Moscow. 1 October 2004. The member of the Management Board of RAO "UES of Russia" and Chairman of the Management Board of OAO "Federal Grid Company of the UES" Andrey Rappoport and Prime Minister of the Republic of Georgia Zurab Zhvania signed an agreement between RAO "UES of Russia" and the Government of the Republic of Georgia on ensuring uninterrupted operation of Georgia's energy system during the 2004/2005 autumn-winter period.

Under the Agreement, the Georgian Government undertakes to ensure full and timely payment for the electricity consumed by the groups of Georgia's population enjoying benefits. Besides that, the Government of Georgia agreed to control the upper limit of indebtedness of the Republic's wholesale electricity market to OOO "Mtkvari Energia" owned by RAO "UES of Russia" (Units 9 and 10 of the Tbilisskaya TPP), which, under the previous agreements, should not exceed 30 million lari (about USD15 million).

Under the Agreement, RAO "UES of Russia" is to ensure uninterrupted operation of Unit 9 of the Tbilisskaya TPP coupled with the appropriate funding of the power plant from 10 October 2004 to 31 March 2005. In addition, RAO "UES of Russia" agreed to ensure, by 10 October 2004, mutual settlement of the debt owed by Telasi to the Georgian wholesale energy market and the debt owed by the energy market to Mtkvari Energia in the amount of 7 million lari (about USD3.5 million).

The Agreement will enhance reliable operation of the energy system in Georgia's capital Tbilisi during the 2004/2005 autumn-winter period.

A year ago, RAO "UES of Russia" started to run some energy facilities in Georgia.

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Information note: RAO "UES of Russia" controls several energy facilities located in Georgia, including AO "Telasi", the energy distribution company which owns the low and medium voltage power networks in the city of Tbilisi and the surrounding area, and OOO Mtkvari, which owns generation units No. 9 and No. 10 at the Tbilisskaya TPP. Besides, RAO "UES of Russia" has the right to run the hydroelectric power plants, Khrami-1 and Khrami-2.

Over the past year, RAO "UES of Russia" has done a great deal of work to increase the reliability of operation of these energy facilities. In particular, repairs have been carried out at Unit 9 of the Tbilisskaya TPP, which made it possible to increase the operating load of the power plant to 250-260 MW from 200 MW. Telasi upgraded its twelve HV substations and ninety-six transformer substations. This reduced the breakdown rate in the low- and medium-voltage networks in Tbilisi by 60% compared to the 2002/2003 autumn-winter period and ensure reliable electricity supply to consumers in the Georgian capital. In 2004, RAO "UES of Russia" has invested USD5 million in funds in Unit 9 of the Tbilisskaya TPP, and over USD6 million in Telasi's distribution grids.

Over the year to date, Telasi has succeeded in improving the payment discipline of Tbilisi's power consumers and increase the payment collection rate from 40% in the summer of 2003 to 80% of the actual cost of electricity supplied this year.