CGAS3: quote, dividends and indicators for Comgás

Companhia de Gás de São Paulo – Comgás is one of the oldest companies still operating in Brazil, founded in 1872, originally as San Paulo Gás Company, an English company authorized to operate in the country to provide public lighting services in the city of São Paulo. Initially incorporated as a limited liability company, it was converted into a corporation in 1968. Its capital was listed in 1996 and the shares began trading on B3 in 1997, currently under the tickers CGAS3 and CGAS5. Throughout its history, the company has gone through privatization processes and changes of control, including the entry of international groups linked to the energy sector and, later, the acquisition of the controlling stake by Cosan, which currently owns Comgás through the holding company Compass Gás e Energia.

Comgás has established itself as the largest piped gas distribution utility in Brazil in terms of volume distributed, serving more than 2.7 million customers and accounting for about 29% of all natural gas (ex-thermal) distributed in the country. The company’s corporate purpose is broad, but its main activity is the provision of public piped gas distribution services, based on State Decree No. 43,888/99 and the Concession Agreement entered into with the State of São Paulo. In addition to distribution, its bylaws include activities such as exploration, production, acquisition, storage, transportation, transmission and commercialization of fuel gas and its by-products, as well as the provision of solutions and services associated with thermal and electrical energy equipment, cogeneration and thermogeneration.

Comgás’s business model is strongly anchored in its piped gas network infrastructure, through which it distributes natural gas to the residential, commercial, industrial, vehicular, cogeneration and thermogeneration segments. The company operates both in captive markets and in the so-called free gas market, in which eligible consumers can contract supply directly with producers or traders, using the distributor’s network for transportation. In 2024, the company distributed about 4.25 billion m³ of natural gas in its concession area, highlighting the operational relevance of its distribution grid. Comgás also provides services associated with the installation, maintenance and technical assistance of equipment related to the use of natural gas, expanding its role in energy solutions for corporate and residential customers.

The company’s business segments have distinct consumption and profitability profiles. In the residential market, where the largest customer base is concentrated, natural gas is used mainly for water heating and supplying stoves, with consumption influenced by climate seasonality. The company segments this market by housing typology, covering condominiums under construction, already occupied developments and single-family homes. In the commercial segment, Comgás serves establishments such as restaurants, hotels, hospitals, laundries and clubs, which use gas for cooking, water heating, air-conditioning systems and other thermal applications as a substitute for electricity, firewood and fuel oil. In the industrial market, one of the most relevant in terms of volume, natural gas is used to generate heat and steam in several sectors, such as chemicals, petrochemicals, ceramics, paper and cardboard, with demand correlated with the level of economic activity in the State of São Paulo.

Activity in distributed generation, thermogeneration and cogeneration broadens Comgás’s role within the energy matrix. In the thermogeneration segment, the company is responsible for distributing gas to thermoelectric plants located in its concession area, such as UTE Fernando Gasparian and UTE Euzébio Rocha, both owned by Petrobras, qualified as self-producers and self-importers of gas. In these cases, Comgás handles custody and transportation of the gas to the delivery point at the plants. In cogeneration, natural gas is used to simultaneously produce electricity, steam and cooling, serving industries that require process heat and large consumers of HVAC services, such as shopping malls, hospitals, hotels and airports. The company also operates in the automotive segment, supplying compressed natural gas (CNG) to light and heavy fleets, contributing to the diversification of gas use in urban mobility.

Comgás’s concession area in the State of São Paulo covers 177 municipalities, including the metropolitan regions of São Paulo and Campinas, as well as the Paraíba Valley and the Baixada Santista, corresponding to a region responsible for about 29% of Brazil’s GDP. The company already serves 97 of these municipalities through a network that exceeds 23 thousand kilometers of distribution pipelines. The extension of the Concession Agreement in 2021, through the 7th Amendment, extended the term until May 2049 and established targets for expanding the grid by an additional 15.4 thousand kilometers, connecting 2.3 million new customers and serving 41 new cities, reinforcing its profile as a regulated infrastructure business. All of Comgás’s revenue is generated in Brazil, focused on the State of São Paulo, with no operations or revenue from abroad.

Comgás’s operations are regulated by the São Paulo Public Services Regulatory Agency (ARSESP), which is responsible for monitoring compliance with the Concession Agreement, establishing criteria for tariff reviews and adjustments, and defining service quality and safety indicators. The regulatory framework provides for tariff reviews every five years, annual adjustments of margins by inflation measured by the IPCA, net of the efficiency factor, and mechanisms for extraordinary adjustment in case of significant changes in input costs, especially gas supplied by providers such as Petrobras, Edge, Brava, Galp, Equinor and Necta. Supply contracts include take-or-pay clauses and transportation capacity charges, which influence the company’s cost structure and demand management. The company is also subject to federal sector legislation, such as the New Gas Law, and personal data protection regulations, notably the LGPD.

In the environmental, social and governance (ESG) field, Comgás is included in Compass’s Annual and Sustainability Report, which consolidates the group’s economic, operational and socio-environmental performance information. The natural gas distributed by the company is presented as a fossil fuel with lower emission intensity compared to alternatives such as oil and coal, according to sector data, which reinforces its role in energy transition strategies. The parent company prepares an annual greenhouse gas emissions inventory, audited by third parties, which includes the direct and indirect emissions from Comgás’s operations. Studies on vulnerability to physical and transition climate risks were conducted, based on methodologies adopted by the IPCC, IEA and TCFD, to map potential impacts on distribution infrastructure and support adaptation plans. The company also reports information through the Carbon Disclosure Project (CDP), demonstrating alignment with climate transparency practices required by the Brazilian capital market, in which its CGAS3 and CGAS5 shares remain listed on B3 as a reference in the regulated piped gas segment.