Presentation by Anatoly Chubais Chief Executive Officer RAO «UES of Russia» October 2001Moscow

2 RAO «UES of Russia» in the Russian economy  407 thermoelectric and hydraulic plants  668,200 employees  72.1 % of the total generation  96.3 % of the total length of trunk transmission lines Rating of RAO “UES of Russia” (Expert-200 Russian poll) September 2001 Indicator Number of Rating Indicator companies amount Capitalisation, US$ mn2005 4,420.2 Sales volume, US$ mn ,942.1 Profit, RUR mn ,698.0

3 Based on the 2000 results RAO «UES of Russia» Group posted a profit … *) All 1999 and 1998 figures are recalculated to adjust for the Rouble purchasing power as of 12/31/ Operational profit of the Group, RUR mn In 2000 the Group for the first time posted an operational profit of RUR 7.9 bn and net profit of RUR 0.5 bn Complete set of financial reports of both JSC and Group RAO «UES of Russia», audited by international agencies, is prepared for the third time running

4 Synchronised operation - base of energy safety Kazakhstan and Central Asia In the USSR, synchronised operations were carried out with its 11 internal republics … decisions of RAO «UES of Russia» resulted in the resumption of synchronised operation with 14 out of 15 countries - former members of the USSR Strategic task – to start synchronised operation with European energy associaitons R U S S I A N F E D E R A T I O N Transcaucasian republics Belarus and Ukraine Baltic countries

5 Electricity export continues to grow US$ mn * bn kwh * - forecast for year end 2001

6 Georgia Finland 40% Belarus 32% Turkey 5% Poland 4% Latvia 6% 2% China 1% Kazakhstan 10% Total: 15,525 mn kwh Key markets for electricity export from Russia Estimated electricity export structure, 2001

7 Most countries opted for a competitive model of the sector’s development Deregulation Privatisation Russia (2000) France (2000) Hungary (1999) Thailand (1996) Italy (1999) California (1995) UK (1990) Ukraine (1997) Scandinavia (1992) Private property State property EU Electricity Directive Argentina (1990) Brazil (1995) South Africa (2000) Greece (2000) Kazakhstan (1998) Moldova (1999) State regulationCompetitive market

8 Reforms are based on the division of monopoly and competitive sectors Generation Competitive sectors Natural monopolies Liberalisation of pricing mechanisms and stimulation of market participation Market rules Production control Backbone and distribution networks Sales Regulated tariffs Ensuring equal access to networks. Reorganisation of market support infrastructure.

9 «5,000 MW» program offers significant investment opportunities * - volume of investment in brackets Kaliningrad heat plant-2 (US$ mn) Surgut federal plant (US$ mn) Berezov federal plant-1 (US$ mn) Krasnodar heat plant (US$ mn) Upper Volga hydraulic plant cascade (US$ 31.2 mn) Ivanovo federal plant (US$ mn) Dzerzhinsk heat plant (US$ 37.6 mn) Schekino federal plant (US$ mn) North-Western heat plant (US$ mn) Pskov federal plant (US$ 32.5 mn)

10 Greenhouse gas emissions by RAO «UES of Russia» CO 2 30% of the total volume of emission reduction were achieved in due to special measures and projects aimed at an improvement in energy efficiency. Remaining 70% of greenhouse gases emission reduction achieved by RAO “UES” over the same period resulted from energy consumption saving within the framework of target governmental programs of demilitarisation, liberalisation and restructuring of national economy., mn tons

11 Power Carbon Fund of RAO «UES of Russia»  A progressive finance mechanism to implement the projects aimed at reduction of greenhouse gas emissions in the Russian Federation  Completed inventory of СО 2 emissions at the JSC enterprises  Organised an independent international expert appraisal of inventory results (error level no more than 4%)  Started implementation of a pilot monitoring system  At present the Fund:  develops corporate strategy of emission reduction and develops the quotas assignment scheme  takes part in the developing international standards for the carbon loan market formation  prepares a database (portfolio) of Mutual Implementation projects Established by decision of the Board of Directors of RAO «UES of Russia» 15 February 2001

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