"While last year was a time of significant challenges, given the circumstances confronting the global economy, from which Colombia was not immune, the results achieved by Promigas were satisfactory and allowed us to successful consolidate our development in the local market and our business objectives in international markets, "said Antonio Celia Martinez-Aparicio, President of Promigas.

As to how Promigas conducted its business, the annual report highlights the company’s positive performance on the Colombian stock market, as ratified by the successful sale of bonds in September 2009.  The demand for the initial offer of COP$ 400 billion was 2.11 times that amount.  For the eighth year in a row, securities issued by the company were AAA-rated by Fitch Ratings Colombia S.A. This is the best possible credit quality rating and indicates virtually no risk.

For the first time, Fitch Ratings assigned Promigas an international  “BBB” local and foreign currency issuer default rating (IDR), with a stable outlook.  According to Fitch, the rating is supported by the company’s strong financial profile, positive cash flows, low leveraging and good coverage for the interest on its debt.

In order to have two companies, each specializing in its own particular line of business, with a more appropriate level of equity to compete and to make effective use of resources and market opportunities, Promigas shareholders decided at a meeting in February 2009 to spinoff of 52% of the company’s stake in SIE (a holding company of Organización Terpel).  An independent firm known as Proenergía Internacional S.A. was born as a result.  Registered on 22 July 2009, its shareholders are the same Promigas shareholders at the time of spin-off.

 
Expanded Natural Gas Coverage

During the past year, 354,507 homes in Colombia were connected to natural gas and another 84 towns were added to the list of municipalities where this public utility is available. In all, coverage was expanded to include more than 5.4 million users in the country.

Through its subsidiaries Surtigas, Gases de Occidente and Gases del Caribe, and their companies Efigas and Gases de La Guajira, Promigas connected 140,099 new users to the natural gas distribution system in 2009. With a total of 2.1 million users receiving service, which amounts to 37% of the natural gas users in Colombia, effective coverage reached 80% and approximately 9.2 million people benefitted. Fifty-four percent (54%) of the clients served by these companies are on the Caribbean Coast, 32% are in Western Colombia and 14%, in the coffee-growing region.

The distribution companies in the Promigas portfolio marketed 1,975 million cubic meters in Colombia, which is 10% more than the year before.  The report also highlights the increase in service provided to the western part of the country through the virtual pipeline system, a program that was started by Gases de Occidente in 2008 and consolidated in 2009, bringing the benefits of natural gas to Buenaventura, the Cauca Valley and Santander de Quilichao, Villa Rica and Puerto Tejada in the Cauca region, cities where11, 476 users were connected to natural gas service.

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In Peru, Cálidda increased the number of users it serves by 66% compared to 2008 and distributed 5% more volume in Lima and Callao.

Natural gas distributors continue to successfully develop a non-bank financing service known as Brilla, which has helped to provide a better quality of life for 76,638 families through 115,405 products financed in 2009. In the three years since the service was launched, COP$248,820 million pesos in goods have been financed, 91% in the three lowest income brackets.

Expansion of Gas Transmission Facilities

The report notes that Promigas transmitted 362.6 MCFD through its gas pipeline system in 2009 and delivered 359.1 MCFD to its customers. This is 22% more than in 2008. One of the main reasons for the increase was "El Niño" weather, which began in the final quarter of 2009 and resulted in 68% more natural gas being required for thermal power generation than the year before.

The report also emphasizes that the Gibraltar project, which is being built under the responsibility of Transorient, will link gas production at this new field to the national transmission system, with a maximum capacity of 45 MCFD. The facility was scheduled to being operating in late 2009; however, start-up was postponed until December 2010 because of cyclical and external factors.

For expansion purposes, Transmetano was granted an environmental license to construct the Eastern Branch Project. It is scheduled to begin operating in May 2010 and will make natural gas available to another four towns in eastern Antioquia, benefitting 44,000 users. The project will require an investment of USD$ 12 million to construct a branch line 40 km long, with a capacity of 7.5 MCFC.

Customer Service and Human Resource Management: A Priority for Promigas

According to a study conducted with support from the National Consulting Center, a rating of the different aspects of the company’s image shows customers view Promigas as a financially sound organization with advanced technology and a commitment to industrial safety, which is extremely important in the natural gas business. Customer loyalty increased from 92% to 94%.

As for human resource management, the organizational climate was gauged in 2009 using the Great Place to Work method. Promigas ranked 15 among 104 participants as one of the best companies to work for in Colombia. In another aspect of the same study, 96% of Promigas employees said the company "is a great place to work."

To attract and retain human talent, the company invests more than COP$ 28 billion in programs and activities for overall human resource development.

"The strategic focus of our business is founded not only on having the best human talent, but also on managing a competence model that enables our employees to develop and progress within the organization," said Antonio Celia Martinez-Aparicio, President of Promigas.  In addition, Promigas invested COP$ 185 million in social-service activities for its employees and their families, COP$ 535 million in education programs for family members, COP$843 million in health care for employees and COP$ 836 million in health care for their immediate family members.

A Decade of Social Action in Conjunction with the Community

In 2009, the company celebrated 10 years of social service developed in conjunction with the community. During that time, it learned important lessons on how to continue to work towards quality education with equity in the Caribbean region.

"Our presence in 137 cities and towns throughout Colombia, including 73% on the Caribbean Coast, confirms our commitment to social welfare and well-being," noted the President of Promigas.

During 2009, the company invested approximately COP$ 4 billion in donations and in the following programs, which are part of its lines of work:

Educational Development Line. The focus is on programs for early childhood, aptitude improvement and to strengthen local school systems. Over 600 educational establishments have benefitted, more than 2,000 teachers have received training, and approximately 300,000 students, mostly at the pre-school and primary levels, have been affected in a positive way.

Business Development Line. The projects in this line are intended to create micro-enterprises and to encourage resourcefulness and innovation.  During the past year, 1,112 businesses were consolidated, 1,436 sources of self-employment were generated, and more than 4,448 persons benefitted directly.

Telecommunications Sector Development

2009 was marked by the entry of Promigas Telecommunications (Promitel) into the international market and the company’s consolidation in the domestic market.

A highlight in Colombia was the entry into Santa Marta, Monteria and Sincelejo, cities where the operational phase began in December 2009. In Barranquilla and Cartagena, Promitel maintains its leadership in the optical fiber business, with a 77% market share. The Cali and Bucaramanga markets continued to develop and Promitel has acquired 15% and 31% of the market, respectively.

The network of the Panama Project was placed in operation during December 2009.
 
The company’s operational success is reflected by COP$ 47,836 million in sales, which is 21% more than the year before.

As to overall results, the company’s president, Antonio Celia, stated: "In 2010, we will continue to work with the same dedication, seeking as always more and better investment opportunities for the benefit of all."

About Promigas.  Promigas S.A. E.S.P. is an energy holding company comprised of 12 natural gas transmission/ distribution and telecommunications companies with operations in Colombia, Peru and Panama.

Forty percent (40%) of the natural gas transported by Promigas travels through the company’s own pipeline network, which is more than 2,200 km long. Approximately 74% is carried by transmission companies in which Promigas has an interest. The company operates almost 1,000 km of pipeline belonging to third parties.

For nearly 40 years, Promigas has brought progress to Colombia through its active involvement in an effort it pioneered to bring about the use of natural gas on a large scale.
   
For more information contact:
Edna Barrios
Office of External Relations and Communications
Promigas
Telephone (5) 3713213 - Mobile 315-7410827

Claudia Ascencio

 FD Gravitas
Telephone (1) 3198400 – Mobile 313-8885034