Moscow, 8 April 2004. Today, the Chairman of the Management Board of RAO "UES of Russia" and the Governor of Ulyanovsk Region Vladimir Shamanov held a meeting to address the crisis in electricity and heat payments in the region.

As was noted during the meeting, Ulyanovsk Region is faced with a critical situation in payments for energy supplies by state-financed consumers or depending on the budget funding. The Administration of Ulyanovsk Region is failing to fulfil the Agreement "On Interaction with RAO "UES of Russia" and OAO "Ulyanovskenergo" made on the instruction of the President of the Russian Federation, which provides for stepwise settlement of the arrears owed by budget-financed consumers to the energy company. In the first quarter, the Administration defaulted on the partial repayment of the accumulated arrears of RUB30.2 million. It should be noted that the debts owed by the stated-financed entities to OAO "Ulyanovskenergo" in respect of 2002 total RUB88.3 million, whereas in 2003 the figure was RUB323.8 million.

Besides, the Administration of Ulyanovsk Region has been unable to ensure full payment for the current bills for the electricity consumed by state-financed enterprises and organizations. In Q1 2004, this consumer group underpaid over RUB400 million to OAO "Ulyanovskenergo" for the electricity and heat supplied to it (including RUB142 million in January, RUB151.8 million in February, and RUB107.9 million in March).

The parties stated that the amount unpaid by the state-financed consumers of Ulyanovsk Region in Q1 2004 is 1.5 times the cost of Ulyanovskenergo's annual repair and maintenance program. All this may jeopardize the preparation of the energy company for the 2004/2005 autumn-winter period and the timely start of the heating season.

Besides, because of the low collection rate of consumer payments (74% of the cost of electricity delivered in Q1 2004), OAO "Ulyanovskenergo" is unable to pay for the purchased fuel. As a result, its major fuel supplier, Ulyanovskregiongaz, has reduced gas supplies to the regional energy system by 70%, which is why OAO "Ulyanovskenergo" is forced to reduce the supply of power to non-paying consumers, primarily to those funded from the regional and municipal budgets.

Because the household consumers in Ulyanovsk Region pay much less for the housing utilities' services compared to the federal standard (under the applicable laws, citizens must pay 90% of the actual cost of the housing utilities' services, with the rest to be paid from the municipal budgets; in Ulyanovsk Region, citizens pay 38%, while the remaining part becomes a heavy burden for the municipal budgets), the regional authorities cannot receive financial aid from the federal budget until this issue is brought into conformity with the laws. As a consequence, despite the extremely difficult situation in the energy sector and housing utilities, Ulyanovsk Region does not receive federal subsidies required to make up for the deficit of funds needed to pay for electricity.

The parties emphasized that the prolonged energy crisis in the region may be handled only by resolving the issue of payment for the current energy supplies to state-financed consumers in Ulyanovsk Region, ensuring transparency of these payments, fulfilling the debt restructuring schedule in a timely and precise manner.

Taking into account the considerable amount of arrears and the fact that it is impossible to repay these debts with funds from the Ulyanovsk Region budget, Anatoly Chubais and Vladimir Shamanov stated, that the situation may only be resolved by joint effort of the Ulyanovsk City Administration, the Administration of Ulyanovsk Region, RAO "UES of Russia", and the Government of the Russian Federation. In the very near future, the parties plan to hold a series of meetings attended by all four parties concerned, which will make it possible to develop measures to resolve the energy crisis in Ulyanovsk Region.