Non Financial Data

NON FINANCIAL DATA Interest Free: "Riba is prohibited in the Qur'an and the Sunnah”. Its exact definition is: any increment stipulated in a loan contract. Stipulated may mean either put as a condition on the contract or it is the customary practice in its area. It is prohibited and considered one of the major sins and acts of disobedience to Allah. The parties to a riba-based contract are declared war on by Almighty Allah and His Messenger, as stated in the Qur'anic verse that reads: “And if ye do not, then be warned of war (against you) from Allah and His Messenger.” (Al-Baqarah: 279) An Islamic bonds is structured such that the issuance is not an exchange of paper for money consideration with the imposition of an interest as per conventional. It is based on an exchange of approved asset for some financial consideration that allow the investors to earn profits from the transactions. Approval of the assets and the contract of exchange would be based on Syariah (Islamic law) principles , which is necessary to meet the Islamic requirement. The various type of Islamic-based structures used for the creation of Islamic bonds are sale and purchase of an asset based on deferred payment, leasing of specific assets or participation in joint-venture businesses. In Islamic finance Equity investing is permissible, so long as the company being invested in does not engage in the prohibited practices mentioned previously. Conventional bonds are considered as Riba and thus not allowed. Instead there exists Sukuk (Islamic Note), which is an Islamic type of bond. In general terms, the transaction is structured on an asset base, and so, if a series of payments arise from an asset based transaction, these can be traded at a market price. Also, even though conventional insurance may be considered Gharar (uncertainty), this is not applicable to reasonable unavoidable business risk. Exception: the word “bond” is sometimes used not in the meaning of a loan to a bond issuer, but simply in the meaning of a certificate. Accordingly, if the bond is used with relation to lease contract, even with the fixed rent for a long period, it is still permissible. The difference is that a lease (ijarah) bond represents ownership of a fixed asset—such as a building, land, a bridge, seaport or an airport—and the fixed assets are leased to a company or a government for, say, twenty years at a fixed annual rent. This kind of bond is permissible in Shari`ah. The OIC (Organization of Islamic Conference) and the International Fiqh Academy preferred to call it sak (pl. sukuk) in order to avoid the Arabic word sanad (pl. sanadat) that has become used exclusively for loan-based bonds. basically conventional banks get deposits on loan/interest basis and provide financing also on loan/interest basis. Islamic banks obtain deposits on silent partnership basis and provide loans on sale basis, lease basis, or active and silent partnership basis.

Comparison between of Islamic and Conventional Bonds: Items Issuance

Islamic Conventional Must be approved by Syariah scholars Must be approved by Securities

process Structure types Issuers Investors

and Securities Commission

Commission only

Asset, equity and debt based

Debt based only

Government, semi- Government and Government, semi- Government private sectors and private sectors Both conventional and Islamic Only conventional investors investors

SECURITY:

Sui Southern Gas Company

Sukukmusharaka

1) Dubai Islamic Bank 2009 - 2012 (the " Investor's Agent") 2) Meezan Bank Limited ( the " Investor's Agent") 3) Bank Islami Pakistan Limited (the "Trustee")

Islamic Sukuk bonds under musharaka agreements are secured by a first pari passu fixed charge created by way of hypothecation over movable fixed assets of the Company comprising of compressor stations, transmission pipelines, distribution pipelines and pipelines construction machinery and equipment.

PEL

Dawood Hercules

diminishing Musharaka

2009-2012

Habib Bank Limited Meezan Bank Limited Allied Bank Limited United Bank Limited MCB Bank Limited Meezan Islamic Income Fund Meezan Tahaffuz Pension

2009-2011

First pari passu charge on present and future plant and machinery of the Company amounting to Rs. 1,600 million. Profit shall be paid on quarterly basis in arrears, whereas principal amount shall be paid in fourteen consecutive quarterly units commencing from June 30, 2009. Participatory redeemable capital represents Islamic Sukuk certificates issued to banks under musharaka arrangements. The loan is secured by a ranking charge created by way of hypothecation over the specific moveable fixed assets of the Company upto the extent of Rs. 7.72 billion, comprising various machinery of urea and ammonia plant In order to protect the interest of the Certificate Holders, and investment agent (Meezan Bank Ltd.) has been appointed as trustee under a trust deed dated 12 September 2007 at fee of Rs. 500,000 each year till the expiry of the agreement. in case the Company defaults on any of its obligations, the trustee may enforce the

Company’s obligations in accordance with the terms of the trust deed.

SLC

ENGRO

diminishing musharika

SLC

2009-2012

Sukuk are secured by hypothecation of specific leased assets and associated lease rentals. The facilities were utilized mainly for lease financial activities

Engro

2009-2016

The company has issued sukuk certificates based on diminishing musharika anounting to Rs 300,000. The principal amount is payable in seven years in two semi annual equal installments.

NAME OF COMPANY Sui Southern Gas Company

TYPE OF ISSUER SECURITY Sukukmusharaka

1Dubai Islamic Bank

REPAYMENT PERIOD 2009 - 2012

2Meezan Bank Limited 3Bank Islami Pakistan Limited

PEL

diminishing Musharaka

SLC

ENGRO

diminishing musharika

SECURITY

Islamic Sukuk bonds under musharaka agreements are secured by a first pari passu fixed charge created by way of hypothecation over movable fixed assets of the Company comprising of compressor stations, transmission pipelines, distribution pipelines and pipelines construction machinery and equipment.

2009-2012

SLC

2009-2012

Engro

2009-2016

First pari passu charge on present and future plant and machinery of the Company amounting to Rs. 1,600 million. Profit shall be paid on quarterly basis in arrears, whereas principal amount shall be paid in fourteen consecutive quarterly units commencing from June 30, 2009. Sukuk are secured by hypothecation of specific leased assets and associated lease rentals. The facilities were utilized mainly for lease financial activities

The company has issued sukuk certificates based on diminishing musharika anounting to Rs 300,000. The principal amount is payable in seven years in two

semi annual equal installments. Dawood Hercules

Habib Bank Limited Meezan Bank Limited Allied Bank Limited United Bank Limited MCB Bank Limited Meezan Islamic Income Fund Meezan Tahaffuz Pension

2009-2011

Participatory redeemable capital represents Islamic Sukuk certificates issued to banks under musharaka arrangements. The loan is secured by a ranking charge created by way of hypothecation over the specific moveable fixed assets of the Company upto the extent of Rs. 7.72 billion, comprising various machinery of urea and ammonia plant In order to protect the interest of the Certificate Holders, and investment agent (Meezan Bank Ltd.) has been appointed as trustee under a trust deed dated 12 September 2007 at fee of Rs. 500,000 each year till the expiry of the agreement. in case the Company defaults on any of its obligations, the trustee may enforce the Company’s obligations in accordance with the terms of the trust deed.