Central Puerto SA (CEPU) Risk Analysis

In recent years, the Argentine Government has substantially increased public expenditures. In 2017, 2018, and 2019, national public sector expenditures increased by 21.8%, 22.4% and 37.2% year over year, respectively (measured in nominal Argentine pesos) and the government reported a primary fiscal deficit of 3.8%, 2.4% and 3.8% of GDP, according to the Argentine Ministry of Treasury. In 2020, national public sector expenditures increased by 48.9%, and the government reported a primary fiscal deficit of 6.5%% of GDP. During recent years, the Argentine Government has resorted to the Central Bank and to the ANSES to alleviate part of its funding requirements. Moreover, the primary fiscal balance could be negatively affected in the future if public expenditures continue to increase at a rate higher than revenues due to, for example, social security benefits, financial assistance to provinces with financial problems and increased spending on public works and subsidies, including subsidies to the energy and transportation sectors. A further deterioration in fiscal accounts could negatively affect the government's ability to access the long-term financial markets and could in turn result in more limited access to such markets by Argentine companies. Additionally, a further deterioration in fiscal accounts could affect the Argentine Government's ability to continue subsidies for consumers in the energy sector.

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

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

The HPDA Concession Agreement executed between us and the Argentine Government, pursuant to which we are permitted to operate our Piedra del Águila plant, expires on December 29, 2023 and does not provide for an automatic renewal. This plant has a total installed capacity of 1,440 MW, and it represented approximately 24% of our total electric energy generation, and 12.34% of our total revenues in 2020 (or 17.72% excluding income related to the self-supplied fuel under Res. 70/18). We currently intend to renew the HPDA Concession Agreement prior to its expiration. If the HPDA Concession Agreement expires without renewal, we will be required to revert the assets to the Argentine Government. The HPDA Concession Agreement also contains various requirements related to the operation of the hydroelectric plant and compliance with laws and regulations. The non-performance of the HPDA Concession Agreement could give rise to certain penalties and even the termination of the concession. If the concession were terminated, it would be granted to a new company organized by the Argentine Government and a tender offer would be carried out for selling the new company's shares of stock. The proceeds to be received by us in such tender offer would be calculated based on a formula in which the proceeds of the tender decrease as the expiration of the concession term comes closer. Any non-renewal or early termination of the HPDA Concession Agreement would materially and adversely affect our financial condition and results of operation.

A non-U.S. corporation will be considered a passive foreign investment company, which we refer to as a PFIC, for U.S. federal income tax purposes in any taxable year in which 75% or more of its gross income is "passive income" or 50% or more of its assets (determined based on a quarterly average) constitute "passive assets." The determination as to whether a non-U.S. corporation is a PFIC is based upon the application of complex U.S. federal income tax rules (which are subject to differing interpretations), the composition of income and assets of the non-U.S. corporation from time to time and, in certain cases, the nature of the activities performed by its officers and employees. Based upon our current and projected income, assets and activities, we do not expect to be considered a PFIC for our current taxable year or for future taxable years. However, because the determination of whether we are a PFIC will be based upon the composition of our income, assets and the nature of our business, as well as the income, assets and business of entities in which we hold at least a 25% interest, from time to time, and because there are uncertainties in the application of the relevant rules, there can be no assurance that we will not be considered a PFIC for any taxable year. If we are a PFIC for any taxable year during which a U.S. Holder, as defined in "Item 10.E. Taxation-Certain United States Federal Income Tax Considerations," holds the ADSs or common shares, the U.S. Holder might be subject to increased U.S. federal income tax liability and to additional reporting obligations. See "Item 10.E. Taxation-Certain United States Federal Income Tax Considerations-Passive Foreign Investment Company." U.S. Holders are encouraged to consult their own tax advisors regarding the applicability of the PFIC rules to their purchase, ownership and disposition of the ADSs or common shares.

With regards to our renewable energy projects, following Rounds 1 and 1.5 of the RenovAR Program, the former Ministry of Energy and Mining pursuant to Resolution No. 275/17, launched Round 2 of the program on August 17, 2017 and granted awards in the amount of 2,043 MW of renewable power capacity. We submitted bids for Round 2 of the RenovAR Program and were awarded a wind energy project called, "La Genoveva I," which allowed us to add an additional capacity of 88.20 MW to our portfolio. The original commitment for the COD for this plant was scheduled for May 2020, which was delayed due to the COVID-19 crisis. The regulatory authority granted various extensions regarding the date of commercial opeartions date of projects affected by the COVID-19 crisis (including the La Genoveva I project). On November 21, 2020, La Genoveva I project obtained the commercial authorization for the total capacity of the wind farm. For further information see "Item 3.D Risk Factors-Risk Relating to Our Business-The novel coronavirus could have an adverse effect on our business operations and financial conditions". Furthermore, the Secretariat of Electric Energy, pursuant to Resolution SEE No. 287-E/17, called for proposals for supply of electric power to be generated through existing units, the conversion of open combined cycle units into closed combined cycle units or the installation of co-generation units. On September 25, 2017, we were awarded the two co-generation projects. Terminal 6 San Lorenzo and Luján de Cuyo projects have the following two sources of income: (i) electric power sales to CAMMESA through PPAs with a 15-year term which are priced in U.S. dollars; and (ii) steam sales pursuant to separate steam supply agreements with T6 Industrial S.A. and YPF, respectively, which are also priced in U.S. dollars. Lujan de Cuyo project started operations in October 2019. The COD of the Terminal 6 San Lorenzo project as closed combined cycle was originally scheduled for May 22, 2020. On September 2, 2019, pursuant to Resolution SRRYME 25/2019, the generation companies that had projects under construction under Resolution SEE No. 287-E/17 were invited to confirm their expected COD, which became the New Committed COD (in Spanish, Nueva Fecha de Habilitación Comercial Comprometida or NFHCC). If a generator decided to inform a New Committed COD, it would not have been subject to penalties under the PPA contracts entered into with CAMMESA, unless the actual COD exceeded the New Committed COD. Accordingly, on October 1, 2019, we informed CAMMESA that our New Committed COD was September 1, 2020 for Terminal 6-San Lorenzo and on December 18, 2019, CAMMESA and the Company entered into an amendment to the PPA. However, due to the outbreak of COVID-19, the COD of this plant as closed combined cycle may be further delayed. Accordingly, we sent a notice to CAMMESA informing about this situation to avoid potential penalties. The Company has requested, both CAMMESA and the Secretariat of Energy, the extension of the new commercial authorization of Terminal 6 - San Lorenzo until July 30, 2021. For further information see "Item 3.D Risk Factors-Risk Relating to Our Business-The novel coronavirus could have an adverse effect on our business operations and financial conditions". With regards to projects currently under development or new potential projects, several factors may affect, delay or cancel the completion of such projects currently under development or new projects: a) sustained or prolonged COVID-19 outbreak, a resurgence or the emergence of a new strain of coronavirus for which current vaccines may be less effective and their respective effects, b) the economic recession in Argentina, c) the decrease in demand of electric energy, d) the lack of available financing, and e) the reduction in the prices of electric energy for power units under Energía Base beginning in February 2020 (Res. 31/20), among others. Regarding our projects currently under development, in June 2019, Central Puerto was awarded the acquisition of the Brigadier Lopez Power plant from IAESA (formerly ENARSA), pursuant to the National and International Public Tender No. CTBL 1/2018. The Company purchased the Brigadier López Power Plant and assumed certain assets and liabilities relating to such plant. In 2010, ENARSA began the construction of the plant and in 2012 reached the Commercial Operation Date (COD) of the open cycle Gas Turbine with a capacity of 280.50 MW, completing the first stage of the project. In accordance to the Public Tender No. CTBL 1/2018, Central Puerto acquired the plant with the objective of installing the existing steam turbine, which will add a capacity of 140 MW in a combined cycle configuration, reaching a total capacity of 420 MW. Such expansion does not have a committed date to be completed. As of the date of this annual report, due to the factors mentioned above, the plant's expansion has not begun yet. Furthermore, in August 2018, Central Puerto purchased the solar project El Puesto, located in the Province of Catamarca. This solar energy project is authorized to sell up to 12 MW of power to private purchasers under MATER. The original committed COD for this project was August 2020. According to the provisions of Resolution No. 281-E/17, which regulates the MATER projects, Central Puerto has provided CAMMESA with a first demand guarantee of US$250,000 per MW. The committed COD may be extended for a period of up to one hundred eighty (180) days by CAMMESA, if the following conditions are met: a) the extension is requested at least thirty (30) days before the expiration of the original term and it is proven that one hundred and eighty (180) days before said expiration the project reached at least a progress in the construction of sixty percent (60%), or b) regardless of the progress achieved in the construction, the extension is requested before the expiration of the term and, together with the request, the amount of pesos equivalent to one thousand five hundred US dollars per megawatt for every thirty (30) days of requested extension is paid to CAMMESA. The request and payment may be made every thirty (30) days and for each thirty (30) days extension requested, for a maximum of one hundred eighty (180) days of extension;c) in the cases contemplated in a) and b) above, with the first request for an extension, the first demand guarantee is increased by US$62,500 per megawatt. Before the expiration of the extension of up to one hundred and eighty (180) days previously provided, the project holders may request CAMMESA for an additional extension, for a maximum period of three hundred sixty (360) days, regardless of the progress in the construction achieved. Along with the request, they must pay CAMMESA the amount of pesos equivalent to four thousand five hundred United States dollars (US$ 4,500) per megawatt for each thirty (30) days of extension requested. The request and payment may be made every thirty (30) days and for the period of extension requested, for a maximum of three hundred sixty (360) days of extension. If Central Puerto fails to timely achieve the committed COD, including the extensions that Central Puerto may have requested, the Company may be subject to penalties.However, as of the date of this annual report, due to the factors mentioned above, the construction has not begun. In this regard, the Association of Electric Energy Generators of the Republic of Argentina (Asociación de Generdores de Energía Eléctrica de la República Argentina, AGEERA), and the chamber that groups all the electric power generators of the country, and Wind Chamber of Argentina (Cámara Eólica Argentina), a chamber that groups wind power generators, from which, in both cases, Central Puerto is part of, have formally informed CAMMESA of the consequences that the Quarantine and the rest of the measures to contain the COVID-19 pandemic crisis, have and may potentially have on the projects under construction and requested that such circumstances should be taken into account in terms of the schedule of each projects, in order to avoid penalties due to the extraordinary circumstances. We cannot assure that such penalties could be effectively avoided. Delays in construction or commencement of operations of expanded capacity in our existing power plants or our new power plants could lead to an increase in our financial needs and also cause our financial returns on new investments to be lower than expected, which could materially adversely affect our financial condition and results of operations. Furthermore, delays in the commencement of operation of our three gas turbines has negatively affected its estimated recoverability. See "Item 5.A. Operating Results-Critical Accounting Policies-Impairment of Property, Plant and Equipment". Factors that may impact our ability to commence operations at our existing power plants, expand their power capacity or build new power plants include: (i) the failure of contractors to complete or commission the facilities or auxiliary facilities by the agreed-upon date or within budget; (ii) the unexpected delays of third parties such as gas or electric power distributors in providing or agreeing to project milestones in the construction or development of necessary infrastructure linked to our generation business; (iii) the delays or failure by our turbine suppliers in providing fully operational turbines in a timely manner; (iv) difficulty or delays in obtaining the necessary financing in terms satisfactory to us or at all; (v) delays in obtaining regulatory approvals, including environmental permits; (vi) court rulings against governmental approvals already granted, such as environmental permits; (vii) shortages or increases in the price of equipment reflected through change orders, materials or labor; (viii) opposition by local and/or international political, environmental and ethnic groups; (ix) strikes; (x) adverse changes in the political and regulatory environment in Argentina; (xi) unforeseen engineering, environmental and geological problems; (xii) adverse weather conditions, natural disasters, accidents or other unforeseen events, and (xiii) the Covid-19 pandemic crisis (See "Item 3.D. Risk Factors-Risks Relating to Argentina", in particular "-the Novel Coronavirus could have an adverse effect on our business operations and financial conditions", which describes the potential impact of COVID-19 over certain of our projects."). Any cost overruns could be material. In addition, any of these other factors may cause delays in the completion of expanded capacity at our existing power plants or the construction of our new power plant, which could have a material adverse effect on our business, financial condition and results of operations. These delays may also result in short-term sanctions by CAMMESA and, in extreme cases, sanctions for the duration of the contract.

Our current and future performance depends to a significant degree on our qualified senior management team, and on our ability to attract and retain qualified management. Our future operations could be harmed if any of our senior executives or other key personnel ceased working for us. Competition for senior management personnel is intense, and we may not be able to retain our personnel or attract additional qualified personnel. The loss of a member of senior management may require the remaining executive officers to divert immediate and substantial attention to fulfilling his or her duties and of seeking a replacement. Any inability to fill vacancies in our senior executive positions on a timely basis could harm our ability to implement our business strategy, which would harm our business and results of operations.

Argentina's financial recovery from the 2001-2002 crisis occurred in a context of price increases for Argentina's commodity exports, such as soy. High commodity prices contributed to the increase in Argentine exports and to high government tax on revenues from export withholdings. However, the reliance on the export of certain commodities has caused the Argentine economy to be more vulnerable to fluctuations in their prices. A continuing decline in the international prices for Argentina's main commodity exports or any future climatic conditions that may have an adverse effect in agriculture could have a negative impact on the levels of government revenues and the government's ability to service its sovereign debt, and could either generate recessionary or inflationary pressures, depending on the government's reaction. Either of these results would adversely impact Argentina's economy and, therefore, our financial condition.