On June 6, 2001, AO MOSENERGO plans to present a package of investment proposals. The investment proposals cover 18 generation facilities including 29 investment projects that include technical upgrades, reconstruction, construction of new units and power facilities and installation of expander generators (DGA) at heat and electric power stations. To implement the whole portfolio of investment proposals, 3,677.7 million dollars will have to be invested in capital construction.

AO MOSENERGO will also need to invest 400-500 million dollars each year to maintain existing generating facilities, including 200-300 million dollars borrowed and drawn annually.

Two funding schemes will be offered. One scheme provides for 100 percent shareholder capital, while another scheme provides 30:70 percent ratio of shareholder and borrowed funds. The amount of capital investment per project ranges from 2.41 million dollars (DGA construction) to 1,727.7 million dollars (construction of new Petrovskaya power station).

These investment proposals are part of AO MOSENERGO's long-term development strategy. The discount payback period extends from 2 to 11 years. The facilities are scheduled to be put into operation during 2002-2011.

The financial and commercial analysis of projects was based on 20 percent internal profitability ratio and 12 percent credit and discount rates.

AO MOSENERGO is a major Russian energy company, which produces approximately 10 percent of electric and 13 percent of heat energy in Russia.

Starting in 1999, energy consumption in Russia has been steadily growing. Energy consumption growth in the Moscow region reached 5.4 percent, which is considerably higher than the country average. Energy consumption is forecast to grow in Moscow and Moscow region 2.5-5 percent a year.