1. RAO UES of Russia: Investment Stage of the Reform 9th Russian Economic Forum London 24.04.2006 Anatoly Chubais Chairman of the Management Board RAO “UES of Russia”

2. 2 Maximum Load of Russian Power Plants Source: RAO UES of Russia 143.5 141.6 153.1 138.6 142 139.1 133.5 133.4 130.3 135.3 134.1 136.5 144.7 148.3 157 160.1 100 125 150 1991199219931994199519961997199819992000200120022003200420052006 Thsd MW Load of UES of Russia: Approaching a new consumption maximum Electric Power Industry: New Trends

3. 3 Regional Energy Systems : Exceeding the consumption maximum of the Soviet period Source: RAO UES of Russia 102 104 105 106 108 110 115 121 124 160 100 110 120 130 140 150 160 170 180 Udmurtia Vologda Karelia Belgorod Kuban Astrakhan Leningrad Tyumen Kaliningrad Moscow Dagestan 2006 vs. 1990, % 1990 = 100% On March 28, 2006 the list of top-priority projects for 19 400 MW was approved. Russian power industry needs badly full scale long term investments

4. 4 Electric Power Industry Reform: adjusting tactics while keeping strategy intact Key Components of the Reform: Completion Status 200770% 4. Development of a markets system (for electric power, capacity, and ancillary services). 200770% 3. Setting up generation companies (WGCs and TGCs) 200770% 2. Consolidation of trunk grids and consolidation of the dispatching vertical 200690% 1. Split-up of vertically-integrated companies and separation of power generation from grids Year of Completion% of completion Reform Components The target of the Reform is not subject to change. The tactics for Reform completion require adjustment The main initial target of the Reform is to launch the investment process Main Point of Adjustment: Large-scale investments during the final stage of the Reform rather than upon completion of the Reform. Investments and the Reform

5. 5 2005 2006 2007 FINISH The Finishing Line was close … Investments and the Reform 2006 2007 2008 FINISH Investment section of the road but had to be pushed two years further along the road

6. 6 Investments: Concept, sources and objects, volumes Annual volumes of investments in RAO UES of Russia: 2005-2006 – about $5 bn, by 2008-2009 – about $15 bn. Reform Concept Investment Deployment Concept Budget investments Competitive sectors (primarily – thermal power generation) Private investments Monopolistic sectors Investment Deployment Concept

7. 7 Thermal Power Generation: Mechanisms to attract investments Investment Deployment Concept Investment guarantee mechanism Direct private investments in local projects Additional share issue of WGCs and TGCs Private placement Public placement Project financing Thermal power generation - a top priority object for investments 2/3 of electric power generation in Russia

8. 8 Additional Share Issue of WGCs and TGCs The logic and sequence of actions was proposed by management and preliminarily approved by the Board of Directors. It is up to the Russian Government to make key decision. WGC-3, WGC-4, WGC-5, TGC-1, TGC-3, TGC-5, TGC-8, TGC-9, TGC-10 Selection of project consultants is starting as well as meetings with potential investors. Special conference for investors into above projects is planned for June 2006. 3-4 companies selected from the approved list of candidates will comprise a short list to make a decision on additional issue and placement of shares. June 2006: RAO UES Board of Directors is expected to make a relevant decision on 3-4 companies to undergo share issue. Long list of generation companies – top candidates for additional issue and placement of shares has been reviewed and approved by RAO UES management board In all cases, placement of additionally issued shares is a tool for attracting investments in preselected projects with total capacity of 6,700 MW New Companies: Top-priority Projects

9. 9 Additional Share Issue of WGCs and TGCs: Timeline New Companies: Top-priority Projects 2006 '04'05'06'07'08'09'10-12'01-03 Preparation and approval of the top candidates list Selection of consultants Consultations with potential investors Negotiations with shareholders Preparation for share placement Implementation of pilot projects Selection of 3 to 4 pilot WGCs and TGCs from the top candidates list and approval of their share placement plans

10. 10 WGC-5: Example of preparedness for share placement Sources: MICEX; analysts reports (Aton, TroikaDialog, RenCap, MegatrustOil) 1.0 2.0 4.0 Current Mcap 19 Apr. 06 2.39 14 Sep. 05 (1st trading day) Independent Appraiser’s evaluation 1.5 0.90.9 0.962 Analyst evaluation (min/max) Prior to trading estimates Current Mcap $ bln 3.0 Installed Capacity – 8,672 MW (5.53% of overall RAO UES’ installed capacity) WGC 5 Shares are traded on RTS, MICEX GDRs will be traded on London and Frankfurt stock exchanges New Companies: Top-priority Projects

11. 11 Reorganization of RAO UES of Russia: Pro rata principle for protection of shareholder rights RAO UES of Russia Spin-off of 1-2 generation companies from the following candidates: WGC-3, WGC-5, TGC-5 Shareholders Meeting (before the end of 2006)… Shareholders Meeting (in 2008) Reorganization of RAO UES of Russia by way of split-up; Pro rata distribution of the Company’s assets among shareholders; Transfer of functions to the Government and infrastructural entities of the energy industry

12. 12 “The train departs in 2006-2008...... and the best seats are in the first car!”