Moscow, 7 August 2006. The Management Board of RAO "UES of Russia" has approved a five-year investment programme until 2010 for the entities of RAO UES Holding Company: WGCs, TGCs, OAO "HydroWGC", OAO "UES SO-CDA", OAO "UES FGC", DCs, and the Parent Company (RAO "UES of Russia"). More than RUB2.1 trillion of investments will be needed to implement the Programme.

RAO "UES of Russia" has prepared lists of investment projects to be implemented by every company of the RAO UES Holding Company (WGCs, TGCs, OAO "HydroWGC", OAO "UES SO-CDA", OAO "UES FGC", DCs, and the Parent Company, RAO "UES of Russia"). These projects will involve new construction or modernization of the existing power facilities.

Under the Investment Programme, 20.9 GW of generating capacity will be brought on line over the next five years. These projects are included in the List of thermal generation projects scheduled for commissioning in 2006-2010.

The Programme also provides for large-scale construction of new and major repair of the existing grid facilities aimed at removing obstacles for connection of new customers and ensuring transportation of power from the plants under construction to the Unified Energy System.

In 2006-2010, investments in the development of generation capacity will exceed RUB1 trillion, of which over RUB650 billion will be invested by WGCs and TGCs in thermal generation projects, over RUB330 billion will be used to finance construction of hydro generation capacity, and about RUB50 billion will be invested in the power plants which are not part of WGCs and TGCs.

The thermal generation projects will be financed through issuance of additional shares, internal sources and borrowing. Specifically, about 40% of funds are expected to be raised through issuance of additional shares by WGCs and TGCs. Just over 35% will come from tariff sources, and about 14% will be borrowed.

In 2006-2010, investments in grid infrastructure development will total RUB1 trillion. The funds will come from tariff sources, connection fee payments, and borrowings. Negotiations are underway with government agencies to agree the terms of additional share issue in OAO "UES FGC", which will be placed to the government.

The RAO UES Investment Programme includes projects involving new construction and modernization of energy facilities in the city Moscow (RUB440 billion), St.-Petersburg (RUB303 billion), and some areas of West Siberia (over RUB246 billion), which were adopted in the spring and summer of 2006.

Under the Programme, the average annual investments will increase 3.5-fold over the next three years (2007-2009) to RUB462 billion, as compared to RUB129 billion in 2004-2006. The investments to be made throughout RAO UES Holding will make RUB182 billion in 2006, RUB407 billion in 2007, RUB485 billion in 2008, and RUB492 billion in 2009. In 2010, the annual volume of capital investments will reach RUB560 billion.

On 3 August 2006, the Russian Federation Government approved the Investment Programme of the Electricity Industry Development for Year 2007 and the Period until 2009, including the investment plans of OAO RAO "UES of Russia", OAO "HydroWGC", OAO "FGC of UES", and OAO "UES SO-CDA". The investments to be made by OAO RAO "UES of Russia", OAO "UES FGC", OAO "HydroWGC", and OAO "UES SO-CDA" will total RUB160.3 billion in 2007, a twofold increase on 2006.

*The list of thermal generation capacity to be commissioned in 2006-2010 throughout the Unified Energy System of Russia was approved by Chairman of the Management Board of RAO "UES of Russia" Anatoly Chubais in March 2006. The List consists of energy projects located in 19 energy systems across Russia, including the Moscow, Leningrad, Tyumen, Sverdlovsk, and Kaliningrad Energy Systems. The reason for including a generation project in the List is the possibility of generating capacity deficit in those energy systems in the near term due to increased energy use and depreciation of plant and equipment, and insufficient transfer capability of the existing power transmission lines.