Moscow, 9 December 2004. RAO "UES of Russia" is concerned about the low level of payment for the heat and electricity consumed by the organizations of the Defence Ministry of the Russian Federation.

By the end of 2004, the amount of energy consumed will exceed the limits of budget allocations* for energy payments by the entities of the Defence Ministry by nearly RUB1 billion. RAO "UES of Russia" has requested on several occasions that the Russian Government settle this problem.

However, the debts owed by the Defence Ministry entities still make up a large proportion of the accounts receivable at the Holding Company's enterprises. For instance, in the eleven months of 2004, OAO "Kamchatskenergo" received RUB47 million less than it is owed by organizations of the Defence Ministry, OAO "Khabarovskenergo" received RUB60 million less, OAO "Amurenergo" RUB49.5 million less, OAO "Yantarenergo" RUB48 million less, OAO "Kolenergo" RUB26 million less, and OAO "Arkhenergo" RUB23 million less.

The shortage of funds experienced by these energy companies because of the non-payments by the organizations of the Defence Ministry does not allow the regional energy companies to timely pay for the fuel supplies and services provided by R&M companies. This may jeopardize the normal operation of RAO UES enterprises during the winter period and endanger reliable and uninterrupted energy supply to all categories of customers.

* Limit of budget allocations is the amount of budget funds determined for each recipient of such funds and approved by the authority responsible for budget execution.