Moscow. 30 July 2004. At its meeting held today, the Board of Directors of RAO "UES of Russia" elected Alexander Voloshin, Advisor to the Head of Administration of the President of the Russian Federation, as Chairman of the Company's Board of Directors, and Victor Khristenko, Minister of Industry and Energy of the Russian Federation, as Deputy Chairman of the Board.
The Board of Directors also approved the appointment of Vitaly S. Chukhlebov as Executive Secretary of the Board of Directors.
Besides, the Board of Directors approved a tentative list of matters to be considered at the Board meetings in July 2004 to June 2005.
The Board of Directors also decided to invite Igor Yu. Artemyev, Head of the Federal Antimonopoly Service of the Russian Federation, to attend the Board meetings on a regular basis.
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The Board of Directors of RAO "UES of Russia" heard the information on the handling of the property of RAO "UES of Russia" owned by the Company's branch, Territorial Isolated Unit of OAO RAO "UES of Russia", Southern Interconnected Power Grids (SIPG).
SIPG holds its books the property used in the reconstruction work that is carried out in the Chechen Republic pursuant to the Resolution of the Government of the Russian Federation "On measures to normalize social and political situation in the territory of the Chechen Republic" and orders of OAO RAO "UES of Russia". For the purpose of arranging the reconstruction work, a wholly-owned subsidiary of OAO RAO "UES of Russia" – OAO "Nurenergo" – was established. OAO "Nurenergo" performs the functions of the Principal in the course of reconstruction of the Republic's power industry instead of the Directorate for the Reconstruction of the Power Industry of the Chechen Republic which is now being liquidated. By now, a substantial part of the power network facilities in the Republic has been reconstructed at the expense of funds of OAO RAO "UES of Russia".
In this connection, the Board of Directors of RAO "UES of Russia" approved the assignment of SIPG's property to OAO "Nurenergo" on the following terms and conditions:
- net book value of the property is RUB85,502,468 (eighty-five million five hundred and two thousand four hundred and sixty-eight Rubles);
- market value of the property is RUB84,723,000 ((eighty-five million seven hundred and twenty-three thousand Rubles);
- method of assignment: direct sale to OAO "Nurenergo";
- sale price of the property: at the market value;
- the method (term) for payment of consideration for the property: deferred cash payment, not later than 1 January 2005;
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The Board of Directors of RAO "UES of Russia" considered the report on the activities of the Management Board of the Company in Q2 2004 and the work plan for Q3 2004.
Over the period just ended, the Company's Management Board took decisions on 282 items of business and prepared 54 minutes. In accordance with the work plan approved by the Chairman of the Management Board and adopted by the Board of Directors of OAO RAO "UES of Russia", the Company's Management Board considered the following priority issues of the Company's activities:
- on the economy of the Holding Company's SDCs in 2003 and the outlook until 2006.
- on the report of OAO RAO "UES of Russia" for 2003 to the Annual General Meeting of shareholders.
- exercise of the powers of general shareholder meetings of the wholly owned subsidiaries of OAO RAO "UES of Russia".
- the report on the financial and business operations of the Holding Company's SDCs and OAO RAO "UES of Russia" for year 2003.
- the results of activities of the R&D sector in 2003 and fulfilment of the program to reform the sector.
- results of the work of RAO UES energy enterprises during the 2003/2004 autumn-winter period and the preparations for the 2004/2005 winter season.
The key questions to be addressed at the meetings of the Management Board in Q3 2004 are as follows:
- Approval of proposals on the arrangement of the investment process, including capital construction funded by the Company;
- Approval of procedures for the interaction of the Corporate Center, Business Units, and SDCs, and interaction of the Company's entities with the federal executive authorities.
- Approval of draft contracts to transfer the powers of the SDCs' one-man executive bodies (CEOs) to management organizations;
- Matters of the reform implementation, development of the technical facilities, and strategy for the electricity industry.
- The Board of Directors of RAO "UES of Russia" noted the report on the activities of the Management Board of the Company in Q2 2004 and approved the work plan for Q3 2004.
* * *
The Board of Directors approved the appointment of the following members of the Valuation Committee:
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Yuzhanov I.A. |
member of Board of Directors, RAO "UES of Russia"; |
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Kosarev S.B. |
Deputy Chairman of the Valuation Committee, Head of Corporate Relations Department of the Corporate Center, OAO RAO "UES of Russia"; |
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Zubakin V.A. |
member of the Management Board, Deputy Head of the Reform Management Center, OAO RAO "UES of Russia"; |
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Makshakov S.V. |
Head of Bookkeeping and Tax Accounting Department of the Corporate Center, OAO RAO "UES of Russia"; |
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Fedotova M.A. |
Head of the Institute for Professional Valuation; Head of Department for Evaluation Activities and Turnaround Management, Financial Academy attached to the Government of the Russian Federation; |
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Tabakova S.A. |
President, Russian Appraisers Association; |
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Verkhozina A.V. |
Head of Valuation Division of the Directorate for Property Accounting, Analysis, Valuation, and Control of its Use, Federal Agency for Federal Property Management; |
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Bystrov M.S. |
Deputy Director of the Department for State Regulation of Tariffs and Infrastructure Reforms, Ministry of Economic Development and Trade of the Russian Federation; |
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Miskov A.Yu. |
Deputy Director of the Financial Control and Audit Department, Ministry of Industry and Energy of the Russian Federation; |
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Shkolnikov Yu.V. |
Deputy President of the Expert Council; Russian Collegium of Appraisers (RKO); |
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Kuskov D.A. |
Investment Manager, Interros Holding Company |
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Mikhaylova E.V. |
Deputy Director General for Corporate and Property relations, OOO "Mezhregiongaz"; |
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Gan A.A. |
Director of the Department for Energy Sector Strategy, ZAO SIBENCO Holding Company |
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Semeyko A.L. |
Vice President of the Investment Department, ESN Group; |
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Remes S. |
Director, Vostok Nafta Investment Ltd. |
Ilya Yuzhanov, member of the Board of Directors of RAO "UES of Russia", was elected Chairman of the Valuation Committee.
The Board of Directors also approved the Regulation on the Valuation Committee of the Board of Directors of RAO "UES of Russia", which establishes the Committee's legal status, purpose, main goals, rights and duties. The main functions of the Committee are regulation of the procedures for the grant and withdrawal of accreditation to appraisal firms by OAO RAO "UES of Russia", and quality control of the appraisal of the Company and its SDCs' assets. The Committee is also responsible for the development of terms of and procedure for holding tenders among the appraisal firms accredited with OAO RAO "UES of Russia", and the documents needed for the use of the Methodology for Valuation of the Business and Assets of OAO RAO "UES of Russia".
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The Board of Directors heard the report of the Audit Committee for the period from September 2003 to June 2004.
The Board noted the Committee's report for 2003/2004.
In September 2003 to June 2004, the Audit Committee held 14 meetings. The Committee took an active part in the work of the Tender Committee to select an Auditor of OAO RAO "UES of Russia" for 2004, and actively interacted with the Company's management and Auditors throughout the period. The Committee's interim report was presented to the Board of Directors of RAO "UES of Russia" at the Board meeting held 30 January 2004.
Already in the first year of its activities, the Audit Committee became an important element of corporate governance at RAO "UES of Russia". Several major goals have been set for the Committee for 2004/2005. One of them is performance of the independent control function in for the Board of Directors of RAO "UES of Russia as part of the process to change the corporate governance system and organizational structure during the period of RAO UES restructuring, especially the formation of the new internal audit and control systems and ensuring their efficient work. Besides, the Audit Committee was commissioned to perform the control and expert examination functions in the interests of the Board of Directors of RAO "UES of Russia" in the course of transition to the new financial reporting system within OAO RAO "UES of Russia" and the companies being established on the basis of the Company. One more aspect of the Audit Committee's work will be controlling the development of the accounting policy guidelines for the preparation of IFRS financial statements in RAO UES Group.
The Board of Directors approved the restated Regulations governing the activities of the Audit Committee: Regulation and Rules of the Audit Committee, and the Procedure for the Committee's Interaction with the Management Bodies, Structural Units, and the SDCs of OAO RAO "UES of Russia", and Other Organizations and Persons. The amendments were made in view of the reorganization of the Company's executive administration, and the awareness of the need to adjust the number of members and principles of forming the Committee.
The Board of Directors approved the appointment of the following members of the Audit Committee:
- Seppo Remes, Committee Head; Director, Vostok Nafta Investment Ltd;
- Skaterschikov S.S., independent expert member of the Committee;
- Kazakov A.I. Chairman of the Committee for Federation Matters and Regional Policy, Federation Council of the Federal Assembly of the Russian Federation;
- Polovnikova E.G. – representative of G.V. Berezkin, member of the Board of Directors of OAO RAO "UES of Russia";;
- Klekovkin A. I. – representative of A.E. Bugrov, member of the Board of Directors of OAO RAO "UES of Russia";
- Yuzhanov I.A. – member of Board of Directors, OAO RAO "UES of Russia";
- Kozhura R. V. representative of V.V. Rashevsky, member of the Board of Directors of OAO RAO "UES of Russia";
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* The Audit Committee of the Board of Directors of RAO "UES of Russia" was formed by the resolution of the Board of Directors of 29 August 2003 and started its activities in September 2003.
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The Board of Directors approved the restructuring plans of OAO "Kolenergo" and OAO "Omskenergo" which have been brought into conformity with the basic restructuring plan.
The restructuring plan of OAO "Kolenergo" approved by the Board provides for the following:
- establishment by OAO "Kolenergo" of [a wholly-owned subsidiary,] OAO "Kolenergosetservis";
- the transfer of the power grid facilities owned by OAO "Kolenergo" which are part of the Unified National Power Grid (UNPG), and the disbursement of funds sufficient to cover the costs connected with the issuance of additional shares, including payment of the securities transactions tax, as consideration for shares in North-West Interregional Transmission Company (North-West ITC) pursuant to the decision of the Board of Directors of RAO "UES of Russia" of 15 August 2002, and full payment of the additional shares in North-West ITC being acquired by OAO "Kolenergo" prior to approval of the resolution to reorganize OAO "Kolenergo".
- reorganization of OAO "Kolenergo" through spin-off of the following companies (while with the current ownership structure preserved):
- OAO "Kolskaya Energy Management Company";
- OAO "Kolskaya Generation Company";
- OAO "Kolskaya Energy Retail Company";
- OAO "Kolskie Trunk Grids", with shares in North-West ITC as its only asset;
The restructuring plan provides for pro-rata distribution of shares in North-West ITC held by OAO "Kolskie Trunk Grids" among the latter's shareholders using the procedure of winding-up of OAO "Kolskie Trunk Grids" or its merger with and into North-West ITC. The plan also provides that the power distribution networks that are not part of the Unified National (All-Russian) Power Grid (UNPG) are to remain the property of OAO "Kolenergo".
The plan provides that the functions of the one-man management bodies (i.e. Directors General) of the following companies are to be transferred to OAO "Kolskaya Energy Management Company":
- OAO "Kolskaya Generation Company";
- OAO "Kolskaya Energy Retail Company";
- OAO "Kolenergo".
The restructuring plan of OAO "Omskenergo" approved by the Board provides for the following:
- establishment by OAO "Omskenergo" of [the wholly-owned subsidiaries], OAO "Omskelektroremont" and OAO "Sotssfera";
- participation of OAO "Omskenergo" in OAO "Sibzolit" being established;
- the transfer of the power grid facilities owned by OAO "Omskenergo" which are part of the Unified National Power Grid (UNPG), and the payment of funds sufficient to cover the costs connected with the issuance of additional shares, including payment of the securities transactions tax, as consideration for shares in Siberia Interregional Transmission Company (Siberia ITC) pursuant to the decision of the Board of Directors of RAO "UES of Russia" of 15 August 2002, and full payment of the additional shares in Siberia ITC being acquired by OAO "Omskenergo" prior to approval of the resolution to reorganize OAO "Omskenergo".
- restructuring of OAO "Omskenergo" through spin-off of the following companies, with the current ownership structure preserved:
- OAO "Omsk Management Company",
- OAO "Omsk Electricity Generation Company";
- OAO "Omsk Energy Retail Company";
- OAO "Omsk Trunk Grid Company", with shares in Siberia ITC as its only asset.
The restructuring plan provides for pro-rata distribution of shares in Siberia ITC held by OAO "Omsk Trunk Grid Company" among the latter's shareholders using the procedure of liquidation of OAO "Omsk Trunk Grid Company" or its merger with and into Siberia ITC. The plan also provides that the power distribution networks that are not part of the Unified National (All-Russian) Power Grid (UNPG) are to remain the property of OAO "Omskenergo".
The plan provides that the functions of the one-man management bodies (i.e. Directors General) of the following companies are to be transferred to OAO "Omsk Management Company":
- OAO "Omsk Electricity Generation Company";
- OAO "Omsk Energy Retail Company";
- OAO "Omskenergo".
The Board commissioned representatives of OAO RAO "UES of Russia" to vote for the approval of the items of business of board meetings and shareholder meetings of OAO "Kolenergo" and OAO "Omskenergo", shareholder meetings of the newly established companies, so as to ensure implementation of the reorganization plans of OAO "Kolenergo" and OAO "Omskenergo".
The Board of Directors also invalidated the Board resolutions of 21 June 2002 "On the Restructuring Plan of OAO "Kolenergo" and "On the Restructuring Plan of OAO "Omskenergo".
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The Board of Directors of the Company approved Supplementary Agreement No. 5 to Project Cost Sharing Contract of 24 May 2001 between OAO RAO "UES of Russia" and OAO "Severo-Zapadnaya CHPP".
The Board of Directors determined the amount of payment for the use of funds provided by the Company for the construction of the second phase of Severo-Zapadnaya CHPP under the Supplementary Agreement at the time of repayment to be equal to the refinancing rate of the Central Bank of Russia.
As was previously announced, OAO RAO "UES of Russia" is funding the construction of the second phase of Severo-Zapadnaya CHPP together with OAO "Severo-Zapadnaya CHPP" under Project Cost Sharing Contract No. 16-1/8DU of 24 May 2001.
The investment programme for capital construction projects financed with the funds of OAO RAO "UES of Russia" for 2004 provides for the allocation of RUB1,239,966,000 in funds for the completion of the power plant's construction, including RUB1,158,134,000 received from exports.
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The Board of Directors of RAO "UES of Russia" approved the participation of OAO "Zelenchukskie HPPs", OAO "Permenergo", OAO "Rostovenergo", OAO "Sverdlovenergo", OAO "Yakutenergo", OAO "Kamskaya HPP", OAO "Stavropolenergo", OAO "Sulakenergo", OAO "Nizhegorodskaya HPP", OAO "Saratovskaya HPP" in Non-Profit Partnership "Gidroenergetika Rossii" ("Russia's Hydropower").
The establishment of the Partnership is designed to increase efficiency of Russia's hydropower facilities in the context of reforms in the electric power industry and the formation of a competitive electricity market. The Partnership will coordinate activities of the hydropower entities aimed at development and implementation of a complex of measures relating to the current operation, creation, improvement, and further development of the country's hydroelectric power.
The creation of a hydropower association in the form of NP "Gidroenergetika Rossii" will help address common problems of hydropower plants, including the increasingly ageing equipment, lack of a clear and effective investment mechanism, etc.
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