1. PRESENTATION FOR INVESTORS Unified Energy System of Russia

2. 2 Contents  Overview of Russia and Russian Electricity Sector  RAO “UES of Russia” Today  RAO “UES of Russia” Restructuring

3. 3 3,864 1,472 1,033 889 588 580 577 546 383 328 0 1,000 2,000 3,000 4,000 5,000 TWh USChinaJapanRussiaCanadaGermanyIndiaFranceUKBrazil Overview of Russia and Russian Electricity Sector Positive Consumption Trend 4th Largest Power Producer in the World in 2003 25.0%9.5%6.7%5.7%3.8%3.7%3.7%3.5%2.5%2.1% % of World Total TWh Severe economic downturn in the 90s resulted in material over-capacity currently estimated at around 28%. Optimistic Scenario Pessimistic Scenario 750 1,000 1,250 1,500 1,750 19901995199619971998199920002001200220032004200520102015 1,073 841828 813809 832 863875879 888 945 911 1,135 1,020 1,315 1,100 1,545 1,200 897 2020

4. 4 Thermal 68% Hydro 21% Nuclear 11% 0 1 2 3 4 5 6 (US$bn) HydroNuclearFossil Fuel 2003E2004E2005E2006E 3.0 3.8 5.2 5.8 Capacity Distribution (by MW) Estimated Capex Requirements (1) Key Facts Total installed generation capacity of 214.5 GW  Average age exceeding 30 years  60%-70% of thermal capacity is co-generation  Gas prices controlled by the government and are significantly lower than in the West Russian government estimates that up to a half of total capacity needs to be replaced in the next 10 years  Due to overcapacity, age of assets does not immediately pose a threat to continuity of supply Electricity consumption in Russia is expected to grow at rates below GDP growth as the country’s economic structure is changing towards less energy – intensive sectors Except for nuclear capacity and several large independent generators, UES controls the electricity industry in Russia  72% of Russia’s installed generation capacity  69% of Russia’s electricity output  32% of Russia’s heat production  96% of Russia’s power transmission lines By Type (1) Overview of Russia and Russian Electricity Sector

5. 5 Russian Federation Minority Shareholders of the Parent Company RAO UES of Russia $13,667.7m Federal Grid Company System Operator 44 Federal Power Stations (inc 8 under construction) Generation Transmission & Distribution Grids Supply Dispatching Services Independent AO-Energos: Irkutskenergo $998m Tatenergo Bashkirenergo $354m Novosirbirskenergo $149m RosEnergoAtom Government 9 Nuclear Stations Leningrad Nuclear Station 73 Regional Power Companies - AO-Energos 100% From 49% to 100% Structure of the Sector Capacity Distribution (by MW) Overview of Russia and Russian Electricity Sector Listed AO-Energos Market Value ($m) Mosenergo2,321 Samaraenergo385 Sverdlovenergo225 Total2,931 52% 48% 100% From 50 to 100% Ros Energo Atom 10,3% UES 72,4% Other 17,3%

6. 6 ____________________ Source: Ministry of Energy Presentation on the Energy Strategy (1)Optimistic scenario with Russian GDP growth 4.7%-5.2% annually until 2020 European part of Russia  Maximum nuclear power plants development  Replacement of steam power turbines by combined cycle units  Development of coal-fired power thermal plants in the Urals region Siberia  Coal-fired thermal power plants and hydro energy development Far East  Hydro power plants  Coal-fired plants and in some regions – nuclear power plants Overview of Russia and Russian Electricity Sector Energy Strategy of Russia till 2020 (1) Priorities of Territorial Electric Power Development Structure of Electricity Production in Russia Year 2003 – 900 TWh Year 2020 (1) – 1,375 TWh Thermal 62% Hydro 16% Nuclear 23% Thermal 66% Hydro 17% Nuclear 17%

7. RAO “UES of Russia” Today

8. 8 Key Facts Operating HighlightsKey Financial Data One of the world’s largest power companies  Serves the area of 17 million square kilometres  Comprised of 72 local AO-Energos (with primarily controlling interest), 32 federal power stations (inc 8 under construction), and a recently formed Federal Grid Company (“FGC”) and System Operator (“SO”)  Installed capacity of 156 GW (72.4% of Russian electricity generation capacity in 2003)  2.5 million km of power transmission lines Each of local AO-Energos is a vertical integrated company comprising regional generation, transmission, distribution and supply assets The largest employer in Russia with a number of employees reaching 577.6 thousand people Heat supplies in 2003 amounted to 468.8 million Gcal (32.4% of the total heat supplies in Russia) ____________________ Source: Annual Report 2002 US$ m9 months ended 30 Sept 2001 9 months ended 30 Sept 2002 9 months ended 30 Sept 2003 Revenue 8,47410,32813,720 Operational Profit 103671,216 Net Profit 909669543 EBITDA 1,0701,4942,720 EBITDA Margin 12.6%14.5%19.8% Operational Margin 1.2%0.6%8.9% Net Margin 10.7%6.5%4% Fixed Assets 24,20125,83429,293 Net Debt 8651,6241,359 Shareholder Equity 14,40416,73019,733

9. 9 RAO “UES of Russia” Today Ownership Structure of AO-Energos

10. RAO “UES of Russia” Restructuring

11. 11  Package of laws regarding the energy reform approved and came into effect in April 2003  Government resolution # 865-p of 27 June 2003 “Action Plan for the Power Sector Reform for 2003-2005” approved  Government resolution # 1254-p on the “Structure of Generation Companies in Wholesale Power Market” signed on September 1, 2003  Government resolution # 643 “On Rules and Regulations of the Wholesale Power Market during the Transition Period” signed on October 24, 2003  Competitive wholesale power market launched with the first “5-15%” spot market trades on November 1, 2003  Government resolution # 1939-p of December 29, 2003 “Concerning Participation of the State in the Creation of Interregional Grid Companies” approved  Seven Inter regional power distribution companies set up on February 26, 2004 Reform RAO “UES of Russia” Restructuring Results achieved

12. 12 Objectives & Constraints Optimal Industrial Structure Create transparent and competitive market place Improve overall economic efficiency of the system Ensure financial viability of individual enterprises Secure affordable end consumer electricity price Attractive Investment Profile Encourage capex into areas where new build is required Raise economic competition and quality through involvement of foreign strategic investors Establish clear and effective regulatory framework Enhance shareholder value of UES, in the process ensuring fair treatment for minority shareholders Social Considerations Ensure smooth transition to deregulated market with minimal price shocks Ensure durability of new system Constraints Restructuring of the industry is required in order to improve efficiency and attract investment Competition Efficiency Durability Attract capital Strategic Equity Debt Appropriate retail price Security of supply Objectives RAO “UES of Russia” Restructuring

13. 13 RAO “UES of Russia” Restructuring Reform Basics Competitive Sectors Market rules  Free price-setting  Stimulating to enter into market Regulated tariffs Generation Sales  Securing equal access to grids  Setting up market infrastructure Natural Monopolies Transmission Distribution Dispatching

14. 14 Minorities to get direct access to UES assets by 2008 The Reform plan envisages the following structural transformations being completed by 2008 RAO “UES of Russia” Restructuring Minority Shareholders FGC1 IDC 6 Thermal- Generation Based WGCs 4 Hydro - Generation Based WGCs Holding of GSs, Isolated AO- Energos System operator TGCs < 25%48%<48%48%< 25 %75% - 100% 65% - 100% 100% 5 IDCs DC N GSs Isolated AO-Energos RGC DC 1 100% 49% - 100% 49% Up to 20 FGC – Federal Grid Company IDC – Interregional Distribution Company WGC – Wholesale Generation Company RGC – Regional Generation Company GS – Guaranteeing Supplier TGC- Territorial Generation Company

15. 15 Structure RAO “UES of Russia” Restructuring

16. 16 Structure RAO “UES of Russia” Restructuring

17. 17 RAO “UES of Russia” Restructuring The “5+5” Strategy Concept was unanimously approved by the Board of Directors in May 2003  System Operator established (centralized dispatching unit)  Federal Grid Company established  AO-Energo restructuring has begun  40 AO-Energos are under the restructuring  April 1, 2004 – first unbundled companies were established  Mechanisms for the creation of wholesale generation companies are being developed  Competitive wholesale power market launched with the first “5-15%” spot market trades on November 1, 2003 (Trading vol. – 12.870 Mln.KWh, Average Price – 264.20 Rub/MWh)

18. 18 RAO “UES of Russia” Restructuring Setting up the legal and regulatory framework In 2004, the following issues will continue to be addressed  Establishing of WGCs and TGCs  Passing the Governmental decision on methods and schedule of WGCs’ separation (including the mechanism of auctions)  Establishing of Interregional Distribution Companies (IDCs)  Developing the monopoly regulation for the consolidated network companies  Amending the Rules of the wholesale market. Developing retail energy market rules  Optimization of the management structure of UES

19. 19 RAO “UES of Russia” Restructuring Factors that may affect Company’s capitalization growth in 2004 WGC separation Tendering in competitive sector of wholesale electricity market Tariff policy Reform at the regional level Tendering up to 15% of the wholesale electricity market Tariffs settings based on “price cap” principle Restructuring regional power companies Sale of the pilot WGC at auction (after the auction procedure is approved)