Moscow, 21 March 2006. OAO "Sakhalinenergo", holding a 49% stake in OAO "Okhinskaya CHPP", has announced its intention to seek offers for its 4,555,772 ordinary shares in OAO "Okhinskaya CHPP".

An additional condition for the sale of the shareholding by OAO "Sakhalinenergo" is the requirement to carry out modernization of the Okhinskaya CHPP under the approved project worth RUB935.9 million. The amount is to be used, in particular, to replace two turbines and generators, carry out a complete overhaul of the cooling tower and electric equipment that has reached the end of its useful life, and implement a set of measures to improve the seismic resistance of the CHPP structures.

The strategy for dealing with the shares in OAO "Okhinskaya CHPP" owned by OAO "Sakhalinenergo" was discussed at the meeting of the Board of Directors of RAO "UES of Russia" held 26 February 2006. The CHPP, whose three first power units were brought online back in 1960-1961, is the only electricity and heat supplier in the north-east of Sakhalin Island. If the plant's operation is continued without modernization, it may put electricity supply in the area to hazard, as the area's power system is an isolated one. However, neither OAO "Okhinskaya CHPP" nor OAO "Sakhalinenergo" have sufficient funds to carry out the plant's modernization.

One of the possible ways for raising the investments required for the project might be increase of the authorized capital of OAO "Okhinskaya CHPP" through private placement of additional shares to OAO Rosneft Oil Company at a market value of RUB935.9 million. The Board of Directors of RAO "UES of Russia" also instructed the Management Board to consider alternative ways of raising investments, including the sale by OAO "Sakhalinenergo" of its shareholding in OAO "Okhinskaya CHPP".

OAO "Sakhalinenergo" will accept offers for its shares in the power plant until 15 April.