Comgás Sustainability Report 2008

2008
comgs AnnuAl RepoRt

HigHligHts
inside comgs
Present in 67 cities in its concession area, which covers the So Paulo metropolit
an region, Campinas administrative region, and the Baixada Santista and Vale do
Paraba regions
Concession area accounts for about a quarter of Brazil's Gross Domestic Product
(GDP)
Strategic focus: growth in residential market, where only 11% of customers were
connected
In 2008, gas was distributed for the first time in the city of Santos and the re
sidential segment in Limeira. A pipeline network was laid in Tamba, where distrib
ution was previously based on compressed natural gas
Concession for distribution of piped natural gas through 2029, which may be exte
nded for a further 20 years
Acting in the residential, commercial, industrial, automotive, co-generation and
thermoelectric segments
gRAPHic HigHligHts
Volume distributed
(in millions of m3) 2006 2007 2008
Total volume 4,761 5,069 5,253
Industrial 3,747 3,960 3,855
Residential 114 121 136
Commercial 98 99 100
Vehicle 535 581 525
Thermoelectric 57 82 333
Co-generation 210 226 304
In 2008, 5.25 billion cubic meters (m3) of gas were distributed to more than 770
,000 users
81,400 new residential customers were gained in 2008
Second in the ranking of distributors that gained most customers during the 12-m
onth period worldwide
Record: 1,000 homes contracted in one month (August 2008)
Renovation of 35 km of the cast-iron pipeline network in 2008, ensuring safe ope
ration and helping reduce greenhouse gas emissions (GHGs)
Record: the Company surpassed the barrier of 1,000 industrial customers connecte
d in May 2008
Record: the Company surpassed the barrier of 700,000 residential customers conne
cted, in March 2008
Online risk management system ensures security and business agility
Meters per segment 2006 2007 2008
Residential* 508,116 562,175 620,191
Commerce 8,361 8,563 8,885
Industrial 965 989 1,004
Automotive 369 384 401
Co-generation 13 16 20
Thermoelectric 2 2 2
Total connections 517,826 572,129 630,503
Number of ARUs 609,036 683,692 765,103
(*) The 620,191 number of meters includes residential buildings with collective
meters. One single meter may supply several customers. Taking the number of ARUs
(autonomous residential units), the year 2008 ended with 765,103 homes connecte
d (81,400 new residential customers over the year).
Customer satisfaction index reaches 92% for the second consecutive year based on
surveys conducted by specialist consultants using ARSESP methodology
Inauguration of the restored historic Comgs headquarters in the Brs neighborhood,
and opening to the public of the permanent exhibition "Memorial for Gas"
Consolidated position throughout the production chain in the state of So Paulo, w
ith presence in various industrial sectors
Pioneer in the introduction of new forms of contracts with Petrobrs, in force fro
m 2008, ensuring continuous supply to major consumers
90% of customers telemeterized in 2008, reducing time and cost of servicing emer
gencies
Inclusion of safety as an item on the list of the Company's values: Safety - on
a daily basis, we guarantee the integrity of all persons and assets through atti
tudes and behaviors ensuring zero injuries
Recognition
Named "Best company in the Oil and Gas sector" by the magazine IstoDinheiro, for
the fourth consecutive year
For the third year, received the FGV Enterprise Excellence Award made by the mag
azine Conjuntura Economica (FGV), as best company in the sector

"Company that most respects the consumer" in the piped gas category from the mag
azine Consumidor Moderno (Modern Consumer), for the third consecutive year
Best performance in safety - AGA Safety Achievement Award prize, made by the Ame
rican Gas Association (AGA)
Reduced emissions from 1998 to 2008
More than 500 industrial customers started using natural gas in the period
4,270,466.3
6,141,386.1
215,980.2 32,397.04,319,605.9
SO2 (Kg)
SO2 = 100%
CO2 (ton) Total before conversion Reduction conversion CO2 = 30%
Reduction
MP (Kg)
MP = 95%
presentation
The Comgs 2008 Annual Report shows how the Company's key indicators developed in
the year, based on the criteria recommended by the Brazilian Association of List
ed Companies (Abrasca). For the fourth consecutive year, the report follows the
guidelines and methodology proposed by the Global Reporting Initiative (GRI), a
global multi stakeholder network consisting of representatives of companies from
several sectors, research institutions and NGOs. By broadening this approach to
include annual accountability, in line with major business trends, Comgs is adop
ting what it believes to be the best benchmarks for transparency, investor relat
ions and sustainability.
The main objective of the report is to inform stakeholders
-shareholders, employees, customers, suppliers of products and services, represe
ntatives of governments, communities and society in general - on improvements in
its economic, social and environmental indicators, which are gradually being al
igned to best corporate practices. Comgs believes that the publication reaches le
vel B under GRI guidelines, and that it now includes new features requested by A
BRASCA.
Through its practices and by developing this compilation of financial and sustai
nability indicators, Comgs hopes that its public effort will contribute to relati
ons that incorporate the new ways of doing business, which are so necessary to b
uild a fairer and sustainable society.
I hope you will all enjoy reading the report!
contents
10 message from the president
14 Profile
22 Business performance
28 governance and commitments
36 Risk management
48 Business strategy
52
56
57
62
63
64
65
65
67
72
73
82
84
86
Economic-financial performance
Relations with strategic segments
Internal public
Customers
Shareholders and investors
Suppliers and subcontractors
Community
Government and society
environment
Awards and recognition
gRi methodology and content
iBase indicators
corporate information
Financial statements
MessAge
fRoM the
PREsidEnt
IN 2008, COmGS INveSTed
R$ 403 mILLION TO expANd
ITS dISTRIBuTION NeTwORk
A PRoud yEAR FoR comgs
I take great satisfaction and pride in submitting the results for 2008, which ar
e the best ever in Comgs history as we approach the tenth anniversary of its priva
tization.
In the first nine months of 2008, the Company showed excellent performance, but
the last quarter was affected by falling industrial output due to the internatio
nal financial crisis, which eventually led to a direct impact for our business.
However, this does not detract from the splendor of a year marked by records. In
the annual balance sheet, among other achievements in the period, we must highl
ight the fact that more than 81,400 new residential consumers were connected to
the Comgs distribution network and we surpassed the mark of 1,000 industrial cust
omers.
There were so many achievements in a year that began with the challenge of meeti
ng demand for gas in Brazil, which was undersupplied at the time. Early in 2008,
the new supply contracts signed with Petrobrs in late 2007 came into force and e
nsured continuous supply to all segments, reinforcing Comgs' commitment to all ou
r customers.
Currently, Comgs supplies natural gas to almost all the major industries located
in its concession area that have high energy demands. We have a consolidated pos
ition in all sectors and industries of the productive chain in the state of So Pa
ulo. Our diversified customer portfolio is an important differential for the Com
pany, especially in times of global crisis, since the different sectors of econo
mic activity are affected at different levels.
In the residential market, which is the Company's strategic focus, Comgs moved fo
rward to formulate differentiated value and product proposals tailored to the sp
ecific needs of each type of consumer. The expansion of the network to connect n
ew customers and this new approach resulted in an increase of almost 13% in volu
me of gas distributed to residences. Furthermore, another important step we have
taken in this segment was our project to supply natural gas to homes in the So P
aulo metropolitan region and in So Jos dos Campos in the Vale do Paraba. Our previo
us focus for business growth was to connect more buildings or complexes containi
ng large numbers of consumers (condominiums). There is still much room to grow i
n this market, since until now Comgs has signed up only 11% of all residences in
its concession area.
Another achievement we are very proud of is the fact that in 2008, for the secon
d consecutive year, Comgs was able to report 92% in its customer satisfaction sur
vey. The number was reported by an independent survey using the methodology esta
blished by the State of So Paulo's Regulatory Agency for Sanitation and Energy (A
RSESP).
In 2008, Comgs invested R$ 403 million to expand its distribution network, partic
ularly in the residential market, and consolidated its focus on growth in this s
egment.
Highly volatile oil prices in 2008, combined with the depreciation of the Brazil
ian real against the dollar, led to a significant increase in the cost of gas. I
n order to restore part of its financial equilibrium, Comgs had to appeal to the
regulatory agency, which authorized an extraordinary tariff increase for the ind
ustrial, commercial, automotive and generating (thermoelectric) segments as of D
ecember 20. In the residential segment which accounts for more than 98% of Comgs
customers out tariffs remained unchanged.
Amid this scenario of uncertainty, in May of 2009, there will be the second tari
ff review under the concession contract signed with the government of the state
of So Paulo. It is to be expected that the Company will maintain current tariff c
onditions in order to continue investing in the growth of its distribution netwo
rk to take piped natural gas to more regions and consumers in its concession are
a. Despite the adverse situation in the year, which saw Comgs celebrate its tenth
The year of 2008 was marked by records -81,400 new residential consumers were co
nnecTed
anniversary under new management, I can say with all certainty that the Company
is a successful case of privatization and we are meeting all the targets set wit
h the regulatory agency (ARSESP). Moreover, we invested more than the amount agr
eed with the regulatory agency, expanded the network more than the parameter sta
ted in the concession contract and renovated the network sooner than stipulated.
These results were only possible on the basis of mutual respect between the par
ties and compliance with the existing legal and regulatory system. Keeping to pr
eviously agreed rules is a fundamental condition for continuing on this growth p
ath for the natural gas industry and building up its share of the energy matrix
in the state of So Paulo.
The obstinacy of security remains a major focus of Comgas and permeates all acti
vities of the Company. In 2008, for example, we started a program called Leading
with Safety, in which all Company executives were actively engaged in training
sessions focusing on safety. This is a priority subject for Comgs. Unfortunately
at the end of the year, an outsourced employee was the victim of a fatal acciden
t. We deeply regret what happened and our sympathy goes to the family. Comgs is i
ncreasingly reinforcing its safety guidelines and implementing more measures wit
h the aim of introducing even more safety precautions and spreading the zero inj
uries target to cover all employees and outsourcers under the slogan "Do it safe
ly or don't do it at all". This year we included safety as an item on the Comgs l
ist of values: Safety: every day we shall guarantee the integrity of all persons
and assets, through attitudes and behaviors that ensure zero injuries".
I can assure you that we shall continue to work with great energy to defend the
interests and desires of our customers, shareholders and employees. I wish to th
ank all those who directly or indirectly helped us reach the historic results we
achieved in 2008. Thank you very much!
Luis Domenech
President, Comgs
profile
prOfIle 15
COmGS IS NOw SuppLyING 67 CITIeS IN ITS CONCeSSION AReA ANd mORe ThAN 98% OF ITS
CuSTOmeRS ARe CONCeNTRATed IN The ReSIdeNTIAL SeGmeNT
mARkEt lEAdER stRAtEgy
Comgs distributes piped natural gas to a region that accounts for approximately a
quarter of Brazil's Gross Domestic Product (GDP). The Company was privatized in
1999 and operates in an area that includes 177 municipalities of the So Paulo me
tropolitan region, Campinas administrative region, and the Baixada Santista and
Vale do Paraba regions.
Comgs is now supplying 67 cities in its concession area and more than 98% of all
customers served are concentrated in the residential segment. In 2008, the Compa
ny distributed 5.25 billion cubic meters (m3) of natural gas.
Comgs serves customers in the residential, commercial, industrial, automotive, co
-generation and thermoelectric markets. In all, there were 630,503 meters instal
led by the end of 2008. Of those meters, 620,191 are residential, 8,885 commerci
al, 1,004 plants or business premises, 401 filling stations for gas-powered vehi
cles, two thermoelectric plants and 20 co-generation plants. The total number of
customers stands at 770,000 since a feature of the residential segment is colle
ctive metering, in which a single device measures the consumption of a number of
apartments.
In the retail segment, the Company has been rapidly gaining new customers. Over
the year of 2008, 81,411 residential customers were incorporated to its portfoli
o .
The concession contract to operate piped gas distribution services was signed in
May 1999, the parties being Comgs and ARSESP, which is a state government agency
.
On its privatization, Comgs came under the control of BG and Shell. Integral Inve
stments owns 71.9% of the Company's total capital and is the main controlling sh
areholder. Integral Investments is controlled by BG So Paulo Investments B.V. (Gr
upo BG) and by Shell Gas B.V. (Grupo Shell), which hold stakes of 83.5% and 16.5
%, respectively. Separately, Shell also holds 6.3% of the capital of the concess
ion operator, whose shares have been listed on the So Paulo Stock Exchange (Boves
pa) since 1997.
we shall make comgs laTin america's The best and biggest naTural-gas disTribuTion
company
The BG conglomerate is operating in more than 20 countries and brings to Comgs it
s extensive experience in every segment of the gas chain, from exploration to di
stribution. Shell is present in over 140 countries, and contributes with its kno
wledge of gas transport and trading.
As the tenth anniversary of privatization approaches, Comgs has met and surpassed
all targets set with the Government of the State of So Paulo, through the regula
tory agency ARSESP. Comgs invested more than the agreed amount, and expanded the
network and gained more customers than stipulated. The target of connecting 200,
000 new customers within ten years was reached three years in advance and the vo
lume of investment agreed with the regulatory agency -R$ 944 million between 200
4 and 2009 -was reached before the end of 2006.
Modernizing the network by laying new pipelines is not only a regulatory require
ment and part of risk prevention, but also a way of optimizing the use of the ne
twork by gaining new customers. As agreed in the concession contract, the commit
ment Comgs signed up to was to renovate 398 km of cast-iron pipelines within ten
years, by May 2009. However, this target was reached in October 2008. By the end
of the year, 403 km of network in the city of So Paulo had been renovated, toget
her with 15,750 branches (connecting the distribution network to each customers
inlet housing) also renovated during the decade.
Vision
We shall make Comgs the biggest and best natural gas distributor in Latin America
, efficiently providing services for every need and for all those needing gas, s
etting high standards for the market and generating value for our customers, sha
reholders and society in general.

mission
Continue to sponsor sustained growth for Comgs, meet the expectations of sharehol
ders for earnings, adopt best management practices and comply with regulatory an
d legal obligations.
Provide our services reliably and safely in competitive conditions, providing so
lutions to exceed customer expectations.
Work with social responsibility and respect for the environment in a positive or
ganizational climate, ensuring safe practices, based on values and ethical princ
iples.
Values
Ethics
Safety
Social responsibility
Customer orientation
Teamwork
Innovation
Commitment to results
Empowerment
Respect for people
prOfIle 17
key operational and financial indicators
In R$ millions 2006 2007 2008
Net equity 1,050 1,076 1,137
Total assets 2,940 3,136 4,014
Investments 426 397 403
Gross revenues 3,757 4,056 5,019
Net revenues 2,972 3,212 3,989
Gross Profit 1,097 1,214 1,366
Operational income
(before financial income) 768 816 900
Ebitda 860 925 1,035
Net Profit 427 443 514
Gross debt 1,060 1,202 1,584
Net Debt 1,020 1,168 1,544
2006 2007 2008
Employee headcount 794 859 952
Current liquidity 0.76 0.72 0.78
Rerun on net shareholder equity (%) 40.70 41.15 45.21
Net Debt/Ebitda (%) 1.19 1.26 1.49
Gross margin 36.89 37.79 34.25

Edbitda Margin 28.95 28.81 25.95
Net Margin (%) 14.38 13.79 12.89
Net profit per share (R$)* 3.57 3.70 4.29
Dividends (R$ million) 178.00 347.40 390.86
* We note that as of October 2, 2007, shares were traded as bundled in the propo
rtion of 100 to 1. This bundling was used to calculate pro-forma net income per
share in the year of 2006.
mAjoR EVEnts in A dEcAdE
April 14 - the privatization auction is held at So Paulo Stock Exchange. May 31 the Government of the State of So Paulo and the new controllers of Comgs (Grupo B
G and Shell) sign a 30-year contract (until 2029) that may be extended for anoth
er 20 years
Length of the pipeline network: 2,534 kilometers
Total customers: 314,000
Adoption of corporate policy, including Health, Safety, Environment and Quality
(HSEQ)
Comgs encourages industry to use natural gas as the most competitive and environm
entally attractive energy option
Extension of the pipeline network: more than 200 km (target reached for extendin
g network: Comgs added 400 km of pipelines to the network, and hit the target eig
ht years early. Reaching a total of 2.9 thousand km of pipeline)
Net revenues: R$ 869 million
Extension of the pipeline network: 302.8 km

Net revenues: R$ 1.94 billion
Obtaining ISO 14001 environmental management certification
19992000200120022003
In its first year operating under new
Comgs reports record length of
management, Comgs is preparing to reach the pipeline network (235.8 km) and
the targets set in the concession contract, significant advances in economic
such as extending the network, gaining and financial performance.
new customers, and renovating pipelines.
Extension of the pipeline network: 109.8 km
Publication of the first
Net revenues R$ 535 million Social Balance Sheet
Creation of Social Investment Policy
Creation of Comgs Apprentice Program
prOfIle 19
Five years after its privatization, the Company is performing very well and impl
ements internal restructuring to meet the challenges of the coming period
Extension of the pipeline network: over 300 km
Redefining Comgas Vision, Mission and Values
Creation of Projeto Evoluo (Evolution Project) which prioritizes a focus on manage
ment by processes
Comgs changes its focus to broaden the coverage of the network to reach more resi
dential users and small businesses through the RIC system
Projeto Campinas (Campinas Project) speeds up expansion of the network in the in
terior of the state
Total customers: 518,000 (target reached - Comgs connected 205,000 new customers
to surpass the target three years in advance)
Investment - more than R$ 1 billion invested between 2004 and 2006, surpassing t
he target agreed with the regulatory agency and three years in advance
75,000 new customers in the residential and small firms segment

Implementation of the first phase of Projeto Campinas
Start of supplies for the residential market in Piracicaba and Jundia
Total distribution system: 5,255 km

Total number of meters installed: 572,000
20042005200620072008
Record Extension of pipeline network and investments
Gas supply-demand equilibrium is reached
Creation of Comgs Apprentice Award to encourage best practices within the program
Administrative headquarters moved to Vila Olympia in So Paulo

Casa Comgs is opened in So Paulo as a point of customer services and showroom for
natural-gas powered equipment
81,411 new customers in the residential and small firms segment

Natural gas reaches Santos. Residential distribution starts in Limeira
Expansion of distribution system in Campinas and So Jos dos Campos
Inauguration of the restored gasworks complex in Brs where the operational center
for the So Paulo metropolitan region starts to operate
Total distribution system: 5,704 km
Total number of meters installed: 630,503
Renovation of 35 km of its cast-iron pipeline network, surpassing the 398 km tar
get seven months in advance
Net revenues: R$ 4.0 billion, an increase of 24.2% over 2007
nAtuRAl gAs distRiBution systEm in tHE concEssion AREA

Comgs concession area
Supplied municipalities
Comgs network of distribution
Planned networks
Transport pipelines
City-gates
Main roads
prOfIle 21
tHE nAtuRAl gAs mARkEt in BRAzil
Promising scenario for new business
Natural gas is more efficient, economically viable and environmentally sustainab
le than other fossil fuels. Moreover it may be used in different segments of the
economy - industry, trade, transport and thermoelectric generation.
The natural gas industry is growing in Brazil. In 2008, high-quality oil fields
and natural gas deposits were discovered in the ocean, below a thick layer of sa
lt (known as "pre-salt") off the coast of the southeast region of Brazil. The ne
w fields energized market agents in the expectation of greater supply of energy
and consistent business growth. Moreover, the debate in Congress advanced in Dec
ember to vote the Gas Law - a new regulatory framework setting clear rules for t
he sector - opened up new perspectives for the natural gas industry in Brazil.
Natural gas is the fuel that has grown its share of the Brazilian energy matrix
most, from 3.7% in 1998 to 9.3%, in 2008. Average growth of its share of energy
is 20% per year, according to the Brazilian Association of Piped Gas Distributor
Companies (Abegs
local acronym).
More than 1.5 million Brazilians enjoy the benefits of natural gas, with a total
of 16,829 km of distribution network, which is still well below the potential o
f the domestic market.
tariff Revision
Under ARSESP rules, the three natural gas distribution companies operating in th
e state of So Paulo undergo review processes every five years. Comgs had its first
review in 2004 and the second is scheduled for May 2009.
During the tariff review period, Comgs must submit a Business Plan to the regulat
ory body to support tariff calculations for the next five years (2009-2014). The
tariff will be adjusted to maintain economic-financial equilibrium, ensuring th
at margins remain attractive
According to Abegs, there are 23 natural gas distribution companies operating in
Brazil, and Petrobras has minority shareholdings in more than half of them. Only
five distributors operating in the states of So Paulo and Rio de Janeiro are pri
vately controlled.
In this context, the Gas Law voted by Congress in December 2008, and sanctioned
by President Luiz Incio Lula da Silva in March 2009, combined with the discovery
of oil reserves in the pre-salt layer and natural gas basins, have focused atten
tion on the potential of this energy source. A new regulatory framework will, in
practice, involve the definition of concepts matching transportation capacity,
production and demand. It is expected that the new rules and guidelines will hel
p to further expand natural gas consumption in Brazil.
The pie graph below shows the breakdown of the energy matrix in Brazil in 2008,
according to the National Energy Balance (BEN
local acronym):
3,2%
Cane sugar derivatives Lumber and charcoal
Hydro and electric Uranium and derivatives Coal and derivatives

Natural gas Oil and derivatives Other renewables
Source: National Energy Balance (BEN) 2008

1,4%
to investors and thus support growth to enable Comgs to supply the benefits of na
tural gas to more customers and cities. The methodology for calculating the tari
ff in 2004 is expected to be used again in 2009.
In addition to the five-yearly review, gas distributor tariffs in So Paulo are ad
justed annually (in May, for Comgs), to pass on changes in the cost of gas and in
flation for the period. In case of economic and financial imbalance, extraordina
ry adjustments may be granted at shorter intervals.
Business
performance
COmGS peRFORmed weLL due TO A COmBINATION OF INveSTmeNTS, The INCReASed NumBeR OF
CITIeS SeRved, ANd
CApABLe mANAGemeNT
A yEAR mARkEd By nEw REcoRds
In 2008, Comgs sold 5.25 billion m3 of natural gas, and average volume sold was 1
4.4 million m3/day. In the same period the national average was around 43.4 mill
ion m3/day.
The Company has significantly invested in expanding its distribution network to
supply natural gas to more customers in different market segments. In 2008, it l
aid an additional 421.3 kilometers and executed another 3,184 new branches. In a
ddition, in order to ensure safety in its operations, Comgs renovated another 35
km of network and 1,685 branches.
Comgs performed well due to a combination of investment, an increase in the numbe
r of cities supplied, and efficient management. Since it was privatized, the Com
pany has invested about R$ 2.7 billion in its concession area. Resources have be
en used to expand and upgrade the distribution system, making it safer and more
efficient. In this period, the distribution network more than doubled and now to
tals 5,700 km.
A pioneering initiative adopted in 2008 was the introduction of new types of con
tracts
-firm, flexible and interruptible - aimed at major bi-fuel consumers. Contracts
with Petrobras had been signed in December 2007. This ensures that supply of gas
will be orderly and in step with industrial demand.
total volume of gas sold in Extension of piped gas distribution concession area
(in billions of m) network (in thousands of km)
1999 2000 2001 2002 2003 2004 2005 2006 2007 2008 1999 2000 2001 2002 2003 2004
2005 2006 2007 2008
To gain more residential consumers, comgs has made value and producT proposals Ta
ilored To The specific needs of each cusTomer profile

Residential market
As the main strategic focus for expanding the Company's business, the residentia
l segment gained 81,400 new customers. By the end of 2008, the Company had 765,1
03 residential customers, an increase of 12% on the 2007 number. Last year, a to
tal of 58,016 new meters were installed, thus beating the previous record for ne
w customers gained by 10.3%. This discrepancy between numbers of meters and cust
omers occurs because a single meter often serves more than one apartment (collec
tive meter).
To gain more residential consumers, Comgs has made value and product proposals ta
ilored to the specific needs of each customer profile in the municipalities of C
ampinas, Limeira, So Jos dos Campos and Santos. Specific marketing initiatives wer
e prepared as the Company reached these cities.
Comgs structured a project to expand retail sales, which is initially aimed at in
creasing its presence in homes in the So Paulo metropolitan region and in So Jos do
s Campos. In just one month, Comgs beat its record of 1,000 new homes connected t
o the distribution system.
Initiatives aimed at the residential segment have earned Comgs the position of Br
azil's largest distributor to this market in terms of volume sales. In the year,
135.9 million m3 were distributed to this segment, with an increase of 12.6% on
2007.
industrial segment
Accounting for 73.4% of all gas delivered by Comgs, the industrial market consume
d 3.85 billion m3 of natural gas in 2008, which was 2.7% less than in 2007. This
reduction occurred largely because one of the largest industrial customers tran
sferred its volume to the co-generation segment; also major customers at the Cub
ato petrochemical complex had a 45-day scheduled maintenance stoppage. The indust
rial and cogeneration markets combined posted volume sales of 4.15 billion m3, wi
th a slight fall of 0.5% against 2007. Obviously the industrial slowdown caused
by the international financial crisis in the last quarter of 2008 also affected
industry volume in the year. More industrial plants connected to the distributio
n network and the Company ended the year with 1,004 customers in this segment, a
1.5% increase over the previous year.
In 2008, the new types of contracts with Petrobrs came into force: firm, flexible
and interruptible. The contracts were signed at the end of 2007 and new agreeme
nts were signed with certain industrial customers in 2008 whose contracts were r
emodeled in light of these new types of contract. These arrangements further gua
rantee the supply of gas on an orderly basis, depending on industrial demand, to
maintain Comgs' growth in the coming period.
industrial customers by segment
4,13%
5,09%
3,21%
Automotive / Tires (6,96%)

Beverages / Foods (6,91%)
Ceramics (16,60%)
Metals / Foundry and non-ferrous (7,69%)
Others (3,21%)
Paper and pulp (15,03%)
Chemicals / Petrochemicals (25,45%)
Steel (5,09%)
Textiles / Laundry / Dyes (4,13%)
Glassmaking (8,93%)
co-generation
The use of natural gas for co-generation is growing not only because of its impo
rtance in terms of thermal efficiency and cost savings, but also for its environ
mental benefits compared with other energy alternatives. The sector ended the ye
ar 2008 with 20 customers connected.
The use of gas for co-generation alone accounted for 5.8% of total natural gas d
istributed in the year 2008, and showed 34.8% growth against 2007, which was mos
tly due to one of the major industrial customers transferring volume to this app
lication and three new customers connecting.
Automotive
This is the second largest market for Comgs, accounting for 10% of the total dist
ributed with
524.7 million m3/year. In 2008, 17 new filling stations were connected - a 4.4%
increase over the previous year. Currently, 45 municipalities in the Company's c
oncession area have automotive gas at a total of 401 filling stations supplying
an estimated 360,000 vehicles.
growth in commerce
The volume of natural gas distributed to the commercial segment totaled 99.6 mil
lion m3 in 2008, which was 1% up on the amount delivered in the previous year. I
n 2008, 322 new commercial customers were connected to Comgs supplies, which was
a 3.8% increase on 2007. The total number of customers in this segment reached 8
,885 at the end of 2008.
In the large-scale commerce segment, Comgs continues to disseminate the benefits
of natural gas for co-generation equipment, generating electricity at peak perio
ds and powering air-conditioning in shopping malls, office buildings, hotels, ho
spitals, hypermarkets, and among other premises. Last year alone, seven new cust
omers at large-scale commercial complexes were connected to the Comgs network.
In small-scale commerce, as well as its own team of professionals, Comgs started
to work with sales consultants from other companies in the commercial segment. A
new feature is the value and product proposal tailor made for small-scale comme
rce, on the lines of the residential model. The pilot project in Campinas was te
sted for two years. In 2009, the new type contracts will be put into practice in
other Comgs areas of activity.
27
thermoelectric
In the natural-gas-fired thermoelectric market in the Comgs concession area, ther
e are two thermal power plants, Piratininga and Fernando Gasparian, which are di
loc
spatched (activated) only on a decision by the National System Operator (ONS
al acronym).
Governance and
commitments
COmGS' INveSTOR ReLATIONS uNIT wORkS FOR exTeNSIve ANd TRANSpAReNT ReLATIONS wITh
The mARkeT
ExtRA EmPHAsis on good PRActicEs
Responding to stakeholders' demands and focusing business sustainability are com
mitments Comgs has assumed over a long period. To implement them, everyday perfor
mance by employees and contractors has followed the guidelines in the Comgs Corpo
rate Governance Manual, which includes its Code of Conduct. In the last two year
s, the Company updated its bylaws, created an Audit Committee, introduced intern
al regulations for its governance bodies and drafted policies and guidelines aim
ed at improving transparency in decision making and processing material informat
ion, and in its relationships with its stakeholders.
On being admitted, all employees and trainees are given a copy of the Code of Co
nduct and formalize their determination to follow its guidelines and ensure it i
s obeyed in the company (read more on page 35 - Ethical Conduct).
investor Relations
Through its Investor Relations unit, Comgs also seeks to maintain broad and trans
parent relations with the market through its website at www.comgas.com.br with d
etailed financial data for investors, in addition to quarterly and annual report
s and material facts disclosed to the market. There is also an exclusive channel
of communication by e-mail investidores@comgas.com.br
(read more on page 63 - Shareholders and investors).
governance structure
As a publicly traded business corporation, the governance structure of Comgs is b
ased on the shareholders general meeting, which sets the course for the company.
Twice yearly, by legal requirement, shareholders attend ordinary general meetin
gs to discuss corporate affairs of the organization's interest.
Board of directors
Consists of eight full members, seven of whom represent the controlling sharehol
ders. The board of directors determines the overall lines of business and decide
s on strategic issues; it must at all times be guided by Comgs' mission, principl
es and values statements.
Luis Augusto Domenech
President of the Board of Directors and Chief Executive Officer
Degree in Business Administration at Universidade de Buenos Aires; postgraduate
degree from Argentina's Instituto de Altos Estudios Empresariales. Concluded the
Executive Program at the University of Michigan School of Management, in the Un
ited States. President of Metrogas S.A., Argentina's largest distributor of natu
ral gas, also part of the BG Group. In April 2004, he became president of Comgs.
Graham Cockroft
Vice-president
Degree in Economics, master's in International Trade from the University of Otag
o, and in Finance from the London Business School. Formerly investment analyst w
ith the Bank of New Zealand. In 1990, joined BG as project and financial transac
tion manager. Became financial manager for South America and subsequently the re
gion's planning manager. General manager of BG Andes & Austral since 2006.
Antonio G. Paes de Assumpo
Board member
Degree in Mechanical Engineering from Universidade Federal Fluminense. President
of Shell Southern Cone Gas & Power since 2003. Over 20 years experience in mini
ng, metallurgy, oil & gas, having held several positions in Brazil and abroad.
Nicholas Crabtree
Board member
Degree in Economics from University of London and masters from University of Oxf
ord. Joined BG in 2001 as business development manager.

In 2006, became regional planning manager for South America. Crabtree was former
ly business manager with Powergen, an economist with Royal Bank of Scotland, and
economics professor at the University of London.
Roberto Schloesser Junior
Board member
Bachelor in Business Administration from Fundao Getlio Vargas and post-graduate deg
ree in Finance from IBMEC. Nine years experience in the energy sector, having wo
rked in various areas including business development, energy marketing and crisi
s management. Joined BG in 2004; nowadays he is business development manager. Pr
eviously spent five years at Enron South America.
Paulo Guilherme Hirata
Board member
Degree in Business Administration. With BG Group since 2005. Formerly financial
superintendent with IQARA. Currently regional finance manager for South America.
Before joining BG Group, he was financial controller for AVAYA, the American te
lecommunications company. Former senior auditor with PriceWaterhouseCoopers.
Alexandre Cerqueira da Silva
Board member
Degree in Mechanical Engineering from PUC-RJ, masters in Business Administration
from COPPEAD / UFRJ. Joined Shell Brasil in 1990 as planning manager for Indust
rial Lubricants and Chemicals and Projects. Former regional lubrications consult
ant with Shell Oil Products Latin America. Currently corporate governance manage
r with Shell Southern Cone Gas & Power, where he was formerly manager of new bus
iness development.
Sidney Batista da Rocha
Board member
Qualified Telecommunications specialist, general secretary of Sindgasista (gas u
nion). Member of the Ministry of Labor tripartite group drafting NR10 safety sta
ndards, coordinator of the NR33 group, and committee member of the municipal occ
upational health center. Has been with Comgs for 14 years.
Fiscal council
Consists of five full members and the same number of alternates, elected at ordi
nary and / or extraordinary general meetings. The fiscal council monitors manage
ment of business affairs, issues opinions on certain subjects and reports to sha
reholders with the aim of protecting shareholders' assets and returns and assuri
ng them that the objectives as stated in the bylaws are being pursued based on t
he principles of ethics, fairness and transparency.
John Housley
Board member
Degree and post graduation degree in Business Administration from Canterbury and
Lincoln Universities (New Zealand). MBA from New York Institute of Technology.
Fourteen years experience in financial areas of companies such as Bell & Howell,
Thomson Legal & Regulatory (IOB), Comgs and Del Monte Fresh Produce. Currently f
inancial and planning coordinator for BG Andes & Austral.
Roberto Klajman
Board member
Degree in Mechanical Production Engineering and post graduation degree in Market
ing. Since 2007, financial manager with Shell's Southern Cone Gas and Energy. Fo
rmerly in strategic and financial planning with Billiton Metals, 1989 to 1995; c
ommercial manager of Cadam, part of the Caemi conglomerate, from 1995 to 1999; f
inancial manager in the downstream area of Shell Brasil, from 1999 to 2001; fina
nce manager with Shell International in London, from 2001 to 2003; and global po
rtfolio manager with Shell Marine, based in Rio de Janeiro, from 2003 to 2006.
Marcelo Bastos de Andrade
Board member
Degree in Accounting from Faculdade Cndido Mendes, postgraduate degree in Finance
/ Capital Markets from PUC-RJ and MBA in Energy Economics and Management from C
OPPEAD - UFRJ. Since 2004 he has been working with BG E&P do Brasil in accountin
g and reporting. Also spent five years in planning and treasury at Telemar holdi
ng company.
Hamilton Silva
Board member
Degree in Economics and Accounting; registered member of the Regional Accounting
Council of So Paulo; Executive MBA at So Paulo Business School. Five years experi
ence in Human Resources at AgipLiquigs do Brasil Ltda. Former audit manager for P
ricewaterhouseCoopers, where he spent 11 years in outside auditing and consultin
g. Also spent three years as accounting manager with Cargill Agrcola SA Currently
financial manager with BG do Brasil Ltda.
Paulo Caio Ferraz de Sampaio
Board member
Degree in civil engineering from the School of Engineering Mackenzie (1975); too
k a real-estate development course at the American Institute of Real Estate Appr
aisal. Currently on the fiscal council of Iguau de Caf Solvel, managing partner of
Guepardo Desenvolvimento Urbano Ltda and chief superintendent of Cobrasco S/A. A
lso worked as supervising engineer with construction company Veloso de Castro Lt
da. from 1976 to 1979.
33
Executive board
Comprising the president and six directors with two-year mandates, the executive
board's main duty is to pursue better economic, financial, operational, environ
mental and social results based on strategies defined by the board of directors.
From left to right: Leonardo Serra Netto Lerner, Roberto Collares Lage, Jos Carlo
s Broisler Oliver, Luis Augusto Domenech, Carlos Eduardo de Freitas Brescia, Mar
cus Vinicius Vaz Bonini e Srgio Luiz da Silva
from January Through sepTember over 90% of our staff aTTended Training sessions
cenTered on our code of conducT
members of the executive board
Luis Augusto Domenech
President of the board and CEO
Srgio Luiz da Silva
Vice-president and director for Large Consumers, Vehicle Gas and Gas Supplies
Degree in Industrial Mechanical Engineering from Centro Federal de Educao Tecnolgic
a de Minas Gerais, and MBA in Marketing from Fundao Dom Cabral. Joined Shell in 19
89, held various executive positions in Brazil and abroad. Became Comgas board m
ember on August 1, 2006.
Roberto Collares Lage
Finance and Investor Relations officer
Degree in Economics from Universidade Candido Mendes, School of Political Scienc
e and Economics (Rio de Janeiro), and specialization in Business Administration
at INSEAD (France). His career has focused on finance and administration; with S
hell Brasil for 13 years.
Carlos Eduardo de Freitas Brescia
Regulatory and Institutional Affairs officer
Degree in Electrical Engineering and Business Administration from Universidade M
ackenzie (Sao Paulo), and master's in Energy from Universidade de So Paulo (USP).
Joined Comgs in 1999, former director of Companhia Energtica de So Paulo (CESP).
Leonardo Serra Netto Lerner
Legal Officer
Law degree from Universidade de So Paulo (USP). Joined Comgs in 2000. Previously l
egal officer for Asea Brown Boveri (ABB) and coordinator of ABDIB's legal counci
l.
Jos Carlos Broisler Oliver
Operations Officer
With Comgs since 1999. Degree in Mechanical Engineering from FEI and Law from USP
; Postgraduate degree from Universidade Mackenzie, and MBA from BG's Internation
al Management Program. Professor of various disciplines attached to the Mechanic
s Course Coordination at Centro Federal de Educao Tecnolgica de So Paulo (CEFET/ SP)
. President of the South American section of Britain's International Institute o
f Gas Engineers and Managers (IGEM). Full member of the Engineering Institute of
So Paulo.
Marcus Vinicius Vaz Bonini
Director of Residential and Commerce Markets
Degree in Electrical Engineering from UMC; MBA in Energy from USP, joined Comgs i
n 1986. Currently responsible for planning and development, sales, contact cente
r, billing, credit and collection. Also worked in all segments of market and sup
ply.
Advisory and support
Comgs' governance structure involves committees and commissions providing support
to officers for the decision making process.
Audit committee
The two-member Audit Committee is an advisory body assisting the board in its du
ties relating to analysis of the process of submitting financial statements (inc
luding, without limitation, the internal control structure and procedures for dr
afting financial statements, and the monitoring of their accuracy and adequacy);
and the manner in which management ensures and monitors the adequacy of interna
l financial and operational controls, compliance and risk management procedures;
the independence and execution of internal audits; and the selection or removal
of outside auditors, their payment and the impartiality of their work.
The committee comprises representatives of BG Group, Shell and the president of
Comgs (non-voting member), who meet (ordinarily) three times a year. In 2008, a C
ode of Ethics for Internal Auditors was drafted to complement the Code of Conduc
t for all Comgs employees.
Approval committees
Comgs has 13 groups responsible for taking decisions on specific matters, coverin
g several links in the value chain and related areas. Six committees involving b
oard and presidency are seen as the highest instance: Crisis Management Committe
e, Health, Safety, Environment & Quality (HSEQ) Central Committee, Ethics, Human
Resources and Officers (RD) Committee and Asset Integrity Committee. These comm
ittees gave an average of eight members.
discussion commissions
They constitute a group responsible for analyzing and discussing specific issues
and making recommendations to a Committee. The commissions consist of professio
nals active in different areas of the Company.
Ethical conduct
Good practices are used in all Comgs business, guided by the Code of Conduct, whi
ch is available on the intranet and Internet to ensure ease of access for the co
mmunity, investors, shareholders, employees, customers, suppliers, creditors and
regulators. The code's rules are designed to enhance Comgs' activities and relat
ions with stakeholders by indicating the conduct required to attain corporate ob
jectives, providing guidelines for the ethical conduct of all employees and refe
rring to documents related to each theme.
The Code is based on four corporate principles: Society, Business, Health, Safet
y and Environment (HSE) and Our Professionals. Each includes a number of Comgas c
ommitments with related rules of conduct that must be followed. On joining Comgs,
all employees and trainees are given a copy of the Code of Conduct, and formali
ze their intention of following its guidelines and ensuring it is complied with.
From January to September more than 90% of employees attended Code of Conduct tr
aining sessions, with dynamics and interactions related to ways of dealing with
situations requiring conduct based on the code. This was followed by a reinforce
ment campaign, with a regular column in the company's weekly Telegs newssheet, de
aling with behavioral dilemmas, including the principles that were put into prac
tice in employees' everyday routine.
risk
manaGement
ASSeT INTeGRITy pOLICy eNSuReS eFFICIeNT SuppLy OF NATuRAL GAS TO CuSTOmeRS
stRAtEgic And oPERAtionAl Risk mAnAgEmEnt
Safe operation of Comgs distribution systems involves constantly assessing risk t
hroughout the lifecycle of the natural-gas pipeline system. Comgs has practiced r
isk management since 1999 and may now be seen as a benchmark in the utilities co
ntext. All routine activities are planned and implemented in accordance with the
law, ARSESP decisions, shareholder recommendations, existing rules, and technic
al standards and best practices in the gas industry.
To ensure flexibility and security in its business risk management, Comgs impleme
nted an online Risk Management system in 2005, which managers may access and int
eract with through the corporate intranet. This positions the company at the cut
ting edge of technology in this field and consolidated its market position by ad
opting international best practice.
All risks are managed at two levels: strategic and operational, so that they can
be identified preventively. This enables Comgs to prioritize measures to allevia
te and rationalize the resources required, thus adding value to both internal an
d external processes.
Asset integrity management Policy
Comgs has an asset integrity management system comprising policy, strategies, obj
ectives, plans and targets.
Asset Integrity policy ensures efficient supply of natural gas to customers, mak
es operations safer and follows business principles while complying with legal a
nd regulatory requirements. This involves constantly improving and maintaining a
ppropriate integrity standards all the way through from distribution system to e
very stage of the lifecycle -design, construction, operation and decommissioning
- since Comgs believes that by obtaining satisfactory performance from its asset
s and continuously improving its management system, it will contribute decisivel
y to business continuity and stakeholder satisfaction.
em 2008, a comgs minisTrou 8.339 homens/hora de TreinamenTos em preveno de danos
Comgs have defined eight strategies for the management system's operational activ
ities:
1.
Risk management
2.
Data management
3.
Change management
4.
Knowledge management
5.
Training and skilling
6.
Damage prevention
7.
Incident response and operational continuity
8.
Continuous improvement
Policy and strategies generate an integrity plan which has objectives and target
s aligned with business strategy. Asset Integrity indicators are defined as part
of Comgs targets.
operational
Business risk is minimized and controlled using the following procedures:
Asset integrity system
It is a pipeline risk management software using a database, design criteria, con
struction data and integrity history of high-pressure steel pipelines providing
integrated visualization of each stretch of the pipeline network. This software
enables Comgs to evaluate threats and take measures to control and manage assets
in all high-pressure pipeline networks throughout their lifecycle. The program w
as introduced in 2008 as the result of a partnership between Assets and IT secti
ons with GE Energy, GE PII, and Logica companies.
supervisory control and data Acquisition (scAdA) system
This system collects data on pressure, temperature, flow and volume of gas piped
from supply line from city-gate to consumers - industry, commerce, or filling s
tations. The SCADA Control Room is at phase III or SCADA GPRS. GPRS technology i
s used for telemetering processes in the field. The SCADA system was installed a
fter the change of controlling shareholder and absorbed an overall investment of
about R$ 10 million by 2008.
geographic information system (gis)
The Geogas system provides all staff with data on location and networks, branche
s and equipment in place. It is used to determine strategies to respond to emerg
encies and to carry out feasibility studies for new projects. There is an associ
ation with the long standing use of drawings and maps of supply pipelines and is
used to control more than 8,000 registration applications per year. To prevent
pipeline damage caused by third parties, a version is available on the Internet
and may be accessed by other utilities companies, municipalities and employees.
meter change program
In order to change the meters used in industry and commerce, Comgs invested R$ 2
million in 2008, against R$ 1.6 million in 2007. There was also a process of che
cking maintenance of Comgs quality standards and results of the metrological veri
fication process on 619 metering devices in the course of the year.
39
telemeterized customers
In 2008, nearly 250 Comgs customers accounting for 80% of total gas consumption w
ere fitted with telemetering devices. This is 25% more than the 2007 number. Mor
e telemeterized stations means faster emergency response times and lower servici
ng costs. Comgs has set a medium term target of 90% telemeterized customers.
Value Assurance Framework (VAF)
This methodology supports investment decisions and contractual commitments by as
sessing risks and identifying value added opportunities. Multidisciplinary group
s are able to work toward consensus on the alternatives presented in order to ma
ximize enterprise value.
VAF provides a platform to leverage "support and challenge" culture and level kn
owledge in the Comgs community by ensuring value throughout the development cycle
s of projects and contracts.
comgs damage Prevention Plan
In 2008, Comgs organized 8,339 man-hours of damage-prevention training sessions a
imed at janitors and utility employees. As a result of these efforts to spread d
amage prevention culture, damage caused to the distribution network fell approxi
mately 40% against 2005.
Training sessions aimed at reducing incidents that occur when repairing building
s or intervening in areas near Comgs pipelines. In 2008, as part of the Damage Pr
evention Plan, we ran a campaign called "No faults in the work", aiming to raise
with outsourcer employees from Sabesp, an awareness of the correct application
of procedures such as reading registers on pipeline networks and branches, or so
undings before starting jobs, among other practices.

From January to December of 2008, Comgs employees and subcontractors monitored 2,
569 jobs and produced 130 inspection reports on damage caused to the distributio
n network.
impact reduced
As strategy to manage risk and meet regulatory targets, Comgs has modernized more
than 400 km of its network of cast-iron pipes, thus minimizing gas leaking into
the atmosphere. In addition to more safety for the community, the pipeline reno
vation program also has a major environmental impact since it helps reduce metha
ne emissions into the atmosphere. By renovating 400 km of its pipeline network,
Comgs is no longer emitting 751,000 equivalent tons of CO2 into the atmosphere (r
ead more on page 68
New network cuts emissions).
A periodic renewal of its operational vehicles is also part of Comgs policy for r
educing the environmental impact of its activities. Over 70% of its vehicles hav
e the option of using natural gas.
Regulations for building installations
Document developed by Comgs containing guidelines and best practices for installi
ng gas supplies. In 2008, Comgs reviewed rules for servicing residential and comm
ercial segments.
Renewal of company vehicles
The process of replacing vehicles used by Comgs employees, based on safety and ve
hicle lifetime criteria, started in May 2008 and is due to end in January 2009.
All vehicles used for emergency responses services, residential sales, construct
ion work for new distribution networks or operational maintenance work carry the
Comgs logo so that employees are identified in workplaces or regions where the c
ustomer base is expanding. A reporting form is available on the intranet for use
rs to report any problems with their vehicles. The report details may be used to
guide corrective maintenance or possibly recall vehicles to guarantee the safet
y of the drivers. The preventive maintenance plan requires checks on various ite
ms subject to natural wear and tear and helps cut operational costs (read more o
n page 67 - New Vehicles).
41
intAngiBlE AssEts
safety
Comgs maintains a robust management system for Health, Safety, Environment and Qu
ality (HSEQ), thus assuring employees, contractors, customers and society that r
isks and impacts from its operations are properly managed. All Comgs activities a
re structured in its Health, Safety, Environmental and Quality policy, which amo
ng other objectives, stipulates that Comgs should aim for excellence in its activ
ities; develop and maintain effective contingency plans; comply with applicable
environmental laws and standards; foster dialogue with employees and their repre
sentatives where appropriate, and provide guidance, training and supervision for
employees.
Comgs' concern for the issue of security is so clearly seen that almost all its o
wn staff and outsourcer employees are familiar with its catch phrase: "Do it saf
ely or don't do it." In 2000, one year after the privatization process, Comgs rep
orted 7.18 incidents for every 1 million man-hours worked. By 2008, this number
was down to 0.29. This indicator includes all cases involving restricted work, m
edical treatment, absence from work, and casualties.
In 2008, as a result of a BG initiative, all the conglomerate's companies, inclu
ding Comgs, ran a program called "Leading with Safety" which aims for progress on
safety issues by ensuring they reach Zero Injuries under a new model for person
al responsibility for all safety-related events. The aim is a new level of safet
y that respects all employees' right to an injuryfree return home at the end of t
heir working day.
Some 155 Comgs managers and supervisors were trained in the second half of 2008 a
nd training sessions will extend to contractors and subcontractors in the first
half of 2009.
Expanded meetings
As of the second half of 2008, monthly meetings of Comgs' Health, Safety, Environ
ment and Quality Central Committee were conducted separately from the monthly bo
ard meeting and were also attended by representatives of contractors and subcont
ractors. These meetings help managers to jointly pursue initiatives to improve e
verybody's performance in terms of safety at work.
safety walk-throughs
Safety Walk-Throughs are field visits with Comgs managers taking part to show lea
dership and commitment to the principles of Health, Safety, Environment and Qual
ity. There is an average of 20 field visits per year in the different locations
where Comgs is doing construction work, including So Paulo, Campinas, Jundia, Braga
na Paulista, So Jos dos Campos, Grande ABC, and Santos, among others.
BBs Program
Comgs has been running its Behavior Based Safety - BBS program for four years. Th
is is an important means of raising awareness of safe working practices. Constan
t positive reinforcements aim to achieve lasting attitudinal changes. Since 2004
, more than 100,000 comments have been made. The aim is to warn employees of uns
afe behavior and to chart risks, thus reducing incidents and ensuring integrity
for everybody. This tool is also used during Safety Walk-Throughs.
comgs also provided
26 grants covering
50% of TuiTion fees for higher-educaTion courses
Safety case-study
This refers to a case study of oil and gas companies to see whether they are ope
rating safely.
This case-study was performed by the Asset Integrity unit with the participation
of a multidisciplinary group to evaluate Comgs operations, processes, controls a
nd systems. The critical elements for safety were identified and their indicator
s defined.
Presentations were made to all Comgs departments in order to commit our professio
nals to this work.
Total incidents
(restricted work, medical treatment, absence from work and casualties
cumulative
% in the year)
TRCF -Total Recordable Cases Frequency
2005 2006 2007 2008*
*Unfortunately, at the end of the year, an employee of a subcontractor company w
as the victim of a fatal accident.
Personnel management
Comgs invested R$ 3.3 million in training such as professional instruction; paid
leave to take courses; outside training; and specific health and safety training
making a total of 68,990 hours for 1,023 people in 2008.
In 2008, professionals had to be trained and skilled to continue the growth stra
tegy for the residential market launched in 2006. Service providers (agents and
coordinators) were also trained to meet retail growth targets.
The Company also held workshops for professionals under the titles "Top score fo
r service" and Customer value perception" to prompt reflection on ways of boosti
ng customer satisfaction. The first event targeted some 300 professionals from c
ontractors providing services for Comgs in the growth areas of Campinas and Vale
do Paraba, and professionals working in the Emergency and Maintenance departments
. The second event was for Emergency department employees only.
Comgs also provided 26 grants for highereducation courses covering 50% of tuition
fees. Loans totaling R$ 325,827.95 were also approved for staff on MBA courses.
In 2008, another R$ 719,279.00 was reserved in grants for employees taking MBAs.
intern Program
In 2008, Comgs launched a new structured intern program to attract higher-educati

on students and encourage them to enter the labor market. The initiative is a wa
y of attracting, retaining and developing the best talent, keeping teams constan
tly updated and training professionals to fill positions in the coming years. Yo
ung people recruited for the program are working in several departments on tasks
compatible with their courses in all cases. Comgs has been recruiting interns si
nce 2000.
In addition to development offered by the Trainee Program, which lasts for a yea
r and may be extended for another year, interns get tuition assistance, meal vou
chers, transportation vouchers, health care, recess time and a working week of 2
0 to 30 hours. Admissions of interns strictly follow guidelines in new legislati
on on this subject.
The program also provides a student training and development plan through bimont
hly meetings with the Human Resources team. Managers appraise and monitor intern
performance with monitoring from Human Resources.
Brand and reputation
Since 2006, Comgs has been developing comprehensive brand research into perceptio
n of its image by different segments. In 2008, the results of this study were pr
esented and consolidated in four pillars that should guide all Comgs communicatio
n.
Attracting residential customers to Comgs involves cultural change in the sense o

f persuading them of the advantages of natural gas in relation to other sources
of energy. The challenge is selling the concept of comfort, practicality and mod
ernity associated with piped natural gas to a segment with a new profile (B2C).
In the course of 2008, Comgs developed several initiatives to strengthen the Comgs
brand in the different municipalities where it operates including:
EnVEloPing nEigHBoRHoods
In So Paulo, due particularly to environmental legislation - the Clean City Law,
which came into force in 2007 - Comgs had to find new ways of reaching its target
segments. Therefore Comgs launched a strategy it called "enveloping neighborhood
s" in 2008. The campaign publicizes the Comgs brand at strategic locations in the
neighborhoods, such as small stores, bakeries, pet shops, drugstores, or pizza
parlors, among others. Consumers see the Comgs logo on pizza boxes, drugstore bag
s, nail files, cups, bread packages, and other items they take home with them. T
his is a way of telling residents that using Comgs natural gas is feasible for th
eir home and that the supply has now reached their neighborhood. The initiative
is a way of prompting residents to feel empathy, involvement and identification
with Comgs, as well as acting as "a door opener" and facilitating the work of the
sales force. The initiative earned the award for "best promotional case" from A
BRACOMP and was used in other cities on the strength of its good results.
communicAtion And mARkEting initiAtiVEs
greater so Paulo
As a means of building relationships with residents of buildings organized on a
gated community basis (aka condominiums) in the Sao Paulo metro region, the supe
rs or committee members from each building were given invitations to the 6th and
final stage of the Stock Car automobile competition. Around 80% of them attende
d the event held at the Interlagos Circuit in So Paulo.
Project Retail
The "Flowers for You" campaign was held for the first time in Sao Jose dos Campo
s and extended to another six of the project's areas (ABC, Osasco, Butant, Piritu
ba, Penha / Vila Carro and Americanpolis). The initiative consisted of a "door-ope
ner" initiative with distribution of a flower and a leaflet presenting Comgs. Thi
s was a nice way of saying that natural gas had now reached the neighborhood and
a sales consultant would soon be visiting this house.
santos
A series of communication and marketing initiatives aimed to raise awareness of
Comgs and create proximity with locals in Santos, where supplies of piped natural
gas became available in 2008. As well as press and media ads, the campaign incl
uded the distribution of inflatable pillows and a leaflet symbolizing the comfor
t provided by natural gas. On the day they were distributed, the beach was used
as the setting for an outdoor ad with the text "Piped Gas. Now in this neighborh
ood" and an arrow pointing to the Gonzaga neighborhood which was the first to ge
t natural gas supplies.
limeira
The supers or boards of the buildings that had not yet signed up with Comgs were
sent a mail shot with a kit called Agora, s falta voc - "Now, you are the only one l
eft", which included a CD with a song called Agora, s falta voc .
stAR tREk
The "Star Trek" campaign between September and December 2008 sought to encourage
outsourcer sales and installations. The launch event was a talk given by Marcos
Pontes, Brazil's first astronaut, who spoke on the importance of working togeth
er for a successful mission. Attendees were encouraged to use teamwork to reach
sales and installation targets, while always putting safety procedures and custo
mer satisfaction first.
45
BRAnd communicAtion
In 2008, Comgs sponsored a series of events to publicize its brand for a number o
f specific target audiences, as a strategy to strengthen its performance in a se
gmented retail market. Among the initiatives, the following were standouts:
master Real-Estate Award 2008
For the first time, Comgs took part in the Master Real Estate Award ceremony, the
leading event of its kind, featuring highlighted companies or individuals in th
e categories developments, professionals, and others.
ceramic linings Fair
Comgs sponsored the 6th Ceramics Linings Fair (Feira Revestir). The event was org
anized by the Ceramic Lining Manufacturers Association (Anfacer
local acronym), recognized in the market as the Latin-American leader in this se
gment. Around 40,000 people attended the fair, and most of the visitors were Com
gs customers or potential customers.
ceramics merit Award 2008
The 2008 edition of the ceramics industry's top award was sponsored by Comgs. The
Ceramics Merit Award, sponsored by the So Paulo Ceramic Lining Association (Aspa
cer), attracted an audience of approximately 1,000 people between employers, ass
ociates, and others from the industry.
convention for apartment-building and residential-complex managers / chairperson
s (Pr-sndico)
This is Brazil's biggest convention for managers (or chairpersons) of apartment
buildings or residential complexes, and its purpose is to display technical cont
ent for related services in the state of So Paulo. Comgs was an official supporter
of the event and its logo was carried on all event material including the Inter
net site, badges, invitations, announcements, outdoor advertisements and printed
papers.
construction industry convention
For the second consecutive year, Comgs participated as official sponsor of the ev
ent held by the Construction Industry of the State of So Paulo (SindusCon-SP).
santos Arquidecor
At the 14th Santos Arquidecor, there were presentations of 12 environments using
natural gas to warm fireplaces, stoves, torches, heated floors and towel rails.
dcor and architecture exhibition (campinas dcor)
Architects highlighted the use of natural gas in ten living spaces at the Campin
as Decor exhibition held at Estao Guanabara between May and June 2008. This was th
e third consecutive year that Comgs supported the Campinas region's top decoratio
n event.
dcor and architecture exhibition (casa cor)
Comgs once again was a partner for Latin America's largest exhibition of decorat
ion, design and architecture. The Comgs logo was present in 19 internal and exter
nal living spaces designed by Brazil's leading architects, interior and landscap
e designers.
mosT of The r&d proJecTs are run in parTnership wiTh some of brazil's
leading research centers
and universiTies
Research and development
The R&D Program introduced in 2004 has achieved recognition and helped Comgs deve
lop strategic plans for expanding its markets and improving operational efficien
cy. During this period, the program's portfolio has included 41 projects. Of thi
s total, 21 projects have already been completed, 20 are in the final stage of d
evelopment and another 19 will start in 2009.
Most of the R&D projects are run in partnership with some of Brazil's leading re
search centers and universities, such as the University of So Paulo (USP), State
University of Campinas (UNICAMP), the Aeronautics Technology Institute (ITA), th
e So Paulo State Technological Research Insitute (IPT), the Foundation for Engine
ering Technological Development (FDTE) and the So Paulo State University (UNESP),
among other hi-tech companies.
comgs R&d investments by cycle
Period Investment (R$)
2004/2005 1.7 million
gas Professorship
The Comgs professorship is one of its most innovative R&D programs. This research
and development project is run in partnership with the Electrotechnics and Ener
local acronym) at USP. The chair was created to disseminate an
gy Institute (IEE
d encourage rational use of gaseous fuels through various activities and events.
Noteworthy among the various activities undertaken by the project are the follow
ing:
"Fuel Gas Facilities Technical Conference," held in June 2008, at Comgs' historic
headquarters (CORMSP) in the downtown area of So Paulo. The event sought to enco
urage training for professionals to work in the field of combustible gases and c
omplement activities already developed in related disciplines. There were 137 at
tendees. Similar conferences were held in Santos and Campinas.
International Seminar on Indoor Residential Facility Fuel Gases held in November
at the So Paulo Industries center (FIESP),
2005/2006
2006/2007
2007/2008
2008/2009
2.2 million with five international speakers from Japan,

2.7 million Colombia, Chile, the USA and the UK.
3 million
3.8 million
gas-powered minibus
Since 2006 Comgs has been running an R&D program to develop a 100% natural-gas po
wered minibus in partnership with installer Osasgs. Designed for use in the publi
c and private transportation segments in the near future, the minibus has been s
ubmitted to various field tests with quite satisfactory results so far. To lend
greater security to the project, Comgs and Osasgs have sought partnership with an
engine manufacturer to run bench tests measuring durability, performance, emissi

ons and costs.
In relation to the cost of fitting gas systems in vehicles, this is expected to
pose a very viable alternative financially for bus companies, who may re-convert
to diesel.
In So Paulo, 20 deaths everyday are related to pollution from vehicle emissions,
so use of natural gas for public transport is a quick and viable alternative, fo
r the big cities particularly.
Business
strategy
The mARkeTING uNIT CONduCTed mARkeT SuRveyS ANd ANALyzed pOTeNTIAL CLIeNTS TO CA
TeR FOR ANd BeTTeR uNdeRSTANd TheIR NeedS ANd deSIReS
nEw gRowtH REinFoRcEs Focus on REtAil
As the key focus for growing Comgs business, the residential campaign was mainly
aimed at the retail market to gain new customers living in houses, and was susta
ined mainly by three major projects:
Project operational Excellence
Launched in July 2007, the project reviewed all internal processes and adapted t
hem to growth, diagnosed the market and business partners, worked to develop new
materials through pilot projects, and developed new training programs to skill
employees for future demands. In addition, it developed a new model focusing reg
ionalization and optimized logistics. The initiative involved several department
s - Residential and Commerce Market, Operations and Finance, and Investor Relati
ons - working together to reach targets.
Project Enterprise Excellence
Comgs' Marketing department conducted market surveys and analyzed potential clien
ts to understand their needs and wishes. The aim was to build profiles of reside
ntial consumers and their level of satisfaction with Comgs products and services.
The sales team thus poses an attractive proposal, and positive results were obt
ained within the first few months of the sales campaign. The project also involv
es training programs for sales agents, formatting a remuneration model for partn
er companies participating in the project and suggesting new post-service propos
als and marketing strategies.
Project Retail Expansion
In January 2008, a retail growth superintendence was set up. It was based on an
integrated performance model so that all activities in the chain, from sales thr
ough customer connection, were placed under the same structure. This required sh
aring skills and capabilities to serve customers' every dimension. In August 200
8, start-up contracts were signed. Comgs connected 3,740 new homes by the end of
the year, built 192.4 kilometers of pipeline network and had over 3,184 branches
located in seven blocks or areas: Northern, Southern and Eastern So Paulo, Butan
t, So Bernardo in the ABC region, So Jos dos Campos and Osasco. For 2009, the Compan
y aims to build 500 km of network and to connect 16,000 new customers in places
by the end of the year.
Retail Results
Homes signed up 6,563
Pipeline laid (km) 192.4
Branches installed 3,184
Connections made 3,740
Gain more home customers - In order to optimize connections to customers' homes,
standardized retail kits were produced with the materials needed for branch and
indoor installations. This led to huge progress in logistics as well as invento
ry and control gains.
Emergency response
Comgs operational strategy aims for quick emergency responses, shorter distances
to travel for outdoor teams, personalized service and streamlined procedures. In

2008, 98.7% of emergency calls came in on 08000 110 197, and we responded withi
n an hour.
comgs Bases
More regional units are still being created to ensure rapid response to emergenc
ies. In 2008, Comgs opened two regional bases, one in Santos and another in the n
eighborhood of So Miguel Paulista (in the city of So Paulo). Other units are locat
ed in So Paulo, in the Butant and Santana neighborhoods, and in the municipalities
of Campinas, Jundia, Cubato, So Jos dos Campos, Limeira, Lorena, Capuava, Santo And
r.
In order to provide better customer service, all procedures at regional bases we
re reviewed and technicians trained and qualified in many other activities and t
asks (metering, collection, analysis and instrumentation).
Every three months, the quality team visits all Comgs bases to hold "Quality Talk
s". These meetings for professionals in the field present problems and progress
on improvement initiatives related to materials and equipment used in the pipeli
ne network. In addition, they establish two-way communication between areas enco
uraging the capture of information in the field and facilitating effective respo
nses.
Highlights
Extension of pipelines in 2008 (km)
2,464 Km polyethylene pipeline 1,942 Km steel pipeline 664 Km of cast-iron pipel
ine network 635 Km of branches (various materials:
steel, galvanized iron and polyethylene)
stations
352 Regulator and Compressor Stations 10,789 Regulator and Metering Units
structures replaced in 2008
35 Km of pipeline 1,685 branches 7 overhead stations
PRojEct dnA
To support fast growth in the retail sector (homes and businesses) in the coming
years, Comgs is investing in a new customer relation and invoicing system from S
AP of Germany.
"Project DNA" was launched at the end of 2007. A team was built working directly
to implement this new SAP system. This team comprises of 150 Comgs professionals
and consultants - SAP, Accenture, and Logica.
DNA activities advanced in the course of 2008 and the team started testing the n
ew system early in 2009. We also ran training sessions for the project in order
to skill train all professionals identified as users of the new SAP system and i
ts new processes. The sessions aim to ensure that they will all be ready to run
everyday activities efficiently.
Project DNA is due to go live in the first half of 2009 and the new system will
mean more flexibility and operational quality with full histories of services ex
ecuted and responses recorded in the company's customer relationship system.
economicfinancial
performance
COmGS' GROSS pROFIT FOR 2008 ReAChed R$ 1.37 BILLION, 12.52% mORe ThAN The R$ 1.2
1 BILLION pOSTed IN 2007
good REsults AcHiEVEd
The year 2008 was another period of good financial performance for Comgs. Gross o
perating revenue reached R$ 5.02 billion, so there was 23.74% growth on 2007, wh
en revenue was R$ 4.06 billion.
gross profit
Comgs' gross profit for 2008 was R$ 1.37 billion, 12.52% more than the R$ 1.21 bi
llion posted in 2007. The result was directly related to increased volume of gas
distributed, to a growing number of customers (particularly the residential seg
ment) and higher gas costs being passed on to tariffs.
Ebitda
Profit before payment of interest charges, taxes, depreciation and amortization
was up 11.89% in 2008. At the end of the year, EBITDA totaled R$ 1.035 billion,
against R$ 925 million in 2007.
Funding strategy
In 2008, Comgs maintained its funding strategy of arranging long-term financing a
t competitive rates to support investment in its expansion.
On August 5, 2008 to Comgs concluded its placement of R$ 100 million of six-year
maturity indivisible and non-convertible debentures paying CDI (Interbank Deposi
t Certificate) + 1.5% pa.
Average debt tenor, as of base date 12/31/2008, was 2.2 years, and its average c
ost was below 100% of the CDI interbank rate.
In 2008, highly volatile oil prices, combined with the depreciation of the Brazi
lian real against the dollar, led to a significant increase in gas costs. Differ
ences between prices and costs comprising Comgs tariffs (as approved by the regul
atory agency) and costs actually incurred by the Company to purchase supplies ar
e posted in a " regulatory account" and periodically passed on to consumers in t
he form of higher (or lower) tariffs for natural gas. In this scenario, we ended
the year with a R$ 529.3 million negative balance (i.e. the cost of gas incurre
d by Comgs in excess of the amount included in the composition of its tariffs). D
ue to these factors, Comgs had to resort to short-term loans to finance its worki
ng capital at an average cost of 130% of the CDI interbank rate, which is consid
ered a high rate due to uncertainty on the world economic scenario.
On December 20, the ARSESP agency authorized an extraordinary increase for indus
trial, commercial, automotive and generating (thermoelectric) supplies. In the r
esidential segment, which accounts for more than 98% of Comgs customers, the tari
ffs remained unchanged. This adjustment ensured economic and financial health fo
r Comgs.
net Profit
Comgs posted 16.03% growth in net profit in 2008. The amount increased from R$ 44
3 million in 2007 to R$ 514 million at the end of the year.
Value added - an indicator of wealth aggregated to society - totaled R$ 1.36 bil
lion in 2008. This value refers to the difference between revenues earned and th
e cost of purchasing gas and services from other companies, plus depreciation an
d amortization. Over the last three years, Comgs has posted R$ 4.32 billion cumul
ative added value.
debt Profile
Short term (op to 1 year) Mid (from 1 to 3 years) Long (more than 3 years)
Value Added statement
Employees Government Financial Institutions Shareholders

relations with strateGic
segments
COmGS ACTS TRANSpAReNTLy ANd ReSpeCTFuLLy IN ReLATIONS wITh empLOyeeS
REsPonsiBlE And tRAnsPAREnt diAloguE
Responsibility and transparency in customer relationships is one of Comgs' strate
gies for generating value - and indispensable for it to perform well in the mark
et. The Company maintains direct channels of communication with its stakeholders
- customers, suppliers, shareholders, civil authorities and all communities it
relates to through its services. Use of these channels is encouraged as part of
its good conduct policy and corporate ethical principles. All demands, requests
or complaints we receive are responded to as soon as possible.
In 2008, Comgs supported over 40 events in order to strengthen relationships with
different segments in its field of activity - residences, commerce, industrial
customers and government agencies.

Comgs' toll-free number - 08000 110 197 - is available to the public 24 hours a d
ay, seven days a week, and took 1,070,548 calls in the course of the year. In ad
dition to this channel, Comgs provides an e-mail address consumidor@comgas.com.br
, which received 19,611 messages. The Company have points of service called Casa
s Comgs located in the municipalities of Campinas, So Paulo, and Santos, in which
24,765 consumers were personally attended.
intERnAl PuBlic
Since Comgs acts transparently and respectfully in relations with its employees,
its team enjoys job satisfaction and is engaged with the Company's objectives. T
his was one of the findings of the organizational climate survey we conducted be
tween September and October 2008, which measured the level of our professionals'
involvement with Company objectives.
In 2008, Comgs' favorability index reached 69%, which was six points higher than
in 2006, as measured by the survey conducted by Hay Group, a reputable internati
onal consulting firm acting in the human resources area. The factors that evolve
d most were working conditions, communication, workload and balance. None of the
factors showed a decline in relation to the previous survey and in general all
item groups (dimensions) showed significant development in 2008. The survey invo
lved the participation of 89% of the employees, or a total of 771 people.
Quality of life
As part of its efforts to ensure quality of life for its employees, Comgs organiz
ed the Adventure Race (for the fourth consecutive year) and the Adventure Walk (
for the first time). Employees registering for the events handed in 396.5 kg of
warm clothing for donation to the Child Citizenship Institute (ICC
local acronym) - which was selected by a draw from among suggestions made by emp
loyees.
During the race, participants adhered to selective collection of garbage for rec
ycling. The Adventure Run, which is now part of the annual Comgs calendar, attrac
ted more than 400 professionals to a farm in Jundia with the aim of facing challe
nges and finishing
sEVERE-illnEss RElAtEd PRogRAms
MEAsUREs AcTIvITIEs DEvElOPED
the trial. The activity also took care to neutralize any carbon dioxide (CO2) ge
nerated by the event. During the prize-award ceremony, a palm tree was planted a
t the site to offset emissions. A specialized company calculated the CO2 neutral
ization requirement, and concluded that 35 trees had to be planted.
Comgs encourages employee wellbeing and health activities such as workplace gymna
stics (three times per week), and free flu vaccination for all their families to
o (annually). It also conducts campaigns for tetanus and hepatitis A and B vacci
nes. In 2008, employees were also administered MMR tripleshots against mumps, rub
ella and measles.
Prevention Flu vaccination for employees, dependents and trainees
Vaccination against hepatitis A / B and anti-tetanus
Triple-shot vaccination against measles, mumps and rubella (MMR) for employees a
nd interns
Fitness activities, at CORMSP
Workplace gymnastics labor for employees, interns and indoor outsourcers
Adventure Run and Walk for all Comgas employees and interns
BG Energy Challenge for the four winning teams from the Comgas Adventure Run
Education "Healthy Morning" event at central complex (CORMSP) and So Jos dos Camp
os
Counseling Ergonomic testing at CORMSP site Weight-watcher program for employee
s and interns
Education, training and risk control Policy restricting use and abuse of alcoho
l and drugs at Comgas Updating the Occupational Health Medical Control program (
locally PCMSO) performed during admission examination, applied to randomly selec
ted employees Check-up at Albert Einstein Hospital for all Comgas executives (ma
nagers, superintendent, officers and president)

diversity
Some 68% of employees interviewed for the fourth Comgs organizational climate sur
vey believed the company provides equal opportunities for employees irrespective
of religion, ethnic origin, gender, physical condition, and ideological interes
ts.
Frequent assessments are made to identify changes that should be made in Comgs in
order to better serve disabled professionals.
Comgs employs 38 disabled professionals. We also hold periodical discussion forum
s on working conditions to ensure improvements for this group. In 2008, Comgs ran
three training programs, on IT, English and professional etiquette training.
Employees by gender (%)
Women Men
Board - 100
Officers - 100
Management 26.1 73.9
Administrative 49.9 50.1
Production 9.7 90.3
Apprentices - 100
Interns 52.5 47.5
Employees by age group (%)
Under
30 30 - 50 Over 50
Board - 76.9 23.1
Officers - 28.5 71.5
Management 6.4 81.7 11.9
Administrative 40.8 54 5.2
Production 23.4 67.5 9.1
Apprentices 100 - Interns 100 - Afro-descendent employees (%)
Women Men
Board - 30.8
Officers - Management - 1.79
Administrative 3.73 7.02
Production 6.45 23.1
Apprentices - Interns - Employees with disabilities (%)
Board Officers
Management Administrative 4
Production Apprentices Interns
composition of the board of directors
Gender 100% men
Age group 76.9% aged 30-50 23.1% over 50
Afro-descendents 30.8%
Disability -
compensation and benefits
Comgs has a consolidated profit-sharing program, which distributed a total of R$
20.6 million in 2008, based on criteria involving company earnings and individua
l performance by each professional as appraised by immediate superiors. Last yea

r, the Company paid out R$ 132.5 million in salaries and benefits, which was 12%
more than the previous year.
In addition to salary and profit-sharing bonus, Comgs offers a comprehensive pack
age of benefits under collective bargaining agreements with unions representing
the different occupations in the company. Benefits include: assistance in cases
of illness / accident, dental and medical assistance, help for children with spe
cial needs, daycare assistance, help with orthopedic materials, eyesight, medica
tions, vacation loans, vocational guidance for employees' children, life insuran
ce and supplementary pensions. Temporary employees also have life insurance, inc
apacity and disability coverage, meal and transportation vouchers supplied by ou
tsource companies.
Comgs also provides internal training courses for employees, and financial suppor
t for
training outside the Company when required.
All staff have a SAP performance contract.
Potential and performance assessments were
performed through career mapping in 2008.
Average annual training
hours for employees
2008
Officers 40
Management 98.22
Administrative 66.68
Production 70.48
Total 65.48
supplementary pensions
The Comgs Retirement Plan is a defined-benefit based supplementary private pensio
n plan offered to all employees irrespective of position.
Employee contributions may correspond to 2% (salaries of up to R$ 1,984.66), 3%
(R$ 1,984.67 to R$ 4,579.99) or 4% (over R$ 4,580.00) of applicable salary (basi
c salary plus personal advantages), in line with the three contribution bands. F
or its part, Comgs pays in 200% of the employee's contribution, so for every R$ 1
paid by the latter, the company pays in R$ 2.
The pension fund provides full coverage based on contributions to the global acc
ount created for this purpose. The estimate made in December 2002 was 1.11%.
internal communication
Internal communication is an effective tool for interaction with Comgs profession
als. The following are main vehicles used to communicate with employees Comgs Tot
al monthly newspaper, Mural Comgs weekly panel, Telugs weekly newsletter, Telugs Sp
ecial (extra version of the weekly newsletter) and Batendo Papo which provides f
or direct contact in chats held monthly, between managers and their subordinates
.
61
in 2008, The casa comgs sTores in so paulo and campinas were equipped wiTh debiT c
ard machines ensuring facility and security for cusTomers paying Their bills
custumERs
new contact center
In 2008, Comgs customers who called the Contact Center on 08000 110 197 were serv
ed by ACS, a Grupo Algar company located in Campinas, in the interior of the sta
te of So Paulo. All Contact Center procedures are carried out by 300 specially tr
ained and qualified professionals. They are housed at modern premises with lates
t generation equipment and technology, which facilitates integration and exchang
e of data between team members.
A new development introduced at the Contact Center in 2008 was the Comgs "mini-ho
me" located in the call responders' workplace, fitted with natural-gas appliance
s (stove, shower, heaters), thus giving them a feel for the company's business.
In the Contact Center, a new "Residential Market Growth Cell" was set up to serv
e customers and people interested in obtaining details of Project Retail. When a
caller asks for details in relation to connecting a home to the gas supply, the
cell's team provides specialized services and responds quickly and flexibly to
the requirements of this specific segment of the public.
Over a period of three months, the customer is regularly phoned by our attendant
s. This was the way Comgs found to show a pro-active approach and at the same tim
e identify potential faults in the procedure and respond with quick and efficien
t solutions.
steps in the procedure followed by the Residential market growth cell service
1.
Welcome
first outbound call made by the Contact Center's exclusive service grou
p for customers of the Homes Program, with the aim of surprising and delighting
customers. This call is made after the customer has had gas connected. They are
given a welcome and their perception is mapped in relation to the process of sal
es, installation, connection and operation.
2.
Services second contact with customer after the first invoice has been sent out
. We call to check that the customer has received the bill and ask if there are
any questions. Our Contact Center also uses the call to inform customers of chan
nels and services available for assistance (telephone, email, fax, chat and pers
onal service) and responds to any questions on functioning and use of appliances
.
3.
Monitoring
contacts monitoring incidents to check whether requests were respond
ed to and verify status of customer positioning.
4.
Workflow Control
monitoring incidents, suggestions, requests or complaints, wit
h follow-up through to the final solution.
ombudsman
Ombudsman team members are specialists in responding to customers that may not h
ave been satisfied with explanations provided by the Contact Center. In May 2008
, the ombudsman's team was extended by adding two service positions at the Conta
ct Center in Campinas.
In 2008, the Ombudsman received 7,781 opinions and 6,449 complaints. Most proble
ms were solved by the team within an average of 12 days.
casas comgs - points of service
A new point of personal service opened in Santos in 2008 is aimed at Comgs consum
ers and others interested in our services or learning more about piped natural g
as supplies.
The service is available during business hours from Monday to Friday. There is a
reception area and two points of service at which customers may order services
such as issuing a duplicate bill, connection to gas supplies, technical assistan
ce, request a network search, or express customer opinions. The Santos point of
service is next to Comgs' local offices. Plans for 2009 include opening a "Casa C
omgs" store on the same lines as those operating in So Paulo and Campinas.
In 2008, the Casa Comgs stores in So Paulo and Campinas were equipped with debit c
ard machines ensuring facility and security for customers to pay their bills. In
December, a three-month campaign was launched to encourage customers to settle
their bills by direct debit from their bank accounts.
connected to our customers
The Connected to our Customers link was launched at the end of 2008. This is a p
oint of care inside Comgs, through which employees can monitor customer service i
n real time. All they have to do is take the phone off the hook and listen to an
y ongoing conversation at the Contact Center in Campinas. The expectation is tha
t after listening to conversations, employees may think about how they can impro
ve customer services and ensure their satisfaction. Suggestions may be shared wi
th everybody at the Connected to our Customers program's hot site on the company
intranet. At the point of service, in addition to a telephone, there is a compu
ter to record employee suggestions.
sHAREHoldERs And inVEstoRs
Comgs communicates with its shareholders through its Investor Relations unit. The
IR website at www.comgas. com.br/investidores carries financial reports, detail
s on the performance of Comgs shares, corporate-governance initiatives and materi
al facts disclosed to the market.
The IR unit's main task is developing strategies to drive the value of our share
s in the market, providing reliable and transparent information to shareholders
and potential investors on performance, activities and new projects, in order to
favor our institutional image. In 2008, the Comgs IR unit held two conference ca
lls for market analysts and professionals, one at the end of each half-year.
share capital
Comgs share capital now consists of 119,822,797 shares, of which 93,910,898 are c
ommon shares (ON) and 25,911,899, class A preferred shares (PNA). Of these, 78%
belong to the controlling shareholders. Investors have access to a free float st
ock of preferred and common shares representing 22% of total share capital.
capital market
Leading stock exchanges worldwide posted losses in 2008, reflecting the effects
of the economic crisis. Following the trend, Comgs preferred shares (CGAS5) fell
15.75% in the year, and average daily volume traded was R$ 4.3 million. Our comm
on shares (CGAS3) ended the year with a cumulative fall of 17.97%. In the same p
eriod, the So Paulo stock market's Ibovespa index racked up a loss of 41.22%, and
ended the year at 37,550 points.
In 2008, Comgs shares were part of the Brazil Index (IBrX) and the BM&F Bovespa M
id Large Cap (MLCX). Over the year, the IBrX fell 41.77% and the MLCX 41.28%.
suPPliERs And outsouRcERs
In 2008, Comgs took an unprecedented initiative in developing 25 providers of ser
vice and materials to extend the pipeline network and connect new customers, amo
ng other activities. This was an initial milestone in ensuring quality for all m
aterials, services and equipment used by Comgs. The Company's qualification Commi
ssion meets at least once a week to work on development of suppliers. The commis
sion consists of professionals whose work involves Health, Safety, Environment a
nd Quality, supplies and technical standards.
The challenge for the Qualification Commission is to help suppliers adapt to the
current stage in Comgs' evolution by ensuring quality services delivered within
agreed deadlines at competitive costs, in line with HSEQ policy.
Comgs actively participates in a Certification Program for Installer Firms (Quali
nstal
local acronym), which evaluates conformity at suitable levels depending on
the specific characteristics of companies in the installation services sector a
nd their respective facilities to enhance efficiency and safety.
training gas technicians
In 2008, Comgs partnered approximately 30 contractors in its license area to prov
ide installation and maintenance services. All these companies employ gas techni
cians. The profession is very important for Comgs business, because these employe
es fit and maintain the indoor and outdoor facilities and pipeline networks for
residential and commercial customers. They also work on installation and convers
ion of gas appliances: stoves, heaters and small boilers. They also install equi
pment for measuring natural-gas flow rates and regulating its pressure.
Comgs has formed a partnership with the industrial training agency Senai to train
gas technicians specializing in new connections. The course involves providing
classroom training (theoretical units) training in the field (practical applicat
ion), teaching materials (handouts), meals, transportation, and accommodation fo
r participants from the interior of the state or the coastal areas.
In 2008, 32 candidates attended courses of whom 22 were approved and hired as as
sistant gas technicians through an outsourcer company specializing in this kind
of work.
in 2008, some r$ 2.15 million were invesTed in social responsibiliTy iniTiaTives
goVERnmEnt And sociEty
Public powers
Comgs has pro-active relationship and maintains a constructive dialogue with the
different spheres of government in Brazil, and develops negotiations with munici
palities and departments in cities where it is active or where it is expanding i
ts network.
It is also actively involved in political discussions and conferences as a const
ant advocate of the strategic and environmental role of natural gas for the well
being of society and the continuity of its own business. Comgs has a representat
ive on the committee of the Brazilian Association of Piped Gas Distributors (ABE
GS
local acronym). It takes part in strategic decisions and fills a vice-presiden
t position in the Brazilian Association for Infrastructure and Basic Industries
(ABDIB local acronym). The Center and Federation of Industries of the State of So
Paulo (FIESP / CIESP
local acronym) has another Comgs vice-president position an
d the company also participates in the Strategic Council of the Infrastructure D
epartment (Deinfra local acronym).
Over the last three years, Comgs has been involved in numerous negotiations and d
iscussions related to legislation known as the Gas Law, which was eventually vot
ed by Congress at the end of December 2008. Comgs believes that certain features
of the new legislation - which was ratified by President Lula in March 2009 - ar
e worth highlighting: a licensing or concession regime for the construction of g
as pipelines and transport facilities; public bidding procedures to lay new pipe
lines and decisions on transport tariffs; regulated free access; definition of "
high producer", "high consumer" and "free consumer"; and maintenance of the mono
poly of pipedgas distribution to states, which benefits local distributors.
community
Comgs has enhanced relationships with local communities, which it sees as strateg
ic to the consistent and sustainable evolution of its business. In 2008, we inve
sted R$ 2.15 million in various social responsibility initiatives in nine munici
palities in the concession area. In all, the initiatives benefited some 20,830 p
eople.
Comgs has taken a series of measures to assess the impact of its operations in th
e communities where it operates. Initially the Company contacts community leader
s and associations that have interfaced with the community, schools, and other o
rganizations in regions it will be serving for the purpose of identifying local
needs that it may commit to meet.
Comgs' operational performance focuses two main points: construction work install
ing the pipednatural-gas distribution network and subsequent delivery of gas serv
ices in addition to continuous monitoring of all infrastructure safety for repai
rs and maintenance. Any interruption of services or Comgs having to leave a parti
cular locality where it is now active would be unprecedented.
comgs Apprentice Program
Comgs Apprentice Program (CAP) commemorated its eighth year of existence in 2008.
Since its inception, the CAP has reached 13 cities to involve 2,000 young parti
cipants in more than 400 social projects working with health, environment, cultu
re, citizenship and communication. A total of R$ 10 million were invested. The m
ain objective of the CAP is to train young people to develop social projects and
ensure their feasibility in their local communities.
Participants are selected from among young people aged 14 to 17 who are at high
school or technical schools (80%) or private schools in So Paulo (20%). In 2008,
the CAP had 34 social projects developed by a group of 160 young people in the c
ity of So Paulo, and another 400 young people developed 94 projects in the interi
or of the state.
The Comgs Apprentice Program has two projects. One is an outreach effort know as
DisseminAo -DisseminAction, which takes CAP methodology to public schools in citie
s within the Comgs concession area. The other is called Coletivo Jovem - Youth Co
llective and is building a network for the exchange of experiences between young
people from various projects that have participated in the program. In 2008 the
se projects have reached new cities. DisseminAction (outreach) intervened in So V
incent and Jundia, and three other cities already covered by the project, and You
ng Collective worked in Santos for the first time.
Comgs employees and suppliers can collaborate with the Apprentice Program by join
ing the Friends of Comgs Apprentice initiative. As volunteers, from among run by
young people from the CAP, they adopt a project they have affinity with and supp
ort it in accordance with their knowledge and skills.
sponsorship incentives
The Comgs Sociocultural Sponsorship Fund was launched in 2007 and has R$ 1 millio
n available exclusively for projects covered by Article 18 of the Federal Law fo
r the Encouragement of Culture, also known as the Rouanet Law. In the second yea
r of program, the level of funds was raised to R$ 1.5 million for projects to be
developed between 2009 and 2010.
Some of the new developments in 2008 were the inclusion of dance and theater spo
nsorship, and the launch of the website www.fundocomgas.com.br.
The second year of the Comgs Sociocultural Fund targeted social projects related
to the theme of "Transformative learning and sustainable relationships," to be d
eveloped in communities where Comgs is active.
During the selection stages, initial screening was performed by outside professi
onals with expertise in the field. The final selection decisions are made by the
Fund's commission, consisting of representatives of the company's departments a
nd validated by the Communication Committee, comprising Comgs officers.
social investment
Voluntary work initiatives
Comgs has a volunteer group comprising 30 employees involved in a range of activi
ties related to society as a whole. The group calls on all Comgs employees to get
involved and take part in specific activities developed in the course of the ye
ar. In 2008, there were three initiatives involving 252 people at a home for sen
iors (Ondina Lobo, in Parque Villa Lobos) and an institution caring for children
with HIV (Sitio Agar).
Comgs also helped organize a campaign to help flood victims in the state of Santa
Catarina. Volunteers raised R$ 6,000 only in cash donations, due to the difficu
lties of storing items received from various parts of Brazil.
"downtown so Paulo as a classroom"
"Downtown So Paulo as a classroom", another project supported by Comgs, offers too
ls for teachers to combine classroom teaching on the history of the city's downt
own area with visits to historic sites. In addition to training for teachers, th
e company provides buses for schools, all located in the municipality, to transp
ort children aged 4 to 10. Among the places visited are the Municipal Theater, Pt
io do Colgio (historic building), Pinacoteca (picture gallery), and other archite
ctural projects located in the historic center.
In 2008, Comgs invested R$ 322,416 in this project and reached 18 schools, 46 tea
chers and 12,000 children.
EnViRonmEnt
Respect for the environment, environmental safety and the adoption of best pract
ices in the use and exploitation of natural resources are now visible aspects of
all Comgs activities. All sectors of the Company use solid, efficient and useful
environment management systems which show customers, contractors, employees and
society in general its concern with environmental preservation.
iso 14001
Comgs maintains ISO 14001 certification and the recertification procedure took pl
ace in November 2008. The international standard defines requirements to set up
and adequately operate an Environmental Management System.
The audit process verified the different aspects of compliance with environmenta
l legislation and procedures, system for treating non-conformities to ensure eli
mination or reduction of environmental impacts, properly trained and qualified p
ersonnel and environmental aspects and impacts of each activity. The audit detec
ted a "Non-Conformity Low Level" and four "Recommendations for Improvement", whi
ch Comgs then dealt with.
Comgs expects to earn its second ISO 14001 recertification in the first half of 2
009.
Vehicles replaced
Environmental impacts classed as significant arise from Comgs operations involvin
g its use of fuels and vehicle emissions. Its 370 vehicles (powered by ethanol,
natural gas, gasoline and diesel) traveled 5,232,246 kilometers in 2008. Taxis a
nd rental car vehicles clocked 232,718 kilometers over the same period.
Comgs regularly monitors outsourcer vehicles and requires maintenance and engine
tuning procedure modifications to reduce emissions of pollutants into the atmosp
here and diminish environmental impacts. Comgs also encourages the use of vehicle
s powered by natural gas in order to minimize the effects of CO2 emissions and o
ther greenhouse-effect gases.
In 2008, Comgs replaced certain vehicles used by a specific group of employees: b
usiness consultants, construction site technicians, and emergency-call responder
s. About one third of the company's fleet was replaced in compliance with rules
such as replacing cars after a maximum of four years use, or 100,000 kilometers.
125 new saloons powered by 1.8 L engines were purchased, all equipped with natu
ral gas kits to help minimize emissions of greenhouse gases such as CO2, one of
the most harmful for the greenhouse effect. Seven Fiat Dobls do not have the kit
due to its effects on engine performance.
pursuing conTinuous improvemenT, a parTnership agreemenT was signed in laTe 2006
wiTh an ngo working To fundao sos maTa aTlnTica*
new network reduces emissions
Comgs invested R$ 32 million to replace cast-iron pipelines in 2008, again benefi
ting the environment. By replacing 35 km of pipeline, atmospheric emissions were
reduced by 2,742 tons of CO2 equivalent.
Industrial use of natural gas supplied by Comgs, instead of other fuels that are
heavier and more harmful to the environment, also has great environmental benefi
t since the reduction in emissions is 100% for SO2 (sulfur dioxide), 30% for CO2
(carbon dioxide) and 95% for micro particles.
Cast-iron pipelines may present cracks or fissures and are mainly responsible fo
r Comgs emissions due to leakages of natural gas.
The regulatory agency (ARSESP) has not set immediate targets for Comgs in terms o
f reducing greenhousegas emissions. However, the license agreement signed on its
privatization in 1999 requires Comgs to replace 400 km of its cast-iron pipelines
by 2009. This target was met six months early in 2008.
comgs greenhouse-gas emission
2006 95,886
2007 95,977
2008 109,639
2009 (estimate) 113,011
Methane (CH4) is the principal component of natural gas and causes the most sign
ificant of the emissions arising from Comgs operations. In 2008, total emission w
as 5,163 tons, compared with 4,504 tons in the previous year (see table).
* Protect atlantic forest vegetation
comgas methane emissions (tons)
2006 4,566
2007 4,504
2008 5,163
Biodiversity
Natural-gas distribution lead to temporary reversible impacts when a new pipelin
e system is installed. Comgs prioritizes the use of areas already modified by hum
an intervention as a means of reducing environmental impact. However, if there i
s no other route available, the impact - usually the loss of native vegetation -
is analyzed as part of environmental licensing procedures, and all control and

mitigation measures are adopted in accordance with environmental legislation.
Before locating a natural gas distribution system, Comgs follows procedures indic
ated by state government's Environment agency including mandatory analyses such
as the Environmental Impact Assessment and Preliminary Environmental Report.
Such studies identify major impacts for the intervention area, and will then be
assessed by the state's Environment agency. Environmental licenses that may be i
ssued, based on the mandatory impact reports, are made public and will include t
he environmental requirements to be met by the development. In order to operate
a gas pipeline, therefore, Comgs must show that it has taken measures to control
and mitigate impact.
Comgs avoids intervening in protected habitats or areas. Whenever possible, it pl
aces gas pipelines in environments that have already been occupied such as areas
alongside highways that have not been used for buildings.
When it is necessary to intervene in places legally classed as areas of permanen
t preservation, Comgs will not intervene until it has been authorized to do so by
the competent environmental agency, and will assume responsibility for restorin
g the area as found, and will sign a binding document (Environmental Recovery Co
mmitment, locally TCRA).
Currently, there are 54 TCRA in progress, and all expired TCRAs have been duly f
ulfilled and submitted to the State Department for the Protection of Natural Res
ources (DEPRN
local acronym).
Part of the Comgs distribution network is located around places classed as enviro
nmental protection area (locally APA), head waters protection area (locally APM)
, permanent preservation area (locally APP) or state park (locally PE). The regi
ons concerned are the following:
APA Piracicaba / Juqueri Mirim (municipalities of Amparo, Bragana Paulista and Ja
guarina)
APA Vrzea do Tiet (municipalities of Barueri, Itaquacetuba, Osasco, So Paulo and Su
zano)
APA Cajamar (municipality of Cajamar)
APA Jundia (municipality of Jundia)
PE do Jaragu (municipality of So Paulo)
PE Serra do Mar (municipalities of Cubato, So Bernardo do Campo and So Paulo)
PE do Tiet (municipality of So Paulo)
APP: Rivers, several streams (within the concession area)
APM (municipalities of So Paulo, Suzano, Emb Guau, Mogi das Cruzes, Rio Grande da S
erra and So Bernardo do Campo)
Atlantic forest vegetation
Whenever Comgs extends its natural-gas distribution network in a permanent preser
vation area, it is required to plant seedlings in the affected region. However,
despite fulfilling the requirements of the State Department for Protection of Na

tural Resources (DEPRN
local acronym) of the Government of the State of So Paulo,
planting these seedlings did not have the desired effect, since they were plant
ed in small quantities and in locations so dispersed they failed to materially e
nhance the environment.
Seeking continuous improvement, Comgs signed a partnership with the SOS Mata Atla
ntica foundation (an NGO) at the end of 2006. Trees were planted at a single loc
ation to foster significant recovery and augment Comgs' contribution to the envir
onment. In 2008, 30,000 seedlings were planted in Itatiba to foster significant
recovery of local gallery forest.
In the period from 2006 to 2008, centralizing planting efforts has led to saving
s of R$ 5 million for Comgs.
selective disposal
Selective waste collection has been part of Comgs routine since 2002. A group of
employees are retained to sort waste material although there are special contain
ers for each item in all sectors. All separated materials are sold to Multilixo,
a disposal company. The funds thus obtained are spent on sending Class 1 waste
- batteries, cell phone units, fluorescent lamps, and others - to a processing p
lant in Rio de Janeiro (Contecom).
At its bases in the interior of the state (Campinas region) and the Baixada Sant
ista, Comgs introduced collection through Multilixo, which arranges proper dispos
al at accredited landfills, including organic waste. For units in Vale do Paraba,
there are partnerships with local municipalities for proper disposal of garbage
and selected waste.
Comgs productive processes generate some waste items classified as hazardous, whi
ch are sent to cement plants for furnace processing (incineration). One of the m
ain items arising from operating activities is the dust produced when cleaning s
crubbers; mercaptan residues; cells and batteries; materials contaminated by oil
, grease, paint or solvents; lamps; laboratory reagents; anaerobic resin and scr
ubber wash effluent.
total weight of hazardous waste transported *
2006 2007 2008
2,065 kg 2,971 kg 4,470 kg
Total weight of hazardous waste transported outside the organization 9,506 kg (
solids)
(*) Comgs does not transport or export treated hazardous waste or ship waste acro
ss international borders.
solid waste generated in 2008, by disposal and weight (tons)*
Hazardous Non-hazardous Landfill Subterranean waste injection Recycling 4,470
108,000 261,938
(*) The specialized company Multilixo was engaged for final disposal.
the history of gas
The history of gas in Brazil, part and parcel of the history of Comgs itself, goi
ng back 136 years, may be seen in the "Gas Memorial Exhibition" at the old gaswo
rks complex in downtown So Paulo. This site housed Comgs' head offices from 1890 t
hrough 1972, but was rebuilt and re-opened in early 2008 as the workplace for 45
0 employees.
This site covering 24,000 m2 became the So Paulo Metro Region Operations Center (
local acronym CORMSP). It had been listed by the Municipal Council for Historica
l Cultural and Environment Heritage of the City of So Paulo (Conpresp
local acron
ym) and by the Council for Protection of Cultural, Archaeological, Artistic and
Tourist Heritage (Condephaat local acronym). The building is classed as sustaina
ble because it enables Comgs to reuse water, with biological effluent treatment a
nd selective waste collection. There are also condenser units for the air-condit
ioning system powered by natural gas, also used for heating water. This energy s
avings from this measure in 2008 are likely to be as much as 20% and 30%.
The new complex's sustainable environment and good location has encouraged our p
rofessionals to take up different habits. Some 30% of them take the subway to wo
rk, in many cases leaving their cars at home. So they too are helping to reduce
greenhouse gases emissions in the atmosphere.
The design for the new complex allocated a permanent space for the Gas History E
xhibition, a museum that students in particular may visit with prior scheduling.
On the tour, lasting approximately two hours and accompanied by specialized gui
des in all cases, visitors see the collection in the meter and compressor houses
, a time capsule buried by Comgs employees in the past, photographic and document
s displays illustrating the company's history.
The exhibition is the fruit of a partnership between Comgs and the Energy and San
itation Foundation of the State of So Paulo, which is responsible for safekeeping
all energy industry archival materials. While the Foundation invests in guides
for the exhibition, Comgs offers free buses to schools located in municipalities
where it has facilities. The museum absorbed investments amounting to R$ 293,570
in 2008.
total water consumption
2006/2008
Year volume (m3)
2006 18,675
2007 17,467
2008 15,571
71
Rational consumption
Comgs is developing projects to reduce consumption of electricity and heavy fossi
l-fuels. A natural-gas fired system generating electricity was installed at the
CORMSP site. About 80% of all energy consumed in the restored building comes fro
m this cogeneration plant.
Among other things, the campaigns developed internally set out to raise employee
awareness of such issues as the need to reduce the number of hard copies (encou
raging them to use electronic files and innovative IT processes instead of paper
). Other activities sponsored by Comgs: reusing used paper; using recycled paper;
replacing ordinary faucets by self-timing faucets; use of vehicles powered by a
lternative fuels; and use of products that may be directed to other activities.
total energy directly consumed by comgs - 2006/2008
Year Hydroelectric Natural gas
(kWh) (m3)
2006 23,88819 35,049
2007 27,17940 22,928
2008 31,95682 288,911
AwARds And REcognition
FgV Award for Enterprise Excellence
In 2008, for the third consecutive year, Comgs was voted the FGV Enterprise Excel
lence Award as the best company in its line of business. The award is made by th
e magazine Conjuntura Economica, published by the Getlio Vargas Foundation - Braz
ilian Economics Institute (FGV).
third masterinstal Award 2008
Seven of the Comgs 12 case studies earned awards. Sponsored by Comgs, the MasterIn
stal award is made by the Brazilian Association for Conformity and Efficiency of
Installations (ABRINSTAL local acronym) and the industrial installation compani
es organization (Sindistalao
local acronym). The main aim is to raise the visibility of companies and profess
ionals in the installation industry. The award includes technical categories for
installation projects such as methods and procedures, training, qualification a
nd employee safety.
Best oil and gas sector company
In August 2008, for the fourth consecutive year, Comgs was elected best company i
n the Oil and Gas sector by As Melhores da Dinheiro, a supplement published by t
he magazine IstoDinheiro.
top gas Award 2008
In December, Petrobrs nominated Comgs for the special Partner Distributor of the Y
ear award, thus highlighting their relationship as partners coping with day-to-d
ay challenges.
AgA safety Achievement Award
Comgs was named "company with the best safety record of all member firms" in 2007
, among the associated companies The award was for its performance in Health, Sa
fety and Environment, and especially its figures for incidents involving days ab
sent from work in relation to man-hours worked, and incidents involving occupati
onal injuries or diseases.
company that most respects consumers in the piped gas category
In 2008, for the third consecutive time, Consumidor Moderno magazine named Comgs
"Company that most respects consumers" in the piped gas category in Brazil. The
magazine surveyed men and women aged over 18 in the main Brazilian state capital
s. Respondents rated attributes such as service, quality of products or services
, price, ethical, diligent and committed advertising, social responsibility and
commitment to environment and sustainability.
columnists award for "Best Promotional case study"
In July 2008, Comgs was given an award in the category "Best Promotional Case Stu
dy", for its enveloping strategy. The award is made by publisher Editora Refernci
a and the Brazilian Association of Marketing and Advertising Columnists (locally
ABRACOMP). The award highlights the most outstanding promotional marketing case
studies, initiatives and materials by companies and professionals acting in Bra
zil.
gri content and methodoloGy
Comgs Annual Report 2008 presents our economic and financial results as well as th
e key to the Company s performance indicators in three dimensions: economic, socia
l and environmental. This one single publication thus consolidates the most rele
vant data showing the development of business in the last year, along with our s
ocio-environmental initiatives and programs in order to facilitate access and ac
countability for our different stakeholders.
The models used to compile this report followed the main references and guidelin
es of the Brazilian Association of Listed Companies (Abrasca local acronym) and
the Global Reporting Initiative (GRI), a multistakeholder global action network
based in Amsterdam, Netherlands.
In terms of the different application levels indicated by the GRI, Comgs believes
that its 2008 annual report reaches level B, since it provides core management
and performance indicators.
Comgs' 2008 annual report covers the period from January 1 to December 31, 2008 a
nd includes all our operational units in our concession area in the state of So P
aulo. No data from the previous report (2007) have been restated to adjust indic
ators. Nor have there been any significant changes in scope, boundary or measure
ment methods in the reporting period.
Should there be any comments, suggestions or criticisms in relation to the conte
nts of this report, please email us at imprensa@comgas.com.br. Comgs is grateful
to all readers for their cooperation.
Application level
Comgs believes that its 2008 annual report reaches application level B in terms o
f completeness as per the Global Reporting Initiative (GRI) reporting structure
criteria shown in detail in the chart below.
indEx
The following table presents relevant information consolidated on the basis of r
esponses to the GRI indicators covered by this report. Some were answered direct
ly, while for others we have indicated the chapter in which they are found and /
or other references. For more on the detailed content of indicator protocols, p
lease see www.globalreporting.org.
Overall indicators
Page
Headcount by type of work

Full time 2006 2007 2008
Board 8 7 7
Management 119 122 142
Administrative 380 418 483
Production 287 312 320
Interns 40 49 71
Total 834 908 1,023
Part-time 2006 2007 2008
Apprentices 2 (6 hours) 2 (6 hours) 6 (6 hours)
Interns 27 (4 hours) 30 (4 hours) 30 (4 hours)
Total 29 32 36
Headcount by type of employment contract
Indefinite 2006 2007 2008
Board 8 7 7
Management 119 122 142
Administrative 380 418 483
Production 287 312 320
Total 794 859 952
Temporary 2006 2007 2008
Apprentices 2 2 6
Interns 67 79 101
Total 69 81 107
Headcount by region
Region 2006 2007 2008
Southeast 794 859 952
LA2. Total number of employees and
turnover rate by gender
WOMEN MENs
2006 2007 2008 2006 2007 2008
Total 13 10 24 21 25 22
Turnover rate 1.64% 1.16% 2,52%
turnover rate by age group
Under 30 30 - 50 Over 50
2006 2007 2008 2006 2007 2008
Total 10 6 7 21 28 36 3 1
Turnover rate 1.26% 0.70% 0.74%
turnover. Internal stakeholders
2.64% 2.91% 2.31%

2006 2007 2008
3
2.64% 3.26% 3.78% 0.38% 0.12% 0.32%
scheduled working days lost * Evolution injury rate* (%)

2006 2007 2008 2006 2007 2008
Man-hours worked Days lost Rate 1,883,638 72 7.6 2,015,895 24 2.3 2,274,543 0
0 2.21 1.28 (*) Excluding minor injuries and outsourced workers. Total injurie
s / total hours worked x 200 / *. 1.67
Total injuries / total hours worked x 200 / *. Excludes outsourced employees.
development of absenteeism * Absolute number of deaths *
2006 2007 2008 2006 2007 2008
7.4% 6.1% 4.2% 0 1 1
(*) Total days absences in period. (*) Including outsourced workers.
ibase indicators
2008 2007
1. Base of calculation Amount (BRl k) Amount (BRl k)
Net Income (NI) 3,989,000 3,212,000
Operating income (OI) 900.045 816.192
Gross Payroll (GP) 111.023 98.844
Amount % on % on Amount % on % on
2. Internal social indicators (BRl k) GP NI (BRl k) GP NI
Food items 6.689 6,0 0,17 5.560 5,6 0,17
Compulsory social contributions 35.561 32,0 0,89 33.810 34,2 1,05
Private Pension 3.365 3,0 0,08 3.001 3,0 0,09
Health 9.828 8,9 0,24 9.695 9,8 0,30
Health & Safety at work
Education
Culture
Qualification and professional development 3.002 2,7 0,07 2.416 2,4 0,08
Nursery or nursery benefit 148 0,1 0,003 136 0,1 0,004
Profit/Gain sharing 20.592 18,5 0,51 16.266 16,5 0,51
Other 1.483 1,3 0,03 3.897 3,9 0,12
Total - internal social indicators 80.669 72,7 2,02 74.781 75,7 2,33
Amount % on % on Amount % on % sobre
3. External social indicators (BRl k) OI NI (BRl k) OI NI
Education 1734 0,19 0,46 1122 0,15 0,04
Culture 293,5 0,32 0,007
Heath and sanitation
Sports
Fight against hunger and food safety
Other
Total contributions to society 2.027,5 0,22 0,05 1.122 0,15 0,04
Taxes (excluding social contributions)
Total - external social indicators 2.027,5 0,22 0,05 1.122 0,15 0,04
Amount % on % on Amount % on % on
4. Environmental indicators (BRl k) OI NI (BRl k) OI NI
Investments related to production/
operation of the company 38 0,004 0 15 0,001 0
Investments in external programs and/or projects 124 0,013
Total investments in the environment
has no targets defined [ x ] has no targets defined [ x ]
Concerning the definition of annual targets to minimize residues,
51 to 75% achievement [ ] 51 to 75% achievement [ ]
the consumption in general in the production/operation and
0 to 50% achievement [ ] 0 to 50% achievement [ ] increase of efficiency in the
use of natural resources, the company: 76 to 100% achievement [ ] 76 to 100% ach
ievement [ ]
5. Personnel indicators
No. of employees at the end of the period 952 859
No. of admissions during the period 155 134
No. of outsourced employees
No. of trainees 101 79
No. employees over 45 years old 192 180
No. of women working in the company 309 256
% of leadership roles occupied by women 24,8% 24,8%

No. of black people working in the company 97 94
% of leadership roles occupied by black people 0,8% 1,3%
No. of people with disability or special needs 38 32
6. Information referring to the exercise Targets
of corporate citizenship 2008 for 2009
Difference between highest and lowest remuneration in the company
Total number of work-related accidents 19
board [ ] board [ ]The social and environmental projects developed by board and
management [ x ] board and management [ x ] the company were defined by: all em
ployees [ ] all employees [ ]
board and management [ x ] board and management [ x ]
The standards of security and salubrity in the
all employees [ ] all employees [ ] workplace were defined by: all personnel + C
ipa [ ] all personnel + Cipa [ ]
does not get involved [ ] will not get involved [ ]
Concerning trade-union freedom, the right of collective negotiation
follows OIT norms [ ] will follow OIT norms [ ] and internal representation of w
orkers, the company: motivates and follows OIT norms [ x ] will motivate and fol
low OIT norms [ x ]
board [ ] board [ ]
board and management [ ] board and management [ ]
Private Pension is for: all employees [ x ] all employees [ ]
board [ ] board [ ]
board and management [ ] board and management [ ]
all employees [ x ] all employees [ ]
Profit/Gain sharing is for:
are not considered [ ] will not be considered [ ]In the selection of suppliers,
the same ethical standards and are suggested [ ] will be suggested [ ]
of social and environmental responsibility adopted by the company: are required
[ x ] will be required [ x ]
does not get involved [ ] will not get involved [ ]Concerning the participation
of employees in voluntary supports [ ] will support [ ]
work programmes, the company: organizes and motivates [ x ] will organize and mo
tivate [ x ]
in company 41488 in companyTotal number of complaints and at Procon 367 at Proc
on
comments from consumers: Lawsuits 76 Lawsuits
in company 100% in company at Procon 100% at Procon Lawsuits 46% Lawsuits
% of complaints and comments resolved:
Total value added for distribution (in BRL k): In 2008 In 2007
government 42% government 48%
Distribution of Value Added (DVA): collaborators 7% collaborators 7%
shareholders 10% shareholders 8%
third parties 13% third parties 12%
retained 28% retained 25%
coRPoRAtE inFoRmAtion
Comgs
Rua Olimpadas, 205 10 andar 04.551-000 So Paulo SP Brazil Tel.: 55 11 4504-5000
www.comgas.com.br
cREdits
Realization
Office os Institute Communication Department of Institucional & Regulatory Affai

rs
overall coordination
Suzy Gasparini Tatiana Bielefeld
Editing coordination and texts
Report Comunicao
graphic design
FutureBrand BC&H
Proofreading
Report Comunicao
Photos
Rogrio Lemos Montenegro
Printing
Grfica Vida
Eletronic Report Edition
Grupo Conectt
circulation Edition
300 print edition 300 eletronic edition
financial statements
companhia de gs de so paulo comgs
december, 31 2008 and 2007 with report of independent Auditors
contents
88 Report of independent auditors
Audited financial statements
89 Balance sheets
91 Statements of income
92 Statements of changes in shareholders equity
94 Statements of cash flows
96 Statements of value added
97 Notes to financial statements
REPoRt oF indEPEndEnt AuditoRs
the management and shareholders of companhia de gs de so Paulo
comgs
1.
We have audited the accompanying balance sheets of Companhia de Gs de So Paulo COM
GS as of December 31, 2008, and the related statements of income, shareholders equ
ity, changes in financial position and in value added for the year then ended. T
hese financial statements are the responsibility of the Company s management. Our
responsibility is to express an opinion on these financial statements.
2.
We conducted our audits in accordance with auditing standards generally accepted
in Brazil which comprised: (a) the planning of the work, taking into considerat
ion the materiality of balances, the volume of transactions and the accounting a
nd internal control systems of the Company; (b) the examination, on a test basis
, of the evidence and records supporting the amounts and disclosures in the fina
ncial statements; and (c) an assessment of the accounting principles used and si
gnificant estimates made by management, as well as an evaluation of the overall
financial statement presentation.
3.
In our opinion, the financial statements referred to above present fairly, in al
l material respects, the financial position of Companhia de Gs de So Paulo
COMGS at
December 31, 2008, and the results of its operations, changes in its shareholde
rs equity, changes in its financial position and value added for the year then en
ded, in accordance with the accounting practices adopted in Brazil.
4.
Previously, we audited the financial statements for the year ended December 31,
2007, including the balance sheet, statements of income, changes in shareholders

equity and in financial position for the year, on which we expressed an unqualif
ied opinion in our report dated January 31, 2008. As mentioned in Note
3, accounting practices adopted in Brazil were changed from January 1, 2008. The
financial statements for the year ended December 31, 2007, disclosed in conjunc
tion with the 2008 financial statements, were prepared in accordance with the ac
counting practices adopted in Brazil effective until December 31, 2007 and, as a
llowed by Brazilian FASB (CPC) Technical Pronouncement 13 First Time Adoption of
Law No. 11638/07 and Provisional Executive Order No. 449/08, not disclosed with
the adjustments for year-to-year comparison.
5.
The statements of cash flows and value added for the year ended December
31, 2007, prepared in connection with the 2008 financial statements, were subje
ct to the same audit procedures outlined in paragraph 2 hereof and, in our opini
on, are fairly presented, in all material respects, in relation to the overall f
inancial statements mentioned in paragraph 4 hereof.
So Paulo, January 30, 2009.
ERNST & YOUNG
Auditores Independentes S.S.
CRC-2SP015199/O-6
Sergio Citeroni
Accountant CRC-1SP170652/O-1
Balance sheets december 31, 2008 and 2007 (in thousands of reais)
2008 2007
Assets
Current assets
Cash and cash equivalents 39,726 34,379
Gas bills receivable (Note 4) 502,682 459,117
Cost of gas recoverable/ (to be passed on) (Note 5) 528,289 (55,948)
Other accounts receivable (Note 6) 68,402 39,748
Allowance for doubtful accounts (Note 4) (31,806) (28,234)
Inventories (Note 7) 34,986 48.527
Taxes recoverable (Note 8) 144,646 100,875
Others 14,874 15,127
Prepaid expenses 447 773
1,302,246 614,364
Non-current assets
Deferred income and social contribution taxes (Note 10) 66,629 59,733
Value-added tax on sales and services (ICMS) (Note 10) 9,859 15,015
Accounts receivable (Note 9) 4,325 15,924
Judicial deposits 10,806 9,904
Others 1,305 1,259
92,924 101,835
Permanent assets
Fixed assets, Net (Note 11) 2,322,809 2,160,456
Deferred charges - 259,664
Intangible assets (Note 12) 294,540 2,617,349 2,420,120
Total non-current assets 2,710,273 2,521,955
Total assets 4,012,519 3,136,319
Balance sheets december 31, 2008 and 2007 (in thousands of reais)
2008 2007
liabilities and shareholders equity
current liabilities
Loans and financing (Note 13) 574,068 161,233
Debentures (Note 14) 6,070 Suppliers (Note 15) 645,660 381,377
Payables to parent companies (Note 16) 10,594 16,901
Salaries and social charges 37,646 27,031
Taxes payable other than income and social contribution taxes 50,604 63,264
Dividends payable 129,107 13,644
Provision for income and social contribution taxes 213,145 183,942
Other current liabilities 12,611 5,715
1,679,505 853,107
Non-current liabilities
Loans and financings (Note 13) 904,132 1,040,972
Debentures (Note 14) 100,000 Advances from customers and others 29,968 18,096
Post-employment benefits (Note 18) 117,629 111,026
Provision for contingencies (Note 17) 37,307 28,984
Deferred income and social contribution taxes (Note 19) 6,897 7,660
1,195,933 1,206,738
shareholders equity (Note 20)
Paid-up capital 326,570 326,278
Capital reserve 84,147 142,631
Revaluation reserve 18,751 20,115
Retained earnings 707,613 587,450
1,137,081 1,076,474
Total liabilities and shareholders equity 4,012,519 3,136,319
See accompanying notes.
statements of income years ended december 31, 2008 and 2007 (in thousands of rea
is)
2008 2007
Gross sales and/or services (Note 21) 5,019,267 4,056,122
Gas sales 4,999,759 4,025,920
Others 19,508 30,202
Taxes and contributions on sales (1,030,193) (844,210)
Net sales and/or services 3,989,074 3,211,912
Cost of sales (2,622,738) (1,998,081)
Cost of gas (2,192,775) (1,520,751)
Transportation and others (429,963) (477,330)
Gross profit 1,366,336 1,213,831
Selling, general and administrative expenses (466,291) (397,639)
Selling (85,451) (73,056)
General and administrative (245,894) (215,458)
Amortization and depreciation (134,946) (109,125)
Profit before financial income (expenses) 900,045 816,192
Financial expenses, Net (Note 22) (117,834) (131,120)
Financial income 39,313 23,268
Financial expenses (157,147) (154,388)
Monetary variation Net (Note 22) (4,325) (3,000)
Operating profit 777,886 682,072
Other expenses (61,285) (59,419)
Income before taxation 716,601 622,653
Social contribution tax (Note 24) (55,754) (49,102)
Income tax (Note 24) (146,802) (130,560)
Net income for the year 514,045 442,991
Earnings per share 4.2900 3.6971
statements of shareholders equity

years ended december 31, 2008 and 2007
(in thousands of reais)
cAPITAl REsERvEs
Tax incentive Reserve for future special
capital reserve capital increase goodwill reserve
Balances at December 31, 2006 245,930 1,201 69,601 141,338
- Shares subscription 348 - (348) - Redemption of preferred shares class B - - (10,677) (58,484)
- Capital contribution 80,000 - - - Realization of revaluation reserve - - - - Income and social contribution taxes on
realization of revaluation reserve - - - - Net income for the year - - - - Appropriation of income :
Legal reserve - - - Dividends paid - - - Dividends proposed - - - Dividends prescribed - - - - Retained earnings - - - Balances at December 31, 2007 326,278 1,201 58,576 82,854
Adjustments
Law No 11638 - - - Shares subscription 292 - (292) Redemption of preferred shares class B - - 292 (58,484)
Realization of revaluation reserve - - - - Income and social contribution taxes on
realization of revaluation reserve - - - - Net income for the year - - - - Appropriation of income:
Legal reserve - - - Dividends paid - - - Dividends proposed - - - Dividends prescribed - - - - Retained earnings - - - Balances at December 31, 2008 326,570 1,201 58,576 24,370
INcOME REsERvE
Revaluation legal Profit Retained
Reserve reserve retention earnings Total
27,088 49,196 515,657 - 1,050,011
- - - - - - - - (69,161)
- - (80,000) - (8,948) - - 8,948 1,975 - - (1,975) - - - 442,991 442,991
- 16,059 - (16,059) - - (238,923) (95,100) (334,023)
- - - (13,376) (13,376)
- - - 32 32
- - 325,461 (325,461) 20,115 65,255 522,195 - 1,076,474
- - - (4,448) (4448)
- - - - -
- - - - (58,192)
(2,066) - - 2,066 702 - - (702) - - - 514,045 514,045
- 58 - (58) - - (262,024) - (262,024)
- - - (128,838) (128,838)
- - - 64 64
- - 382,129 (382,129) 18,751 65,313 642,300 - 1,137,081
statements of cash flows years ended december 31, 2008 and 2007 (in thousands of
reais)
2008 2007
Operating activities
Net income for the period 514,045 442,991
Depreciation and amortization 194,229 167,617
Permanent asset disposals, Net 12,808 9,792
Interest and monetary variation on loans and debentures 142,265 123,670
Provision for contingencies 6,762 13,526
Provision for post-employment benefit (CVM 371) 6,603 9,184
Deferred tax assets and liabilities (5,367) (4,680)
Allowance for doubtful accounts 7,929 6,910
Adoption of Law No. 11638/07 1,622 Adjustment
Others (799) 880,097 769,010
Decrease (increase) in operating assets
Accounts receivable (66,938) (46,918)
Gas costs recoverable/(to be passed on) (585,255) 13,088
Prepayments and taxes to be offset (41,224) (3,347)
Inventories 13,540 44,704
Other credits 1,162 4,084
(678,715) 11,611
Increase (decrease) in operating liabilities
Suppliers 264,283 (31,526)
Taxes and social contribution taxes payable 16,545 22,538
Salaries and social charges 10,614 6,604
Other liabilities 2,460 (2,494)
293,902 (4,878)
Cash from operating activities 495,284 775,743
Investment activities
Acquisition of fixed assets (403,468) (397,040)
Advances for asset item sale 10,000 Generation (use) of cash in investment activities (393,468) (397,040)
>> continued 2008 2007
Financing activities
Loans and financing taken out 1,585,467 870,436
Amortization of loans and financing principal (1,319,657) (691,539)
Interest paid
loans and financings (128,752) (160,247)
Issuance of debentures 100,000 Payment of dividends (275,335) (334,051)
Payment of downstream merger (58,192) (69,161)
Generation (use) of cash in financing activities (96,469) (384,562)
Increase (decrease) in cash and cash equivalents 5,347 (5,859)

Initial balance of cash and cash equivalents 34,379 40,238
Final balance of cash and cash equivalents 39,726 34,379
Statement of increase (decrease) in cash and cash equivalents 5,347 (5,859)
statements of value added years ended december 31, 2008 and 2007 (in thousands o
f reais)
2008 2007
1 Revenues 5,100,557 4,131,592
1.1 Revenue from sale of gas 5,091,778 4,109,234
1.2 Other operating revenues 19,508 30,202
1.3 Allowance for doubtful accounts (7,929) (6,910)
1.4 Other (expenses) revenues (2,800) (934)
2 Costs and expenses (3,593,242) (2,654,331)
2.1 Cost of gas and shipment (3,429,370) (2,521,543)
2.2 Costs of products and services sold (7,867) (5,457)
2.3 Materials, services and other expenses (156,005) (127,331)
3 Gross added value ( 1 + 2 ) 1,507,315 1,477,261
4 Retentions (193,430) (167,609)
4.1 Depreciation and amortization (134,946) (109,125)
4.2 Goodwill amortization (58,484) (58,484)
5 Net added value generated by the Company ( 3 + 4 ) 1,313,885 1,309,652
6 Transferred added value received 41,160 24,715
6.1 Financial revenues 41,160 24,715
7 Added value to be distributed ( 5 + 6 ) 1,355,045 1,334,367
8 Distribution of added value 1,355,045 1,334,367
8.1 Salaries and social charges 96,254 91,314
8.2 Taxes, levies and contributions 568,479 645,476
8.3 Financial expenses and rentals 176,266 154,586
8.4 Dividends 128,838 108,476
8.5 (Shareholders) Retained earnings 385,208 334,515
notEs to FinAnciAl stAtEmEnts
1. operations
The Company distributes piped gas in the State of So Paulo (approximately 180 mun
icipalities, including the region referred to as Greater So Paulo) to industrial,
residential, commercial, and automotive, thermalpower generation and co-generati
on consumers.
The Concession Contract for the Exploration of Public Piped Gas Distribution Ser
vices was signed on May 31, 1999 by the new controlling shareholders and the con
ceding authority - represented by the Sanitation and Energy Regulatory Agency of
the State of So Paulo
ARSESP (former Commission of Public Energy Services
CSPE).
The contract grants and regulates the concession for the exploration of public p
iped gas distribution services for a period of 30 years, which may be extended f
or a further period of 20 years at the concessionaire s request.
2. Presentation of the financial statements
The financial statements have been prepared in conformity with the accounting pr
actices adopted in Brazil and regulations issued by the Brazilian Securities Com
mission Resolution, as well as the Public Piped Gas Distribution Services Chart
of Accounts, as established by CSPE s Administrative Rule 22, of November 19, 1999
.
The 2008 results disclosures for financial statements preparation were made in t
he meeting held by the executive board on January 20, 2009.
The process for preparation of the financial statements involves the use of some
accounting estimates based on objective and subjective factors taking into cons
ideration the management judgmental analysis to determine the fair amount to be
recorded in the financial statements. Therefore, at the time of actual financial
settlement of these assets and liabilities, the results determined may be diffe
rent from estimates.
All amounts presented in the notes to financial statements are expressed in thou
sands of reais, except where otherwise indicated.
As allowed by CVM Rule No. 565, of December 17, 2008, which approves CPC Technic
al Pronouncement No. 13, the Company adopted, for the first time, Law
No. 11638/07 and Provisional Executive Order No. 449/08 for the year ended Decem
ber 31, 2008. Consequently, the following accounting practices were modified in
relation to the year ended December 31, 2007:
In order to fulfill CVM Rule No. 566, of December 17, 2008, which approves CPC t
echnical pronouncement 14, derivatives were considered derivative financial instr
uments intended for hedge , and foreign currency debts were considered items subjec
t to hedge , and are recorded at their fair value (see note 13). Until December 31
, 2007, derivatives were recorded according to their contractual conditions. Net
effect of marked to market derivatives and corresponding debts in foreign curre
ncy ( hedge accounting of fair value ) did not generate significant differences, as
disclosed in Notes 13 and 25.
In order to fulfill CVM Rule No. 564, of December 17, 2008, which approves CPC t
echnical pronouncement 12, adjustments to present value of accounts were carried
out with significant effect on current and non-current assets, where applicable
. Up until December 31, 2007, all balances were recorded at their par value.
The equity revaluation reserve account was extinguished and no asset revaluation
is allowed. Balances existing in the referred to revaluation reserve shall be k
ept until their effective realization, or reversed until the end of the social y
ear in which the Law becomes effective. The Company decided to keep revaluation
reserves until their effective realization.
Pursuant to item 51 of CPC Technical Pronouncement 13, the Company is not presen
ting the Statements of Changes in Financial Position for the year ended December
31, 2007.
Effects on P&L and shareholders equity due to first time adoption of Law
No. 11638/07 and Provisional Executive Order (MP) No. 449/08 are as follows: Yea
rs ended December 31, Adjustment description 2008 2007 Shareholders equity before
changes introduced by Law No. 11638/07 and MP 449/08 1,142,601 1,076,474 Applic
ation of hedge accounting of fair value I (2,742) (3,124) Adjustment to present
value of monetary assets and liabilities subject to qualification II (5,621) (3,
617) Deferred income and social contribution taxes on the adjustments above III
2,843 2,292 Net effects arising out of full application of Law No. 11638/07 and
MP 449/08 (5,520) (4,449) Shareholders equity with full application of Law No. 11
638/07 and MP 449/08 1,137,081 1,072,025 Notes: I Effects disclosed in Notes 13
and 25; II Effects disclosed in Notes 5, 6, 8, 9 and 10 and in Other current and
non-current assets; III Effects disclosed in Notes 10 and 19.
Adjustment description 2008 Net income for the year before changes introduced by
Law No. 11638/07 and MP 449/08 515,116 Application of hedge accounting of fair
value I 382 Adjustment to present value of monetary assets and liabilities subje
ct to qualification II (2,004) Deferred income and social contribution taxes on
the adjustments above III 551 Net effects arising out of full application of Law
No. 11638/07 and MP 449/08 (1,071) Shareholders equity with full application of
Law No. 11638/07 and MP 449/08 514,045 Notes: I Effects disclosed in Notes 13 an
d 25; II Effects disclosed in Notes 5, 6, 8, 9 and 10 and in Other current and n
on-current assets; III Effects disclosed in Notes 10 and 19.
In addition, the financial statements for the year ended December 31, 2007 were
reclassified, where applicable, in order to improve comparison presentation and
maintenance of uniformity.
Comparison of balances disclosed in the financial statements of December 31, 200
7 and balances disclosed for comparison purposes are stated as follows:
Disclosed Reclassified 2007 2007
Assets
Total current assets 614,364 612,810
Total non-current assets 2,521,955 2,522,184
Total assets 3,136,319 3,134,994
liabilities
Total current liabilities 853,107 853,693
Total non-current liabilities 1,206,738 1,209,276
Shareholders equity 1,076,474 1,072,025
Total liabilities and shareholders equity 3,136,319 3,134,994
According to Company s analysis, there were no significant impacts in P&L for the
period ended December 31, 2007 due to adoption of Law No. 11638/07.
3. summary of significant accounting practices
The main accounting practices adopted by the Company for preparing financial sta
tements are:
a.
Cash and banks - This balance includes short-term investment, recorded at cost,
plus income earned up to balance sheet date;
b.
Allowance for doubtful accounts Established in an amount sufficient to cover estimated losses in accounts receiv
able;
c. Inventories - Materials in storerooms are valued at average cost of acquisiti
on, not exceeding replacement value. Materials allocated to construction in prog
ress are recorded as fixed assets;
The balances of gas and transportation not used (Take or Pay and Ship or Pay) ar
e valued using the FIFO method;
d. Investments - Investments are valued at acquisition cost, reduced through a p
rovision for loss, when applicable;
e.
Fixed assets - They are stated at acquisition and/ or construction cost, less a
ccumulated depreciation, and partly revaluated. Depreciation is determined throu
gh the straight-line method, based on rates that consider the useful economic li
fe of underlying assets, ratified by the regulating authority through Administra
tive Rule CSPE 050/2000 (see Note 11);
f.
Deferred charges - These charges comprise expenses incurred in the conversion o
f consumers for the use of natural gas, amortized in five years using the straig
ht-line method, from the month subsequent to deferral; expenses related to the i
mplementation of systems are amortized over five years using the straight-line m
ethod, from the start of operations; Studies and projects in progress; and amoun
ts regarding the downstream merger of the Parent Company are amortized over 9 ye
ars. Due to adoption of Law No. 11638/07, the Company reclassified the amounts o
f customer loyalty, software and goodwill to intangible assets in the beginning
balance for the current year;
g.
Intangible Assets - Recorded at customer loyalty cost, amounts related to conve
rsion of customers previously classified in deferred assets, and software and ot
hers, less accumulated amortization.
h.
Liabilities - Are recognized in the balance sheet when the Company has a legal
or constructive obligation arising from past events, the settlement of which is
expected to result in an outflow of economic benefits. Certain liabilities due t
o uncertainty with respect to the timing and amount of the outflow of economic b
enefits required for their settlement are estimated as incurred and recorded as
a provision. Provisions are recorded reflecting the best estimates of the risk i
nvolved;
i.
Income and social contribution taxes
Taxation on profit comprises income and so
cial contribution taxes. Income tax is calculated at a 15% rate, plus a surtax o
f 10% on taxable profit exceeding R$ 240 over 12 months, whereas social contribu
tion tax is computed at a 9% rate on taxable profit, both recognized on an accru
al basis.
Deferred taxes on temporary differences are presented in current assets and in l
ongterm receivables, according to their realization expectation, which is reviewe
d on an annual basis Advances or amounts subject to offsetting are stated in cur
rent or non-current assets, according to expected realization.
Details of expenses with income and social contribution taxes recorded for the y
ear are stated in Note 24.
j.
Net income - This balance is determined on an accrual basis; and
k.
Unbilled revenue - Relates to gas supply revenue, delivered and unbilled to the
customer, calculated on an estimated basis, relating to the period after monthl
y measurement and until the last day of the month, which allows costs and revenu
es of the corresponding year to be crosschecked.
4. gas bills receivable
Gas bills receivable are demonstrated as follows:
2008 2007
Gas bills receivable 182,140 168,874
Unbilled gas 320,542 290,243
Allowance for doubtful accounts (31,806) (28,234)
470,876 430,883
Unbilled gas refers to the part of gas supplied in December, for which metering
and billing to customers have not yet occurred
nOteS tO fInanCIal StateMentS | deCeMBer 31, 2008 and 2007 101 In thOuSandS Of r
eaIS, exCept when OtherwISe IndICated
5. cost of gas recoverable / (to be passed on)
2008 2007
Cost of gas recoverable / (to be passed on) 514,596 (57,985)

Tax credits recoverable 14,710 2,037
Adjustment to present value of taxes
Adoption of Law No. 11638/07 (1,017) Amounts recorded under cost of gas recoverable/(to be passed on) R$ 528,289 and
(55,948) at December 31, 2008 and December 31, 2007 respectively, refer to varia
tions between the acquisition cost of gas and the cost effectively passed on thr
ough tariffs, also including tax rate differences not added yet. They are record
ed pursuant to the Public Service of Piped Gas Distribution Chart of Accounts an
d the Concession Contract, item 11a, according to which amounts of cost of gas r
ecoverable are
6. other accounts receivable
528,289 (55,948)
passed on in tariffs on May 31 of each year, or as needed, in case significant v
ariations are identified.
Due to increase in variables that compose the cost of gas, there was significant
increase in cost of gas acquisition in the second half of 2008. On December 20,
2008, the regulatory agency authorized the increase in tariffs aiming at the ba
lance of gas costs therein. Company expects to gradually realize the amounts cos
ts of the gas recoverable account within the next year.
2008 2007
Gas accounts in installments 13,456 10,557
Adjustment to present value
Adoption of Law No. 11638/07 (512) Allowance for doubtful accounts (4.,54) (4,476)
Take or pay - Customers 4,540 6,084
Financial participation of users 1,179 1,200
Collaterals 6,254 4,608
Debtor per sale of equipment 12,950 7,658
Adoption of Law No. 11638/07 (895) Charge-backs due to network interference 5,099 4,552
Accounts receivable property sale 2,448 5,154
Petrobras charge-backs 9,146 Land and constructions 14,688 841
Other receivables 5,003 3,570
68,402 39,748
Gas bills in installments refer to agreements with customers for the payment of
overdue receivables in installments. Overdue amounts with collection risks are p
roperly accrued.
The amount of take or pay
customers refers to the difference between real consum
ption and the obligatory minimum volumes engaged.
Escrow deposit amounts refer to the amounts deposited by the Company required by
public authorities for the term during which Company s work is carried out.
The balance of recoverable amounts for network interferences refers to amounts t
o
7. inventories
be reimbursed by third parties for damages to the gas distribution network.
The amounts recorded in Petrobras Chargebacks relate to recovery of City-gate con
struction costs, transferred to non-current assets in 2008 due to renegotiation
and, according to contractual conditions, were updated on a monthly basis in acc
ordance with General Market Price Index (IGP-M) variation. See Note 9.
The amount in Land and Constructions relates to residual costs and dismantlement
in the Mooca branch, intended for sale and transferred from Fixed Assets. The c
losing of the sale operation is expected to occur in the first half of 2009.
2008 2007
Finished goods 1,813
Sundry materials 19,425 10,044
Ship or pay - PB 2,938 -
Take or pay
BG -37,531
Ship or pay - BG 10,810 Recovery of balance relating to ship or pay gas will be automatic, free of charg
e for Comgas, inasmuch as over 83.5% of the agreed volume of gas is transferred.
The remaining balance was transferred to the agreement executed with BG Comrcio
e Importao Ltda. on May 15, 2008.
8. taxes recoverable
Taxes recoverable are as follows:
34,986 48,527
Due to the new gas supply agreement renegotiation with BG in 2008, the amount re
garding take or pay gas was partially received in current currency and the remai
ning installment was included in the new gas agreement executed between the part
ies through the ship or pay method.
2008 2007
Prepaid income and social contribution taxes 83,908 67,392
Value-added tax on sales and services (ICMS) recoverable 59,375 33,404
Adoption of Law No. 11638/07 (807) Others 2,170 79
144,646 100,875
9. Accounts receivable non-current assets
2008 2007
Other accounts receivable 829 3,884
Customers
installment payments - 1,326
Amounts recoverable from Petrobras - 8,388
Debtors on sale of equipment 3,814 2,326
Adoption of Law No. 11638/07 (318) 4,325 15,924
The amounts recorded in Recoverable from Petrobras consist of recovered costs of
construction of City-gates and were transferred to short-term receivables. See N
ote 6.
10. deferred and recoverable taxes long term receivables
A Deferred and recoverable taxes are as follows:
2008 2007
Income tax credit on temporarily non-deductible expenses 17,589 16,164
Social contribution credit on temporarily non-deductible expenses 4,977 5,820
Credit from provision for post-employment benefits plan (CVM Instruction 371) 3
9,994 37,749
Deferred IRPJ and CSLL on adoption of Law No. 11638/07 4,069 Deferred income tax (IRPJ) and social contribution on net income (CSLL) 66,629
59,733
ICMS recoverable on property, plant and equipment purchases 11,663 15,015
adoption of Law No. 11638/07 (1,804) Taxes recoverable 9,859 15,015
The amount regarding taxes recoverable relate to determination of ICMS falling u
pon goods intended to Fixed Assets through four years
credit utilization (Supple
mentary Law No. 102/01).
In accordance with the dispositions of CVM Resolution 273/98 and CVM Instruction
371/02, the Company has deferred tax credits recorded in long-term receivables
arising from timing differences and post-employment benefit plan provision as pe
r CVM Deliberation 371.
The credit related to the effects of CVM Resolution No. 371 is estimated to be r
ealized within 25 to 30 years, whilst the tax credits on temporary differences a

re subject to a term estimated at three years.
11. Property, plant and equipment
Depreciation Balances Movement Balances
weighted
average rate 31/12/2007 Additions to Transfers
Write-offs 31/12/2008
Historical costs
Land - 19,085 - 1,351 (7,936) 12,500
Pipes 3.4% 1,975,839 - 242,182 (663) 2,217,358
Buildings improvements 2.7% 17,710 - 37,731 (2,653) 52,788
Machinery and equipment 5.4% 374,151 - 56,294 (5,228) 425,217
Transportation equipment 20.0% 11,505 - 6,445 (916) 17,034
Administrative furniture and equipment 10.0% 44,909 - 10,375 (2,118) 53,166
Construction in progress - 281,889 267,934 (350,190) - 199,633
Materials to Fixed Assets - 44,922 - - - 44,922
Others - 2,070 - - - 2,070
2,772,080 267,934 4,188 (19,514) 3,024,688
Accumulated depreciation
Land - - - - - Pipes 3.4% (492,298) (67,935) - 141 (560,092)
Buildings improvements 2.7% (4,216) (1,134) - 1,031 (4,319)
Machinery and equipment 5.4% (82,134) (18,606) - 2,814 (97,926)
Transportation equipment 20.0% (5,065) (2,173) - 764 (6,474)
Administrative furniture and equipment 10.0% (27,911) (7,114) - 1,957 (33,0
68)
Construction in progress - - - - - Materials to Fixed Assets - - - - - (611,624) (96,962) - 6,707 (701,879)
2,160,456 170,972 4,188 (12,807) 2,322,809
In March 1988, the Company made a spontaneous revaluation of part of its propert
y, plant and equipment (pipelines, buildings, machinery, operating equipment) ba
sed on an independent appraisal. On December 31, 2008, the balance of this reval
uation amounted to R$ 23,933 (R$ 26,000 in 2007) and the depreciation recorded i
n the results of operations amounted to R$ 2,066 (R$ 2,068 in 2007).
The income and social contribution taxes posted to the revaluation balance, the
depreciation of which is not deductible for determining taxable income, totaled
R$ 5,183 at 31 December 2008.
The net amount regarding realization of reserve revaluation is not considered in
the tax base for dividend distribution.
In 2008, there was capitalization of interest on construction in progress of R$
15,287 (R$ 23,183 in 2007).
12. intangible
Balance Movement Balance
Reclassifications
Notes 31/12/2007 law No. 11638/07 Additions to Transfers 31/12/2008
Intangible assets in service
Customer Loyalty - 200,258 - 66,073 266,331
Accumulated amortization (a) - (105,295) (30,020) - (135,315)
- 94,963 (30,020) 66,073 131,016
Software and Others - 54,715 - 22,870 77,585
Accumulated amortization (a) - (30,012) (8,556) - (38,568)
- 24,703 (8,556) 22,870 39,017
-119,666 (38,576) 88,943 170,033

Intangible assets in Progress
Customer Loyalty - 23,074 66,950 (49,590) 40,434
Software and Others - 34,071 69,116 (43,483) 59,704
- 57,145 136,066 (93,073) 100,138
Holding Pay-up
Goodwill on Merger - Integral Holding BV Accumulated amortization (b) --- 526.3
59 (443,506) 82,853 -(58,484) (58,484) --- 526,359 (501,990) 24,369
- 259,664 39,006 (4,130) 294,540
Notes: (a) Average rate 20% p.a.
(b) Amortization of goodwill is over the investment return period, up to May 200
9.
As mentioned in Note 2, in order to fulfill CPC technical pronouncement 04 on in
tangible assets, approved by CVM Rule No. 533/08, the Company reclassified the a
mounts relating to customer loyalty, software and goodwill on merger of the defe
rred charges group of accounts (R$ 259,664 in 2007), to the intangible assets gr
oup in the initial balance for the current year (R$ 294,540 in 2008).
Balance regarding intangible assets in progress relates to customer loyalty cost
, when converting customer, software and others.
The Company was authorized by the shareholders at the Extraordinary Stockholders
Meeting held on June 26, 2000 to carry out a reverse merger with its parent comp
any, Integral Holdings S.A., under the terms of the Relevant Event notice publis
hed in the press on 9 June 2000.
Due to this merger, the Company recorded in
deferred charges the goodwill determined by the
parent company on the acquisition of the investment
in the net amount of R$ 526,359. This amount
had as contra entry the account special premium
reserve in stockholders equity, as provided by
paragraph III, article 6 of CVM Instruction 319/99.
Amortization of goodwill is over the investment
return period, up to May 2009.
13. loans and financings
2008 2007
In local currency charges short-term long-term short-term long-term
Banco do Brasil - BNDES TJLP + 2.0 % p.a. - - 3,424 23,596
BNDES (Project II) TJLP + 4.0 % p.a. 23,069 41,787 23,064 64,423
BNDES (Project III) TJLP + 4.0 % p.a. 39,200 123,981 39,162 161,823
BNDES (Project IV) - Direto TJLP + 3.2% p.a. 38,634 188,725 29,120 225,925
BNDES (Project IV) - Direto com Fiana TJLP + 2.8% p.a. 21,568 400,200 1,194
292,363
BNDES (Project III) - Bco.Votorantim TJLP + 4.7 % p.a. 16,061 50,739 16,047
66,225
BNDES (Project III) - Bco. Bradesco TJLP + 4.7% p.a. 16,061 50,739 16,046 6
6,225
Working capital 125.9% do CDI 252,575 - - 407,168 856,171 128,057 900,580
In foreign currency: (a)
BNDES (Basket of currencies) 113% do CDI 15,642 23,428 14,269 34,189
Banco do Brasil (DMLP) 8% p.a. - - 337 3.402
Banco Europeu de Investimentos 94.7% do CDI 76,793 - 4,069 68,983
Banco Ita/BBA-(Repasse IFC) 110.0% do CDI 14,615 24,533 14,501 33,818
Working capital 132.5% do CDI 59,850 - - 166,900 47,961 33,176 140,392

574,068 904,132 161,233 1,040,972
Note: (a) As disclosed in Note 25, in order to protect the Company from foreign
exchange variations, derivative financial instruments are taken out for all loan
s in foreign currency
The long-term balance composition is demonstrated as follows:
01/10
Due dates on to 12/10 until 12/11 until 12/12 until 12/13 until 12/14 Tota
l
In local currency: :
BNDES (Project II) 22,792 18,995 - - - 41,787
BNDES (Project III) 38,148 38,148 38,148 9,537 - 123,981
BNDES (Project IV) - Direto 37,745 37,745 37,745 37,745 37,745 188,725
BNDES (Project IV) - Direto com Fiana 80,040 80,040 80,040 80,040 80,040 40
0,200
BNDES - (Project III) - Bradesco 15,612 15,612 15,612 3,903 - 50.739
BNDES - (Project III) - Votorantim 15,612 15,612 15,612 3,903 - 50,739
209,949 206,152 187,157 135,128 117,785 856,171
In foreign currency:
Banco Ita/BBA-(Repasse IFC) 12,982 11,551 - - - 24,533
BNDES (Cesta de Moedas) 13,551 9,877 - - - 23,428
Banco Europeu de Investimentos - - - - - 26,533 21,428 - - - 47,961
236,482 227,580 187,157 135,128 117,785 904,132
The initial rates of loans and financing in foreign currency, before SWAP operat
ions, are as follows:
Description charges
BNDES (Swap Votorantim) 12.5% p.a. + basket of currencies for exchange variatio
n
Banco Europeu de Investimentos (Swap ABN Amro Libor + up to 0.15% p.a. + US dol
lar exchange variation
Banco Ita/BBA (DEG and IFC transfers) 8.11% p.a. + US dollar exchange variation
BNDES financing has amortization of the principal amount and payment of monthly
interest, except for those in the waiting period. For such financing, offered gu
arantees are:
Project II: amounts receivable by the Company, under the custody of Banco Ita.
Project III: amounts receivable by the Company, under the custody of Banco Brade
sco.
Project IV:
For direct portion: amounts receivable by the Company, under the custody of Banc
o Ita;
For the direct portion with guarantee: bank guarantee from Banco Ita, Votorantim,
Bradesco and Santander, on a 25% each basis.
Financing from the European Investment Bank involves repayment of principal in a
sole installment maturing June 2009 and interest payment twice annually. For th
is financing, a bank guarantee is offered from Bank Santander Central Hispano.
The financing from Ita-BBA (IFC onlending) involves repayments of principal and i
nterest payment twice annually.

14. debentures
31/12/2008
Issue series Quantity current long-term Remuneration
2nd
. Sole 1
The Company concluded on August 5, 2008 the issue of debentures in the amount of
R$ 100,000, with repayments of 33.33% of principal in August 2012, 33.33% in Au
gust 2013 and 33.34% in August 2014. Interest payment is on an annual basis with
no renegotiation. This is a simple debenture not convertible into shares.
15. suppliers
The Company has contracts for the supply of natural gas under the following cond
itions:
Firm gas supply contract with Petrobras, effective from January 2008 to December
2012 for a daily volume of 3.5 million m. This contract replaces the National Ga
s Contract with Petrobras terminated in December 2007.
Firm gas supply contract with Petrobras for the supply of Bolivian gas, effectiv
e until June 2019 for a daily volume of 8.75 million m to be reduced to 8.1 milli
on m in mid-2011.
Firm gas supply contract with BG Comrcio e Importao Ltda. for the supply of Bolivia
n gas, effective until May 2011 for a daily volume of 0.635 million m.
Two gas contracts in connection with the Priority Thermoelectricity Program (PPT
) for a daily volume of 3.06 MMm.
Firm-flexible gas supply contract with Petrobras for the supply of natural gas,
where Petrobras either supplies natural gas or reimburses additional costs
6,070 100,000 CDI + 1.5% p.a.
incurred by the customer to purchase alternative fuel, for a daily volume of 1 M
Mm. This contract is effective from January 2008 to December 2012.
Interruptible gas supply contract with
Petrobras for an initial daily volume of 0
up to 1.5 MMm. This contract is effective
from January 2008 to December 2010.
All gas supply contracts have specific characteristics, such as minimum gas cons
umption by Comgs ("Take or Pay" for commodity and "Ship or Pay" for transportatio
n), i.e. if consumption is below contractual amounts, the Company must pay the d
ifference between actual and contractual amounts, which may be offset (via consu
mption) over the term of the contract.
The price of gas supply contracts is made up of two
parts: one is indexed to a basket of fuel oils in the
international market and adjusted on a quarterly
basis; the other is adjusted once a year based on
local or US inflation rates. The cost of gas is fixed in
R$/m, and Bolivian gas is defined in US$/MMBTU,
including monthly foreign exchange fluctuation.

16. Payables to Parent companies
The balance payable to parent companies at December 31, 2007 and 2006 is as foll
ows:
2008 2007
BG Group Shell Group 9,885 709 10,594 16,090 811 16,901
BG Group Balances at 12/31/07 Current expenses Exchange variationPayments Balanc
es at 12/31/08 TTA 10,566 23,666 (28,779) 5,453 OsA/csA 5,524 2,620 54 (3,766)
4,432 Total 16,090 26,286 54 (32,545) 9,885
shell Group Balances at 12/31/07 Current expenses Payments Balances at 12/31/08
csA 811 3,374 (3,476) 709 Total 811 3,374 (3,476) 709
Contracts are divided as follows:
Bg group
Technology transfer agreement (TTA) BG makes available technology in all operati
ng aspects and commits itself to applying all its significant experience and kno
wledge.
Operational services agreement (OSA) Operational services agreement (OSA)
BG pro
vides operating services and personnel in order to keep, operate, develop and, i
f necessary, escalate Company s operations in a secure and efficient way and in ac
cordance with the regulatory framework.
Commercial services agreement (CSA) Commercial services agreement (CSA) - BG wil
l make commercial services and personnel available so as to provide administrati
ve support to conduct the Company s business.
shell group
Commercial services agreement
onnel available so as to assist
tration.
Regarding gas supply agreements
ote 15, due balances were of R$
07, respectively.
(CSA) Shell will make commercial services and pers

the Company with respect to its business adminis
with BG Comrcio e Importao Ltda., as described in N
31,620 and R$ 576 as of December 31, 2008 and 20
a. manager and officer fees Fees of managers, responsible for planning, managing
and controlling the Company s activities, including members of the Board of Direc
tors and statutory officers, are disclosed as follows: Salaries and other short
-term benefits Others Total 2008 8,321 415 8,736 2007 8,268 -8,268
17.Provision for contingencies
2007 Updates new recordings Write-offs 2008
Labor Judicial depositsCivil and administrative TaxShort-termLong-term 11,695 (
3,310) 13,122 9,990 31,497 (2,513) 28,984 3,285 1,208 5,400 623 10,516 (2,469)
353 (2,590) -(4,706) 12,511 (1,749) 15,932 10,613 37,307 -37,307
Labor claims arise mainly from the period prior to privatization, while the civi
l and administrative cases arise from the normal course of activities.
Tax contingencies arise from tax assessments occurred in 2007. All contingencies
are provisioned according to likelihood of occurrence (possible, probable and r
emote).
Based on the opinion of its legal advisers, the Company s management understands t
hat the provision is sufficient to cover any unfavorable decisions on these case
s.
The Company reclassified the judicial deposits in connection with labor continge
ncies in the amount of R$ 1,749, as shown above. Judicial deposits were previous
ly classified as non-current assets.
18. Post-employment benefit plans (cVm deliberation no. 371/00)
The amounts related to post-employment benefit plans, which include health care
and incentive pension, are calculated by an actuary and recorded in conformity w
ith CVM Resolution No. 371, The amount of R$ 117,629 posted at 12/31/2008, based
on the actuarial report, considered the following assumptions: Discount rate: 1
3.14% p.a. (includes 5% inflation)
Salary increase: 8.15 % p.a. (includes 5% inflation)
The amount of recognized actuarial gains or losses consists of the portion of ga
in or loss which exceeds the greatest between 10% of present value of the actuar
ial obligation or 10% of the fair value of the plan assets, amortized throughout
the average term of the future service of plan members.
2008 2007
Actuarial liability 136,288 142,876
Actuarial loss (10,040) (25,680)
Fair value of plan assets (8,619) (6,170)
117,629 111,026
2008 2007
Initial balance 111,026 101,842
Cost of current services (with interest) 358 368
Interest on actuarial liabilities 15,669 15,909
Expected earnings from assets (87) (187)
Amortization of actuarial losses 759 1,379
Contributions on the part of employer (7,821) (8,405)
Others (2,275) 120
Closing balance 117,629 111,026
The tax effects arising from this provision are recorded in deferred IRPJ and CS
LL in long-term receivables (see Note 10).
The Company maintains with Ita Previdncia e Seguros S.A. a private pension plan de
nominated PGBL, comprised by variable contributions and approved by the Superint
endency of Private Insurances
SUSEP, The Company s contributions for 2008 amounted
to R$ 3,524 (R$ 3,013 in 2007), It is a fixed income plan of which the objectiv
e is to grant post-employment benefits in the form of life-time monthly pension.
19. deferred iRPj and csll
Deferred income tax and social contribution composition is as follows:
2008 2007
Income tax on the credit balance of the revaluation reserve 3,776 4,293
Social contribution on the credit balance of the revaluation reserve 1,360 1,5
45
Income tax on gains on the sale of Augusta head office building 394 1,340
Social contribution tax on gains on the sale of Augusta head office building 14
1 482
Deferred IRPJ and CSLL on adoption of Law No. 11638/07 1,226 6,897 7,660
In the last quarter of 2007, the Company sold the building cited in Augusta stre
et and recorded deferred income and social contribution tax liabilities on capit
al gain.
20. stockholders equity
a. capital
The Company s authorized capital is R$ 371,672. At December 31, 2008, paid-up capi
tal amounted to R$ 326,570 (R$ 326,278), divided into 93,910,898 nominative comm
on shares, with no nominal value and 25,911,899 preferred shares with no nominal
value, held as follows:

Amount of shares
in thousands
shareholders common % Preferred % Total %
INTEGRAL INVESTMENTS BV 82,521 87.87 3,649 14.08 86,170 71.91
SHELL BRAZIL HOLDING BV 7,594 8.09 - - 7,594 6.34
POLAND FIA 1,107 1.18 9,619 37.12 10,726 8.95
TARPON 1,826 1.94 4,441 17.14 6,267 5.23
OTHERS 863 0.92 8,203 31.66 9,066 7.57
93,911 100.00 25,912 100.00 119,823 100.00
b. dividends
Under the by-laws, stockholders are entitled to a dividend of at least 25% of ne
t income for the year, adjusted in accordance with Corporate Law.
R$ mil
Net income for the year 514,045
Movement of retained earnings 1,364
515,409
Legal reserve movement (58)
Calculation basis of proposed dividends 515,351
Minimum dividends of 25% 128,838
Dividends (25%) ..................................Common shares 98,839
Dividends (25%) ..................................Preferred shares 27,272
10% additional for preferred shares 2,727
TOTAL DIVIDENDS FOR DISTRIBUTION 128,838
c. dividends paid
The Board of Directors Minutes of Meeting of February 27, 2008, confirmed by the
General and Special Shareholders Meeting (AGO/E) of April 10, 2008, approved the
application of R$ 275,400 (R$ 13,376 relating to balance provisioned at December
31, 2007 and R$ 262,024 relating to the balance provisioned in the current year
) retained in profit reserves at December 31, 2007 for dividend distribution in
2008, paid in three installments during 2008.
d. special goodwill reserve and capital reserve
As decided by the shareholders in approving the Merger Justification Protocol of
Integral Holdings S.A. into Companhia de Gs de So Paulo Comgs in the Extraordinary G
neral Meeting held on June 26, 2000, the tax benefit generated on 2008 were the
amount of R$ 58,484 ( R$ 58,484 in 2007 ).
e. Appropriation of the remaining net income for the year balance
According to the capital budget approved by the Board of Directors, the remainin
g net income for the year balance shall be maintained for future Company expansi
on.
The group of accounts Income reserves exceeded the amount of paid up capital due t
o prior years profit retention. The general meeting, in conformity with article 1
99 of the corporation law, will deliberate on the application of the surplus pai
d up capital or capital increase or distribution of dividends.
21. sales revenue
The revenue per segment is as follows:
(Unaudited) - M thousand
2008 2007 2008 2007
Residential 444,504 358,482 135,944 120,742
Commercial 190,858 164,061 99,633 98,600
Industrial 3,637,079 2,978,976 3,855,030 3,960,145
Thermal power generation 104,006 24,243 333,301 81,937
Co-generation 197,659 122,748 304,403 225,875
Automotive 425,653 377,410 524,725 582,066
Others 19,508 30,202 - 5,019,267 4,056,122 5,253,036 5,069,365

22. Financial income and expenses
2008 2007
Financial expenses
Interests loans/financings/ debentures (139,232) (120,685)
CPMF (77) (15,933)
IOF / Bank expenses (10,273) (23)
Commissions (382) (63)
Reallocation to fixed assets in progress 15,187 23,217
Interest (CVM 371) (16,027) (16,282)
Interest on current account (ARSESP) - (15,698)
Others (6,343) (8,921)
(157,147) (154,388)
Monetary adjustments:
Loans and financings (3,033) (3,008)
Monetary variation gains 1,847 1,447
Monetary variation losses (3,139) (1,439)
(4,325) (3,000)
Financial revenue:
Default interest from customers 11,885 11,874
Financial income 4,969 Interest 2,237 2,449
Interest on current account (ARSESP) 19,840 8,928
Others 382 17
39,313 23,268
(122,159) (134,120)
23. insurance
The most significant insurance coverage, contracted according to the nature and
risk level against any losses on the Company s assets, is as follows:
Risk Operating risk Civil responsibility Us$ (000) 71,378 100,000
24. income and social contribution taxes Reconciliation between nominal and effe
ctive rates:
2008 2007
Income before taxation Goodwill amortization, net of provision of equity integri
ty Income without goodwill amortization Rate Income and social contribution taxe
s at nominal rates 716,601 58,484 775,085 34% (263,529) 622,653 58,484 681,137
34% (231,587)
Reconciliation:
Benefits generated by the Reverse Merger
Permanent differences 2,489 (6,559)
(202,556) (179,662)
58,484 58,484
25. Financial instruments

Main risks associated with the Company s financial strategy:
Policy for risk management and use of derivatives
Treasury Policy sets forth guidelines for risk management, its measurement and c
onsequent mitigation. Therefore, financial operations carried out, including der
ivative operations, shall be the best alternatives possible both financially and
economically, and shall never be carried out in order to speculate, i.e., there
shall always be an exposure that justifies the operation agreement.
When there is sufficient liquidity in the financial market, the perfect hedge, i
n which value and term of the taken out derivatives is exactly the same as the c
ash flow of the operation in negotiation, shall be sought. When there is no suff
icient liquidity for full hedge, it shall be made over the longest period possib
le.
The best alternative shall always be analyzed, respecting the abovementioned Ris
k Management policy, with respect to the minimum hedge percentage to be taken ou
t, of 75% of notional amount, for amounts over US$500,000.
Related risks
Interest rate risk: the Company is exposed to interest rate risk due to its inde
btedness. This may be covered through use of swaps, in which the Company may cha
nge variable positions to fixed positions or viceversa, in addition to changing i
ndexes.
Foreign exchange risk: part of loans taken out for financing investments and wor
king capital is related to currencies other than the Real. The variation risk of
these currencies may be covered through forward and swap operations.
Credit risk: credit is not concentrated on large customers in volumes above 10%
of sales.
At December 31, 2008, the Company had the main financial instruments, as follows
:
a.
Loans and financing - Note 13.
b.
Derivatives
The Company operates in bank credit markets, raising funds in national and forei
gn currencies for financing its investments and working capital, and is exposed
to risks arising out of variations in foreign exchange rates of foreign currenci
es and interest rate risk.
The Company maintains a Treasury Policy, approved by the Board of Directors, wit
h periodic reviews, which prohibits the use of derivative instruments for specul
ative purposes. These are permitted only for protection against previously ident
ified risks (hedge operations). Therewith, the Treasury Policy determines the me
thodology for derivative operation counterpart credit risk and stipulates the pe
rmitted instruments, swaps and forwards.
In order to protect itself from foreign exchange exposure and from interest rate
s of financing agreements in foreign currency, the Treasury Policy determines th
e following methodology: foreign currency coverage of the principal and interest
until final maturity of the loan operation, to, at least, 75% of the total amou
nt (notional amount). When there is no foreign exchange swap available in the fi
nancial market to cover the full operation period, it shall be made over the lon
gest period possible.
Financing swaps in foreign currency
Financing swaps in foreign currency aims at protecting the exposure generated by
foreign exchange rate variation of original financing currencies. Thus, swaps t
urn liabilities in USD into liabilities in Reais at the Interbank Deposit Certif
icate (CDI) rate
which eliminates the exposure in USD and international interest
rate (Libor or fixed rate). Par value, rates and swap receivables maturities ar
e identical to the financing. Swaps were carried out in the over-the-counter mar
ket and no deposit guarantee is required in the operation. These are considered
swaps with no cash. Details of the operation are displayed in the table below.
Comgs will continue with the swaps of its financing in foreign currency until the
y mature. The recording is in the group of short and long-term financing.
The determination criteria, methods and assumptions applied in fair value comput
ation relate to asset market
quoted price , and are in accordance with the system e
stablished in agreement between the parties.
Find below a summary of derivative financing instrument amounts:
sensitivity analysis
Description counterpart Original currency Assets liabilities Final Maturity
BNDES - Basket I BNDES - Basket II IFC remittance Ita BBA European Investiment Ba
nk Compror 2770 Bank Votorantim Bank Votorantim Bank Ita BBA Bank Real Unibanco
Basket of currencies Basket of currencies USD USD USD 17.15% p.a. + FE 17.26%
p.a. + FE 9.88% p.a. + FE Libor + until 0.15% p.a. + FE 5.00% p.a. + FE 122% CD
I 96.5% CDI 110% CDI 94.7% CDI 130.5% CDI October-2011 October-2011 December-20
11 June-2009 March-2009
Accumulated effect (1)
2008 2007
Description Assets liabilities Net Position Assets liabilities Net Positio
n
194,260 (211,070) (16,810) 115,218 (169,117) (53,899)
BNDES - Basket I 15,521 (26,364) (10,843) 16,125 (34,030) (17,905)
BNDES - Basket II 5,107 (10,280) (5,174) 5,293 (13,716) (8,423)
IFC remittance Ita BBA 20,770 (38,450) (17,681) 21,036 (48,319) (27,283)
European Investment Bank 94,279 (77,075) 17,204 72,763 (73,051) (288)
Unibanco 58,583 (58,900) (317) - - Fair value (2)
2008 2007
Description Assets liabilities Net Position Assets liabilities Net Positio
n
194,210 (212,515) (18,305) 116,617 (171,140) (54,524)
BNDES - Basket I 15,914 (27,230) (11,315) 17,077 (35,595) (18,518)
BNDES - Basket II 5,266 (10,228) (4,962) 5,657 (13,620) (7,963)
IFC remittance Ita BBA 20,983 (39,151) (18,168) 21,877 (49,509) (27,632)
European Investment Bank 93,970 (76,836) 17,134 72,006 (72,416) (410)
Unibanco 58,077 (59,070) (994) - Notes: (1) Appropriate derivative (in the curve);
(2) Marked to market.
Pursuant to CVM Rule No. 475, Comgs developed a sensitivity analysis, identifying
the risk factors which may generate variations in its derivative financial inst
ruments, loans and financing.
The sensitivity analyses are established by using assumptions and presupposition
s and future events. The settlement of the transactions involving these estimate
s may leads to amounts different from those herein estimated, in connection with
the subjectivity inherent to the preparation process of these analyses.
These variations may impact the results and/ or future cash flows of Comgs, as fo
llows:
The scenarios of exposure of financial instruments indexed to the variable inter
est
Description
rate (CDI) were maintained on the basis of
calculation curves at December 31, 2008.
The effects herein stated consist of the
variations in P&L for the next year.
Scenario I (probable): Maintenance
of levels of interest and exchange rate
existing at December 31, 2008;
Scenario II 25%: Deterioration of 25%
of each of the risk factors in relation to
that existing at December 31, 2008;
Scenario III 50%: Deterioration of 50%

in each of the risk factors in relation to
that existing at December 31, 2008.
scenario I scenario II scenario III
Risk (Probable) 25% 50%
Assets indexed to SELIC Change in SELIC 33,583 25,419 17,105
Foreign currency debts
Debts Derivatives (receivables) Net effect Change in US$Change in US$ --- (49,1
39) 48,619 (520) (98,278) 97,185 (1,093)
Derivative (payable) Change in CDI (31,771) (31,911) (32,047)
local currency debtl
CDI debts TJLP debts Change in CDIChange in TJLP (26,034) (92,151) (31,282) (
124,261) (36,376) (150,730)
SELIC US$ CDI TJLP 12.50% R$ 2.34 12.50% 6.25% 9.37% R$ 2.92 15.63% 7.81% 6.2
5% R$ 3.51 18.75% 9.38%

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2008

comgs AnnuAl RepoRt

azine Conjuntura Economica (FGV), as best company in the sector

reholders and society in general.

Gross margin 36.89 37.79 34.25

Extension of the pipeline network: 302.8 km

Comgs reports record length of

75,000 new customers in the residential and small firms segment

Total distribution system: 5,255 km

Administrative headquarters moved to Vila Olympia in So Paulo

81,411 new customers in the residential and small firms segment

Net revenues: R$ 4.0 billion, an increase of 24.2% over 2007

nAtuRAl gAs distRiBution systEm in tHE concEssion AREA

Hydro and electric Uranium and derivatives Coal and derivatives

Source: National Energy Balance (BEN) 2008

ilored To The specific needs of each cusTomer profile

Automotive / Tires (6,96%)

ord. Joined BG in 2001 as business development manager.

undings before starting jobs, among other practices.

In 2008, Comgs launched a new structured intern program to attract higher-educati

Attracting residential customers to Comgs involves cultural change in the sense o

2.2 million with five international speakers from Japan,

engine manufacturer to run bench tests measuring durability, performance, emissi

to travel for outdoor teams, personalized service and streamlined procedures. In

Employees Government Financial Institutions Shareholders

customers and government agencies.

nagers, superintendent, officers and president)

l performance by each professional as appraised by immediate superiors. Last yea

is analyzed as part of environmental licensing procedures, and all control and

despite fulfilling the requirements of the State Department for Protection of Na

Headcount by type of work

turnover. Internal stakeholders

2.64% 2.91% 2.31%

scheduled working days lost * Evolution injury rate* (%)

% of leadership roles occupied by women 24,8% 24,8%

Office os Institute Communication Department of Institucional & Regulatory Affai

2007, including the balance sheet, statements of income, changes in shareholders

statements of shareholders equity

Increase (decrease) in cash and cash equivalents 5,347 (5,859)

Cost of gas recoverable / (to be passed on) 514,596 (57,985)

ealized within 25 to 30 years, whilst the tax credits on temporary differences a

-119,666 (38,576) 88,943 170,033

Working capital 132.5% do CDI 59,850 - - 166,900 47,961 33,176 140,392

nterest payment twice annually.

eaIS, exCept when OtherwISe IndICated

(CSA) Shell will make commercial services and pers

value, held as follows:

Others 19,508 30,202 - 5,019,267 4,056,122 5,253,036 5,069,365

25. Financial instruments

Scenario III 50%: Deterioration of 50%

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