of Law No. 26,361. Amount Procedural stage of the proceedings Conclusion 38.1.1.2 Legal action brought by ASOCIACIÓN
DE DEFENSA DE DERECHOS DE USUARIOS Y CONSUMIDORES – ADDUC Purpose: Amount Procedural stage of the proceedings: Conclusion: 38.1.2 Sales tax The Company maintains interpretative differences
with the AFIP and Argentinian provincial tax authorities related to taxes applicable to its oil and gas activity. The Company estimates
that the outcome of these differences will not have significant adverse effects on the Company’s financial position or results
of operations. HIDISA and HINISA have filed a note to
the Province of Neuquén’s Revenue Department informing that they consider that the electric power generation activity
conducted in that province should be covered by the provisions of Section 12 of Act No. 15,336. Pursuant to this Section, revenues
resulting from the generation of electric power are exempted from the provincial sales tax. 38.2. Actions submitted by the Company 38.2.1 Claim for the recognition of
Gas Plus costs In September 2015, CAMMESA informed CTLL
that, pursuant to SE Resolution No. 529/14, as from the termination of the first automatic renewal of the natural gas supply agreements
in force as at that date (January 2016), it would cease recognizing: (i) any other automatic renewal of such contracts, (ii) costs
associated with the acquisition of Gas Plus (including the 10% contemplated in the Master Agreement). Therefore, on September 3, 2015 and January
1, 2016, CTLL declared a force majeure regarding the agreements for the acquisition of natural gas with Pan American Energy LLC
Argentina and PEPASA, respectively, which resulted in the suspension of CTLL's obligations under both agreements. Additionally,
claims against CAMMESA were filed regarding both agreements. In the absence of a reply by the ES, on
November 13, 2015 CTLL submitted an administrative claim prior to the filing of a complaint to reverse CAMMESA's decision and,
subsidiarily, to seek a redress for the damages sustained by CTLL. In view of this situation and after all administrative remedies
had been exhausted, on October 7, 2016 the Company filed a complaint against the National Government for the January-March 2016
period. 38.2.2 Income tax 38.2.2.1. Inflation adjustment HIDISA and HINISA have assessed their income
taxes for fiscal years 2012 - 2015 and CTG for the fiscal year 2015, taking into consideration the application of the inflation
adjustment mechanisms set forth in Title VI of the Income Tax Act, the update of Property, plant and equipment amortizations (Sections
83, 84 and 89), a cost restatement on account of the disposal of shares and mutual funds quotas (Sections 58, 61 and 89), and the
update of intangible assets amortizations (Sections 81.c, 84 and 89, and Section 128 of its regulatory decree), to such effect
using the domestic wholesale price index (IPIM) published by the National Institute of Statistics and Censuses, until October 2015
and the index of consumer prices City of Buenos Aires (IPCBA) for the November-December 2015 period, based on the similarity with
the parameters put forward in the matter of “Candy S.A.” heard by the National Supreme Court of Justice, which on July
3, 2009 ruled for the application of the inflation adjustment mechanism. As of December 31, 2017 the Company, HIDISA,
HINISA and CTG will hold a provision for the additional income tax liabilities assessable for fiscal years mentioned in case the
inflation adjustment had not been deducted. This provision amounts to $ 843 million including compensatory interest and was disclosed
in the line “Income tax liability and minimum notional income tax non-current”. On March 31, 2017, CTG adhered to the tax
moratorium set forth by Act No. 27,260 for income taxes corresponding to fiscal year 2015 on account of the application of the
above-described inflation adjustment mechanism. 38.2.2.2 Tax refund claim The Company, HIDISA, HINISA and CPB have
filed several tax refund claims in the amount of $ 1,228 million for overpaid income taxes taking into considerations
the effects of the inflation adjustment mechanism. On December 7, 2017, CPB collected the
amount claimed for the 2002 period, which amounts to $ 4 million plus interest. The Company considers it has a high probability
of obtaining a favorable final and conclusive ruling. 38.2.3 Minimum national income tax 38.2.3.1 Tax refund claim The Company and CTLL have filed different
petitions for refund against AFIP – DGI for the application of the IGMP corresponding to the fiscal years 2008 and 2009,
seeking the refund of $ 25 million, including the recovery of payments recorded and the reversal of the payment made on account
of the offsetting of several fiscal credits. As AFIP didn’t answer the claim, the Company and CTLL brought the tax refund
claim before a National First Instance Administrative Litigation Court Federal. On August 25, 2016 CTLL obtained a favorable
ruling by the Chamber of Appeals, which upheld the first instance decision sustaining the refund claim; however, the payment has
not been received as of the date of these financial statements and the company is filing all applicable claims in this respect. The Company considers it has a high probability
of obtaining a favorable final and conclusive ruling. 38.2.3.2 Declaratory relief The Company and its subsidiaries filed
a petition for declaratory relief pursuant to Section 322 of the Federal Code of Civil and Commercial Procedure against AFIP in
order to obtain assurance as to the application of the minimum notional income tax for the fiscal years from 2010 to 2015, based
on the decision by the CSJN in “Hermitage” dated on September 15, 2010. In this established precedent, the Court
had declared this tax unconstitutional since it may be considered unreasonable under certain circumstances and since it breaches
the tax capacity principle. Furthermore, the Company and certain subsidiaries
have requested the granting of interim injunctive relief so that AFIP may refrain from demanding payment or instituting tax execution
proceedings on the tax and for the fiscal year mentioned. The Court seized of in the proceedings decided to reject the precautionary
measures. During November and December, 2015, the
Company and EGSSA (currently merged with the Company) received a favorable decision by the first-instance Court and the Chamber
of Appeals, respectively, on the declaratory relief claim filed for fiscal period 2010. During the month of November 2016, EGSSA
obtained a favorable first-instance decision on the declaratory relief claim filed for fiscal period 2011. During December 2016, the Treasury concluded
an inspection on Edenor for fiscal year 2014, during which Edenor had applied the criterion established by the “Hermitage”
decision in its IGMP. Taking into consideration the different
rulings favorable to the Company and its subsidiaries, and in line with the case law established by the “Hermitage”
decision and the Treasury’s position on closing several verifications for periods where taxpayers do not have any taxable
income (before the calculation of tax losses), in which the Treasury has waived its claims for these debts based on the unfavorable
case law and in line with the criterion established by the Court, the Company has decided to derecognize the liabilities it had
previously disclosed for the IGMP it should have assessed if the provisions of the Hermitage decision had not applied. On March 31, 2017, CTLL and EASA adhered
to the tax moratorium set forth by Act No. 27,260 regarding claims for the 2011 period in the case of EASA, and the 2012, 2014
and 2015 periods in the case of CTLL. As of December 31, 2017, and due to the
uncertainty on whether it may obtain a favorable decision, the Company keeps a $ 97 million in the line “Income tax liability
and minimum notional income tax non-current” for the fiscal periods in which no tax losses have been evidenced. As of December
31, 2016 the minimum notional income tax provision amounted to $ 97 million, including compensatory interest. 38.2.4 Distribution Segment Legal action brought by Edenor (“Edenor
S.A. VS FEDERAL GOVERNMENT – MINISTRY OF FEDERAL PLANNING / PROCEEDING FOR THE DETERMINATION OF A CLAIM AND MOTION TO LITIGATE
IN FORMA PAUPERIS”) On June 28, 2013, Edenor instituted these
proceedings for the recognizance of a claim and the related leave to proceed in forma pauperis, both pending in the Federal Court
of Original Jurisdiction in Contentious and Administrative Federal Matters No. 11 – Clerk’s Office No. 22. Purpose Procedural stage of the proceedings Regarding the motion to litigate in forma
pauperis that was filed on July 2, 2013, the discovery period has ended and the period for the parties to put forward their arguments
on the merits of the evidence produced has begun. At the date of issuance of these financial statements, the procedural time-limits
in this incidental motion, as those in the main proceedings, continue to be suspended. Conclusion

39. LEASES

39. LEASES12 Months Ended
Dec. 31, 2017
Leases
LEASES39.1 Operating
a. As lesee The features that these assignments of
use have in common are that payments (installments) are established as fixed amounts; there are neither purchase option clauses
nor renewal term clauses (except for the assignment of use contract of the Energy Handling and Transformer Center that has an automatic
renewal clause for the term thereof); and there are prohibitions such as: transferring or sub-leasing the building, changing its
use and/or making any kind of modifications thereto. All operating assignment of use contracts have cancelable terms and assignment
periods of 2 to 13 years. Among them the following can be mentioned:
commercial offices, two warehouses, the headquarters building (comprised of administration, commercial and technical offices of
Edenor), the Energy Handling and Transformer Center (two buildings and a plot of land located within the perimeter of Central Nuevo
Puerto and Puerto Nuevo) and Las Heras Substation. As of December 31, 2017, 2016 and
2015, future minimum payments with respect to operating leases of use are as follow:
12.31.2017 12.31.2016 12.31.2015
2016 - - 48
2017 - 41 20
2018 84 8 6
2019 84 9 4
2020 35 6 -
2021 3 2 -
Total future minimum lease payments 206 66 78 Total expenses for operating leases of
use for the years ended December 31, 2017 and 2016 are $ 85 million and $ 68 million, respectively.
a. As lessor Edenor has entered into operating assignment
of use contracts with certain cable television companies granting them the right to use the poles of Edenor’s network. Most
of these contracts include automatic renewal clauses. As of December 31, 2017, 2016 and
2015, future minimum collections with respect to operating assignments of use are as follow:
12.31.2017 12.31.2016 12.31.2015
2016 - - 91
2017 137 109 85
2018 137 109 -
2019 131 103 -
Total future minimum lease collections 405 321 176 Total income from operating assignments
of use for the years ended December 31, 2017 and 2016 is $ 131 million and $ 108.2 million, respectively. 39.2 Financial Corresponds to the financing granted to
TGS for the sale of certain properties, plant and equipment belonging to the Oil and Gas business segment. This agreement was entered
into in August 11, 2016 and consists of the collection of 119 monthly installments of US$ 623 thousand and a purchase option for
the same amount payable at the end of the 120 months of contract life. As of December 31, 2017, this credit is included in other
current and non-current receivables in an amount of $ 72 million and $ 89 million, respectively.

40. OPERATIONS IN HYDROCARBON C

40. OPERATIONS IN HYDROCARBON CONSORTIUMS12 Months Ended
Dec. 31, 2017
Operations In Hydrocarbon Consortiums
OPERATIONS IN HYDROCARBON CONSORTIUMS40.1 General considerations The Company is jointly and severally liable
with the other participants for meeting the contractual obligations under these arrangements. The production areas in Argentina are operated
pursuant to concession production agreements with free hydrocarbons availability. According to Law No.17,319, royalties equivalent
to 12% of the wellhead price of crude oil and natural gas are paid in Argentina. The wellhead price is calculated by deducting
freight and other sales related expenses from the sale prices obtained from transactions with third parties. This rate may increase
from 3% to 4% depending to the producing jurisdiction and market value of the product. 40.2 Oil and gas areas and participation
in joint-operations As of December 31, 2017, the Company and
associates are part of the joint operations and consortia for the exploration and production of oil and gas as indicated below:
Participation Duration Up To
Name Note Location Direct Indirect Operator
Argentine production
25 de Mayo - Medanito S.E. (g) Río Negro 100.00% - PAMPA 2,026
Jagüel de los Machos (g) Río Negro 100.00% - PAMPA 2,025
Bajada del Palo (g) Neuquén 3.85% 43.07% PELSA 2,025
Río Neuquén (g) Río Negro and Neuquén 33.07% - YPF 2027/2051
Entre Lomas (g) Río Negro and Neuquén 3.85% 43.07% PELSA 2,026
Sierra Chata Neuquén 45.56% - PAMPA 2,023
El Mangrullo Neuquén 100.00% - PAMPA 2,025
La Tapera - Puesto Quiroga Chubut 35.67% - Tecpetrol 2,027
El Tordillo Chubut 35.67% - Tecpetrol 2,027
Aguaragüe Salta 15.00% - Tecpetrol 2023/2027
Gobernador Ayala (a) Mendoza 22.51% - Pluspetrol 2,036
Charco del Palenque - Jarilla Quemada (g) Río Negro 3.85% 43.07% PELSA 2034/2040
Anticlinal Neuquén 15.00% - YPF 2,026
Estación Fernández Oro (e) Río Negro 15.00% - YPF 2,026
Rincón del Mangrullo (e) Neuquén 50.00% - YPF 2,051
Senillosa (f) Neuquén 85.00% - PAMPA 2,040
Foreign
Oritupano - Leona Venezuela - 22.00% PDVSA 2,025
Acema Venezuela - 34.49% PDVSA 2,025
La Concepción Venezuela - 36.00% PDVSA 2,025
Mata Venezuela - 34.49% PDVSA 2,025
Argentine exploration
Parva Negra Este Neuquén 42.50% - PAMPA 2,018
Enarsa 1 (E1) (c) Argentine Continental Shelf 25.00% - YPF -
Enarsa 3 (E3) (c) Argentine Continental Shelf 35.00% - PAMPA -
Chirete Salta 50.00% - High Luck Group Limited 2,017
Río Atuel Mendoza 33.33% - Tecpetrol 2,018
Borde del Limay (b) Neuquén 85.00% - PAMPA 2,014
Los Vértices (b) Neuquén 85.00% - PAMPA 2,014
Veta Escondida y Rincón de Aranda Neuquén 55.00% - PAMPA 2,027
(a) The granting of the concession is in progress and the term will be
25 years from such granting.
(b) It is in process of returning to Gas y Petróleo del Neuquén
SA (“GyP”, permit holder).
(c) The Company, in compliance with section 5.2 of the respective partnership
agreements, informed to the partners of Enarsa 1 and Enarsa 3, its decision not to participate in retraining them in exploration
permits according to section 30 of Law 27.007.
(d) Within the concession agreement renegotiation with the Province of
Río Negro, it was agreed to assign to EDHIPSA 5% of the rights and obligations inherent to the production concession in Rio
Neuquén area in the Province of Río Negro, to be assumed in equal parts by the partners.
(e) The 15% interest in the assets corresponds to 12 wells in the
Estación Fernandez Oro area and 10 wells in the Anticlinal area.
(f) The company is currently conducting a process for the total reversal
of the area.
(g) In January 2018, the Company decided to sell these interests (Note
1). 40.3 Production concession in
the Veta Escondida area On April 4, 2012 by the sanction of the
Provincial Decree No. 563/12, Petrobras Argentina was notified of a decision of the government of the Province of Neuquén
to terminate the production concession in the Veta Escondida area. The Company has sought relief alleging that it has complied
with all requirements under the concession and that it did not commit any breach which would support the decision adopted by the
Government of Neuquén. As of the date of these financial statements,
the parties are negotiating a solution to the conflict taking into account the current situation of the industry and market. 40.4 New concession and changes
in working interest oil and gas areas 40.4.1 Parva Negra Area Petrobras had submitted a request for an
exploitation concession in Parva Negra area, holding a 100% interest. In 2014, Petrobras renegotiated its rights on the area and
entered into a joint operation agreement with GyP, holder of the Parva Negra Este exploration permit, with GyP having a 15% interest
and Petrobras (operator) having a 85% interest. Regarding that circumstance, the Executive
Branch of the Province of Neuquén, through Decree No. 575/2014, approved the joint operation agreement (UTE) for Parva Negra
Este area, while Decree No. 1600/2015 approved Amendment No. 1 whereby EXXONMOBIL Exploration Argentina is authorized to participate.
The Company has a 42.5% stake and the remaining commitment to drill 1 horizontal branch of approximately 2,500 meters in an exploratory
well, and, if successful, to complete and test it, until the end of 2017. With the drilling and completion of an
approximate 2,500-meter horizontal branch in the PNE.x-1001(h) well and the corresponding trials which are currently under way,
there are no outstanding commitments under this permit. A one-year extension was requested to conduct tests and trials in the well
and evaluate its production behavior in order to conclude the evaluation of the permit. 40.4.2 Senillosa Area On May 18, 2016, and subject to certain
conditions subsequent, PEPASA and Rovella agreed on the assignment of Rovella’s 35% interest in the whole Senillosa joint
venture in favor of PEPASA in consideration of the forgiveness of a debt it held with the company. Thus, PEPASA now holds an 85%
interest in the Senillosa joint venture. Lastly, as of the date of these financial
statements and as a result of the low pressure and production in the wells, the long-term production trial was terminated and the
built facilities were dismantled. Therefore, PEPASA recorded an impairment of Property, Plant and Equipment in the amount of $ 35
million under “Exploration Expenses”. During fiscal year 2017, tasks for the
abandonment of 12 wells were initiated, which will be concluded in the first semester of 2018. 40.4.3 Río Neuquén and Aguada
de la Arena areas On October 14, 2016, the Company perfected
the sale of its 33.33% interest in the “Río Neuquén” area concession and its whole interest in the “Aguada
de la Arena” area concession to YPF. On October 27, 2016, the Company consummated also the sale to an affiliate of Petrobras
Brazil of 33.6% of all rights and obligations under the concession over the Río Neuquén area and 100% of all rights and
obligations in the Colpa and Caranda areas in Bolivia. 40.4.4 Río Neuquén area in the
Province of Neuquén Pursuant to Decree No. 776/2016 passed
on June, 13, 2016, the Executive Branch of the Province of Neuquén approved the Investment Memorandum of Agreement executed
by Petrobras Argentina and such province, whereunder a 35-year non-conventional exploitation concession was granted over the Río
Neuquén area, including a 5-year pilot development plan period. This agreement mainly provides that Petrobras
will be under a duty to execute a pilot plan for the development of non-conventional hydrocarbons (tight gas) involving the drilling
of 24 wells and the refurbishing of surface facilities from 2016 through 2020. Total investments for such period are estimated
at US$ 346 million. The agreement provides for the payment of a fixed bond of US$ 5.7 million and a Corporate Social
Responsibility Contribution in the amount of US$ 8.6 million. In addition, through a payment of $ 208
million, differences in interpretation concerning the sales tax in the proceedings pending before the Tax Bureau of the Province
of Neuquén were finally settled. YPF S.A. has been the operator of the area,
where Petrobras Operaciones S.A. has an interest, since 2016. 40.4.5 25 de Mayo-Medanito S.E. area in
the Province of La Pampa On March 30, 2016, the Legislature of the
Province of La Pampa enacted a law declaring “of strategic interest” the 25 de Mayo-Medanito S.E. area located in that
province with the purpose of transferring its possession to the province after the expiration of the original term of the concession
to Petrobras for 25 years. On October 29, 2016, the Province of La
Pampa took possession of the 25 de Mayo-Medanito S.E area. As a result of the foregoing, the Company
recognized a loss of $ 213 million, as of December 31, 2016 mainly related to environmental remediation and retirement obligations PEPASA and Pampetrol SAPEM entered into
an operating services agreement for the area for a term of one year as from October 29, 2016 in consideration of a compensation
equivalent to approximately 62% of the hydrocarbon production in the area. This exploitation concession belongs to Pampetrol, and
the agreement has not granted the Company any rights or interests over it. On October 28, 2017, the rendering of the
operating services terminated and the area began to be operated by Pampetrol SAPEM. The Company has performed all undertaken obligations,
returned the facilities as and when required and in an operating status, and provided all the applicable environmental documentation. 40.4.6 Las Tacanas Norte area Under the Public Tender No 1/2017 - V Round,
for the selection of companies interested in the exploration, development and eventual exploitation of the blocks located in the
Province of Neuquén and concessional in favor of the Gas y Petróleo del Neuquén S.A. (‘GyP’), on November
1, 2017, the Board of Directors of GyP has proceed to award in favor of the Company for the offer summited for Las Tacanas Norte
block. Las Tacanas Norte block has a 120 km2 surface
and is adjacent to El Mangrullo block, which is currently operated by the Company. The accepted offer consists of a perforation
of up to 8 wells with the objective toward Vaca Muerta formation, and other exploratory studies. The exploratory license is for
a 4-year term (2018-2021). 40.4.7 Rincón del Mangrullo area On August 1, 2017, YPF entered into an
Agreement with the Province of Neuquén for the awarding of an unconventional exploitation concession in the Rincón del
Mangrullo area, which was approved by a provincial executive order. The main commitments of the Agreement are
as follows:
- A 35-year extension of the exploitation concession,
- A commitment to pay a bond, a corporate social responsibility contribution
and the stamp tax for a total amount of US$ 20 million, and
- An investment commitment of US$ 150 million aiming to further
the development of the Mulichinco formation (tight gas) and to explore the potential of the Lajas and Vaca Muerta formations. Although the Company will participate in
this new unconventional concession in Rincón del Mangrullo jointly with YPF, its investment commitment will amount to 30%
of the total amount agreed upon between YPF and the Province of Neuquén as PEPASA’s Agreement with YPF does not include
the Vaca Muerta formation. 40.5 Investment Commitments In the Province of Río Negro, in the
25 de Mayo – Medanito, Jagüel de los Machos and Río Neuquén concessions, the Company committed to spend a
total estimated amount of US$ 908 million in exploration and exploitation activities (US$ 451 million until 2017, US$ 266
million during the 2018-2020 period and US$ 191 million from 2021 onwards). Additionally, in Entre Lomas field concession,
PELSA committed to spend a total estimated amount of US$ 492 million in exploration and exploitation activities as from the
agreement’s effective date (US$ 173 million until 2017, US$ 140 million during the 2018-2020 period and US$ 179
million from 2021 onwards). In January 2018, the Company decided to
sell its 58.88% interest in PELSA and its interests in the Entre Lomas, Bajada del Palo, Agua Amarga and Medanito / Jagüel
de los Machos areas to Vista Oil & Gas (Note 1.5.2). 40.6 Exploratory well costs The following table provides the year end
balances and activity for exploratory well costs, during the years ended December 31, 2017 and 2016:
12.31.2017 12.31.2016 12.31.2015
At the beginning of the year 274 113 30
Increase for subsidiaries acquisition - 227 -
Increases 196 102 86
Transferred to development (177) (57) -
Loss of the year (27) (111) (3)
At the end of the year 266 274 113
Number of wells at the end of the year 7 7 6 40.7 Oil and gas reserves (INFORMATION
NOT COVERED BY THE AUDITORS’ REPORT) The table below presents the estimated
proved reserves of oil (including crude oil, condensate and LNG) and natural gas, by geographic area as of December 31, 2017.
Proved Reserves
Proved Developed Proved Undeveloped Total Proved
Oil and LNG (1) Natural Gas (2) Oil and LNG (1) Natural Gas (2) Oil and LNG (1) Natural Gas (2)
Argentina 32,935 12,646 8,695 8,667 41,630 21,313
Total at 12.31.2017 32,935 12,646 8,695 8,667 41,630 21,313 (1) (2)

41. ECONOMIC AND FINANCIAL SITU

41. ECONOMIC AND FINANCIAL SITUATION OF GENERATION, TRANSMISSION AND ENERGY DISTRIBUTION SEGMENTS12 Months Ended
Dec. 31, 2017
Economic And Financial Situation Of Generation Transmission And Energy Distribution Segments
ECONOMIC AND FINANCIAL SITUATION OF GENERATION, TRANSMISSION AND ENERGY DISTRIBUTION SEGMENTS41.1 Generation During the fiscal years ended December
31, 2017 and 2016, CPB recorded comprehensive losses for $ 120 million and $ 210 million, respectively. This is mainly due to: (i) a heavier
financial burden due to the cessation of the capitalization of financial expenses corresponding to the portion of CAMMESA’s
financing destined to the Technological Upgrade Works for units TV29 and TV30, which concluded in 2016 and 2017, respectively;
(ii) certain sudden outages of both units; and (iii) the delay in their commissioning after the conclusion of the overhauls. However, CPB is starting to remedy
this situation with the higher reliability and availability of turbines, as well as an improvement in the remuneration scheme set
forth by SEE Resolution No. 19/2017. This allowed for the operating income to record a profit of $ 252 million. As of December 31, 2017, CPB’s
working capital was negative in the amount of $ 375 million. It should be pointed out that CPB
has recorded financing with affiliates in the amount of $ 449 million under “Loans”, which will be partially refinanced
through future disbursements by CAMMESA under the Overhauls Financing Agreement and with the higher operating cash flow expected
by the Company. Notwithstanding the foregoing, and
according to the estimates made by CPB’s Management, there is no significant substantial doubt on CPB´s ability to continue
operating as an on-going business. 41.2 Distribution of
energy The measures adopted by the Federal Government,
aimed at resolving the electricity rate situation of the electric power sector during 2016, together with the application of the
RTI as from February 1, 2017 are making it possible to gradually restore Edenor’s economic and financial position; therefore,
Edenor’s Board of Directors is optimistic that the new electricity rates will result in Edenor’s operating once again
under a regulatory framework with clear and precise rules, which will make it possible to not only cover the operation costs, afford
the investment plans and meet debt interest payments, but also deal with the impact of the different variables that affect Edenor’s
business. As of December 31, 2017, Edenor’s
comprehensive income results in a profit to $ 691 million, whereas the working capital totals $ 3.3 billion – deficit-, which
includes the amount owed to CAMMESA for $ 4.7 billion (principal plus interest accrued as of December 31, 2017). Edenor’s equity and negative working
capital reflect the deteriorated financial and cash position Edenor still has as a consequence of both the Federal Government’s
delay in the compliance with certain obligations under the Adjustment Agreement and the constant increase in operating costs in
prior fiscal years, which Edenor absorbed in order to comply with the execution of the investment plan and the carrying out of
the essential operation and maintenance works necessary to maintain the provision of the public service, object of the concession,
in a satisfactory manner in terms of quality and safety. Despite the previously described progress
achieved with regard to the completion of the RTI process, at the date of issuance of these financial statements, the definitive
treatment to be given, by the MINEM, to the effects resulting from the non-compliance with the Adjustment Agreement, including
the level of penalties the remaining balances with CAMMESA and other effects caused by the partial measures adopted, has yet to
be defined during the years prior to the validity of the new RTI. These issues, among other, are the following:
i) the treatment to be given to the funds received from the Federal Government
through the loans for consumption (mutuums) agreements entered into with CAMMESA for the fulfillment of the Extraordinary Investment
Plan, granted to cover the insufficiency of the FOCEDE’s funds;
ii) the conditions for the settlement of the balance outstanding with
CAMMESA at the date of issuance of SEE Resolution No. 32/15;
iii) the treatment to be given to the Penalties and Discounts whose payment/crediting
is pending, determined by the ENRE, under the terms and during the term of validity of the Agreement Act unfulfilled by the National
State. In this regard, on April 26, 2017 Edenor
was notified that the MINEM had provided that, upon completion of the RTI process, the SEE -with the participation of the Under-Secretariat
for Tariff Policy Coordination and the ENRE-, should determine in a term of 120 days whether any pending obligations existed until
the effective date of the electricity rate schedules resulting from the RTI and in connection with the Adjustment Agreement entered
into on February 13, 2006. Likewise, the treatment to be given to those obligations was also to be determined. Edenor has submitted
the information requested by the MINEM in the framework of this requirement. At the date of issuance of these financial statements
such situation is still pending resolution.

42. OPERATIONS IN ECUADOR

42. OPERATIONS IN ECUADOR12 Months Ended
Dec. 31, 2017
Operations In Ecuador
OPERATIONS IN ECUADORAs from 2006 the Ecuadorian government
implemented far-reaching tax and regulatory reforms in connection with hydrocarbon activities, which involved material changes
in the conditions set forth at the time of execution of participation agreements. Amendatory Agreements and Law amending
the Hydrocarbon Law On October 31, 2008, EcuadorTLC S.A., Teikoku
Oil Ecuador and Petroecuador, among others, executed the Amendatory Agreements regulating the operation of Block 18 and Palo Azul
while the parties negotiated the migration to a new contract modality. On July 26, 2010, the amendment to the
Hydrocarbon Law in force was approved by operation of law, which provided for, among other things, the obligation to migrate to
a new contract modality before November 24, 2010. As a result of the negotiation process
mentioned above, the Company decided not to accept the final proposal received from the Ecuadorian government, as this is insufficient
to migrate to Service Agreements in Block 18 and Palo Azul Unified Field. Consequently, through Resolution dated November 25, 2010
the Hydrocarbon Secretary notified EcuadorTLC S.A. the termination of the Participation Agreements and instructed Petroamazonas
EP to undertake the operational transition process. Section 9 of the Amendatory Agreements
indicates that the Ecuadorian government must compensate the terminated parties in an amount equivalent to unamortized investments
adjusted by a variable rate and provides for a period of time for the Ecuadorian government and the terminated parties to work
out the details of the termination payment. On March 18, 2011, the Hydrocarbon Secretary
issued Official Notice No. 626 to inform the Company that it was analyzing and structuring a new regulatory framework to determine
a settlement price for the termination, to be applied instead of the provisions of the Amendatory Agreements. On April 11, 2011,
the Company filed an answer to the Official Notice and rejected the terms thereof claiming these did not comply with the conditions
set forth in the Amendatory Agreements by the parties concerned, which conditions may not be unilaterally modified. In this respect,
the Company informed the Hydrocarbon Secretary that it would continue to seek compliance with the terms of the Amendatory Agreements. On December 9, 2011, Petrobras Argentina
served a notice on the Ecuadorian government (Trigger Letter) informing the existence of a dispute under the terms of the Treaty
for the Promotion and Reciprocal Protection of Investments previously entered into between Argentina and Ecuador. The Treaty, implies
the opening of a negotiation period prior to a possible arbitration to seek enforcement of the provisions of the Amendatory Agreements. On June 21, 2013, not having reached an
agreement with the Ecuadorian government, EcuadorTLC SA, Cayman International Exploration Company and Teikoku Oil Ecuador, members
of the joint operation, submitted to the Ecuadorian Goverment a letter of notification of a dispute under the terms of the Amendatory
Agreements starting their decision to submit the dispute to international arbitration under the arbitration Rules of the United
Nations Commission on International Trade Law. Finally, on February 26, 2014 the request for
arbitration against Ecuador and EP Petroecuador, was presented in the above terms. On January 16, 2018, the Court issued the award
determining a settlement value of US$515 million, of which US$176 million are payable to EcuadorTLC S.A., based on its participation
in the block. Even though the parties may file a plea
of nullity before the Courts of the City of Santiago de Chile within 3 months after the service of notice of the award, they have
begun to negotiate the conditions to cancel the settlement. As of December 31, 2017 the Company
has recorded $ 998 million to be recovered from the Ecuadorian State in accordance with the provisions of the Amendments Agreement,
disclosed in Other non-current receivables. Such amount does not include the calculation of the update provided for in such agreements
since, as of December 31, 2017, it was not possible to determine with certainty the applicable adjustment rate. Crude Oil Transportation Agreement with
OCP The Company holds a contract with OCP,
whereby it assumed a commitment to an oil transport capacity of 80,000 barrels/day for a term of 15 years counted as from November
10, 2003. The transport contract is a “Ship
or Pay” contract, so the Company must meet its contractual obligations for the total volume agreed upon, regardless of the
real volume transported, and has to pay, the same as the other producers, a rate that covers the operating costs and financial
services of OCP, among others. EcuadorTLC has the right to sell the transport
capacity in the heavy crude oil pipeline (OCP) to mitigate the negative impact of its non-use. Periodically, the Company negotiates
the sale of the hired transport capacity. On December 31, 2008, the Company entered into a contract with Petroecuador whereby the
Ecuadorian State assumed a commitment to charge, effective January 1, 2009, the available crude owned by it and transported through
the heavy crude oil pipeline to the oil transport capacity hired by the Company, up to a maximum volume of 70,000 barrels/day.
In addition, the Company sold transport capacity of approximately 8,000 barrels/day of oil for the period from July 2004 to January
2012. As a result of the contract non-compliance by the buyers, the Company is making the pertinent claims. Lastly, 40% of the
net contractual commitment resulting from the above had been assumed by Teikoku Oil Ecuador, as consideration for the transfer
to this company of the 40% interest in Block 18 and Palo Azul in October 2008. In the third quarter of 2015, the
Company, through Petrobras Bolivia Internacional S.A., reassumed the obligations previously assigned to Teikoku Oil Ecuador relating
to the mentioned agreement and received a US$ 95 million payment. As of December 31, 2017 the Company
carries a liability for the net transport capacity hired from OCP, in current provisions for $ 389 million. The premises used in
calculation of the provisions mainly include the estimate of the applicable rate and the transport capacity used by third parties.
The discount rates used in the measurement consider the type of liability in question, the business segment and the country where
the transactions are conducted. In the assessment of liabilities as of December 31, 2017, the Company reviewed the assumptions
used for the calculation based on the progress in the contractual renegotiations, which resulted in a $ 150 million net profit
under “Other operating income”. No additional obligations resulting from contractual renegotiations are estimated as
of December 31, 2017. In January 2018, EcuadorTLC assigned
to PEO a transportation capacity of 10,000 barrels/day. In consideration thereof, EcuadorTLC will pay to PEO US$ 2.9 million
so that PEO may cancel the commitments associated with the transportation capacity. To afford this compensation, EcuadorTLC will
receive a loan from the Company. In January 2018 PEO declared the
Equity Expropriation Event, whereby, under certain circumstances stipulated in the agreement, the Company, in its capacity as guarantor,
will bear the payments for the capital charges associated with the assigned transportation capacity. The Company must hold collaterals to ensure
compliance with its financial commitments under the Ship or Pay transport contract with OCP and the commitments related to OCP
trade payables. The collaterals, falling due in December 2018, will be gradually released in the same proportion as those commitments
become extinguished. As of December 31, 2015, the Company holds collaterals for approximately US$ 23 million, which are disclosed
under “Other current receivables” in the line item “Guarantee deposits”. The Company is required to renew
or replace the collaterals as they fall due; otherwise, those amounts shall be paid in cash. Investment in Oleoductos de Crudos Pesados
(OCP) - Ecuador The Company has a 11.42% equity
interest in OCP, an oil pipeline in Ecuador that has a transportation capacity of 450,000 barrels/day. OCP has negative equity as a result
of certain tax assessments in favor of the Government of Ecuador in issues where OCP and the Ecuadorian Treasury have differences
in interpretation. However, and since the Company has not made any capital contributions or financial assistance commitments to
OCP, this shareholding has been valued at zero.

43. REGULARIZATION REGIME (MORA

43. REGULARIZATION REGIME (MORATORIUM)12 Months Ended
Dec. 31, 2017
Regularization Regime Moratorium
REGULARIZATION REGIME (MORATORIUM)Between the
29 and the 31 of March 2017 As the adhesion to the regularization
regime established benefits of releasing tax fines and reducing compensatory interests, the Company has recorded on March 31, 2017
a net gain after income tax effects of $335 million .

44. PROFIT DISTRIBUTIONS

44. PROFIT DISTRIBUTIONS12 Months Ended
Dec. 31, 2017
Profit Distributions
PROFIT DISTRIBUTIONSDividends In accordance with Law No. 25,063, passed
in December 1998, dividends distributed in cash or in kind, in excess of accumulated tax profits at the end of the year immediately
before the date of payment or distribution, will be subject to a 35% income tax withholding in a single and final payment. To such
effect, income to be considered in each fiscal year will be that resulting from adding to the specific income determined pursuant
to the general provisions of the Income Tax Act the dividends or earnings from other companies not computed within the determination
of such income during the same fiscal periods. The distribution of dividends is made based on the Company’s Stand-Alone Financial
Statements.

45. COMPENSATION PLANS

45. COMPENSATION PLANS12 Months Ended
Dec. 31, 2017
Compensation Plans
COMPENSATION PLANS45.1. Company-Value Compensation - PEPASA On November 6, 2013, PEPASA’s Extraordinary
General Meeting of Shareholders resolved to approve a variable and contingent compensation to certain officers equivalent to 7%
of the capital stock after the Company’s capital stock increase, valued based on the difference between the share’s
market value at the time of exercising the right and a given value of US$ 0.1735 per share determined at the exact moment of the
capital stock increase. On January 13, 2014, the capital stock
increase was carried out and the rights granted to Officers to receive the Company-Value Compensation became effective. The variable remuneration may be required
by officers as follows:
1) 25% as from June 2015
2) 7.14% as from December 2015
3) 32.15% as from June 2016
4) 35.71% as from June 2017 The given right may be monetized at any
time from the date of effective enforcement until November 15, 2020 (by 5%) and 11 January 2021 (for the remaining 2%) over 7%
of the share capital calculated according to what was detailed in the first paragraph of the note. The fair value of the Option has been measured
according to the Black-Scholes valuation model. The main variables considered in such model were the following:
1) 54.3% volatility based on the volatility of the shares of other comparable
companies;
2) 1,6886% risk-free U.S. dollars interest rate; Since its organization, PEPASA s growth
and performance has far exceeded all initially defined metrics, parameters, and development and business plans. Therefore, and
in view of its officers' significant contribution to meeting such goals, on December 28, 2015, PEPASA entered into an amendment
to the compensation agreement providing for the full and irrevocable accrual of the variable remuneration to be collected by officers
regarding the percentages which are not yet due effective as from that date, without this affecting the previously described enforceability. On January 18, 2017, PEPASA's executives
requested the monetization of a significant part of the right due at that date, which was canceled by the Company on January. 45.2 Stock-based Compensation Plan –
Certain officers and other key staff On February 8, 2017, the Company’s
Board of Directors approved the creation of a stock-based compensation plan and the first Specific Program (2017-2019), whereby
certain officers and other key staff covered by each Specific Program will receive a certain number of company shares within the
stipulated term aiming to encourage the alignment of the employees performance with the Company’s strategy and to generate
a clear and direct link between the creation of value for shareholders and the employees’ compensation. Furthermore, the Company’s Board
of Directors approved the acquisition of own shares in the market as a means of implementing the Plan. The first Specific Program was established
for a three-year period, between 2017 and 2019, and considers the compensation period comprised between August 1 and December 31,
2017, plus the assigned bonus, as the basis for calculating the number of shares, with one-third vesting each year, which will
be awarded together with the payroll for April of the year following the vesting date. On April 7, 2017, the Company's Shareholders’
Meeting ratified the approval of the Stock-based Compensation Plan by the Board of Directors on its February 8, 2017 meeting, as
well as its terms and conditions; and approved the cancellation of the preferential offer to shareholders in respect to the disposition
of such shares as authorized by Section 67 of Capital Markets' Act No. 26,831 for the purposes of implementing such Plan. The number of shares is calculated based
on a percentage over the total annual remuneration, plus the bonus assigned to each covered employee, divided by the weighted average
price, in pesos, of the Company’s share and ADR for the same period, provided the employment relationship continues at least
as at each vesting date. As of the issuance date of these Financial
Statements, the Company has: (i) determined that 383,198 treasury shares should be delivered to employees pursuant to the first
Specific Program (2017-2019 period), with vests in March 2017, 2019 and 2020, of 33%, 33% and 34%; and (ii) estimated a quantity
of 672.898 treasury shares should be delivered to employees pursuant to the second Specific Program 2018-2020, with vests in March
2019, 2020 and 2021, of 33%, 33% and 34%. As of the issuance date of these Financial
Statements, the Company has acquired 193,000 treasury shares and 92,280 treasury ADRs for an amount of $ 72 million, which will
be destined to the implementation of the Company’s Stock-based Compensation Plan. 45.3. Compensation agreements - Senior
Management On June 2, 2017, the Board of Directors
approved the execution and signing of compensation agreements with the Company’s main officers (the “Senior Management”),
conditional upon their approval by the Annual Ordinary Meeting of Shareholders to be held each year. These agreements are effective
as of January 1, 2017. In accordance with international practices,
the purpose of these agreements is to efficiently align the Senior Management’s interests with those of the Company and its
shareholders, creating value for them only inasmuch as value is generated for shareholders, that is, if the Company’s market
value increases. Under these agreements, the Senior Management
will be entitled to a fixed compensation and an annual, variable and contingent long-term compensation related to the Company’s
annual market value appreciation, with a cap on the Company’s operating income With the purpose of avoiding duplication,
any analogous compensation that the Senior Management had received from any of the Company’s subsidiaries, will be deducted
from the compensation amount in proportion to the Company’s interests in such subsidiaries. 45.4. Share-based Compensation Plan
- Edenor In the last months of fiscal year 2016,
Edenor’s Board of Directors proposed that the treasury shares be used for the implementation of a long-term incentive plan
in favor of executive directors, managers or other personnel holding key executive positions in the Company in an employment relationship
with the latter and those who in the future are invited to participate, under the terms of section 67 of Law No. 26,831 on Capital
Markets, after the effort made by the directors in the negotiation of the RTI. The plan was ratified and approved by the ordinary
and extraordinary shareholders’ meeting of Edenor held on April 18, 2017. At the date of issuance of these condensed
interim financial statements, Edenor awarded a total of 1,618,332 shares to executive directors and managers as additional remuneration
for their performance in special processes developed during fiscal year 2016. 45.5 Opportunities Assignment Agreement On
September 27, 2006, the Company entered into an Opportunities Assignment Agreement whereby certain officers undertook to offer
the Company, on a priority basis, all investment opportunities above US$ 5 million they detect within the Company’s investment
guidelines. In consideration of this commitment, the Company has granted these officers Warrants for up to 20% of its capital stock
(the “Warrants Issuance Agreements”). On
April 16, 2009, the parties agreed on the following modifications to the Opportunities Assignment Agreement and the Warrants Issuance
Agreements: i) the term of the agreement
was extended for five years, until September 27, 2014; ii) one-fifth of the Warrants
will accrue annually, as from September 28, 2010 and until September 28, 2014, and Warrants will remain in effect for fifteen years
as from the date of issuance. iii) their exercise price
was set at US$ 0.27 per warrant. On September 28, 2014, the Opportunities
Allocation Agreement terminated, having been complied of all stipulated obligations. Furthermore, as from the stated date all Company
shares’ purchase options granted to the Officers may be actually exercised, according to the following expiration dates and
exercise prices:
Expiration Price of the year (U$S) Stock Options
04.26.2024 0.27 111,500,000
04.26.2024 0.27 150,000,000
04.26.2024 0.27 120,048,564 The fair value of these Warrants
has been measured according to the Black-Scholes valuation model. The main variables considered in such model are the following:
(i) a 27% volatility, based on the historical volatility of the Company; (ii) 3% dividends; and (iii) a 4.63% risk-free U.S. dollars
interest rate. Regarding
these Warrants, in 2015 the Company has recognized a total $ 266 million in profit and loss, with an offsetting entry in an equity
reserve during the life of the Opportunities Assignment Agreement. On
November 23, 2015, the Company received a notification from Merrill Lynch, Pierce, Fenner & Smith Incorporated, which, acting
as attorneys in fact for the holders of all warrants, formally communicated the decision to exercise, conditional upon the meeting
of certain conditions, all warrants against the payment of the set exercise price. In
furtherance of the obligations under the Warrants Issuance Agreements, on December 1, 2015, against the payment of US$ 103,018,112,
that is US$ 0.27 per common share or its equivalent in pesos, the Company issued 381,548,564 new common shares in the form
of American Depositary Shares (“ADS”). Therefore,
the Company recognized in its Statement of Changes in Shareholders’ Equity additional paid-in capital in the amount of $ 883
million and a $ 266 million decrease in reserves. The movements in the number of
Warrants and their respective average exercise prices are detailed below:
12.31.2015
Stock options Average price of the year in US$
At the beginning 381,548,564 0.27
Executed (381,548,564) 0.27
At the end - -

46. INCIDENT AT CENTRAL T_RMICA

46. INCIDENT AT CENTRAL TÉRMICA GENELBA12 Months Ended
Dec. 31, 2017
Incident At Central Trmica Genelba
INCIDENT AT CENTRAL TÉRMICA GENELBAOn September 22, 2017 a major incident
occurred in the TG11 unit, which makes up Central Térmica Genelba’s combined cycle plant, and which resulted in severe
damage to the turbine’s generator. Following the incident, the combined-cycle generation capacity has been reduced by 50%
(330 MW). After evaluating the causes of the failure,
the Company, together with the generator’s manufacturer (SIEMENS), started the works for the installation of a new generator. On January 5, 2018, works concluded and
TG11 became operative again, thus regaining 100% of the combined cycle capacity. Following this event, the Company is making
all necessary filings with insurance companies to collect the compensations for the damages sustained as a result of the failure
and to minimize losses in connection with breaches of its availability commitments.

47. NEW GENERATION PROJECTS

47. NEW GENERATION PROJECTS12 Months Ended
Dec. 31, 2017
New Generation Projects
NEW GENERATION PROJECTSUnder the National Government’s call
for the expansion of the generation offer, the Company participates in the following thermal generation closing projects: 47.1 2014 Agreement for the Increase of Thermal Generation Availability On September 5, 2014, the Company, together
with its generation subsidiaries, executed a thermal generation availability increase agreement with the National Government through
the application of LVFVDs and the generators’ own resources. The project consisted of a 120 MW
expansion in CTLL’s power plant generation capacity through the installation of two 8 MW engine generators and a 105 MW
high-efficiency gas turbine. On July 15, 2016, the new 105 MW high-efficiency
gas turbine was commissioned for service, whereas the second project is currently under construction, and its commissioning is
expected for May 2018. 47.2 SE Resolution No. 21/2016 The following projects were awarded under
the call for bids made by the National Government to parties interested in offering new thermal power generation capacity pursuant
to SE Resolution No. 21/2016. For each of the awarded projects, the Company
has entered into a wholesale power purchase agreement with CAMMESA for a term of 10 years. The remuneration will be made up of
the available power capacity price plus the variable non-fuel cost for the delivered energy and the fuel cost (if offered), less
penalties and fuel surpluses.
47.2.1 Central Térmica Parque Pilar (“CT Pilar”) This project, which consisted of the construction
of a new power plant in the Pilar Industrial Complex (located at Pilar, Province of Buenos Aires), is made up of 6 cutting-edge
and high-efficiency Wärtsilä engine generators with a total 100 MW capacity and the possibility to run on natural
gas or fuel oil. The total investment was approximately US$ 103 million. On August 31, 2017, CAMMESA granted the
commercial commissioning of CT Pilar, which became operative as from that date.
47.2.2 Extension of Central Térmica Loma de la Lata The project consists of the expansion of
CTLL’s power plant generating capacity through the installation of a new GE aeroderivative gas turbine (model LMS100) with
a gross generation capacity of 105 MW. The investment amounted to approximately US$ 90 million. On August 5, 2017, CAMMESA declared the
commercial commissioning of the new gas turbine, which became operative as from such date.
47.2.3 Central Térmica Ingeniero White (“CT I. White”) The project consisted of the installation
of a new power plant in I. White (Bahía Blanca, Province of Buenos Aires) with similar characteristics as that mentioned in
Note 47.2.1. The total investment was approximately US$ 90 million. On December 21, 2017, CAMMESA declared
the commercial commissioning of CT I. White, which became operative as from that date. 47.3 SEE Resolution No. 420/2017 Under the call by the National Government
to parties interested in developing projects for co-generation and the closing to combined cycles over existing equipment, on October
18, 2017 the SEE, through Resolution No. 926-E/17, awarded Genelba Plus’ closing to combined cycle, which will add a 383 MW
capacity over Genelba’s power plant existing facilities. The Genelba Plus’ closing to combined
cycle project consists of the installation of a new gas turbine, a steam turbine, and several enhancement works over the current
Genelba Plus gas turbine, which altogether will complete the second combined cycle at Genelba, with a total gross power capacity
of 552 MW. The estimated investment amounts to US$ 350 million. Siemens and Techint will be in charge of
the equipment supply, and the construction and commissioning of the project on a turnkey basis. Its commissioning at open cycle
is expected for the second quarter of 2019, and as closed cycle for the second quarter of 2020. 47.4 RenovAr Program (Round 1) Under the call by the National Government
to parties interested in developing projects for generation from renewable sources, on October 7, 2016 the MEyM, through Resolution
No. 213/16, awarded the Corti wind farm project submitted by Greenwind. On January 23, 2017, the Company entered
into a wholesale power purchase agreement with CAMMESA for a term of 20 years. The project consists of the installation
of a 100 MW wind farm in Bahía Blanca, Province of Buenos Aires. The total investment will amount to approximately US$
135 million. Vestas will be in charge of the equipment
supply, and the construction and commissioning of the project on a turnkey basis. Its commercial commissioning is expected for
May 2018. 47.5 SEE Resolution No. 281/2017 –
Renewable MAT Under the new regulations for the Renewable
MAT, which production will be targeted at large users under power supply agreements between private parties, on January 29, 2018
CAMMESA granted a 50 MW priority to the “Pampa Energía” wind farm and a 28 MW dispatch priority to “de
la Bahía” wind farm. These projects will be developed in the
Province of Buenos Aires, near the City of Bahía Blanca, and together will have a 100 MW power capacity. The total investment
amounts to approximately US$ 140 million. The priority allocation will ensure dispatch
for both wind farms and therefore, will guarantee support to our future clients choosing to comply with their obligation to meet
their electricity demand with renewable sources of energy from our wind farms.

48. TAX REFORM

48. TAX REFORM12 Months Ended
Dec. 31, 2017
Tax Reform
TAX REFORMOn December 29, 2017 the National Executive
Branch passed Act No. 27430 – Income Tax. This Act introduced several modifications in the income tax treatment, the key
components of which are described below: 48.1 Income tax 48.1.1. Income tax rate The income tax rate for Argentine companies
will be gradually reduced from 35% to 30% for fiscal years beginning as from January 1, 2018 until December 31, 2019, and to 25%
for fiscal years beginning as from January 1, 2020. The effect of the application of the income
tax rate changes on deferred tax assets and liabilities pursuant to the above-mentioned tax reform was recognized, based on their
expected realization year, in “Income tax rate change” under Income tax and Minimum presumed income tax of the Consolidated
Statement of Comprehensive Income (Note 14). 48.1.2. Tax on dividends The tax on dividends or earnings distributed
by, among others, Argentine companies or permanent establishments to individuals, undivided estates or beneficiaries residing abroad
is introduced based on the following considerations: (i) dividends resulting from earnings accrued during fiscal years beginning
as from January 1, 2018 until December 31, 2019, will be subject to a 7% withholding; and (ii) dividends resulting from earnings
accrued during fiscal years beginning as from January 1, 2020 will be subject to a 13% withholding. Dividends resulting from benefits gained
until the fiscal year prior to that beginning on January 1, 2018 will remain subject to the 35% withholding on the amount exceeding
the untaxed distributable retained earnings (equalization tax’ transition period) for all beneficiaries. 48.1.3. Transfer prices Controls are established for the import
and export of goods through international intermediaries different from the exporter at the point of origin or the importer at
destination. Furthermore, the Act sets out the obligation
to provide documentation allowing for the verification of the characteristics of the transaction for the import and export of goods
and the export of commodities, in both cases when they are conducted through an international intermediary different from the exporter
at the point of origin or the importer at destination. 48.1.4. Tax and accounting revaluation The Act provides that Companies may opt
to make a tax revaluation of assets located in the country and subject to the generation of taxable earnings. The special tax on
the revaluation amount depends on the asset, and will amount to 8% for real estate not accounted for as inventories, 15% for real
estate accounted for as inventories, and 10 % for personal property and other assets. Once the option is exercised for a certain
asset, all assets within the same category should be revalued. The tax result from the revaluation will not be subject to income
tax, and the special tax on the amount of the revaluation will not be deductible from such tax. The Company is currently analyzing the
impact of the above-mentioned option. 48.1.5. Adjustment The reform sets out the following rules
for the application of the income tax inflation adjustment mechanism: (i) a cost adjustment for goods acquired or investments made
during fiscal years beginning after January 1, 2018 taking into consideration the variations in the Wholesale Domestic Price Index
(IPIM) published by the National Institute of Statistics and Censuses (INDEC); and (ii) the application of a comprehensive adjustment
when the IPIM variation exceeds 100% in the 36 months preceding the closing of the fiscal period. The adjustment of acquisitions or investments
made in fiscal years beginning as from January 1, 2018 will increase the deductible depreciation and its computable cost in case
of sale. 48.2 Value-added tax Reimbursement of favorable balances
from investments. A procedure is established for the reimbursement
of tax credits originated in investments in property, plant and equipment which, after 6 months as from their assessment, have
not been absorbed by tax debits generated by the activity. 48.3. Fuel tax Certain modifications are introduced to
the fuel tax, incorporating a tax on the emission of carbon dioxide. The reform simplifies the fuel taxation structure, keeping
the same tax burden effective prior to the reform.

49. DOCUMENTATION KEEPING

49. DOCUMENTATION KEEPING12 Months Ended
Dec. 31, 2017
Documentation Keeping
DOCUMENTATION KEEPINGOn August 14, 2014, the National Securities
Commission issued General Resolution No. 629, which introduced modifications to the provisions applicable to the keeping and
conservation of corporate and accounting books and commercial documentation. To such effect, the Company and its subsidiaries Edenor,
CTG, CTLL, EASA and PEPASA have sent non-sensitive work papers and information corresponding to the periods not covered by the
statute of limitations for their keeping in the Administración de Archivos S.A (AdeA)’s data warehouse located at Ruta
36, km 34.5, Florencio Varela, Provincia de Buenos Aires and in the Iron Mountain Argentina S.A.’s data warehouses located
at the following addresses:
- Azara 1245 –C.A.B.A.
- Don Pedro de Mendoza 2163 –C.A.B.A.
- Amancio Alcorta 2482 C.A.B.A.
- San Miguel de Tucumán 601, Carlos Spegazzini, Municipality of
Ezeiza, Province of Buenos Aires. A list of the documentation delivered for
storage, as well as the documentation provided for in Article 5.a.3) Section I, Chapter V, Title II of the PROVISIONS (2013 regulatory
provisions and amending rules), is available at the Company headquarters.

4. ACCOUNTING POLICIES (Policie

4. ACCOUNTING POLICIES (Policies)12 Months Ended
Dec. 31, 2017
Accounting Policies Policies
New accounting standards, amendments and interpretations issued by the IASB effective as of December 31, 2017 and adopted by the CompanyThe Group has applied the following
standards and/or amendments for the first time for their annual reporting period commencing January 1, 2017 - Amendments to IAS 7 "Statement
of cash flows", - Amendments to IAS 12 “Income
taxes”, y - Amendments to IFRS 12 “Disclosures
of interests in other entities” (within improvements to IFRSs – 2014-2016 Cycle) The adoption of these modifications
did not have any impact on the Company’s operating results or financial position. Additional information is disclosed
in Notes 6 and 20 as a result of the application of disclosure requirements on changes in liabilities arising from financing activities
and the clarification of the scope of the standard related to entity’s interest classified as held for sale in accordance
with IFRS 5 was considered in Note 1, as a result, summarised financial information was not disclosed as it is not required.
New accounting standards, amendments and interpretations issued by the IASB which are not yet effective and have not been early adopted by the Company- IFRS 15 “Revenue from Contracts
with Customers", issued in May 2014 and later in September 2015, effected date was amended for applying to annual period beginning
on or after January 1, 2018. The standard addresses the principles for recognizing revenues and establishes the requirements for
reporting about the nature, amount, timing an uncertainty of revenue and cash flows arising from contracts with customers. The
basic principle implies the recognition of revenue that represent the transfer of goods or services to customers at an amount that
reflects the consideration the entity expects to be entitled in exchange for those goods or services. The Company will elect to apply
IFRS 15 only to contracts that are not completed at the date of initial application, recognizing the cumulative effect of the application
as an adjustment to the opening balance of retained earnings as of January 1, 2018. Management has assessed the effects
of applying IFRS 15 on the group’s financial statements regarding not completed contracts as of January 1, 2018. As a result
of this assessment, the Company has not identified any differences associated with performance obligations identification or price
allocation methodology which could affect the timing of future revenue recognition forward. Finally, no contract assets or contract
liabilities to be separately presented under IFRS 15 have been identified. - IFRS 9 “Financial Instruments”:
was amended in July 2014. This amended version covers all the phases of the IASB project to replace IAS 39 “Financial Instruments:
Recognition and Measurement”. These phases are the classification and measurement of instruments, impairment and hedging.
This version adds a new impairment model based on expected losses and some minor modifications to the classification and measurement
of financial assets. This new version supersedes all previous versions of IFRS 9 and is effective for periods starting as from
January 1, 2018. The Company has adopted the first phase of IFRS 9 as of the transition date. The Company will apply IFRS 9 amended
retrospectively from January 1, 2018 with the practical expedients permitted under the standard, and comparative periods will not
be restated. Pampa has reviewed its financial
assets currently measured and classified at fair value through profit and loss or at amortized cost and has concluded that satisfy
conditions to maintain classification; hence, IFRS 9’s modifications are not expected to affect the classification and measurement
of financial assets. Regarding the new hedge accounting
model which, in general terms, allows more hedge relationships might be eligible for hedge accounting, in order to align the accounting
with the related risk management practices, Pampa has not opted for the designation of any hedge relationships as of the issuance
of these financial statements and it does not expect to make such designation; consequently, it does not expect any modifications
resulting from the application of IFRS 9. As regards the new impairment model
based on expected credit losses rather than incurred credit losses, based on the assessments conducted as of the issuance of these
financial statements, Pampa expects an approximate 13% increase in the allowances for trade receivables and for other receivables. - IFRS 16 “Leases”: issued
in January 2016 and replaces the current guidance in IAS 17. It defines a lease as a contract, or part of a contract, that conveys
the right to use an asset (the underlying asset) for a period of time in exchange for consideration. Under this standard, lessees
have to recognize a lease liability reflecting future lease payments and a ‘right-of-use asset’ for lease contracts.
This is a significant change compared to IAS 17 under which lessees were required to make a distinction between a finance lease
(on balance sheet) and an operating lease (off balance sheet). IFRS 16 contains an optional exemption for lessees in case of short-term
leases and leases for which the underlying asset is of low value assets. The IFRS 16 is effective for annual periods beginning
on or after 1 January 2019. The Company is currently analyzing the impact of its application. - IFRS 2 “Share based payments”:
amended in June 2016 to clarify the measurement basis for cash-settled share-based payments and the accounting for modifications
that change an award from cash-settled to equity-settled. It also introduces an exception to IFRS 2 principles by requiring an
award to be treated as if it was wholly equity-settled, where an employer is obliged to withhold an amount for the employee’s
tax obligation associated with a share-based payment and pay that amount to the tax authority. It is effective for annual periods
beginning on or after January 1, 2018. The Company estimates that these amendments will not have an impact on the Company’s
operating results or financial position. - IFRIC 22 “Foreign Currency Transactions
and Advance Consideration”: issued in December 2016. The interpretation addresses how to determine the date of the transaction
for the purpose of determining the exchange rate to use on initial recognition of the related asset, expense or income related
to an entity that has received or paid an advance consideration in a foreign currency. The date of the transaction is the date
on which an entity initially recognizes the non-monetary asset or non-monetary liability arising from the payment or receipt of
advance consideration. It is effective for annual periods beginning on January 1, 2018. The Company estimates that this interpretation
will not have an impact on the Company’s operating results or financial position. - Improvements to IFRSs –
2014-2016 Cycle: amendments issued in December 2016 that are effective for periods beginning on or after January 1, 2018. The Company
estimates that these amendments will not have an impact on the Company’s operating results or financial position. - - - IFRS 9 "Financial instruments":
application guidance modified in October 2017, in relation to the classification of financial assets in the case of contractual
terms that change the timing or amount of contractual cash flows to determine whether the cash flows that could arise due to that
contractual term are sol ely payments of principal and
interest on the principal amount. It is effective for annual periods beginning on or after January 1, 2019, early adoption is
permitted. The Company is analyzing the impact of its application, however, it estimates that it will not have any impact on the
Company´s results of operations or financial position. -
IAS 28 "Investments in associates and joint ventures": amended in October 2017. Clarifies IFRS 9 applies to other financial
instruments in an associate or joint venture to which the equity method is not applied. It is applicable to annual periods beginning
on or after January 1, 2019, early adoption is permitted. The Company is analyzing the impact of its application, however, it
estimates that it will not any impact on the Company’s results of operations or financial position. - Improvements to IFRSs –
2015-2017 Cycle: amendments issued in December 2017 that are effective for periods beginning on or after January 1, 2019. The
Company estimates that these amendments will not have an impact on the Company’s operating results or financial position.
Principles of consolidation and equity accounting4.3.1 Subsidiaries Subsidiaries are all entities over
which the Group has control. The Group controls an entity when the Group is exposed to, or has rights to, variable returns from
its involvement with the entity and has the ability to affect those returns through its power to direct the activities of the entity.
Subsidiaries are fully consolidated from the date on which control is transferred to the Group. They are deconsolidated from the
date that control ceases. The acquisition method of accounting
is used to account for business combinations by the group (see Note 4.3.5 below). Intercompany transactions, balances
and unrealized gains on transactions between Group companies are eliminated. Unrealized losses are also eliminated unless the transaction
provides evidence of an impairment of the transferred asset. Accounting policies of subsidiaries have been changed where necessary
to ensure consistency with the policies adopted by the Group. Since the functional currency of
some subsidiaries is different from the functional currency of the Company, exchange gains or losses arise from intercompany operations.
Those exchange results are included in “Financial results” in the Consolidated Statement of Comprehensive Income. Non-controlling interests in the
results and equity of subsidiaries are shown separately in the Consolidated Statement of Comprehensive Income, Consolidated Statement
of Changes in Equity and Consolidated Statement of Financial Position respectively. 4.3.2 Associates Associates are all entities over
which the group has significant influence but not control or joint control. This is generally the case where the Group holds between
20% and 50% of the voting rights. Investments in associates are accounted for using the equity method of accounting (see Note 4.3.4
below), after initially being recognized at cost. 4.3.3. Joint arrangements Under IFRS 11 “ Joint Arrangements” Joint operations The Company recognizes its direct
right to the assets, liabilities, revenues and expenses of joint operations and its share of any jointly held or incurred assets,
liabilities, revenues and expenses. These have been incorporated in the financial statements under the appropriate headings. Joint ventures Interests in joint ventures are
accounted for using the equity method (see Note 4.3.4 below), after initially being recognized at cost in the Consolidated Statement
of Financial Position. 4.3.4. Equity Method Under the equity method of accounting,
the investments are initially recognized at cost and adjusted thereafter to recognize the Group’s share of the post-acquisition
profits or losses of the investee in profit or loss, and the Group’s share of movements in other comprehensive income of
the investee in other comprehensive income. Dividends received or receivable from associates and joint ventures are recognized
as a reduction in the carrying amount of the investment. When the Group’s share of
losses in an equity-accounted investment equals or exceeds its interest in the entity, together with any long-term interests that,
in substance, form part of the net investment, the Group does not recognize further losses, unless it has incurred obligations
or made payments on behalf of the other entity. Unrealized gains on transactions
between the Group and its associates and joint ventures are eliminated to the extent of the group’s interest in these entities.
Unrealized losses are also eliminated unless the transaction provides evidence of an impairment of the asset transferred. Accounting
policies of equity accounted investees have been changed where necessary to ensure consistency with the policies adopted by the
group. The carrying amount of equity accounted
investments is tested for impairment in accordance with the policy described below in Note 4.8. 4.3.5 Business combinations The acquisition method of accounting
is used to account for all business combinations, regardless of whether equity instruments or other assets are acquired. The consideration
transferred for the acquisitions comprises:
i) the fair value of the transferred assets,
ii) the liabilities incurred to the former owners of the acquired business,
iii) the equity interests issued by the group,
iv) the fair value of any asset or liability resulting from a contingent
consideration arrangement, and
v) the fair value of any pre-existing equity interest in the subsidiary.
Identifiable assets acquired and
liabilities and contingent liabilities assumed in a business combination are measured initially at their fair values at the acquisition
date. The group recognises any non-controlling interest in the acquired entity on an acquisition-by-acquisition basis either at
fair value or at the non-controlling interest’s proportionate share of the acquired entity’s net identifiable assets. Acquisition-related costs are expensed
as incurred. The value of the goodwill represents the excess of: Where settlement of any part of
cash consideration is deferred, the amounts payable in the future are discounted to their present value as at the date of exchange.
The discount rate used is the entity’s incremental borrowing rate, being the rate at which a similar borrowing could be obtained
from an independent financier under comparable terms and conditions. Contingent consideration is classified
either as equity or a financial liability. Amounts classified as a financial liability are subsequently remeasured to fair value
with changes in fair value recognised in profit or loss. If the business combination is achieved
in stages, the acquisition date carrying value of the acquirer’s previously held equity interest in the acquiree is remeasured
to fair value at the acquisition date. Any gains or losses arising from such remeasurement are recognised in profit or loss. The
Group has up to 12 months to finalize the accounting for a business combination. Where the accounting for a business combination
is not complete by the end of the year in which the business combination occurred, the Group reports provisional amounts. 4.3.6. Changes in ownership interests The group treats transactions with
non-controlling interests that do not result in a loss of control as transactions with equity owners of the group. A change in
ownership interest results in an adjustment between the carrying amounts of the controlling and non-controlling interests to reflect
their relative interests in the subsidiary. Any difference between the amount of the adjustment to non-controlling interests and
any consideration paid or received is recognized in “Other reserves” within equity attributable to owners of the Company. When the Group ceases to consolidate
or equity account for an investment because of a loss of control, joint control or significant influence, any retained interest
in the entity is remeasured to its fair value with the change in carrying amount recognized in profit or loss. This fair value
becomes the initial carrying amount for the purposes of subsequently accounting for the retained interest as an associate, joint
venture or financial asset. In addition, any amounts previously recognized in other comprehensive income in respect of that entity
are accounted for as if the Group had directly disposed of the related assets or liabilities. This may mean that amounts previously
recognised in other comprehensive income are reclassified to profit or loss. If the ownership interest in a joint
venture or an associate is reduced but joint control or significant influence is retained, only a proportionate share of the amounts
previously recognized in other comprehensive income are reclassified to profit or loss where appropriate.
Segment reportingOperating
segments are reported in a manner consistent with the internal reporting provided to the Executive committee. The
Executive committee, is the highest decision-making authority, is the person responsible for allocating resources and setting
the performance of the entity’s operating segments, and has been identified as the person/ body executing the Company’s
strategic decisions. In
segmentation the Company considers transactions with third parties and intercompany operations, which are done on internal transfer
pricing based on market prices for each product. In the aggregation of segments,
the Company has primarily considered the nature of the regulatory framework of the Energy Industry in Argentina and product integration
in the Company’s production process.
Property, plant and equipmentProperty, Plant and Equipment is
measured following the cost model. It is recognized at cost less depreciation a less any accumulated impairment. Subsequent costs are included in
the asset’s carrying amount or recognised as a separate asset, as appropriate, only when it is probable that future economic
benefits associated with the item will flow to the group and the cost of the item can be measured reliably. The carrying amount
of any component accounted for as a separate asset is derecognised when replaced. All other repairs and maintenance are charged
to profit or loss during the reporting period in which they are incurred. The cost of work in progress whose
construction will extend over time includes, if applicable, the computation of financial costs accrued on loans granted by third
parties and other pre-production costs, net of any income obtained from the sale of commercially valuable production during the
launching period. Works in progress are valued according
to their degree of progress. Works in progress are recorded at cost, less any loss due to impairment, if applicable. The depreciation methods and periods
used by the group are described below. Assets’ residual values and
useful lives are reviewed, and adjusted if appropriate, at the end of each year. An asset’s carrying amount is written down
immediately to its recoverable amount if the asset´s carrying amount is greater than its estimated recoverable amount. Gains and losses on disposals are determined
by comparing the proceeds with the carrying amount.
4.5.1 Depreciation methods and useful lives The group depreciates productive
wells, machinery and camps in the oil and gas production areas according to the units of production method, by applying the ratio
of oil and gas produced to estimated proved developed oil and gas reserves. The acquisition cost of property with proved reserves
is depreciated by applying the ratio of oil and gas produced to estimated proved oil and gas reserves. Acquisition costs related
to properties with unproved reserves is valued at cost with recoverability periodically assessed on the basis of geological and
engineering estimates of possible and probable reserves that are expected to be proved over the life of each concession. Machinery and generation equipment
(including any significant identifiable component) are depreciated under the unit of production method. The group´s remaining items
of property, plant and equipment (including any significant identifiable component) are depreciated by the straight-line method
based on estimated useful lives, as detailed below:
Buildings: 50 years
Substations: 35 years
High voltage lines: 40 - 45 years
Medium voltage lines: 35 - 45 years
Low voltage lines: 30 - 40 years
Transformer centrals: 25 - 35 years
Meters: 25 years
Vehicles: 5 years
Furniture, fittings and communication equipment: 5- 20 years
Computer equipment and software: 3 years
Tools: 10 years
Gas Plant and Pipeline: 20 years The depreciation method is
reviewed, and adjusted if appropriate, at the end of each year.
Intangible assets4.6.1 Goodwill Goodwill is the result of the acquisition
of subsidiaries. Goodwill represents the excess of the acquisition cost over the fair value of the equity interest in the acquired
entity held by the company on the net identifiable assets acquired at the date of acquisition. For the purpose of impairment testing,
goodwill acquired in a business combination is allocated from the acquisition date to each of the acquirer’s cash-generating
units or group of CGUs that are expected to benefit from the synergies of the combination. Each unit or group of units that goodwill
is allocated represents the lowest level within the entity at which the goodwill is monitored for internal management purposes.
4.6.2 Concession arrangements Concession arrangements corresponding
to Edenor and hydroelectric generation plants Diamante and Nihuiles are not under the scope of the guidelines of IFRIC 12 “Service
Concession Arrangements”. These concession agreements meet the criteria
set forth by the IFRSs for capitalization and are amortized following the straight-line method based on each asset’s useful
life, which corresponds to the life of each concession agreement. The concession agreement of Edenor, has
a remaining life of 71 years, while the HIDISA and HINISA has a life of 22 years.
4.6.3 Identified intangible assets in acquired investments Corresponds to intangible assets
identified at the moment of the acquisition of companies. Identified assets meet the criteria established in IFRS for capitalization
and are amortized by the straight-line method according to the useful life of each asset, considering the estimated way in which
the benefits produced by the asset will be consumed. As of December 31, 2016, corresponds
to the commercial contracts identified in the Refining and distribution segment with an average useful life of five years based,
among other factors, on contractual agreements, consumer behavior and economic factors related to companies Combined.
Assets for oil and gas explorationThe Company uses the successful
efforts method of accounting for its oil and gas exploration and production activities. This method involves the capitalization
of: (i) the cost of acquiring properties in oil and gas exploration and production areas; (ii) the cost of drilling and equipping
exploratory wells that result in the discovery of commercially recoverable reserves; (iii) the cost of drilling and equipping development
wells, and (iv) the estimated asset retirement obligations. According to the successful efforts
method of accounting, exploration costs, excluding exploratory well costs, are expensed during the period in which they are incurred.
Drilling costs of exploratory wells are capitalized until it is determined that proved reserves exists and they justify the commercial
development. If reserves are not found, such drilling costs are expensed. Occasionally, an exploratory well may determine the existence
of oil and gas reserves but they cannot be classified as proved when drilling is complete. In those cases, such costs continue
to be capitalized insofar as the well has allowed determining the existence of sufficient reserves to warrant its completion as
a production well and the Company is making sufficient progress in evaluating the economic and operating feasibility of the project. The initial estimated asset retirement
obligations in hydrocarbons areas, discounted at a risk adjusted rate, are capitalized in the cost of the assets and depreciated
using the units of production method. Additionally, a liability at the estimated value of the discounted amounts payable is recognized.
Changes in the measurement of asset retirement obligations that result from changes in the estimated timing, amount of the outflow
of resources required to settle the obligation, or the discount rate, are added to, or deducted from, the cost of the related asset.
If a decrease in the liability exceeds the carrying amount of the asset, the excess is recognized immediately in profit or loss.
Impairment of non-financial assetsIntangible assets that have an indefinite
useful life and goodwill are not subject to amortization and are tested annually for impairment, or more frequently if events or
changes in circumstances indicate that they might be impaired. Other assets are tested for impairment whenever events or changes
in circumstances indicate that the carrying amount may not be recoverable. An impairment loss is recognized for the amount by which
the asset´s carrying amount exceeds its recoverable amount. The recoverable amount is the higher of an asset´s fair value
less costs of disposal and value in use. For the purpose of assessing impairment, assets are grouped at the lowest levels for which
there are separately identifiable cash flows which are largely independent of the cash inflows from other assets or groups of assets
(cash generating units or CGUs). Non-financial assets, other than goodwill, that have been impaired are reviewed for possible reversal
of the impairment at the end of each reporting period.
Foreign currency translation4.9.1 Functional and presentation
currency Information included in the financial
statements is measured in the functional and presentation currency of the Company, which is the currency of the primary economic
environment in which the entity operates. The functional currency is Argentine peso, which is the Group’s presentation currency. IAS 29 "Financial
reporting in hyperinflationary economies" requires for financial statements of an entity whose functional currency is the
currency of a hyperinflationary economy, whether they are based on a historical cost approach or a current cost approach, to
be stated in terms of the measuring unit current at the end of the reporting year. In general terms, by applying to
non-monetary items the change in a general price index from the date of acquisition or the date of revaluation, as
appropriate, to the end of the reporting period. In order to conclude about the existence of a hyperinflationary economy, the
standard mentions certain indications to consider including a cumulative rate of inflation in three years that approaches or
exceeds 100%. Despite the high inflation rates in Argentina, in recent years, considering that the INDEC WPI official
publication was suspended from November to December 2015; the existence of other qualitative and quantitative indicators,
such as the program established by the Argentine Central Bank to foster monetary stability aiming to induce a systematic and
sustainable low inflation rate; and that the market has evidenced a downard trend in inflation rates during 2017, there is
not enough evidence to conclude Argentina qualifies as a hyperinflationary economy pursuant to the criteria set forth in IAS
29 and accordingly, we have not restated financial information. Although the conditions necessary
to qualify Argentine economy as hyperinflationary in accordance with the provisions of IAS 29 have not been met, and considering
professional and regulatory limitations for the preparation of adjusted financial statements as of December 31, 2017, certain
macroeconomic variables affecting the Company's business, such as wage costs and purchase prices, have experienced significant
annual variations, and as a result should be considered in the evaluation and interpretation of the financial position and results
presented by the Company in these financial statements. 4.9.2 Transaction and balances Foreign currency transactions are
translated into the functional currency using the exchange rates as of at the date of the transaction. Foreign exchange gain and
loss resulting from the settlement of any transaction and from the translation at year-end exchange rates of monetary assets and
liabilities denominated in foreign currencies are recognized in the income statement, unless they have been capitalized. The exchange rates used are as follows:
buying rate for monetary assets, selling rate for monetary liabilities, average rate at the end of the year for balances with related
parties, and transactional exchange rate for foreign currency transactions. 4.9.3 Group companies Results and financial position of
subsidiaries and associates that have a different functional currency from the presentation currency are translated into the presentation
currency as follows:
- assets and liabilities are translated using the closing exchange rate;
- gains and losses are translated using the exchange rates prevailing
at the date of the transactions. The results from the remeasurement
process into the functional currency are recorded in line “Financial results” of the Consolidated Statement of Income. The results from the remeasurement
process into the functional currency to presentation currency transactions are recognized in “Other Comprehensive Income”.
When an investment is sold or disposed of, in whole or in part, the related differences are recognized in the Consolidated Statement
of Income as part of the gain/loss on the sale or disposal.
Financial assets4.1.1 Classification 4.10.1.1 Financial assets at amortized
cost Financial assets are classified and measured
at amortized cost only if the following criteria have been met:
i. the objective of the Group’s business model is to hold the asset
to collect the contractual cash flows;
ii. the contractual terms, on specified dates, have cash flows that are
solely payments of principal and interest on the outstanding principal. 4.10.1.2 Financial assets at fair value If any of the above mentioned criteria
has not been met, the financial asset is classified and measured at fair value through profit or loss. All equity investments are measured
at fair value. For equity investments that are not held for trading, the Group can irrevocably choose at the moment of the initial
recognition to present changes in fair value through other comprehensive income. The decision of the Group was recognizing changes
in fair value through profit or loss. 4.10.2 Recognition and measurement At initial recognition, the Group
measures a financial asset at its fair value plus, in the case of a financial asset not at fair value through profit or loss, transaction
costs that are directly attributable to the acquisition of the financial asset. A gain or loss on a debt investment that
is subsequently measured at fair value and is not part of a hedging relationship is recognized in profit or loss. A gain or loss
on a debt investment that is subsequently measured at amortized cost and is not part of a hedging relationship is recognized in
profit or loss when the financial asset is derecognized or impaired and through the amortization process using the effective interest
rate method. The Group subsequently measures
all equity investments at fair value. When the Group elects to present the changes in fair value in other comprehensive income,
such changes cannot be reclassified to profit or loss. Dividends from such investments continue to be recognized in profit or loss
as long as they represent a return on investment. The Company reclassifies financial
assets if and only if its business model to manage financial assets is changed. 4.10.3 Impairment of financial assets Financial assets at amortized cost The Company assesses at each reporting
date whether there is objective evidence that a financial asset or group of financial assets is impaired and if so, an impairment
charge is recorded in the income statement. The amount of the impairment loss
is measured as the difference between the asset’s carrying amount and the present value of estimated future cash flows (excluding
future credit losses that have not been incurred) discounted at the financial asset’s original effective interest rate. If
the financial asset has a variable interest rate, the discount rate for the calculation of the impairment loss is the currently
effective interest rate under the contract. As a practical expedient, the Group may measure impairment on the basis of an instrument’s
fair value using an observable market price. If, in a subsequent period, the
amount of the impairment loss decreases and the decrease can be related objectively to an event occurring after the impairment
was recognized, the reversal of the previously recognized impairment loss is recognized in the statement of comprehensive income. 4.10.4 Offsetting of financial instruments Financial assets and liabilities
are offset, and the net amount reported in the consolidated statements of financial position, when there is a legally enforceable
right to offset the recognized amounts, and there is an intention to settle on a net basis, or realize the asset and settle the
liability simultaneously.
Income recognitionInterest income Interest income is recognized using
the effective interest method. When a receivable is impaired, the group reduces the carrying amount to its recoverable amount,
being the estimated future cash flow discounted at the original effective interest rate of the instrument, and continues unwinding
the discount as interest income. Interest income on impaired loans is recognised using the original effective interest rate. Dividends Dividend on interests that are not
accounted for using the equity method are recognized as revenue when the right to receive payment has been established. This applies
even if they are paid out of pre-acquisition profits. However, the investment may need to be tested for impairment as a consequence.
Trade and other receivablesTrade receivables and other receivables
are recognized at fair value and subsequently measured at amortized cost, using the effective interest method, less provision for
impairment, if applicable. A loss allowance is recognized when
there is objective evidence that the Company will not be able to collect its receivables at their original maturities or for the
full amount, based on the evaluation of different factors, including significant customer’s financial difficulties, breach
of contractual clauses, customer´s credit risk, historical trends and other relevant information. Receivables from CAMMESA, documented
as LVFVDs, have been valued at their amortized cost, the maximum value of which is their recoverable amount at the period’s
closing date. The amortized cost has been determined based on the estimated future cash flows, discounted based on a rate reflecting
the time value of money and the risks inherent to the transaction. Receivables arising from services
billed to customers but not collected by Edenor, as well as those arising from services rendered but unbilled at the closing date
of each financial year are recognized at fair value and subsequently measured at amortized cost using the effective interest rate
method. Receivables from electricity supplied
to low-income areas and shantytowns are recognized, also in line with revenue, when the Framework Agreement has been renewed for
the period in which the service was provided. The amounts thus determined are
net of an allowance for the impairment of receivables. Any debt arising from the bills for electricity consumption that remain
unpaid 7 working days after their due dates for small-demand (tariff 1) customers and 7 working days after due date for medium
and large-demand (tariff 2 and 3) customers is considered a delinquent balance. The uncollectibility rate is determined per customer
category based on the historical comparison of collections made and delinquent balances of each customer group. Additionally, and faced with temporary
and/or exceptional situations, Edenor Management may redefine the amount of the allowance, specifying and supporting the criteria
used in all the cases. Where applicable, allowances for
doubtful tax credits have been recognized based on estimates on their uncollectibility within their statutory limitation period,
taking into consideration the Company’s current business plans.
Derivative financial instrumentsDerivative financial instruments
are measured at fair value, determined as the amount of cash to be collected or paid to settle the instrument as of the measurement
date, net of any prepayment collected or paid. Fair value of derivative financial instruments traded in active markets is disclosed
based on their quoted market prices and fair value of instruments that are not traded in active markets is determined using different
valuation techniques. Changes in the measurement of derivative
financial instruments designated as effective cash flow hedges are recognized in equity. Changes in the measurement of derivative
financial instruments that do not qualify for hedge accounting or are not designated as hedges are recognized in the statement
of income. The Company partially hedges its
exchange rate risk mainly through the execution of forward contracts denominated in U.S. dollars. However, the Company has not
formally designated privately negotiated derivatives as hedging instruments. Therefore, changes in their value are disclosed in
“Foreign currency exchange difference”, under “Other financial results”.
InventoriesThis line item includes crude oil
stock, raw materials, work in progress and finished products relating to the Refining and Distribution, Petrochemicals and Oil
and Gas business segments as well as materials and spare parts relating to the Generation and Distribution of Energy business segments. Inventories are stated at the lower
of cost or net realizable value. Cost is determined using the weighted average price method. The cost of inventories includes expenditure
incurred in purchases and production and other necessary costs to bring them to their existing location and condition. In case
of manufactured products and production in process, the cost includes a portion of indirect production costs, excluding any idle
capacity (slack). The net realizable value is the estimated
selling price in the ordinary course of business less the estimated cost of completion and the estimated costs to make the sale. The assessment of the recoverable
value of these assets is made at each reporting date, and the resulting loss is recognized in the statement of income when the
inventories are overstated. The Company has classified materials
and spare parts into current and non-current, depending on the timing in which they are expected to be used for replacement or
improvement on existing assets. The portion of materials and spare parts for maintenance or improvements on existing assets, is
exposed under the heading “Property, plant and equipment”.
Non-current assets (or disposal group) held for sale and discontinued operationsNon-current assets are classified
as held for sale if their carrying amount will be recovered principally through a sale transaction rather than through continuing
use and a sale is considered highly probable. They are measured at the lower of their carrying amount and fair value less costs
to sell, except deferred tax assets, assets arising from employee benefits, financial assets and investment property that are carried
at fair value and contractual rights from insurance contracts, which are specifically exempt from this requirement. An impairment loss is recognised
for any initial or subsequent write-down of the asset (or disposal group) until fair value less costs to sell. A gain is recognised
for any subsequent increases in fair value less costs to sell of an asset (or disposal group), but not in excess of any cumulative
impairment loss previously recognised. The gain or loss not previously recognised by the date of the sale of the non-current asset
(or disposal group) is recognised at the date of derecognition Non-current assets (including those
that are part of a disposal group) are not depreciated or amortized while they be classified as held for sale. Interest and other
expenses attributable to the liabilities of a disposal group classified as held for sale continue to be recognized. Non-current assets classified group
of assets classified as held for sale are presented separately from the other assets in the balance sheet. The liabilities of a
disposal group classified as held for sale are presented separately from other liabilities in the balance sheet. These assets and
liabilities are not offset. If it is a discontinued operation,
that is, an item which has been disposed of or classified as held for sale; and (i) it represents a significant business line or
geographic area which may be considered separate from the rest; (ii) it is part of a single coordinated plan to dispose of a significant
business line or operating geographic area which may be deemed separate from the rest; or (iii) it is a subsidiary entity acquired
solely for the purpose of reselling it; a single amount is disclosed in the statement of comprehensive income, which shows results
of discontinued operations, net of tax, including the result for the valuation at fair value less cost of sales or asset disposal
costs, if applicable.
Cash and cash equivalentsFor the purpose of presentation
in the Consolidated Statement of Cash Flows, cash and cash equivalents includes cash on hand, deposits held at call with financial
institutions, other short-term, highly liquid investments with original maturities of three months or less that are readily convertible
to known amounts of cash and which are subject to an insignificant risk of changes in value. If any, bank overdrafts are shown
within borrowings in current liabilities in the Consolidated Statement of Financial Position and there are not disclosed under
Cash and cash equivalents in the Consolidated Statement of Cash Flows since they are not part of the Company’s cash management.
Shareholder´s equityEquity’s movements have been
accounted for in accordance with the pertinent decisions of shareholders' meetings and legal or regulatory standards. a.
Share capital Share capital represents the capital issued,
composed of the contributions that were committed and/or made by the shareholders and represented by shares that comprise outstanding
shares at nominal value. Ordinary shares are classified as equity. b. Share
premium It includes:
(i) The portion of the collected price exceeding the face value of the
shares issued by the Company, net of absorbed accumulated losses.
(ii) The difference between the fair value of the consideration paid/collected
and the accounting value of the equity interest in the subsidiary acquired/sold/diluted which does not represent a loss of control
or significant influence.
(iii) The difference between the proportional equity value registered before
the merger of subsidiary and the value resulting from applying to the subsidiary’s merged equity interest, the new ownership
share resulting from the exchange relationship. c. Legal reserve In accordance with the Argentine
Commercial Companies Law No. 19550, 5% of the profit arising from the statement of comprehensive income for the year, prior years'
adjustments, the amounts transferred from other comprehensive income and prior years' accumulated losses, must be appropriated
to a legal reserve until such reserve equals 20% of the Company’s outstanding capital. When for any reason, the amount of
this reserve will be shorter, dividends may not be distributed, until such amount is made. d. Voluntary
reserve This reserve results from an allocation
made by the Shareholders’ Meeting, whereby a specific amount is set aside to cover for the funding needs of projects and
situations associated with Company policies. e. Other reserves It includes the result of operations with
non-controlling interest that do not result in a loss of control and reserves for stock compensation plans. f.
Retained earnings (Accumulated losses) Retained earnings comprise accumulated
profits or losses without a specific appropriation; positive earnings can be distributable by the decision of the Shareholders'
meeting, as long as they are not subject to legal restrictions. These earnings comprise prior years' earnings that were not distributed,
the amounts transferred from other comprehensive income and prior years' adjustments, according to IFRS. General Resolution No. 593/2011
issued by the CNV provided that Shareholders in the Meetings at which they should decide upon the approval of financial statements
in which the Retained earnings account has a positive balance, should adopt an express resolution as to the allocation of such
balance, whether to dividend distribution, capitalization, setting up of reserves or a combination of these. The Company’s
Shareholders have complied with these requirements. g. Other comprehensive income It includes gains and losses from
the remeasurement process of foreign operations and actuarial gains and losses for defined benefit plans and the related tax effect. h.
Dividends distribution Dividend distribution to Company
shareholders is recognized as a liability in the consolidated financial statements in the year in which the dividends are approved
by the Shareholders' Meeting. The distribution of dividends is made based on the Company’s Stand-Alone Financial Statements.
Compensation plansNote 45 details the conditions applicable
to the different compensation agreements, the payment conditions, and the main variables considered in the corresponding valuation
model. The following guidelines under IFRS
2 have been taken into consideration for the registration of stock-based compensations: - Compensations payable in cash:
i) Compensation agreements – Senior Management: the reasonable
value of the received services is measured through a share appreciation estimate using the Black-Scholes-Merton valuation model.
The fair value of the amount payable under the compensation agreements is accrued and acknowledged as an expense, with the corresponding
increase in liabilities. Liabilities are revalued on each balance sheet date. Any change in the fair value of liabilities is disclosed
under profit or loss.
ii) Company Value Sharing (“Company-Value Compensation”) -
PEPASA: the Black-Scholes-Merton financial valuation model was used to make this estimate, taking into consideration the enforceability
of the remuneration. The fair value of the amount payable for the compensation plan is accrued and acknowledged as an expense,
with the recognition of an increase in liabilities. Liabilities are revalued on each balance sheet date and at their settlement
date. Any change in the fair value of liabilities is disclosed under profit or loss. - Compensations payable in shares
i) Stock-based Compensation Plan – Officers and other key staff:
the fair value of the received services is measured at the fair value of shares at the time of granting, and is disclosed during
the vesting period, together with the corresponding increase in equity.
ii) Stock-based Compensation Plan -Edenor: The fair value of the services
received is disclosed as an expense and determined by reference to the fair value of the granted shares and charged to profit or
loss in the vesting period, or immediately if vested at the grant date. On the other
hand, PEPASA accrued The Company recognizes a provision
(liability) and an expense for this EBDA Compensation based on the previously mentioned formula.
Trade payables and other payablesTrade payables and other payables
are recognized initially at fair value and subsequently measured at amortized cost using the effective interest method, except
for particular matters described below. 4.19.1 Customer guarantees Customer guarantees are initially
recognized at fair value and subsequently measured at amortized cost using the effective interest method. In accordance with the Concession
Agreement, Edenor is allowed to receive customer guarantees in the following cases:
i. When the power supply is requested and the user is unable to provide evidence of his legal ownership
of the premises;
ii. When service has been suspended more than once in one-year period;
iii. When the power supply is reconnected and Edenor is able to verify the illegal use of the service
(fraud).
iv. When the customer is undergoing liquidated bankruptcy or reorganization proceedings. Edenor has decided not to request
customer guarantees from residential tariff customers. Customer guarantees may be either
paid in cash or through the customer’s bill and accrue monthly interest at a specific rate of Banco de la Nación Argentina
for each customer category. When the conditions for which Edenor
is allowed to receive customer guarantees no longer exist, the customer’s account is credited for the principal amount plus
any interest accrued thereon, after deducting, if appropriate, any amounts receivable which Edenor has with the customer. 4.19.2 Customer refundable contributions Edenor receives assets or facilities
(or the cash necessary to acquire or built them) from certain customers for services to be provided, based on individual agreements
and the provisions of ENRE Resolution No. 215/12. These contributions are initially recognized as trade payables at fair value
against Property, plant and equipment, and are subsequently measured at amortized cost using the effective interest rate method. 4.19.3 Particular matters The recorded liabilities for the
debts with the FOTAE, the penalties accrued, whether imposed or not yet issued by the ENRE (Note 2.3), and other provisions are
the best estimate of the settlement value of the present obligation in the framework of IAS 37 provisions at the date of these
financial statements. The balances of ENRE Penalties and
Discounts are adjusted in accordance with the regulatory framework applicable thereto and are based on Edenor’s estimate
of the outcome of the RTI process described in Note 2.3, whereas the balances of the loans for consumption (mutuums) are adjusted
by a rate equivalent to the monthly average yield obtained by CAMMESA from its short-term investments.
BorrowingsBorrowings are recognized initially at
fair value, net of transaction costs incurred. Borrowings are subsequently measured at amortized cost. Any difference between the
proceeds (net of transaction costs) and the redemption amount is recognized in profit or loss over the period of the borrowings,
using the effective interest method. Borrowings are removed from the statement
of financial position when the obligation specified in the contract is discharged, cancelled or expired. The difference between
the carrying amount of a financial liability that has been extinguished or transferred to another party and the consideration paid,
including any non-cash assets transferred or liabilities assumed, is recognised in profit or loss as other income or finance costs. Borrowings are classified as current liabilities
unless the group has an unconditional right to defer settlement of the liability for at least 12 months after the reporting period. Borrowing costs General and specific borrowing costs that
are directly attributable to the acquisition, construction or production of a qualifying asset are capitalized during the period
of time that is required to complete and prepare the asset for its intended use or sale. Qualifying assets are assets that necessarily
take a substantial period of time to get ready for their intended use or sale. Investment income earned on the temporary
investment of specific borrowings pending their expenditure on qualifying assets is deducted from the borrowing costs eligible
for capitalization. Other borrowing costs are expensed in the
period in which they are incurred.
Deferred revenuesNon-refundable customer contributions Edenor receives assets or facilities
(or the cash necessary to acquire or built them) from certain customers for services to be provided, based on individual agreements.
In accordance with IFRIC 18 “Transfers of Assets from Customers”, the assets received are recognized by Edenor as Property,
plant and equipment with a contra-account in deferred revenue, the accrual of which depends on the nature of the identifiable services,
in accordance with the following:
i. Customer connection to the network: revenue is accrued until such connection is completed;
ii. Continuous provision of the electric power supply service: throughout the shorter of the useful
life of the asset and the term for the provision of the service.
Employee benefits4.22.1 Short-term obligations Liabilities for wages and salaries, including
non-monetary benefits and accumulating sick leave that are expected to be settled wholly within 12 months after the end of the
period in which the employees render the related service are recognised in respect of employees’ services up to the end of
the reporting period and are measured at the amounts expected to be paid when the liabilities are settled. The liabilities are
presented as current salaries and social security payable in the consolidated statement of financial position. 4.22.2 Defined benefit plans Labor costs liabilities are accrued
in the periods in which the employees provide the services that trigger the consideration. The cost of defined contribution
plans is periodically recognized in accordance with the contributions made by the Company. Additionally, the Company operates
several defined benefit plans. Defined benefit plans define an amount of pension benefit that an employee will receive on retirement,
depending on one or more factors, such as age, years of service and compensation. In accordance with conditions established in
each plan, the benefit may consist in a single payment, or in making complementary payments to those made by the pension system. The defined benefit liability recognized
in the financial statement balance sheet, at the end of the reporting period, is the present value of the defined benefit obligation
net of the fair value of the plan assets, when applicable. The defined benefit obligation is calculated annually by independent
actuaries using the projected unit credit method. The present value of the defined benefit obligation is determined by discounting
the estimated future cash outflows using future actuarial assumptions about demographic and financial variables that affect the
determination of the amount of such benefits. Actuarial gains and losses from
experience adjustments and changes in actuarial assumptions, are recognized in other comprehensive income (loss) in the period
in which they arise and past service costs are recognized immediately in the statement of income (loss).
Provisions and contingent liabilitiesProvisions are recognized when the
group has a present legal or constructive obligation as a result of a past event, it is probable that an outflow of resources will
be required to settle that obligation, and the amount can be reliably estimated. Provisions are not recognised for future operating
losses. Provisions are measured at the present
value of the expenditures expected to be required to settle the present obligation, taking into account the best available information
as of the date of the financial statements based on assumptions and methods considered appropriate and taking into account the
opinion of each Company’s legal advisors. As additional information becomes available to the Company, estimates are revised
and adjusted periodically. The discount rate used to determine the present value reflects current market assessments of the time
value of money and the risks specific to the liability. The increase in the provision due to the passage of time is recognised
as other financial results. Contingent liabilities are: i) possible
obligations that arise from past events and whose existence will be confirmed only by the occurrence or non-occurrence of uncertain
future events not wholly within the control of the entity; or ii) present obligations that arise from past events but it is not
probable that an outflow of resources will be required to its settlement; or whose amount cannot be measured with sufficient reliability. Contingent liabilities are not recognized.
The Company discloses in notes to the financial statements a brief description of the nature of material contingent liabilities. Contingent liabilities, whose possibility
of any outflow in settlement is remote, are not disclosed unless they involve guarantees, in which case the nature of the guarantee
is disclosed.
RevenueRevenue is measured at the fair value of
the consideration received or receivable. Amounts disclosed as revenue are net of discount and amounts collected on behalf of third
parties. The Group recognises revenue when the amount
of revenue can be reliably measured, it is probable that future economic benefits will flow to the entity and specific criteria
have been met for each of the Group’s activities. The group bases its estimates on historical results, taking into consideration
the type of customer, the type of transaction and the specifics of each arrangement. The revenue recognition criteria of the
main activities of the Company include:
i. From the power generation activity
ii. From the electricity distribution activity Revenue from the electricity
provided by Edenor to low-income areas and shantytowns is recognized to the extent that the Framework Agreement has been renewed
for the period in which the service was rendered. Edenor also recognizes revenue
from other concepts included in distribution services, such as new connections, reconnections, rights of use on poles, transportation
of electricity to other distribution companies, etc.
iii. From exploration and exploitation of oil and gas, petrochemicals
and refining and distribution activities Revenues from oil and natural
gas production in which the Company has a joint interest with other producers are recognized on the basis of the net working interest,
regardless of actual assignment. Any imbalance between actual and contractual assignment will result in the recognition of an amount
payable or receivable according to the actual share in production, whether above or below the production resulting from the Company’s
contractual interest in the consortium. The Company performs diesel
oil and gasoline sale transactions with other refining companies in different geographical areas to optimize the logistics chain.
These transactions are disclosed on a net basis in the Consolidated statement of Comprehensive income (loss). Finally, the Company provides
the service of hydrocarbon operation and production in exchange for a participation in the production of the hydrocarbon areas.
Other Income - Government grantsGrants from the government are recognised
at their fair value where there is a reasonable assurance that the grant will be received and the Group will comply with all attached
conditions. There are no unfulfilled conditions or other contingencies attaching to the following grants. The group did not benefit
directly from any other forms of government assistance. 4.25.1 Recognition of higher cost The recognition of higher costs
not transferred to the tariff, as well as the recognition established by SE Resolution No. 32/15 and the recognition of income
due to the effect of the precautionary measures of the Municipalities of Pilar and La Matanza (Note 2.3) fall within the scope
of IAS 20 “Accounting for Government Grants and Disclosure of Government Assistance” as they imply a compensation to
cover the expenses and afford the investments associated with the normal provision of the public service, object of the concession. Their recognition is made at fair
value when there is reasonable assurance that they will be collected and the conditions attached thereto have been complied with,
i.e. provision of the service in the case of the recognition established in SE Resolution No. 32/15, and the ENRE’s approval
and the SE’s recognition, by means of a Note or Resolution, in the case of the recognition of higher costs. Such concepts have been disclosed
in the “Income recognition on account of the RTI – SE Resolution No. 32/15”, “Higher Costs Recognition
- SE Resolution 250/13 and subsequent Notes” and “Recognition of income provisional measures MEyM Note N° 2016-04484723”
line items under Other operating income in the Consolidated Statement of Comprehensive Income, recognizing the related tax effects. 4.25.2 Recognition of compensation
for injection of surplus gas The recognition of income for the
injection of surplus gas is covered by IAS 20 since it involves a compensation as a result of the production increase committed.
This item has been disclosed under Compensation for Surplus Gas Injection, under Other operating income, in the Consolidated Statement
of Comprehensive Income (loss). Furthermore, fiscal costs related to the program has been disclosed under Extraordinary Canon, under Other
operating expenses, in the Consolidated Statement of Comprehensive Income (loss).
Income tax and minimum notional income tax4.26.1 Current and deferred income tax The tax expenses for the year include
current and deferred tax. Tax is recognized in the income statement, except to the extent that it relates to items recognized in
other comprehensive income or directly in equity. In this case, the tax is also recognized in other comprehensive income or directly
in equity, respectively. The current income tax charge is
calculated on the basis of the tax laws enacted or substantively enacted at the balance sheet. Management periodically evaluates
positions taken in tax returns with respect to situations in which applicable tax regulation is subject to interpretation. It establishes
provisions, where appropriate, on the basis of amounts expected to be paid to the tax authorities. Deferred income tax is recognized,
using the liability method on temporary differences between the tax bases of assets and liabilities and their carrying amounts
in the consolidated financial statements. However, deferred tax liabilities are not recognized if they come from the initial recognition
of goodwill; or if it arises from initial recognition of an asset or liability in a transaction other than a business combination
that at time of the transaction affects neither accounting nor taxable profit or loss. Deferred income tax assets are recognized
only to the extent that it is probable that future taxable profit will be available and can be used against temporary differences. Deferred income tax is provided
on temporary differences from investments in subsidiaries and associates, except for deferred income tax liability where the timing
of the reversal of the temporary difference is controlled by the group and it is probable that the temporary difference will not
reverse in the foreseeable future. Deferred income tax assets and liabilities
are offset when there is a legally enforceable right to offset the recognized amounts and when the deferred income tax assets and
liabilities relate to income taxes levied by the same taxation authority on either the same taxable entity or different taxable
entities where there is an intention to settle the balances on a net basis. Current and deferred tax assets
and liabilities have not been discounted, and are stated at their nominal value. Income tax rates prevailing at year-end
in Argentina (see Note 48), Venezuela, Ecuador, Bolivia, Spain and Uruguay are 35%, 50%, 22%, 25%, 25% and 25%, respectively. Additionally,
payment of Bolivian-source income to beneficiaries outside Bolivia is levied with a 12.5% withholding income tax. 4.26.2 Minimum notional income tax The Company assesses the minimum
notional income tax by applying the current 1% rate over the assets computable at the closing of the year. As this tax supplements
the income tax, the Company does not assess it for the periods where no income is evidenced on the income tax, based on the case
law established by the “Hermitage” decision (CSJN, 15/06/2010), which ruled on the unconstitutionality of this tax
when tax losses are disclosed for the period. The Company’s tax obligation
for each year will be the higher of the two taxes. If in a fiscal year, however, minimum notional income tax obligation exceeds
income tax liability, the surplus will be computable as a payment in advance of income tax through the next ten years. As of the closing date hereof, the Company’s
Management analyzed the receivable’s recoverability, and allowances are created in as long as it is estimated that the amounts
paid for this tax will not be recoverable within the statutory limitation period taking into consideration the Company’s
current business plans. The Company’s Management will evaluate the evolution of this recoverability in future fiscal years.
LeasesLeases of property, plant and equipment
where the Group, as lessor, has transferred all the risks and rewards of ownership are classified as finance leases (Note 39.2).
Finance leases are recognized at the lease’s inception at the fair value of the leased property or, if lower, the present
value of the minimum lease payments. The corresponding rental rights, net of finance charges, are included in other current and
non-current receivables. Each lease payment received is allocated between the receivable and finance income. The finance income
is charged to the profit or loss over the lease period so as to produce a constant periodic rate of interest on the remaining balance
of the receivable for each period. The property, plant and equipment leased under finance leases is derecognized if there is reasonable
certainty that the Group will assign ownership at the end of the lease term. Leases in which a significant portion
of the risks and rewards of ownership are not transferred to the Group as lessee are classified as operating leases (Note 39.1.a).
Payments made under operating leases (net of any incentives received from the lessor) are charged to profit or loss on a straight-line
basis over the period of the lease. Lease income from operating leases
where the Group is a lessor is recognised in income on a straight-line basis over the lease term (Note 39.1.b). The respective
leased assets are included in the Consolidated Statement of Financial Position based on their nature.

1. GENERAL INFORMATION AND GR56

1. GENERAL INFORMATION AND GROUP STRUCTURE (Tables)12 Months Ended
Dec. 31, 2017
General Information And Group Structure Tables
Fair value of the acquisitionPurchase price allocation
Cash payment 13,362
Total consideration transferred 13,362
Investments in joint ventures 3,407 (a)
Investments in associates 777 (b)
Financial assets at amortized cost 21,801 (c)
Intangible assets 224 (d)
Financial assets at fair value through profit and loss 653 (b)
Financial assets at amortized cost 315
Trade and other receivables 7,256 (e)
Inventories 3,072
Cash and cash equivalents 4,384
Non current assets classified as held for sale 3,405
Trade and other payables (4,324)
Borrowings (7,434)
Salaries and social security payable (383)
Defined benefit plans (484)
Deferred tax liabilities (4,096)
Taxes payables (859)
Provisions (5,793) (f)
Liabilities associated with assets classified as held for sale (240)
Income tax and minimum notional income tax provision (1,444)
Non-controlling interest (7,869) (g)
Goodwill 994 (h)
Total purchase price allocation 13,362
Consolidated statement of comprehensive income related to discontinued operationsAs of December 31, 2017:
Oil and gas Refining y distribution Eliminations Total
Revenue 5,972 16,795 (6,890) 15,877
Cost of sales (4,840) (14,256) 6,906 (12,190)
Gross profit 1,132 2,539 16 3,687
Selling expenses (182) (1,957) - (2,139)
Administrative expenses (127) (80) - (207)
Exploration expenses (19) - - (19)
Other operating income 377 223 - 600
Other operating expenses (181) (110) - (291)
Impairment of non current assets classified - (687) - (687)
Operating income (loss) 1,000 (72) 16 944
Finance income 22 15 - 37
Finance expenses - (16) - (16)
Other financial results (239) (14) - (253)
Financial results, net (217) (15) - (232)
Income (loss) before income tax 783 (87) 16 712
-
Income tax and minimum notional income tax (662) 44 - (618)
Profit (loss) of the year for discontinued operations 121 (43) 16 94
Other comprehensive income
Items that will not be reclassified to profit or loss
Remeasurements related to defined benefit plans (7) 17 - 10
Income tax (174) (6) - (180)
Items that may be reclassified to profit or loss -
Exchange differences on translation 773 - - 773
Other comprehensive income of the year for discontinued operations 592 11 - 603
Total comprehensive income (loss) of the year for discontinued operations 713 (32) 16 697
Oil and gas Refining y distribution Eliminations Total
Total income (loss) of the year for discontinued operations attributable to:
Owners of the company 10 (43) 16 (17)
Non - controlling interest 111 - - 111
121 (43) 16 94
Total comprehensive income (loss) of the year for discontinued operations attributable to:
Owners of the company 282 (32) 16 266
Non - controlling interest 431 - - 431
713 (32) 16 697 As of December 31, 2016:
Oil and gas Refining y distribution Eliminations Total
Revenue 2,456 6,550 (2,821) 6,185
Cost of sales (1,941) (5,973) 2,931 (4,983)
Gross profit 515 577 110 1,202
Selling expenses (63) (757) - (820)
Administrative expenses (25) (23) - (48)
Exploration expenses (41) - - (41)
Other operating income 235 459 (377) 317
Other operating expenses (656) (98) 377 (377)
Operating income (35) 158 110 233
Finance income 38 6 - 44
Finance expenses (10) (9) - (19)
Other financial results (43) (40) - (83)
Financial results, net (15) (43) - (58)
Income (loss) before income tax (50) 115 110 175
Income tax and minimum notional income tax (24) (40) (39) (103)
Profit (loss) of the year for discontinued operations (74) 75 71 72
Other comprehensive income
Items that will not be reclassified to profit or loss
Remeasurements related to defined benefit plans (62) 14 - (48)
Income tax 22 (5) - 17
Items that may be reclassified to profit or loss -
Exchange differences on translation 280 - - 280
Other comprehensive income of the year for discontinued operations 240 9 - 249
Total comprehensive income (loss) of the year for discontinued operations 166 84 71 321
Oil and gas Refining y distribution Eliminations Total
Total income of the year for discontinued operations attributable to:
Owners of the company (64) 75 71 82
Non - controlling interest (10) - - (10)
(74) 75 71 72
Total comprehensive income of the year for discontinued operations attributable to:
Owners of the company 77 84 71 232
Non - controlling interest 89 - - 89
166 84 71 321
Consolidated statement of cash flows related to discontinued operations12.31.2017 12.31.2016
Net cash generated by operating activities 1,979 1,549
Net cash used in investing activities (1,176) (661)
Net cash (used in) generated by financing activities (719) (922)
Increase (Decrease) in cash and cash equivalents from discontinued
operations 84 (34)
Cash and cash equivalents at the beginning of the year 77 111
Increase (Decrease) in cash and cash equivalents 84 (34)
Cash and cash equivalents at the end of the year 161 77
Assets and liabilities that comprise the assets held for sale and associated liabilitiesOil and gas Refining y distribution 12.31.2017 12.31.2016
ASSETS
NON-CURRENT ASSETS
Property, plant and equipment 7,545 1,119 8,664 -
Intangible assets 311 104 415 -
Financial assets at amortized cost 35 - 35 19
Trade and other receivables 6 - 6 -
Total non-current assets 7,897 1,223 9,120 19
CURRENT ASSETS
Inventories 153 1,960 2,113 -
Financial assets at fair value through profit and loss 681 - 681 -
Trade and other receivables 426 - 426 -
Cash and cash equivalents 161 - 161 -
Total current assets 1,421 1,960 3,381 -
Total assets classified as held for sale 9,318 3,183 12,501 19
LIABILITIES
NON-CURRENT LIABILITIES
Defined benefit plans 97 58 155 -
Deferred tax liabilities 567 - 567 -
Provisions 922 52 974 -
Total non-current liabilities 1,586 110 1,696 -
CURRENT LIABILITIES
Trade and other payables 390 - 390 -
Salaries and social security payable 47 - 47 -
Defined benefit plans 2 6 8 -
Income tax and minimum notional income tax provision 26 - 26 -
Taxes payables 117 - 117 -
Provisions 51 35 86 -
Total current liabilities 633 41 674 -
Liabilities associated to assets classified 2,219 151 2,370 -

2. REGULATORY FRAMEWORK (Tables

2. REGULATORY FRAMEWORK (Tables)12 Months Ended
Dec. 31, 2017
Regulatory Framework Tables
Generating units in operationGenerator Generating unit Tecnology Power Applicable regime
CTG GUEMTG01 TG 101 MW Energy Plus Res. N° 1281/06 and SEE Resoluion N° 19/2017 (1)
CTG GUEMTV11 TV ≤100 MW SE Resolutions No. 22/2016 and 19/2017
CTG GUEMTV12 TV ≤100 MW SE Resolutions No. 22/2016 and 19/2017
CTG GUEMTV13 TV >100 MW SE Resolutions No. 22/2016 and 19/2017
Piquirenda PIQIDI 01-10 MG 30 MW SE Resolution No. 220/2007 (1)
CPB BBLATV29 TV >100 MW SE Resolutions No. 22/2016 and 19/2017
CPB BBLATV30 TV >100 MW SE Resolutions No. 22/2016 and 19/2017
CT Ing. White BBLMD01-06 MG 100 MW SEE Resolution No. 21/2016 (1)
CTLL LDLATG01 TG >50 MW SE Resolutions No. 22/2016 and 19/2017
CTLL LDLATG02 TG >50 MW SE Resolutions No. 22/2016 and 19/2017
CTLL LDLATG03 TG >50 MW SE Resolutions No. 22/2016 and 19/2017
CTLL LDLATG04 TG 105 MW SEE Res. 220/2007 (75%), SEE Res. 22/2016 and 19/2017 (25%)
CTLL LDLATG05 TG 105 MW SEE Resolution No. 21/2016 (1)
CTLL LDLATV01 TV 180 MW SE Resolution No. 220/2007 (1)
CTGEBA GEBATG01/TG02/TV01 CC >150 MW SE Resolutions No. 22/2016 and 19/2017
CTGEBA GEBATG03 TG 164 MW Energy Plus Res. N° 1281/06
HIDISA AGUA DEL TORO HI HI – Media 120<P≤300 SE Resolutions No. 22/2016 and 19/2017
HIDISA EL TIGRE HI Renewable ≤ 50 SE Resolutions No. 22/2016 and 19/2017
HIDISA LOS REYUNOS HI HI – Media 120<P≤300 SE Resolutions No. 22/2016 and 19/2017
HINISA NIHUIL I HI HI – Small 50<P≤120 SE Resolutions No. 22/2016 and 19/2017 (2)
HINISA NIHUIL II HI HI – Small 50<P≤120 SE Resolutions No. 22/2016 and 19/2017 (2)
HINISA NIHUIL III HI HI – Small 50<P≤120 SE Resolutions No. 22/2016 and 19/2017 (2)
HPPL PPL1HI HI HI – Media 120<P≤300 SE Resolutions No. 22/2016 and 19/2017
HPPL PPL2HI HI HI – Media 120<P≤300 SE Resolutions No. 22/2016 and 19/2017
HPPL PPL3HI HI HI – Media 120<P≤300 SE Resolutions No. 22/2016 and 19/2017
Ecoenergía CERITV01 TV 15 MW Energy Plus Res. N° 1281/06 (1)
CT Parque Pilar PILBD01-06 MG 100 MW SEE Resolution No. 21/2016 (1) (1) (2)
Generating units in constructionGenerator Generating unit Tecnology Applicable regime
CTLL MG 15 MW SE Resolution No. 19/2017
Greenwind Wind 100 MW Renovar
CTGEBA CC 383 MW Resolution No. 420/2017
Effects of the credit notes issuedRes.
No. 6 and 41 /2016 Res. ENRE No. 1/2016
Payables for purchase of electricity - CAMMESA (270) (1,126)
Purchase of electricity 270 -
Income recognition of Note No. 2016-04484723 - 1,126

4. ACCOUNTING POLICIES (Tables)

4. ACCOUNTING POLICIES (Tables)12 Months Ended
Dec. 31, 2017
Accounting Policies Tables
Property, plant and equipment estimated useful livesBuildings: 50 years
Substations: 35 years
High voltage lines: 40 - 45 years
Medium voltage lines: 35 - 45 years
Low voltage lines: 30 - 40 years
Transformer centrals: 25 - 35 years
Meters: 25 years
Vehicles: 5 years
Furniture, fittings and communication equipment: 5- 20 years
Computer equipment and software: 3 years
Tools: 10 years
Gas Plant and Pipeline: 20 years

6. FINANCIAL RISK MANAGEMENT (T

6. FINANCIAL RISK MANAGEMENT (Tables)12 Months Ended
Dec. 31, 2017
Financial Risk Management Tables
Financial liabilities contractual undiscounted cash flows maturityType Amount of foreign currency Exchange rate (1) Total 12.31.2017 Total 12.31.2016
ASSETS
NON CURRENT ASSETS
Financial instruments
Financial assets at amortized cost
Third parties US$ - - - 1
Other receivables
Related parties US$ 42.4 18.599 789 733
Third parties US$ 62.7 18.549 1,163 934
Financial assets at fair value through profit and loss
Third parties US$ - - - 513
Total non current assets 1,952 2,181
CURRENT ASSETS
Financial instruments
Financial assets at fair value through profit and loss
Third parties US$ 263.0 18.549 4,879 678
Derivative financial instruments
Third parties US$ 0.2 18.549 4 -
Trade and other receivables
Related parties US$ 10.2 18.599 189 106
Third parties US$ 246.0 18.549 4,563 4,464
EUR - - - 1
VEF - - - 2
Cash and cash equivalents US$ 21.8 18.549 404 1,087
EUR 0.3 22.283 7 2
Total current assets 10,046 6,340
Non Financial instruments
Non current assets classified as held for sale US$ 39.0 18.549 723 19
Total assets 12,721 8,540
Type Amount of foreign currency Exchange rate (1) Total 12.31.2017 Total 12.31.2016
LIABILITIES
NON CURRENT LIABILITIES
Financial instruments
Trade and other payables
Third parties US$ 6.7 18.649 125 -
Borrowings
Related parties US$ 0.8 18.599 14 16
Third parties US$ 1,737.5 18.649 32,403 11,737
Non financial instruments
Provisions
Related parties US$ - - - 366
Third parties US$ 89.1 18.649 1,662 2,378
Total non current liabilities 34,204 14,497
CURRENT LIABILITIES
Financial instruments
Trade and other payables
Related parties US$ 2.2 18.599 40 95
Third parties US$ 249.4 18.649 4,651 3,447
EUR 22.4 22.450 502 57
CHF 0.6 19.168 12 -
SEK 21.0 2.280 48 6
VEF - - - 5
Borrowings
Third parties US$ 213.4 18.649 3,979 5,398
Non financial instruments
Salaries and social security payable
Third parties US$ 0.1 18.649 3 1
Taxes payables
Third parties US$ 1.0 18.649 19 11
Provisions
Related parties US$ 21.3 18.599 396 394
Third parties US$ 15.0 18.649 280 307
Total current liabilities 9,930 9,721
Liabilities associated to assets classified as held for sale US$ 68.9 18.649 1,285 -
Total liabilities 45,419 24,218
Net Position Liability (32,698) (15,678) (1)
Exposure to the price riskIncrease (decrease) of the result for the year
Financial assets 12.31.2017 12.31.2016
Shares 15 15
Government securities 502 158
Investment funds 959 319
Corporate bonds - 1
Variation of the result of the year 1,476 493
Borrowings classified by interest rate12.31.2017 12.31.2016
Fixed interest rate:
Argentinian pesos 2,270 2,729
U.S dollar 33,769 14,305
Subtotal loans granted at a fixed interest rate 36,039 17,034
Floating interest rates:
Argentinian pesos 3,603 5,808
U.S dollar 2,108 2,479
Subtotal loans granted at a floating interest rate 5,711 8,287
Non-interest accrual
U.S dollar 697 284
Argentinian pesos 519 367
Subtotal non-interest accrual 1,216 651
Total borrowings 42,966 25,972
Liquidity index12.31.2017 12.31.2016
Current assets 36,912 23,150
Current liabilities 29,958 30,063
Index 1.23 0.77
Financial liabilities contractual undiscounted cash flows maturityAs of December 31, 2017 Trade and other payables Borrowings Total
Less than three months 12,041 13,936 25,977
Three months to one year 6,004 12,938 18,942
One to two years 221 4,166 4,387
Two to five years 122 16,624 16,746
More than five years - 30,239 30,239
Without established term 6,068 6,071 12,139
Total 24,456 83,974 108,430
As of December 31, 2016 Trade and other payables Borrowings Total
Less than three months 8,799 1,088 9,887
Three months to one year 4,068 10,995 15,063
One to two years 311 2,548 2,859
Two to five years 118 6,312 6,430
More than five years - 12,080 12,080
Without established term 4,907 - 4,907
Total 18,203 33,023 51,226
Financial leverage ratios12.31.2017 12.31.2016
Total borrowings 42,966 25,972
Less: cash and cash equivalents, and financial assets at fair value through profit and loss (15,412) (5,609)
Net debt 27,554 20,363
Total capital attributable to owners 44,464 31,417
Leverage ratio 61.97% 64.82%
Financial assets and liabilities at fair value by fair value hierarchyAs of December 31, 2017 Level 1 Level 2 Level 3 Total
Assets
Financial assets at fair value through
Government securities 5,024 - - 5,024
Shares - - 150 150
Investment funds 9,589 - - 9,589
Derivative financial instruments - 4 - 4
Other receivables 590 - - 590
Total assets 15,203 4 150 15,357
Liabilities
Derivative financial instruments - 82 - 82
Total liabilities - 82 - 82
As of December 31, 2016 Level 1 Level 2 Level 3 Total
Assets
Financial assets at fair value through
Corporate securities 12 - - 12
Government securities 1,576 - - 1,576
Trust - - 150 150
Investment funds 3,189 - - 3,189
Other 3 - - 3
Cash and cash equivalents
Investment funds 61 - - 61
Derivative financial instruments - 13 - 13
Other receivables 29 - - 29
Total assets 4,870 13 150 5,033

7. INVESTMENTS IN SUBSIDIARIES

7. INVESTMENTS IN SUBSIDIARIES (Tables)12 Months Ended
Dec. 31, 2017
Investments In Subsidiaries Tables
Subsidiaries information12.31.2017 12.31.2016
Company Country Main activity Direct and indirect participation % Direct and indirect participation %
BLL (1) Argentina Winemaking - 100.00%
Corod Argentina Oil 100.00% 100.00%
CPB Energía S.A. Argentina Oil 100.00% -
CTG (1) Argentina Generation - 90.42%
CTLL (1) Argentina Generation - 100.00%
Ecuador TLC S.A. Ecuador Oil 100.00% 100.00%
Edenor Argentina Distribution of energy 51.54% 51.54%
Eg3 Red (1) Argentina Distribution - 100.00%
Enecor S.A. Argentina Transportation of electricity 69.99% 69.99%
IEASA (2) Argentina Investment - 100.00%
INDISA (1) Argentina Investment - 91.60%
INNISA (1) Argentina Investment - 90.27%
HIDISA Argentina Generation 61.00% 61.00%
HINISA Argentina Generation 52.04% 52.04%
IPB (1) Argentina Investment - 100.00%
PACOSA (3) Argentina Distributor 100.00% 100.00%
PBI Bolivia Investment 100.00% 100.00%
PELSA (4) Argentina Oil 58.88% 58.88%
Petrobras Energía Colombia Gran Cayman Colombia Oil 100.00% 100.00%
Petrobras Energía México Mexico Oil - 100.00%
Petrobras Energía Ecuador Gran Cayman Investment 100.00% 100.00%
Petrobras Energía Operaciones Ecuador Ecuador Oil 100.00% 100.00%
PEPASA (1) Argentina Oil - 49.54%
Petrolera San Carlos S.A. Venezuela Oil 100.00% 100.00%
PHA Spain Investment 100.00% 100.00%
PISA Uruguay Investment 100.00% 100.00%
PP Argentina Investment 100.00% 100.00%
PP II (1) Argentina Investment - 100.00%
PPSL Spain Investment 100.00% 100.00%
TGU Uruguay Gas transportation 100.00% 100.00%
Transelec Argentina Investment 100.00% 100.00%
WEBSA (3) Argentina Distributor - 100.00% (1)
See Note 1.4.1. (2)
See Note 1.4.3.1. (3)
See Note 1.4.3.2. (4)
See Note 1.5.2.
Summary statement of financial position for subsidiaries with significant non-controlling interestEdenor
12.31.2017 12.31.2016
Non Current
Total non current assets 16,042 12,311
Borrowings 4,192 2,770
Other non current liabilities 7,511 6,238
Total non current liabilities 11,703 9,008
Current
Cash and cash equivalents 83 259
Other current assets 9,180 6,363
Total current assets 9,263 6,622
Borrowings 71 54
Other current liabilities 12,470 9,509
Total current liabilities 12,541 9,563
Total equity 1,061 362
Non-controlling interest 514 175 PELSA
12.31.2017 12.31.2016
Non Current
Total non current assets 5,081 4,896
Other non current liabilities 954 1,012
Total non current liabilities 954 1,012
Current
Cash and cash equivalents 162 77
Other current assets 1,727 1,154
Total current assets 1,889 1,231
Other current liabilities 599 630
Total current liabilities 599 630
Total equity 5,417 4,485
Non-controlling interest 2,227 1,844
Summary statement of comprehensive income (loss) for subsidiaries with significant non-controlling interestEdenor
12.31.2017 12.31.2016 12.31.2015
Revenue 24,340 13,080 3,802
Depreciation (430) (352) (281)
Interest income 273 197 96
Interest expense (1,541) (1,442) (430)
Profit (loss) for the year before tax 1,123 (1,932) 1,326
Income tax (441) 743 (184)
Profit (loss) for the year 682 (1,189) 1,142
Other comprehensive loss 9 5 (2)
Total comprehensive (loss) profit of the year 691 (1,184) 1,140
Income (loss) of the year attributable to non-controlling interest 331 (576) 553
Other comprehensive income of the year attributable to non-controlling interest 4 2 (1)
Comprehensive income (loss) of the year attributable to non-controlling interest 335 (574) 552 PELSA
12.31.2017 12.31.2016 (1)
Revenue 3,321 1,155
Depreciation (1,017) (413)
Interest income 22 13
Income (loss) for the year / period before tax 278 (3)
Income tax (8) (41)
Income (loss) for the year / period 270 (44)
Other comprehensive income 769 228
Total comprehensive profit of the year / period 1,039 184
Income (loss) of the year attributable to non-controlling interest 111 (18)
Other comprehensive income of the year attributable to non-controlling interest 316 94
Comprehensive income (loss) of the year attributable to non-controlling interest 427 76
(1) The information reflects the effect of consolidation of Petrobras Argentina as from July 27, 2016 when the Acquisition was consummated. PEPASA
09.30.2017 (1) 12.31.2016 12.31.2015
Revenue 2,894 2,839 943
Depreciation (661) (867) (276)
Interest income 22 1 12
Interest expense (188) (712) (382)
Profit for the year before tax 1,277 816 515
Income tax (411) (288) (164)
Profit for the period / year 866 528 351
Comprehensive income of the period/year attributable to non-controlling interest 437 266 177
(1) The information reflects the effect of consolidation until September 30, 2017 when the PEPASA
has merged with Pampa.
Summary statement of cash flowEdenor
12.31.2017 12.31.2016 12.31.2015
Net cash generated by operating activities 3,283 2,931 3,217
Net cash used in investing activities (4,046) (2,373) (3,103)
Net cash generated by (used in) financing activities 587 (493) (173)
(Decrease) Increase in cash and cash equivalents (176) 65 (59)
Cash and cash equivalents at the beginning of the year 259 129 179
Exchange difference generated by cash - 65 9
Cash and cash equivalents at the end of the year 83 259 129 PELSA
12.31.2017 12.31.2016 (1)
Net cash generated by operating activities 543 332
Net cash used in investing activities (362) (243)
Net cash generated by financing activities (108) (108)
Increase (Decrease) in cash and cash equivalents 73 (10)
Cash and cash equivalents at the beginning 77 121
Exchange difference generated by cash and cash equivalents 12 (34)
Cash and cash equivalents at the end of the year 162 77
(1) The information reflects the effect of consolidation of Petrobras Argentina as from July
27, 2016 when the Acquisition was consummated. PEPASA
09.30.2017 (1) 12.31.2016 12.31.2015
Net cash generated by operating activities 565 1,659 461
Net cash generated by (used in) investing activities 1,209 (2,476) (1,187)
Net cash (used in) generated by financing activities (1,961) 994 706
(Decrease) Increase in cash and cash equivalents (187) 177 (20)
Cash and cash equivalents at the beginning of the year 226 40 51
Exchange difference generated by cash 4 9 9
Cash and cash equivalents at the end of the period/year 43 226 40
(1) The information reflects the effect of consolidation until September 30, 2017 when the PEPASA
has merged with Pampa.

8. INVESTMENTS IN JOINT VENTU61

8. INVESTMENTS IN JOINT VENTURES (Tables)12 Months Ended
Dec. 31, 2017
Investments In Joint Ventures Tables
Investments in Joint ventures information Information about the issuer
Main activity Date Share capital Profit (loss) of the year Equity Direct and indirect participation %
CIESA (1) Investment 12.31.2017 639 1,356 2,900 50%
Citelec (2) Investment 12.31.2017 555 1,201 1,505 50%
Greenwind (3) Generation 12.31.2017 5 (104) 222 50% (1) therefore, the Company has an indirect participation of 25.50% in TGS. (2) (3)
Interest in joint ventures12.31.2017 12.31.2016
CIESA 4,048 3,532
Citelec 757 167
Greenwind 125 -
4,930 3,699
Result from interests in joint ventures12.31.2017 12.31.2016 12.31.2015
CIESA 518 125 -
Citelec 596 (20) 9
Greenwind (50) - -
1,064 105 9
Evolution of interests in joint ventures 12.31.2017 12.31.2016 12.31.2015
At the beginning of the year 3,699 224 227
Reclassifications (1) 175 - -
Increase for subsidiaries acquisition (2) - 3,407 -
Other decreases (2) (32) (14)
Share of profit 1,064 105 9
Share capital increase - - 1
Other comprehensive (loss) income (6) (5) 1
At the end of the year 4,930 3,699 224 (1)
(2) Corresponds to the incorporation of the interest in CIESA (Note
1.3.1).

9. INVESTMENTS IN ASSOCIATES (T

9. INVESTMENTS IN ASSOCIATES (Tables)12 Months Ended
Dec. 31, 2017
Investments In Associates Tables
Investments in Associates informationInformation about the issuer
Main activity Date Share capital Profit (loss) of the period / year Equity Direct participation %
Refinor Refinery 09.30.2017 92 (10) 980 28.50%
Oldeval Transport of hydrocarbons 12.31.2017 110 216 657 23.10%
Investments in associates12.31.2017 12.31.2016
Refinor 602 602
Oldelval 221 184
Other 1 1
824 787
Result from investments in associates12.31.2017 12.31.2016 12.31.2015
Oldelval 44 11 -
Refinor - (1) -
CIESA - (3) (10)
44 7 (10)
Evolution of investments in associatesNote 12.31.2017 12.31.2016 12.31.2015
At the beginning of the year 787 123 133
Dividends 30 (7) (4) -
Increase for subsidiaries acquisition - 777 -
Decreases on disposal of investment in subsidiary - (116) -
Share of profit (loss) 44 7 (10)
At the end of the year 824 787 123

10. PROPERTY, PLANT AND EQUIP63

10. PROPERTY, PLANT AND EQUIPMENT (Tables)12 Months Ended
Dec. 31, 2017
Property Plant And Equipment Tables
Changes in property plant and equipmentOriginal values
Type of good At the beginning Translation effect Increase for subsidiaries acquisition Reversal of impairment Increases Decreases Transfers (1) Reclassification to assets classified as held At the end
Land 1,193 - - - 54 (582) 12 (323) 354
Buildings 2,090 1 - - - (18) 239 (238) 2,074
Equipment and machinery 9,000 17 - - 41 (27) 4,046 (913) 12,164
High, medium and low voltage lines 4,586 - - 304 - (20) 1,076 - 5,946
Substations 1,729 - - 85 - - 464 - 2,278
Transforming chamber and platforms 1,040 - - 64 - (2) 281 - 1,383
Meters 943 - - 170 - - 64 - 1,177
Wells 10,522 872 - - 295 (425) 3,017 (7,718) 6,563
Mining property 5,033 81 - - 220 - - (1,566) 3,768
Vehicles 296 2 - - 74 (6) 2 (21) 347
Furniture and fixtures and software equipment 287 7 - - 229 (4) 65 (67) 517
Communication equipments 93 - - - - - 1 (1) 93
Materials and spare parts 628 3 - - 298 (83) (330) (60) 456
Refining and distribution industrial complex 873 - - - - (12) 77 (790) 148
Petrochemical industrial complex 756 - - - - - 169 - 925
Work in progress 6,560 23 - - 12,647 10 (8,355) (320) 10,565
Advances to suppliers 786 - - - 1,131 (274) (911) - 732
Other goods 12 - - - - - - - 12
Total at 12.31.2017 46,427 1,006 - 623 14,989 (1,443) (83) (12,017) 49,502
Total at 12.31.2016 17,334 286 21,801 - 8,440 (1,273) 1 - 46,589 (1) Includes
the transfer of materials and spare parts to item “inventories” of the current asset.
Property plant and equipment depreciation and net book valuesDepreciation Net book values
Type of good At the beginning Decreases Translation effect For the year (1) Reversal of impairment Reclassification to assets classified as held At the end At the end At 12.31.2016
Land - - - - - - - 354 1,193
Buildings (177) 15 - (109) - 22 (249) 1,825 1,913
Equipment and machinery (1,090) 16 (2) (1,238) - 211 (2,103) 10,061 7,910
High, medium and low voltage lines (778) 13 - (163) (91) - (1,019) 4,927 3,808
Substations (318) - - (58) (27) - (403) 1,875 1,411
Transforming chamber and platforms (191) - - (39) (18) - (248) 1,135 849
Meters (306) - - (47) (26) - (379) 798 637
Wells (1,665) - (180) (2,374) - 2,006 (2,213) 4,350 8,857
Mining property (630) - (18) (898) - 362 (1,184) 2,584 4,403
Vehicles (122) 5 (1) (65) - 8 (175) 172 174
Furniture and fixtures and software equipment (23) 1 (3) (137) - 32 (130) 387 264
Communication equipments (39) - - (4) - - (43) 50 54
Materials and spare parts (18) 47 - (8) - - 21 477 610
Refining and distribution industrial complex (36) 11 - (74) - 83 (16) 132 837
Petrochemical industrial complex (27) - - (113) - - (140) 785 729
Work in progress - - - - - - - 10,565 6,560
Advances to suppliers - - - - - - - 732 786
Other goods (6) - - (1) - - (7) 5 6
Total at 12.31.2017 (5,426) 108 (204) (5,328) (162) 2,724 (8,288) 41,214
Total at 12.31.2016 (2,825) 302 - (2,976) - - (5,499) 41,001
(1) Includes $ 1,940 million and $ 803 million corresponding to discontinued operations, for 2017 and 2016, respectively.

11. INTANGIBLE ASSETS (Tables)

11. INTANGIBLE ASSETS (Tables)12 Months Ended
Dec. 31, 2017
Intangible Assets Tables
Intangible assets original valuesOriginal values
Type of good At the beginning Increase for subsidiaries acquisition (1) Reversal of impairment Increase Decrease Reclassification to assets held for sale
At the end
Concession agreements 951 - 96 - - - 1,047
Goodwill 999 - - - - (311) 688
Intangibles identified in acquisitions of companies 416 - - - (54) (206) 156
Others 14 - - - - (14) -
Total at 12.31.2017 2,380 - 96 - (54) (531) 1,891
Total at 12.31.2016 965 1,297 - 118 - - 2,380
(1) Includes the increase of intangible assets related to the purchase of PPSL in the amount of $ 1,218 million.
Intangible assets amortizationAmortization
Type of good At the beginning For the year (1) Reversal of impairment Decrease Reclassification to assets held for sale At the end
Concession agreements (249) (27) (14) - - (290)
Goodwill - - - - - -
Intangibles identified in acquisitions of companies (28) (44) - - 57 (15)
Others - (1) - - 1 -
Total at 12.31.2017 (277) (72) (14) - 58 (305)
Total at 12.31.2016 (231) (46) - - - (277)
(1) Includes $ 39 million and $ 18 million corresponding to discontinued operations, for 2017 and 2016, respectively.
Intangible assets net book valuesNet book values
Type of good At the end At 12.31.2016
Concession agreements 757 702
Goodwill 688 999
Intangibles identified in acquisitions of companies 141 388
Others - 14
Total at 12.31.2017 1,586
Total at 12.31.2016 2,103

12. FINANCIAL ASSETS AT FAIR 65

12. FINANCIAL ASSETS AT FAIR VALUE THROUGH PROFIT AND LOSS (Tables)12 Months Ended
Dec. 31, 2017
Financial Assets At Fair Value Through Profit And Loss Tables
Financial assets at fair value through profit and loss12.31.2017 12.31.2016
Non current
Shares 150 150
Government bonds - 592
Total non current 150 742
Current
Government bonds 5,024 984
Corporate bonds - 12
Investment funds 9,589 3,189
Other - 3
Total current 14,613 4,188

13. FINANCIAL ASSETS AT AMORT66

13. FINANCIAL ASSETS AT AMORTIZED COST (Tables)12 Months Ended
Dec. 31, 2017
Financial Assets At Amortized Cost Tables
Financial assets at amortized cost12.31.2017 12.31.2016
Non current
Government securities - 44
Corporate securities - 1
Financial Trustee - Gasoducto Sur Work - 17
Total non current - 62
Current
Government securities 11 2
Financial Trustee - Gasoducto Sur Work 14 21
Total current 25 23

14. DEFERRED TAX ASSETS AND L67

14. DEFERRED TAX ASSETS AND LIABILITIES, INCOME TAX AND MINIMUM NOTIONAL INCOME TAX (Tables)12 Months Ended
Dec. 31, 2017
Deferred Tax Assets And Liabilities Income Tax And Minimum Notional Income Tax Tables
Deferred tax assets and liabilities12.31.2016 Reclassification to held for sale Profit (loss) (1) Other comprehensive income (loss) (2) 12.31.2017
Tax loss-carryforwards 942 - 694 - 1,636
Trade and other receivables 194 (5) (70) - 119
Financial assets at fair value through profit and loss - - 12 - 12
Trade and other payables 1,124 - 58 - 1,182
Defined benefit plans 361 (56) (41) (4) 260
Provisions 1,722 (306) (674) - 742
Taxes payable 224 - (55) - 169
Liabilities associated to assets classified as held for sale - 367 - - 367
Other 126 - (81) - 45
Deferred tax asset 4,693 - (157) (4) 4,532
Property, plant and equipment (4,624) 841 2,083 - (1,700)
Investments in companies (1,329) - 222 (176) (1,283)
Intangible assets (294) - 221 - (73)
Trade and other receivables (851) - 176 - (675)
Financial assets at fair value through profit and loss (95) - 46 - (49)
Borrowings (61) - (75) - (136)
Assets classified as held for sale - (841) - - (841)
Other (3) - 8 - 5
Deferred tax liabilities (7,257) - 2,681 (176) (4,752)
(1) Includes a loss of $ 618 million corresponding to discontinued operations.
(2) Includes a loss of $ 180 million corresponding to discontinued operations.
12.31.2015 Increase for subsidiaries acquisition Profit (loss) (1) Other comprehensive income (loss) (2) 12.31.2016
Tax loss-carryforwards 32 - 910 - 942
Trade and other receivables 53 89 52 - 194
Financial assets at fair value through profit and loss 8 - (8) - -
Trade and other payables 333 - 791 - 1,124
Defined benefit plans 109 170 55 27 361
Provisions 134 1,372 216 - 1,722
Taxes payable 49 379 (192) (12) 224
Other 23 112 (9) - 126
Deferred tax asset 741 2,122 1,815 15 4,693
Property, plant and equipment (710) (4,477) 563 - (4,624)
Share of profit from joint ventures and associates - (1,281) (48) - (1,329)
Intangible assets (229) (74) 9 - (294)
Trade and other receivables (266) (269) (316) - (851)
Financial assets at fair value through profit and loss (49) (53) 7 - (95)
Borrowings (25) (43) 7 - (61)
Other (2) (21) 20 - (3)
Deferred tax liabilities (1,281) (6,218) 242 - (7,257)
(1) Includes a loss of $ 103 million corresponding to discontinued operations .
(2) Includes a gain of $ 17 million corresponding to discontinued operations.
Net Deferred tax assets and liabilities12.31.2017 12.31.2016
Deferred tax asset 1,306 1,232
Deferred tax liabilities (1,526) (3,796)
Deferred tax liabilities, net (220) (2,564)
Income tax charge12.31.2017 12.31.2016 12.31.2015
Current tax 1,385 1,021 370
Deferred tax (2,524) (2,057) 163
Direct charges for income tax 79 - -
Difference in the estimate of previous fiscal year income tax and the income return (307) (5) -
Other comprehensive (loss) income - (15) -
Minimum notional tax - (145) 54
Total income tax expense (gain) (1,367) (1,201) 587
Reconciliation of income tax expenseNote 12.31.2017 12.31.2016 12.31.2015
Profit (loss) before tax 4,209 (1,525) 4,436
Current tax rate 35% 35% 35%
Result at the tax rate 1,473 (534) 1,553
Share of profit of joint ventures and associates (208) (39) -
Non-taxable results (1,347) (731) (1,045)
Non-deductible cost 194 - -
Non-deductible provisions 121 123 12
Other 9 131 (2)
Effect of tax rate change in deferred tax 48 (449) - -
Minimum notional income tax credit - (145) 54
Difference in the estimate of previous fiscal year income tax and the income tax statement (447) 13 45
Deferred tax not previously recognized (714) 17 (282)
Deferred tax assets not recognized 1 (36) 252
Total income tax expense (gain) (1,367) (1,201) 587
Tax loss caryforwardsFiscal year generation Fiscal year prescription 12.31.2017 12.31.2016
2012 2017 - 167
2013 2018 1 115
2014 2019 1 153
2015 2020 10 252
2016 2021 684 942
2017 2022 940 -
1,636 1,629
Unrecognized deferred assets - (687)
Recognized Tax loss-carryforwards 1,636 942

15. TRADE AND OTHER RECEIVABL68

15. TRADE AND OTHER RECEIVABLES (Tables)12 Months Ended
Dec. 31, 2017
Trade And Other Receivables Tables
Trade and other receivablesNote 12.31.2017 12.31.2016
Non Current
CAMMESA Receivable (1) 2,868 2,286
Other 6 6
Trade receivables, net 2,874 2,292
Tax credits 163 533
Allowance for tax credits (14) (105)
Related parties 36 794 740
Prepaid expenses 20 26
Financial credit 37 44
Guarantee deposits 92 80
Contractual receivables in Ecuador 42 998 850
Receivable for sale of property, plant and equipment 67 -
Other 11 9
Other receivables, net 2,168 2,177
Total non current 5,042 4,469
Current
Receivables from energy distribution sales 6,115 4,138
Receivables from MAT 436 311
CAMMESA 2,887 1,501
CAMMESA Receivable (1) 421 519
Receivables from oil and gas sales 769 1,038
Receivables from refinery and distribution sales 958 949
Receivables from petrochemistry sales 924 744
Related parties 36 170 108
Other 136 25
Allowance for doubtful accounts (557) (429)
Trade receivables, net 12,259 8,904
Note 12.31.2017 12.31.2016
Tax credits 1,290 415
Advances to suppliers 11 24
Advances to employees 25 17
Related parties 36 215 98
Prepaid expenses 69 121
Receivables for non-electrical activities 218 143
Financial credit 83 126
Receivable for the sale of interests in subsidiaries and financial instruments - 1,263
Guarantee deposits 1,053 941
Natural Gas Surplus Injection Promotion Program (2) 2,592 1,582
Insurance to recover 202 -
Expenses to be recovered 371 314
Receivables from arbitral proceedings 388 -
Other 528 343
Allowance for other receivables (159) (147)
Other receivables, net 6,886 5,240
Total current 19,145 14,144 (1) As of December 31, 2017 and 2016, the Company and its generation subsidiaries
hold receivables from CAMMESA which, at nominal value and together with accrued interest, amount to a total $ 4,508 million
and $ 3,798 million, with an estimated recoverable value of $ 3,289 million and $ 2,805 million, respectively.
These receivables are made up as follows:
a. LVFVDs pursuant to SE Resolution No. 406/2003 for the 2004-2006 period.
They have been assigned to FONINVEMEM in the amount of $ 68 million and $ 74 million including interest, and their estimated recoverable
value amounts to $ 66 million and $ 71 million, respectively.
b. LVFVDs pursuant to SE Resolution No. 406/2003 for the 2008-2013 period
and the Trust under SE Resolution No. 95/2013 for the 2013-2016 period in the amount of $ 4,028 million and $ 3,232 million including
interest, which estimated recoverable value amounts to $ 2,827 million and $ 2,242 million, respectively. As of December 31, 2017
and 2016, $ 1,445 and $ 1,159 million, including interest, have been allocated to the “2014 Agreement for the Increase
of Thermal Generation Availability”, which estimated recoverable value amounts to $ 1,445 million and $ 1,050 million,
respectively.
c. LVFVDs for Maintenance Remuneration in the amount of $ 396 million
and $ 492 million, respectively, to finance the overhauls previously authorized by the SE. They are valued at their nominal
value plus accrued interest and, if applicable, they are netted from partial advances received under CAMMESA financing.
(2) As of December 31, corresponds to balances pending collection for
compensations under the IR and IE Programs for the April 2016-December 2017 period.
Aging analysis of trade receivables12.31.2017 12.31.2016
Less than three months 878 2,432
Three to six months 450 135
Six to nine months 22 37
From nine to twelve months 301 161
Up to twelve months 2 1
Total expired trade receivables 1,653 2,766
Allowance for the impairment of trade receivables12.31.2017 12.31.2016
At the beginning 429 88
Allowance for impairment 289 252
Decreases (45) (30)
Reversal of unused amounts (1) (23)
Reclassification to assets held for sale (115) -
Increases for purchases of subsidiaries - 142
At the end of the year 557 429
Allowance for the impairment of other receivables12.31.2017 12.31.2016
At the beginning 252 314
Allowance for impairment 33 49
Decreases (15) (9)
Decreases for deconsolidation - (3)
Reversal of unused amounts (97) (180)
Increase for subsidiaries acquisition - 81
At the end of the year 173 252

16. INVENTORIES (Tables)

16. INVENTORIES (Tables)12 Months Ended
Dec. 31, 2017
Inventories Tables
Inventories12.31.2017 12.31.2016
Materials and spare parts 1,514 1,336
Advances to suppliers 143 103
In process and finished products 640 1,496
Stock crude oil 29 425
Total 2,326 3,360

17. CASH AND CASH EQUIVALENTS (

17. CASH AND CASH EQUIVALENTS (Tables)12 Months Ended
Dec. 31, 2017
Cash And Cash Equivalents Tables
Cash and cash equivalents12.31.2017 12.31.2016
Cash 30 16
Banks 327 1,308
Investment funds - 61
Time deposits 442 36
Total 799 1,421

19. TRADE AND OTHER PAYABLES (T

19. TRADE AND OTHER PAYABLES (Tables)12 Months Ended
Dec. 31, 2017
Trade And Other Payables Tables
Trade and other payablesNon Current 12.31.2017 12.31.2016
Customer contributions 80 98
Funding contributions for substations 60 52
Customer guarantees 101 83
Trade payables 241 233
ENRE Penalties and discounts 3,886 3,477
Loans (mutuums) with CAMMESA 1,885 1,347
Compensation agreements 124 -
Liability with FOTAE 190 173
Payment agreement with ENRE 73 106
Other 5 -
Other payables 6,163 5,103
Total non current 6,404 5,336
Current Note 12.31.2017 12.31.2016
Suppliers 8,687 5,705
CAMMESA
7,595 5,470
Customer contributions 19 46
Discounts to customers 37 37
Funding contributions substations 8 22
Customer
advances 205 384
Customer guarantees 1 15
Related parties 36 80 181
Other 12 6
Trade payables 16,644 11,866
ENRE Penalties and discounts 288 56
Related parties 36 12 14
Advances for works to be executed 14 14
Compensation agreements 562 708
Payment agreements with ENRE 63 60
Other creditors 205 55
Other 264 94
Other payables 1,408 1,001
Total current 18,052 12,867

20. BORROWINGS (Tables)

20. BORROWINGS (Tables)12 Months Ended
Dec. 31, 2017
Borrowings Tables
BorrowingsNon Current Note 12.31.2017 12.31.2016
Financial borrowings 5,950 691
Corporate bonds 27,764 12,158
CAMMESA financing 3,398 2,421
Related parties 36 14 16
37,126 15,286
Current
Bank overdrafts - 846
Financial borrowings 5,097 7,539
Corporate bonds 739 2,246
CAMMESA financing - 34
Related parties 36 4 21
5,840 10,686
Borrowings maturity and exposure to interest ratesFixed rate 12.31.2017 12.31.2016
Less than one year 4,667 5,335
One to two years 550 536
Two to five years 7,509 580
Up to five years 23,313 10,583
36,039 17,034
Floating rates
Less than one year 594 4,918
One to two years 610 207
Two to five years 2,561 3,162
Up to five years 1,946 -
5,711 8,287
Non interest accrues
Less than one year 579 433
One to two years - (5)
Two to five years 530 223
Up to five years 107 -
1,216 651
Changes in borrowings12.31.2017 12.31.2016
At the beginning 25,972 7,993
Proceeds from borrowings 26,892 18,367
Payment of borrowings (16,150) (6,813)
Accrued interest 3,252 2,715
Payment of borrowings' interests (2,469) (1,519)
Net foreign currency exchange difference 5,150 1,761
Increase for subsidiaries acquisition - 7,434
Costs capitalized in property, plant and equipment 329 244
Decrease through shares of subsidiaries (1) - (1,179)
Decrease through offsetting with other credits (2) - (1,951)
Decrease through offsetting with trade receivables (4) (242)
Repurchase and redemption of corporate bonds (28) (893)
Other financial results 22 55
At the end of the year 42,966 25,972
(1) Corresponding to US$ 77.4 million related to EMES financing.
(2) Corresponding to US$ 123 million (comprised of US$ 120 million of principal plus US$ 3 million of interests) related to YPF financing.
Borrowings compositionType of instrument Company Currency Residual value Interest Rate Expiration Book value as of 12.31.17
Corporate bonds:
2022 CB Edenor US$ 172 Fixed 10% 2022 3,321
Class 4 CB PAMPA US$ 34 Fixed 6% 10/30/2020 638
Class E CB PAMPA ARS 575 Variable Badlar 11/13/2020 590
Class A CB PAMPA ARS 282 Variable Badlar 10/5/2018 297
T Series CB PAMPA (1) US$ 500 Fixed 7% 7/21/2023 9,491
Class 1 CB PAMPA (2) US$ 750 Fixed 8% 1/24/2027 14,184
28,521
Regulatory:
CAMMESA 2014 Agreement PAMPA ARS 855 Variable CAMMESA (4) 1,572
CAMMESA Mapro PAMPA ARS 140 Variable CAMMESA (3) 193
CAMMESA Mapro CPB ARS 1,088 Variable CAMMESA (3) 1,633
3,398
Financial loans:
PAMPA U$S 352 Fixed Between 2,9% and 7,5% Feb-2018 to May-2021 6,628
PAMPA U$S 63 Variable 6% + Libor Sep-2018 to May-2024 1,164
PAMPA ARS 2,270 Fixed Between 22% y 22,25% Aug-2018 to Oct-2019 2,314
Edenor U$S 50 Fixed Libor + 4,27% 10/11/2020 941
11,047
42,966
Type of instrument Company Currency Residual value Amount repurchased Interest Rate Expiration Book value as of 12.31.16
Corporate bonds:
CB at Par EASA USD 4 2 Fixed 5% 12/16/2017 27
Discount CB EASA USD 130 130 Fixed 9% 12/16/2021 -
2022 CB Edenor USD 172 - Fixed 10% 10/25/2022 2,823
2017 CB Edenor USD 15 15 Fixed 11% 10/09/2017 -
Class 7 CB CTG ARS 173 - Variable Badlar + 3,5% 02/12/2018 179
Class 8 CB CTG USD 1 - Fixed 7% 08/12/2020 22
Class 3 CB CTLL ARS 51 - Variable Badlar + 5% 10/30/2017 53
Class 4 CB CTLL USD 30 - Fixed 6% 10/30/2020 543
Class C CB CTLL ARS 258 - Fixed/Vble. Badlar + 4,5% and 27,75% 05/06/2017 267
Class E CB CTLL ARS 575 - Variable Badlar 11/13/2020 589
Class A CB CTLL ARS 282 - Variable Badlar 10/05/2018 297
Class II CB PEPASA ARS 525 - Variable Badlar 06/06/2017 532
Class VII CB PEPASA ARS 310 - Variable Badlar + 5% 08/03/2017 322
Class VIII CB PEPASA ARS 403 - Variable Badlar + 4% 06/22/2017 402
STV 14 PEPASA ARS 296 - Variable Badlar + 5,9% 04/14/2017 311
T Series CB PAMPA (1) USD 500 - Fixed 7% 07/21/2023 8,074
14,441
Type of instrument Company Currency Residual value Amount repurchased Interest Rate Expiration Book value as of 12.31.16
Regulatory:
CAMMESA 2014 Agreement CTLL ARS 736 - Variable CAMMESA (4) 1,154
CAMMESA Mapro CTLL ARS 337 - Variable CAMMESA (3) 102
CAMMESA Mapro CPB ARS 1,211 - Variable CAMMESA (3) 1,199
2,455
Syndicated Lons:
PAMPA ARS 993 - Fixed 28% 07/26/2017 999
PAMPA ARS 963 - Variable Badcor + 3% 07/26/2017 970
PAMPA USD 141 - Variable Libor + 7% 07/26/2017 2,236
PAMPA ARS 142 - Fixed 30% 02/26/2019 142
4,347
Financial loans:
PEPASA USD 153 - Fixed Between 5% and 8% Aug-2017 to Feb-2018 2,436
PAMPA USD 25 - Fixed Between 2,9% and 7,5% Apr-2017 to Dec-2017 398
CTLL USD 15 - Variable Libor + 4,5% 09/26/2018 239
CTLL USD 19 - Fixed 8% 06/30/2018 305
CTLL ARS 500 - Fixed 20% 11/11/2017 505
3,883
Adelantos en cuenta corriente:
PAMPA ARS - - 846
25,972
(1) On July 14, 2016, Petrobras issued the Series T Notes, for a total amount of US $ 500 million, part of which was used to cancel the Series S in its entirety, thus fulfilling the previous condition for the closing of the acquisition of PPSL.
(2) On January 24, 2017, the Company issued Class 1 Corporate Bonds for a face value of U$S 750 million with an issuance price of 99.136%. Funds derived from the issuance of these CBs will be destined to investing in physical assets located in Argentina; financing working capital in Argentina; refinancing liabilities and/or making capital contributions in controlled companies or affiliates to use funds for the above-mentioned purposes.
(3) Corresponds to the mutual contracts entered into with CAMMESA to finance major maintenance works related to the different generation units approved by the SE. The financing will be amortized in 36 monthly and consecutive installments as from the completion of the works, this term could be extended by 12 months. Maintenance Remuneration will be used to cancel the financing granted. As a result of the entry into force of the new remuneration scheme (Resolution SE No. 19-E /17), the Maintenance Remuneration was discontinued and it was defined that the balance of the financing will be repayable through the discount of US $ 1 / MWh for the energy generated until its total cancellation.
(4) On December 1, 2014, CTLL and CAMMESA signed a Financing and Assignment of Loan Agreement in order to finance the works of the 2014 Agreement Project (see Note 47.1). The financing will be canceled, at Pampa option, through a payment in cash or through offsetting with CAMMESA receivables of the Company and other subsidiaries, 36 months as from the month following the commercial commissioning of the last generating unit making up the Projects.
Financing on arbitration proceedingsLoan principal balance 244
Interest and taxes 80
Total TGS loan 324
Rights over arbitration proceedings (109)
Gain from discharge / cancellation of TGS loan 215

21. DEFERRED REVENUE (Tables)

21. DEFERRED REVENUE (Tables)12 Months Ended
Dec. 31, 2017
Deferred Revenue Tables
Deferred revenue12.31.2017 12.31.2016
Non current
Customer contributions not subject to repayment 195 200
Total non current 195 200
Current
Customer contributions not subject to repayment 3 1
Total current 3 1

22. SALARIES AND SOCIAL SECUR74

22. SALARIES AND SOCIAL SECURITY PAYABLE (Tables)12 Months Ended
Dec. 31, 2017
Salaries And Social Security Payable Tables
Salaries and social security payable12.31.2017 12.31.2016
Non current
Seniority - based bonus 116 89
Early retirements payable 4 5
Total non current 120 94
Current
Salaries and social security contributions 579 419
Provision for vacations 671 617
Provision for gratifications and annual bonus for efficiency 899 705
Early retirements payable 5 4
Total current 2,154 1,745

23. INCOME TAX AND MINIMUM PR75

23. INCOME TAX AND MINIMUM PRESUME TAX LIABILITY (Tables)12 Months Ended
Dec. 31, 2017
Income Tax And Minimum Presume Tax Liability Tables
Income tax and minimum presume tax liability12.31.2017 12.31.2016
Non current
Income tax, net of withholdings and advances 848 837
Minimum notional income tax, net of withholdings and advances 15 97
Total non current 863 934
Current
Income tax, net of withholdings and advances 880 1,451
Minimum notional income tax, net of withholdings and advances 63 3
Total current 943 1,454

24. DEFINED BENEFITS PLANS (Tab

24. DEFINED BENEFITS PLANS (Tables)12 Months Ended
Dec. 31, 2017
Defined Benefits Plans Tables
Defined Benefit plan information12.31.2017
Present value of the obligation Fair value of plan assets Net liability at the end of the year
Liabilities at the beginning 1,188 (155) 1,033
Items classified in profit or loss (1)
Current services cost 58 - 58
Cost for interest 280 (23) 257
Cost for past service 28 - 28
Items classified in other comprehensive income
Actuarial losses (gains) (2) (21) 10 (11)
Exchange differences on translation 32 (16) 16
Benefit payments (105) 7 (98)
Contributions paid - (7) (7)
Reclassification to liabilities associated to assets classified as held for sale (268) 105 (163)
At the end 1,192 (79) 1,113
(1) Includes $ 25 million corresponding to discontinued operations .
(2) Includes $ 10 million corresponding to discontinued operations.
12.31.2016 12.31.2015
Present value of the obligation Present value of assets Net liability at the end of the year Present value of the obligation
Liabilities at the beginning 310 - 310 223
Items classified in profit or loss (1)
Current services cost 42 - 42 36
Cost for interest 208 (13) 195 86
Items classified in other comprehensive income
Actuarial losses (gains) (2) 73 5 78 1
Benefit payments (76) 2 (74) (36)
Contributions paid - (2) (2) -
Increase for subsidiaries acquisition 631 (147) 484 -
At the end 1,188 (155) 1,033 310
(1) Includes a loss of $ 5 million corresponding to discontinued operations for 2016 .
(2) Includes $ 9 million corresponding to discontinued operations for 2016.
Estimated expected benefits payments12.31.2017
Less than one year 121
One to two years 84
Two to three years 74
Three to four years 89
Four to five years 81
Six to ten years 377
Principal actuarial assumptions12.31.2017 12.31.2016 12.31.2015
Discount rate 4% 5% 6%
Salaries increase 1% 1% 2%
Average inflation 15% 21% 32%
Sensitivity analyses on actuarial assumptions variations12.31.2017
Discount rate: 4%
Obligation 1,298
Variation 106
10%
Discount rate: 6%
Obligation 1,102
Variation (90)
(8%)
Salaries increase: 0%
Obligation 1,126
Variation (66)
(6%)
Salaries increase: 2%
Obligation 1,269
Variation 77
7%

25. TAX LIABILITIES (Tables)

25. TAX LIABILITIES (Tables)12 Months Ended
Dec. 31, 2017
Tax Liabilities Tables
Tax liabilities12.31.2017 12.31.2016
Non current
Value added tax 219 287
Sales tax 17 9
Payment plans 130 10
Total non current 366 306
Current
Value added tax 526 840
Municipal, provincial and national contributions 398 377
Payment plans 61 3
Municipal taxes 69 58
Tax withholdings to be deposited 195 381
Stamp tax payable 10 10
Royalties 138 165
Extraordinary Canon 553 527
Sales tax - 14
Other 15 17
Total current 1,965 2,392

26. PROVISIONS (Tables)

26. PROVISIONS (Tables)12 Months Ended
Dec. 31, 2017
Provisions Tables
ProvisionsNote 12.31.2017 12.31.2016
Non Current
Provisions for contingencies 3,468 3,977
Asset retirement obligation 918 1,719
Environmental remediation 15 174
Onerous contract (Ship or pay) 42 - 366
Other provisions 34 31
4,435 6,267
Current
Provisions for contingencies 129 94
Asset retirement obligation 152 143
Environmental remediation 127 175
Onerous contract (Ship or pay) 42 389 394
798 806
Changes in provisions12.31.2017
For contingencies Asset retirement obligation For environmental remediation
At the beginning of the year 4,071 1,862 349
Increases 980 634 98
Reclassification (209) (16) 16
Decreases (881) (166) (135)
Reclassification to liabilities associated to assets classified as held for sale - (875) (184)
Reversal of unused amounts (364) (369) (2)
At the end of the year 3,597 1,070 142
12.31.2016
For contingencies Asset retirement obligation For environmental remediation
At the beginning of the year 335 49 -
Increases 472 629 210
Increases for purchases of subsidiaries 3,333 1,210 235
Decreases (69) (26) (96)
At the end of the year 4,071 1,862 349
12.31.2015
For contingencies Asset retirement obligation
At the beginning of the year 141 3
Increases 228 46
Decreases (34) -
At the end of the year 335 49

27. REVENUE (Tables)

27. REVENUE (Tables)12 Months Ended
Dec. 31, 2017
Revenue Tables
Revenue12.31.2017 12.31.2016 12.31.2015
Sales of energy to the Spot Market 5,546 2,411 1,050
Sales of energy by contract 3,965 2,187 1,357
Other sales 49 11 11
Generation subtotal 9,560 4,609 2,418
Energy sales 24,170 12,952 3,721
Right of use of poles 131 99 76
Connection and reconnection charges 38 19 5
Other sales - 9 -
Distribution subtotal 24,339 13,079 3,802
Oil, Gas and liquid sales 8,271 4,746 848
Other sales 560 117 -
Oil and gas subtotal 8,831 4,863 848
Administrative services sales 383 50 37
Other sales 5 2 1
Holding and others subtotal 388 52 38
Petrochemicals sales 7,229 2,507 -
Petrochemicals subtotal 7,229 2,507 -
Total revenue 50,347 25,110 7,106

28. COST OF SALES (Tables)

28. COST OF SALES (Tables)12 Months Ended
Dec. 31, 2017
Cost Of Sales Tables
Cost of sales12.31.2017 12.31.2016 12.31.2015
Inventories at the beginning of the year 3,360 225 136
Plus: Charges for the year
Incorporation of inventories for acquisition of companies - 3,072 -
Purchases of inventories, energy and gas 19,649 9,110 2,496
Salaries and social security charges 4,659 3,450 2,196
Benefits to personnel 164 77 36
Accrual of defined benefit plans 169 134 97
Fees and compensation for services 1,948 1,125 586
Property, plant and equipment depreciations 3,222 2,068 641
Intangible assets amortization 33 28 29
Transport of energy 79 11 16
Consumption of materials 645 390 297
Penalties (1) 269 2,377 260
Maintenance 422 366 128
Canons and Royalties 1,295 602 139
Environmental control 64 33 -
Rental and insurance 264 174 79
Surveillance and security 141 95 53
Taxes, rates and contributions 67 45 25
Communications 45 36 15
Water consumption 25 14 9
Other 233 81 25
Subtotal 33,393 23,288 7,127
Less: Inventories at the end of the year (2,326) (3,360) (225)
Total cost of sales 34,427 20,153 7,038
(1) Includes $ 414 million of recover by penalties (Note 2.3)

29. SELLING EXPENSES (Tables)

29. SELLING EXPENSES (Tables)12 Months Ended
Dec. 31, 2017
Selling Expenses Tables
Selling expenses12.31.2017 12.31.2016 12.31.2015
Salaries and social security charges 618 482 311
Accrual of defined benefit plans 14 13 12
Fees and compensation for services 593 496 333
Compensation agreements 132 157 74
Property, plant and equipment depreciations 56 50 35
Taxes, rates and contributions 696 343 95
Communications 177 129 59
Penalties 266 182 24
Doubtful accounts 254 235 27
Transport 85 29 -
Other 13 16 3
Total selling expenses 2,904 2,132 973

30. ADMINISTRATIVE EXPENSES (Ta

30. ADMINISTRATIVE EXPENSES (Tables)12 Months Ended
Dec. 31, 2017
Administrative Expenses Tables
Administrative expenses12.31.2017 12.31.2016 12.31.2015
Salaries
and social security charges 1,953 1,517 527
Benefits
to the personnel 140 53 16
Accrual of defined benefit
plans 135 85 13
Fees
and compensation for services 1,338 1,222 294
Compensation
agreements 468 236 101
Directors'
and Syndicates' fees 95 65 44
Property,
plant and equipment depreciations 110 55 15
Consumption
of materials 61 38 23
Maintenance 60 33 3
Transport
and per diem 44 25 6
Rental and insurance 138 115 77
Surveillance
and security 94 51 26
Taxes,
rates and contributions 102 37 45
Communications 48 30 9
Institutional advertising
and promotion 56 29 1
Other 63 37 21
Total
administrative expenses 4,905 3,628 1,221

31. EXPLORATION EXPENSES (Table

31. EXPLORATION EXPENSES (Tables)12 Months Ended
Dec. 31, 2017
Exploration Expenses Tables
Exploration expenses12.31.2017 12.31.2016 12.31.2015
Geological and geophysical expenses 17 18 -
Decrease in unproductive wells 27 76 3
Total exploration expenses 44 94 3

32. OTHER OPERATING INCOME AN84

32. OTHER OPERATING INCOME AND EXPENSES (Tables)12 Months Ended
Dec. 31, 2017
Other Operating Income And Expenses Tables
Other operating income and expensesOther operating income Note 12.31.2017 12.31.2016 12.31.2015
Recovery of expenses 1 48 7
Recovery of doubtful accounts 86 29 1
Surplus Gas Injection Compensation 2,340 2,037 547
Commissions on municipal tax collections 32 21 15
Services to third parties 190 109 54
Profit for property, plant and equipment sale 5 91 -
Dividends received 33 6 4
Recognition of income - provisional remedies Note MEyM No 2016-04484723 - 1,126 -
Income recognition on account of the RTI - SE Res. No. 32/15 - 419 5,025
Higher costs recognition - SE Res. No. 250/13 and subsequent Notes - 82 551
Onerous contract (Ship or pay) 42 - 150 -
Reversal of contingencies provision 521 5 -
Gain from cancellation of TGS Loan - - 215
Other 180 41 98
Total other operating income 3,388 4,164 6,517
Other operating expenses
Provision for contingencies (881) (455) (228)
Decrease in property, plant and equipment (15) (51) (6)
Allowance for uncollectible tax credits (14) (29) (95)
Net expense for technical functions - (18) (13)
Tax on bank transactions (817) (473) (176)
Other expenses FOCEDE - (15) (60)
Cost for services provided to third parties (39) (32) (52)
Compensation agreements (45) (109) (48)
Donations and contributions (38) (17) (7)
Institutional relationships (65) (44) (18)
Extraordinary Canon (314) (366) -
Contingent consideration 1.2.1 (171) - -
Onerous contract (Ship or Pay) (90) - -
Other (462) (267) (66)
Total other operating expenses (2,951) (1,876) (769)

33. FINANCIAL RESULTS (Tables)

33. FINANCIAL RESULTS (Tables)12 Months Ended
Dec. 31, 2017
Financial Results Tables
Financial resultsFinance income 12.31.2017 12.31.2016 12.31.2015
Commercial interest 986 677 239
Financial interest 334 67 61
Other interest 112 105 31
Total finance income 1,432 849 331
Finance expenses
Commercial interest (1,030) (1,021) (194)
Fiscal interest (260) (76) (75)
Financial interest (1) (3,714) (3,083) (937)
Other interest (5) (3) (2)
Taxes and bank commissions (78) (36) (33)
Other financial expenses (25) (58) (16)
Total financial expenses (5,112) (4,277) (1,257)
Other financial results
Foreign currency exchange difference, net (3,558) (1,099) (566)
Result from repurchase of Corporate Bonds - (4) 10
Changes in the fair value of financial instruments 1,471 1,120 2,271
Discounted value measurement (141) (65) 23
Asset retirement obligation (40) (32) (19)
Other financial results 2 - -
Total other financial results (2,266) (80) 1,719
Total financial results, net (5,946) (3,508) 793 (1)

34. EARNING (LOSS) PER SHARE (T

34. EARNING (LOSS) PER SHARE (Tables)12 Months Ended
Dec. 31, 2017
Earning Loss Per Share
Earnings (loss) per share12.31.2017 12.31.2016 12.31.2015
Earning (loss) for continuing operations attributable to the equity holders of the Company 4,623 (93) 3,065
Weighted average amount of outstanding shares 1,971 1,736 1,347
Basic and diluted earnings (loss) per share for continuing operations 2.3455 (0.0536) 2.2760
(Loss) Earning for discontinued operations attributable to the equity holders of the Company (17) 82 -
Weighted average amount of outstanding shares 1,971 1,736 1,347
Basic and diluted (loss) earnings per share for (0.0086) 0.0472 -
Earning (loss) attributable to the equity holders of the Company 4,606 (11) 3,065
Weighted average amount of outstanding shares 1,971 1,736 1,347
Basic and diluted earnings (loss) per share 2.3369 (0.0063) 2.2760

35. SEGMENT INFORMATION (Tables

35. SEGMENT INFORMATION (Tables)12 Months Ended
Dec. 31, 2017
Segment Information Tables
Operating segmentsConsolidated profit and loss information as of December 31, 2017 Generation Distribution Oil and gas Refining and Petrochemicals Holding and others Eliminations Consolidated
Revenue 9,560 24,339 8,831 - 7,229 388 - 50,347
Intersegment sales 37 - 1,810 - - 36 (1,883) -
Cost of sales (5,358) (17,667) (6,581) - (6,655) (3) 1,837 (34,427)
Gross profit (loss) 4,239 6,672 4,060 - 574 421 (46) 15,920
Selling expenses (94) (2,079) (455) - (290) - 14 (2,904)
Administrative expenses (357) (1,444) (975) - (74) (2,095) 40 (4,905)
Exploration expenses - - (44) - - - - (44)
Other operating income 420 97 2,522 - 64 289 (4) 3,388
Other operating expenses (149) (758) (776) - (571) (697) - (2,951)
Reversal of impairment of property, plant and equipment - 461 - - - - - 461
Reversal of impairment of intangible assets - 82 - - - - - 82
Share of profit (loss) from joint ventures (50) - - - - 1,114 - 1,064
Share of profit from associates - - 44 - - - - 44
Operating profit (loss) 4,009 3,031 4,376 - (297) (968) 4 10,155
Finance income 881 272 96 - 10 214 (41) 1,432
Finance expenses (932) (1,595) (245) - - (2,381) 41 (5,112)
Other financial results 55 (9) (193) - 11 (2,130) - (2,266)
Financial results, net 4 (1,332) (342) - 21 (4,297) - (5,946)
Profit (loss) before income tax 4,013 1,699 4,034 - (276) (5,265) 4 4,209
Income tax and minimum notional income tax 85 (417) (389) - - 2,088 - 1,367
Profit (loss) for the year from continuing operations 4,098 1,282 3,645 - (276) (3,177) 4 5,576
Profit (loss) for the year from discontinued operations - - 121 (43) - - 16 94
Profit (loss) for the year 4,098 1,282 3,766 (43) (276) (3,177) 20 5,670
Depreciation and amortization 845 443 1,956 - 117 60 - 3,421
Consolidated profit and loss information as of December 31, 2017 Generation Distribution Oil and gas Refining and Petrochemicals Holding and others Eliminations Consolidated
Total profit (loss) attributable to:
Owners of the Company 3,890 951 3,241 (43) (276) (3,177) 20 4,606
Non - controlling interest 208 331 525 - - - - 1,064
Consolidated statement of financial position as of December 31, 2017
Assets 22,833 26,149 22,116 5,887 3,161 29,449 (5,128) 104,467
Liabilities 7,635 24,460 10,446 3,599 2,406 40,948 (5,139) 84,355
Additional consolidated information as of December 31, 2017
Increases in property, plant and equipment 6,277 4,137 4,195 154 110 116 - 14,989
Consolidated profit and loss information as of December 31, 2016 Generation Distribution Oil and gas Refining and Petrochemicals Holding and others Eliminations Consolidated
Revenue 4,609 13,079 4,863 - 2,507 52 - 25,110
Intersegment sales 15 - 716 - - 28 (759) -
Cost of sales (2,726) (12,220) (3,737) - (2,207) (3) 740 (20,153)
Gross profit (loss) 1,898 859 1,842 - 300 77 (19) 4,957
Selling expenses (65) (1,618) (334) - (110) (5) - (2,132)
Administrative expenses (392) (1,171) (632) - (15) (1,446) 28 (3,628)
Exploration expenses - - (94) - - - - (94)
Other operating income 55 1,718 1,892 - - 560 (61) 4,164
Other operating expenses (104) (465) (826) - (263) (282) 64 (1,876)
Share of loss from joint ventures - - - - - 105 - 105
Share of profit (loss) from associates - - 11 (1) - (3) - 7
Income from the sale of subsidiaries and financial assets - - - - - 480 - 480
Operating profit (loss) 1,392 (677) 1,859 (1) (88) (514) 12 1,983
Finance income 600 206 103 - 2 105 (167) 849
Finance expenses (750) (1,645) (730) - - (1,320) 168 (4,277)
Other financial results 228 (360) 22 - (3) 35 (2) (80)
Financial results, net 78 (1,799) (605) - (1) (1,180) (1) (3,508)
Profit (loss) before income tax 1,470 (2,476) 1,254 (1) (89) (1,694) 11 (1,525)
Income tax and minimum notional income tax (317) 753 (305) - - 1,070 - 1,201
Profit (loss) for the year from continuing operations 1,153 (1,723) 949 (1) (89) (624) 11 (324)
Profit for the year from discontinued operations - - (74) 75 - - 71 72
Profit (loss) for the year 1,153 (1,723) 875 74 (89) (624) 82 (252)
Depreciation and amortization 378 364 1,398 - 35 26 - 2,201
Consolidated profit and loss information as of December 31, 2016 Generation Distribution Oil and gas Refining and Petrochemicals Holding and others Eliminations Consolidated
Total profit (loss) attributable to:
Owners of the Company 1,045 (1,147) 627 74 (89) (603) 82 (11)
Non - controlling interest 108 (576) 248 - - (21) - (241)
Consolidated statement of financial position as of December 31,2016
Assets 19,577 17,219 19,414 6,259 2,812 19,494 (7,498) 77,277
Liabilities 8,632 18,856 11,662 3,267 2,401 25,883 (7,498) 63,203
Additional consolidated information as of December 31, 2016
Increases in property, plant and equipment 2,378 2,703 3,051 165 58 85 - 8,440
Increases in intangible assets 108 - 994 224 - - - 1,326
Consolidated profit and loss information at December 31, 2015 Generation Distribution Oil and gas Holding Eliminations Consolidated
Revenue 2,418 3,802 848 38 - 7,106
Intersegment sales - - 96 16 (112) -
Cost of sales (1,282) (5,189) (660) (3) 96 (7,038)
Gross profit (loss) 1,136 (1,387) 284 51 (16) 68
Selling expenses (24) (833) (116) - - (973)
Administrative expenses (262) (697) (150) (128) 16 (1,221)
Exploration expenses - - (3) - - (3)
Other operating income 91 5,656 552 218 - 6,517
Other operating expenses (79) (599) (82) (9) - (769)
Reversal of impairment of property, plant and equipment 25 - - - - 25
Share of profit in joint ventures - - - 9 - 9
Share of loss in associates - - - (10) - (10)
Operating profit 887 2,140 485 131 - 3,643
Finance income 295 96 1 26 (87) 331
Finance expenses (358) (577) (389) (20) 87 (1,257)
Other financial results (82) (870) 419 2,252 - 1,719
Financial results, net (145) (1,351) 31 2,258 - 793
Profit before income tax 742 789 516 2,389 - 4,436
Income tax and minimum notional income tax (192) (176) (164) (55) - (587)
Profit for the year 550 613 352 2,334 - 3,849
Depreciation and amortization 149 295 276 - - 720
Consolidated profit and loss information at December 31, 2015 Generation Distribution Oil and gas Holding Eliminations Consolidated
Total profit attributable to:
Owners of the Company 497 59 175 2,334 - 3,065
Non - controlling interest 53 554 177 - - 784
Consolidated statement of financial position as of December 31, 2015
Assets 8,051 11,737 3,970 6,563 (1,171) 29,150
Liabilities 5,956 11,673 3,361 950 (1,171) 20,769
Additional consolidated information as of December 31, 2015
Increases of property, plant and equipment 1,516 2,518 2,214 - - 6,248

36. RELATED PARTIES_ TRANSACT88

36. RELATED PARTIES´ TRANSACTIONS (Tables)12 Months Ended
Dec. 31, 2017
Related Parties Transactions Tables
Sales of goods and services12.31.2017 12.31.2016 12.31.2015
Joint ventures:
Transener (1) 28 15 15
TGS (2) 527 254 -
Associates and other related parties:
CYCSA - 14 2
TGS (2) - - 40
Refinor (3) 126 45 -
Oldelval 4 1 -
685 329 57
(1) Corresponds to advisory services in technical assistance.
(2) Corresponds to advisory services in technical assistance and gas and refined products sales.
(3) Corresponds to oil sales.
Purchases of goods and services 12.31.2017 12.31.2016 12.31.2015
Joint ventures:
Transener (7) (10) (5)
TGS (1) (197) (132) -
SACME (47) (35) (27)
Associates and other related parties:
Origenes Vida (13) (6) -
TGS (1) - - (3)
Refinor (2) (393) (117) -
Oldelval (3) (74) (31) -
(731) (331) (35)
(1) Corresponds to natural gas transportation services.
(2) Corresponds to purchase of refined products.
(3) Corresponds to oil transportation services.
Fees for services12.31.2017 12.31.2016 12.31.2015
Associates and other related parties:
Salaverri, Dellatorre, Burgio & Wetzler (16) (23) (1)
(16) (23) (1)
Other operating income12.31.2017 12.31.2016 12.31.2015
Associates and other related parties:
TGS - - 215
CYCSA - - 6
OCP - 150 -
- 150 221
Other operating expenses 12.31.2017 12.31.2016 12.31.2015
Associates and other related parties:
OCP (1) (90) - -
Foundation (2) (35) (13) (3)
(125) (13) (3) (1)
Corresponds to onerous contract (Ship or Pay). (2)
Corresponds to donations.
Financial income12.31.2017 12.31.2016 12.31.2015
Joint ventures:
TGS 65 24 -
65 24 -
Financial expenses12.31.2017 12.31.2016 12.31.2015
Associates and other related parties:
TGS - - (12)
Orígenes Retiro (6) (7) -
Grupo EMES (1) - (417) -
(6) (424) (12)
(1) Note 20.
Corporate bonds transactionsPurchase of Corporate Bonds
12.31.2017 12.31.2016 12.31.2015
Associates and other related parties:
Orígenes Retiro - 666 -
- 666 - Sale of Corporate Bonds
12.31.2017 12.31.2016 12.31.2015
Associates and other related parties:
Orígenes Retiro - 590 -
- 590 -
Dividends received12.31.2017 12.31.2016 12.31.2015
Associates and other related parties:
CIESA - 4 -
Oldelval 7 - -
TJSM 8 3 -
TMB 10 3 -
25 10 -
Payment of dividendsAssociates and other related parties: 12.31.2017 12.31.2016 12.31.2015
EMESA (44) - -
APCO Oil (44) (45) -
Ultracore - (3) -
(88) (48) -
Balances with related partiesAs of December 31, 2017 Trade receivables Other receivables
Current Non Current Current
Joint ventures:
Transener 5 - -
TGS 129 789 75
Greenwind - - 127
SACME - 5 -
Associates and other related parties:
Ultracore - - 10
Refinor 10 - -
SACDE 25 - 2
Other 1 - 1
170 794 215
As of December 31, 2017 Trade payables Other payables Borrowings Provisions
Current Current Non Current Current Current
Joint ventures:
TGS 17 - - - -
SACME - 5 - - -
Associates and other related parties:
Orígenes Seguro de vida - - - 2 -
Orígenes Retiro - - 14 2 -
OCP - - - - 389
Refinor 53 - - - -
Oldelval 9 - - - -
Other - 7 - - -
80 12 14 4 389
As of December 31, 2016 Trade receivables Other receivables
Current Non Current Current
Joint ventures:
Transener 10 - -
TGS 90 733 88
SACME - 7 1
Associates and other related parties:
Ultracore - - 4
Refinor 6 - 4
Oldelval 1 - -
Other 1 - 1
108 740 98
As of December 31, 2016 Trade payables Other payables Borrowings Provisions
Current Current Non Current Current Non Current Current
Joint ventures:
Transener 9 - - - - -
TGS 116 - - - - -
SACME - 5 - - - -
Associates and other related parties:
Orígenes Retiro - - 16 21 - -
OCP - - - - 366 394
UTE Apache - 5 - - - -
Refinor 32 - - - - -
Oldelval 22 - - - - -
Other 2 4 - - - -
181 14 16 21 366 394

37. FINANCIAL INSTRUMENTS (Tabl

37. FINANCIAL INSTRUMENTS (Tables)12 Months Ended
Dec. 31, 2017
Financial Instruments Tables
Financial instrumentsAs of December 31, 2017 Financial assets/liabilities at amortized cost Financial assets/liabilities at fair value through profit and loss Subtotal financial assets/liabilities Non financial assets/liabilities Total
Assets
Trade receivables and other receivables 21,512 590 22,102 2,085 24,187
Financial assets at amortized cost
Government securities 11 - 11 - 11
Trusts 14 - 14 - 14
Financial assets at fair value through profit
Government securities - 5,024 5,024 - 5,024
Shares - 150 150 - 150
Investment funds - 9,589 9,589 - 9,589
Derivative financial instruments - 4 4 - 4
Cash and cash equivalents 799 - 799 - 799
Total 22,336 15,357 37,693 2,085 39,778
Liabilities
Trade and other liabilities 18,142 1,885 20,027 4,429 24,456
Borrowings 42,966 - 42,966 - 42,966
Derivative financial instruments - 82 82 - 82
Total 61,108 1,967 63,075 4,429 67,504
As of December 31, 2016 Financial assets/liabilities at amortized cost Financial assets/liabilities at fair value through profit and loss Subtotal financial assets/liabilities Non financial assets/liabilities Total
Assets
Trade receivables and other receivables 17,553 29 17,582 1,031 18,613
Financial assets at amortized cost
Government securities 46 - 46 - 46
Corporate securities 1 - 1 - 1
Trusts 38 - 38 - 38
Financial assets at fair value through profit and loss
Government securities - 1,576 1,576 - 1,576
Corporate securities - 12 12 - 12
Shares - 150 150 - 150
Investment funds - 3,189 3,189 - 3,189
Derivative financial instruments - 13 13 - 13
Cash and cash equivalents 1,360 61 1,421 - 1,421
Total 18,998 5,030 24,028 1,031 25,059
Liabilities
Trade and other liabilities 13,016 1,347 14,363 3,840 18,203
Borrowings 25,972 - 25,972 - 25,972
Total 38,988 1,347 40,335 3,840 44,175
Income, expenses, gains and losses from financial instrumentsAs of December 31, 2017 Financial assets/liabilities at amortized cost Financial assets/liabilities at fair value through profit and loss Subtotal financial assets/liabilities Non Financial assets/ liabilities Total
Interest income 1,277 155 1,432 - 1,432
Interest expense (4,767) - (4,767) (242) (5,009)
Foreign exchange, net (4,353) 1,115 (3,238) (320) (3,558)
Results from financial instruments at fair value - 1,471 1,471 - 1,471
Other financial results (245) - (245) (37) (282)
Total (8,088) 2,741 (5,347) (599) (5,946)
As of December 31, 2016 Financial assets/liabilities at amortized cost Financial assets/liabilities at fair value through profit and loss Subtotal financial assets/liabilities Non Financial assets/ liabilities Total
Interest income 845 4 849 - 849
Interest expense (3,700) (417) (4,117) (66) (4,183)
Foreign exchange, net (1,369) 250 (1,119) 20 (1,099)
Results from financial instruments at fair value - 1,120 1,120 - 1,120
Other financial results (166) 3 (163) (32) (195)
Total (4,390) 960 (3,430) (78) (3,508)
As of December 31, 2015 Financial assets/liabilities at amortized cost Financial assets/liabilities at fair value through profit and loss Subtotal financial assets/liabilities Non Financial assets/ liabilities Total
Interest income 327 4 331 - 331
Interest expense (1,137) - (1,137) (71) (1,208)
Foreign exchange, net (1,027) 461 (566) - (566)
Results from financial instruments at fair value - 2,271 2,271 - 2,271
Other financial results (17) 1 (16) (19) (35)
Total (1,854) 2,737 883 (90) 793

39. LEASES (Tables)

39. LEASES (Tables)12 Months Ended
Dec. 31, 2017
Leases Tables
Future minimum payments of operating assignments of use12.31.2017 12.31.2016 12.31.2015
2016 - - 48
2017 - 41 20
2018 84 8 6
2019 84 9 4
2020 35 6 -
2021 3 2 -
Total future minimum lease payments 206 66 78
Future minimum collections from operating assignments of use12.31.2017 12.31.2016 12.31.2015
2016 - - 91
2017 137 109 85
2018 137 109 -
2019 131 103 -
Total future minimum lease collections 405 321 176

40. OPERATIONS IN HYDROCARBON91

40. OPERATIONS IN HYDROCARBON CONSORTIUMS (Tables)12 Months Ended
Dec. 31, 2017
Operations In Hydrocarbon Consortiums Tables
Participation in exploration and production of oil and gas areas