RAO «UES of Russia» Dialogue with Shareholders - New Initiatives and Next Steps Presentation by Anatoly Chubais Chief Executive Officer 25 September 2002 Moscow

1 Agenda UES Performance to Date New Initiatives of UES Management Progress to Date and Next Steps

UES Performance to Date Share Price Performance Understanding Negative Market Sentiment

Share Price Performance 2 Uncertainties concerning UES reform risks led to share price decline of 47% vs. RTS growth of 29% since the beginning of ,0 8,0 10,0 12,0 14,0 16,0 18,0 20,0 22,0 24, UESRTS Index US cents RTS Index UES

3 Understanding Negative Market Sentiment Negative market sentiment results from internal and external issues Final industry structure, regulation and timing remain unclear Increasing uncertainty due to the delayed submission of legislation package from June to autumn Some Duma deputies support plans to nationalise the Grid and question pro-rata distribution Under Management Control Insufficient consideration of minority shareholders’ views regarding the development of the company’s strategy and restructuring’s principles Insufficient communication to shareholders regarding the goals, motivation and substance of the management policy Premature consideration of asset sales in uncertain sector conditions Beyond Management Control

New Initiatives of UES Management Seven Steps of UES Management for the Benefit of Minority Shareholders Shareholder Communication

4 Seven Steps of UES Management for the Benefit of Minority Shareholders 1.Moratorium on sale of core assets and granting of options to purchase these assets until the mechanisms of fair valuation and proceeds distribution are established 2.No pledge of shares for loans 3.No asset transfers to Government other than at fair value 4.Pro-rata allocation of shares 5.Preservation of liquidity of shares at all levels throughout the process 6.Financial / operating results to remain a priority during restructuring 7.Substantial modification of the dividend policy for the benefit of shareholders

5 Shareholder Communication – Significant Intensification Real-time Company website to continue presenting investor information in a timely manner Frequently Workshops on aspects of restructuring including valuation, regulation etc Monthly Conference calls with participation of senior management Twice a year Investor road-shows with restructuring status and outlook, attended by the CEO We are committed to increasing transparency of process for all shareholders

Progress to Date and Next Steps Progress to Date Next steps

6 Progress to Date Representation of shareholder interests enhanced Board of Directors – three representatives of minority shareholders (D. Herne, A. Branis, A. Lebedev) and one independent director (R. Birhoff) Board’s Restructuring Committee – four representatives of minority shareholders Board’s Valuation Committee – two representatives of minority shareholders Together with minority shareholders UES have developed and approved the rules of conduct between UES and its subsidiaries and affiliates Together with the Government, UES prepared a legislation package regarding reforms in the industry UES Board approved the “UES Corporate Code” UES is finalising a strategic plan for the restructuring period (“3+3 program”) UES has taken initial steps towards creation of market infrastructure (System Operator, Trading System Administrator, Transmission Grid) Deloitte & Touche - on valuation methodology Alfa Bank/Merrill Lynch - on restructuring and shareholder communication Restructuring Advisors UES is undertaking one of the most challenging restructurings in corporate history. Definite progress has been made and the next steps are well defined Shareholder Representation

Next Steps Create a new working group, comprising the CEO, minority representation and advisors to review and optimise a step-by-step strategic plan Present UES strategic plan (“3+3 program”) reflecting the comments of minority shareholders in Q4 2002, addressing: General approach to the restructuring Corporate governance Legislative and regulatory environment Final structure Transition mechanism Timetable Workshops on UES restructuring program and valuation 7