Moscow, 23 April 2004. At its regular meeting held today, the Board of Directors of RAO "UES of Russia" considered the questions relating to the conduct of the Annual General Meeting of shareholders of the Company.

The Board fixed 12 May 2004 as the record date for making a list of shareholders entitled to take part in the AGM.

The Board also determined that, pursuant to Articles 5.6 and 5.6.1. of the Charter of RAO "UES of Russia", the holders of the Company's preferred shares are not entitled to take part in the AGM in 2004.

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The Board of Directors approved the configuration of the Territorial Generation Companies (TGCs) prepared by RAO UES management and discussed on several occasions with the relevant Ministries and Departments, with the participation of minority shareholders and potentially interested investors.

The interregional consolidation of generation facilities within TGCs is designed to achieve integration effects, cut general costs, diversify the heat and electricity demand, boost investor appeal, improve financial stability and reduce the risks during the transition period, and increase flexibility of operation in a competitive market environment.

Pursuant to the resolution of the Board of Directors of RAO "UES of Russia", 14 TGCs will be established on the basis of the generation facilities of the following energy companies:

• TGC 1 – on the basis of the generation assets of OAO "Kolenergo", OAO "Karelenergo", and OAO "Lenenergo";
• TGC 2 – on the basis of the generation assets of OAO "Tverenergo", OAO "Novgorodenergo", OAO "Pskovenergo", OAO "Kostromaenergo", OAO "Vologdaenergo", OAO "Arkhenergo", and OAO "Yarenergo";
• TGC 3 – on the basis of the generation assets of OAO "Mosenergo";
• TGC 4 – on the basis of the generation assets of OAO "Bryanskenergo", OAO "Kalugaenergo", OAO "Orelenergo", OAO "Tulenergo", OAO "Kurskenergo", OAO "Lipetskenergo", OAO "Voronezhenergo", OAO "Ryazanenergo", OAO "Tambovenergo", OAO "Belgorodenergo", and OAO "Smolenskenergo";
• TGC 5 – on the basis of the generation assets of OAO "Maryenergo", OAO "Chuvashenergo", OAO "Kirovenergo", and OAO "Udmurtenergo";
• TGC 6 – on the basis of the generation assets of OAO "Ivenergo", OAO "Vladimirenergo", OAO "Penzaenergo", OAO "Nizhnovenergo", and OAO "Mordovenergo";
• TGC 7 – on the basis of the generation assets of OAO "Saratovenergo", OAO "Ulyanovskenergo", OAO "Orenburgenergo", and OAO "Samaraenergo";
• TGC 8 – on the basis of the generation assets of OAO "Volgogradenergo", OAO "Rostovenergo", OAO "Astrakhanenergo", OAO "Stavropolenergo", OAO "Kubanenergo", Kaspiyskaya CHPP + Makhachkalinskaya CHPP (OAO "Dagenergo");
• TGC 9 – on the basis of the generation assets of OAO "Komienergo", OAO "Sverdlovenergo", and OAO "Permenergo";
• TGC 10 – on the basis of the generation assets of OAO "Chelyabenergo", OAO "Kurganenergo", and OAO "Tyumenenergo";
• TGC 11 – on the basis of the generation assets of OAO "Kuzbassenergo" - 1, OAO "Tomskenergo", and OAO "Omskenergo";
• TGC 12 – on the basis of the generation assets of OAO "Kuzbassenergo" - 2 and OAO "Altayenergo";
• TGC 13 – on the basis of the generation assets of OAO "Krasnoyarskenergo", OAO "Khakasenergo", and OAO "Tyvaenergo";
• TGC 14 – on the basis of the generation assets of OAO "Chitaenergo" and OAO "Buryatenergo".

The Board of Directors of RAO "UES of Russia" deemed it advisable, in the process of implementation of the basic plan for the establishment of the TGCs, to create operational companies in 2004 and to lease the regional energos' generation assets to these companies, subject to agreement with this resolution by minority shareholders' representatives in each regional energo.

This scenario may be realized through co-founding of a TGC by several regional energos whose generation assets are to be transferred to the relevant TGC (in accordance with the approved configuration).

Subsequently, shareholders of a Regional Generation Company (RGC) may agree to the merger of the RGC with and into the TGC. The Concept of RAO UES Strategy for Years 2003-2008 ("5+5") states that RAO "UES of Russia", being a shareholder in these companies, is ready to facilitate such measures.

In this connection, the Board of Directors commissioned the Management Board of RAO "UES of Russia" to make, within one month, an analysis of the regional energos' restructuring plans, which, due to the peculiarities of these companies, are different from the basic restructuring plan.

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The Board of Directors of RAO "UES of Russia" considered a report presented by the Management Board, which stated that it would be unadvisable to establish two regional generation companies (RGCs) on the basis of the CHPPs owned by OAO "Mosenergo".

This report was prepared by the Management Board in accordance with Instruction No. 158 of 30 January 2004 given by the Board of Directors.

While preparing proposals on the TGC configuration, the Management Board adhered to the basic principle that, during the period of transition to a competitive electricity market, there should not be any competition among the CHPPs operating within one centralized heating system.

Currently, there does not exist an adequate dispatching control infrastructure or any mechanisms for heat trading necessary to introduce a competition model among CHPPs and other heat suppliers within one centralized heating system. The creation of a fully-fledged market infrastructure will take a lot of time and require significant investments. Until these basic conditions are created, and all details of the competitive heat market are finalized, transfer of CHPPs operating within one centralized heating system to different companies will cause additional problems without bringing any economic effect.

Having considered the Agreements on Cooperation in Reforming the Electric Power Complex of the City of Moscow and Moscow Region among RAO "UES of Russia", Moscow City Government, the REC of Moscow, and OAO "Mosenergo", and among RAO "UES of Russia", the Moscow Region Government, and OAO "Mosenergo", the Ministry of Antimonopoly Policy concluded (Letter No. AG/16634 dated 29 December 2003) that the provisions of said Agreements, including those envisaging the establishment of one TGC, do not contradict the antimonopoly laws.

The Management Board of RAO "UES of Russia" deems it unadvisable to

The Board of Directors of RAO "UES of Russia" reviewed and noted the materials on this issue presented by the Management Board.

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The Board of Directors approved the restructuring plan of OAO "Chitaenergo".

The energy company will be restructured in accordance with the basic scenario through spin-off of the following companies (with the current ownership structure preserved):

• OAO "Chita Management Company";
• OAO "Chita Generation Company";
• OAO "Chita Energy Retail Company"; and
• OAO "Chita Trunk Grids", 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 "Chita Trunk Grids" among the latter's shareholders using the procedure of liquidation of OAO "Chita Trunk Grids" 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 "Chitaenergo".

According to the plan, the functions of the one-man executive bodies (i.e. Directors General) of the following companies are to be transferred to OAO "Chita Management Company":

• OAO "Chita Generation Company";
• OAO "Chita Energy Retail Company";
• OAO "Chitaenergo".

The Board resolved to instruct the RAO UES representatives to vote FOR the approval of all items of business of board meetings and shareholder meetings of OAO "Chitaenergo", and shareholder meetings of the newly established companies, required to implement the reorganization plan of OAO "Chitaenergo".

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The Board of Directors approved the configuration of the Interregional Distribution Companies (IDCs).

The approved IDC configuration is based on the principle of maximum consolidation of companies to ensure sufficient assets (the regulatory capital base is to be at least US$0.5 billion) and high liquidity of IDC shares on the stock market. The maximum consolidation of the IDCs will result in an additional growth in their market capitalization.

The IDC configuration proposed by the Board of Directors are based on the following principles:

• territorial adjacency of the Regional Distribution Companies (RDCs) that are to be united within the respective IDC (creation of companies in a single territory will help minimize the staff number and increase efficiency of management);
• comparable aggregate book value of the IDCs (satisfaction of this criterion will ensure, whenever possible, comparable value of the future companies);
• comparable total length of the distribution lines owned by RGCs that are to be transferred to the respective IDCs (satisfaction of this criterion will ensure, wherever possible, comparable conditions for each IDC).

On that basis, the following configuration was approved for the Interregional Distribution Companies (IDCs):

• IDC-1 within the IES of Center and the IES of North Caucasus;
• IDC-2 within the IES of North-West;
• IDC-3 within the IES of Urals and the IES of Middle Volga;
• IDC-4 within the IES of Siberia.

Decision on the establishment of IDC-5 in the Far East of Russia will be taken in the future taking into account the specific decisions on the restructuring of the regional energos.

As was noted by the Board of Directors, the establishment of that very number of companies will help create a competitive environment for the IDCs' managerial teams and make it possible to compare the efficiency of the companies' management.

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The Board of Directors considered the governance principles for the Interregional Distribution Companies (IDCs) during the transition period of electricity reform.

The Board deemed it advisable to transfer the IDCs' shares, for the transition period, into trust management of OAO "UES Federal Grid Company" to the extent of exercising the rights attached to such shares, after ownership of these shares is transferred to RAO "UES of Russia".

The transfer of the IDC shares into trust management of OAO "UES FGC" will enable RAO "UES of Russia" to:

• preserve its control over the functioning of the IDCs and the Regional Distribution Companies (RDCs) until the reorganization of RAO "UES of Russia";
• establish the criteria of trust management, objectives, and deadlines for their implementation;
• restrict the actions performed by the trust manager under the contract;
• determine in accordance with the Charter of RAO "UES of Russia" the representatives' positions for voting at the General Meeting of shareholders and Board meeting of the IDC and RDCs;

This will also enable OAO "UES FGC" to work out the governance standards for IDCs and RGCs, oversee the compliance with these standards by the management of those companies, and control the IDCs and RGCs without transferring the functions of day-to-day management in these companies to OAO "UES FGC".

The contract of trust administration of IDC shares, insofar as it relates to the exercise of rights attached to the shares, is expected to be concluded between RAO "UES of Russia" and OAO "UES FGC" for a term of one year and contain the list of trust administrator powers granted to OAO "UES FGC".

At the same time, OAO "UES FGC" will not have a right to dispose of the shares held in trust (i.e. to alienate, pledge, or otherwise encumber).

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The Board of Directors considered the mechanism for the separation of power plants supplying energy to a single consumer.

This mechanism is designed to ensure more efficient use of property of RAO "UES of Russia" and regional energos and guarantee protection of the rights of shareholders of RAO "UES of Russia" and regional energos in the disposal of such power plants.

The Board resolved that the decision on the separation to be taken after various options for the disposal of the single-consumer plants are compared:

• establishment of a general partnership by the power plant and its only consumer;
• lease out of the power plant;
• sale of the power plant;
• transfer of the power plant into trust management;
• conclusion of a long-term contract to supply power.

The Board of Directors also approved the following criteria for decisions on the sale such power plants:

• presence of a real threat of loss of the power plants due to reasons beyond control of the management of the Company owning such power plant;
• possibility of receiving extra income for the shareholders of RAO "UES of Russia" and its SDCs, if the power plant is sold to a buyer for whom the power plant's value is higher than its value for RAO "UES of Russia" or its SDC.

If sale is chosen as a way for the power plant's disposal, it should be carried out through competitive tenders or auctions; where tenders fail, decision on the future of such power plant is to be taken by the Board of Directors of RAO "UES of Russia". The payment instrument at such tenders is to be cash.

• Novgorodskaya CHPP-20 (OAO "Novgorodenergo");
• Kargalinskaya CHPP (OAO "Orenburgenergo");
• Argayashskaya CHPP (OAO "Chelyabenergo");
• Novomoskovskaya TPP (OAO "Tulenergo");
• Bogoslovskaya CHPP (OAO "Sverdlovenergo");
• Volgogradskaya CHPP-3 (OAO "Volgogradenergo");
• Kaluzhskaya CHPP-1 (OAO "Kalugaenergo");
• Tobolskaya CHPP (OAO "Tyumenenergo").

* * *

The Board of Directors heard and noted the information on the investment program of RAO "UES of Russia" for the year 2005.

The Company's Investment Program for 2005 is based on the draft of the three-year investment program of RAO "UES of Russia" approved by Resolution No. 969 pr/2 of the Management Board dated 01 March 2004.

The Investment Program of RAO "UES of Russia" for 2005 totals RUB24.8 billion, including RUB16.3 billion in own funds and RUB8.5 billion in borrowed funds.

RUB million

The Board recommended the Management Board of RAO "UES of Russia" to submit the draft investment program for approval to the relevant Ministries and Departments of the Government of the Russian Federation.

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The Board has accepted the resignation of the member of the Management Board of RAO "UES of Russia" Victor Pauli in connection with his change of employment.

On the proposal of the Chairman of the Management Board Anatoly Chubais, the Board of Directors approved the appointment of Boris Ayuyev as member of the Management Board.

Boris Ilyich Ayuyev was born in 1957 in Rostov-on-Don. In 1979, he graduated from Uralsky Polytechnic Institute, where he specialized in power plants engineering. In 1978 - 1997 he worked as an engineer, senior engineer, programmer engineer, and head of department in the IDA of Urals. In 1997-2002 Boris headed the FOREM service of the IDA of Urals. In July-October 2002 he served as Acting Deputy Chairman of the Management Board of OAO "UES SO-CDA", and since 2002, he has been Deputy Chairman of the Management Board of OAO "UES SO-CDA". Candidate of Technical Sciences. Boris was actively involved in the development and implementation of the project to reorganize the UES Central Dispatch Administration into OAO "UES System Operator – Central Dispatch Administration".