Moscow, 4 August 2006. Today, OAO "Southern Grid Company" (OAO "SGC"*) was registered with the Inspectorate of the Federal Tax Service of Russia for the city of Pyatigorsk, Stavropol Kray.

The only founder of OAO "SGC" is OAO RAO "UES of Russia". The company was created to enhance efficiency of the distribution and retail companies in the South of Russia during the transitional period of the electricity reform.

Magomed Kaitov, Head of OAO "Caucasian Energy Management Company" (distribution company), was elected Director General of SGC.

The following persons were elected to the Board of Directors of OAO "Southern Grid Company": Alexander Pochinok, Deputy Representative Plenipotentiary of the President of the Russian Federation in Southern Federal Okrug; Alexander Chistyakov, First Deputy Chairman of the Management Board, OAO "UES FGC"; Andrey Gabov, Head of Corporate Management and Shareholder Relations Department, RAO "UES of Russia"; Andrey Dyomin, Head of Department for Regional Power Grids Management, OAO "UES FGC"; Magomed Kaitov, Director General, OAO "SGC"; Andrey Kurochkin, Deputy Head of Department for Regional Power Grids Management, OAO "UES FGC"; Vladimir Lusinin, Deputy Head of Department for Regional Power Grids Management, OAO "UES FGC"; Fyodor Dyakov, Acting Director General of OAO "UES FGC" branch, South IPG; and Madina Suyunova, Chief Expert of Strategy Department at the Reform Management Center, RAO "UES of Russia".

The charter capital of the Company is RUB150,000 divided into ordinary shares of RUB1 par value.

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* The decision to establish OAO "SGC" was taken by the Board of Directors of RAO "UES of Russia" at its meeting held 14 June 2006.

OAO "SGC" performs the CEO functions at OAO "Dagenergo", OAO Dagestan Energy Retail Company", OAO "Ingushenergo", OAO "Kabbalkenergo", OAO "Caucasian Energy Management Company", OAO "Kalmenergo", OAO "Kalmenergosbyt", OAO "Karachaevo-Cherkesskenergo", OAO "Nurenergo", OAO "Sevkavkazenergo", and OAO "Stavropolenergo".

Apart from the geographical closeness, these companies have similar technological and economic conditions, such as large amount of obsolescent and worn-out electric equipment, insufficient transfer capability of the existing distribution lines in some regions, insufficient resources for consistent scientific, technical and investment policies, seeking to improve operation and develop power grids.