Moscow, 13 February 2007. RAO "UES of Russia" has approved the revised Investment Programme of the Holding Company until 2011.

The Investment Programme for 2006-2010 was first approved by the Management Board of RAO "UES of Russia" in August 2006 and provided for 20,900 MW of new capacity to be constructed. The amount of funds needed to finance the generation and grid construction was estimated at RUB2 trillion.

The current change to the RAO UES Investment Programme is due to the changes in the electricity consumption growth forecast. According to the forecast approved by the Russian Government on 30 November 2006, by 2011 the average consumption growth rate will reach 5 percent, which means that an additional 40,900 MW of generation capacity will need to be constructed and brought on line. Of this amount, 34,200 MW will be constructed by RAO UES energy companies.

The total amount of financing for the Investment Programme until 2011 will make RUB3.1 trillion. Implementation of the Investment Programme will make it possible to fully meet the growing electricity and heat demand from the industrial and household sectors and prevent potential capacity shortfalls.

RAO UES companies will spend over RUB1.8 trillion in funds on new power unit projects. A major part of the new capacity will be created at the existing power plants, which will significantly reduce the expenses related to building the transport and transmission infrastructure and modernizing the existing power plants. Such large-scale construction of generation capacity will be financed with the energy companies' own funds, proceeds from WGC and TGC share offerings, project finance arrangements, and direct private investment. The RAO UES Investment Programme also envisages the construction of power units financed by with funds raised from private investors under the investment guarantee mechanism.

The Investment Programme will dramatically change the technological set-up in the electricity sector owing to broad introduction of advanced combined-cycle technologies, which will raise efficiency of gas generators to more than 50%. The use of the circulating fluidized-bed coal burning technology will help increase the efficiency of coal-fired power plants to 42-46%. Also, these advanced technologies will reduce the power plants' adverse environmental impact by 20-25%.

The large-scale generation capacity expansion will be accompanied with the adequate construction of power grids. More than RUB1.3 trillion in funds will be spent on the grid infrastructure development during the period until 2011. This part of the programme will be financed with the power grid companies' own funds, charges for new connections, government investments, and proceeds from the sale of the WGC and TGC shares owned RAO "UES of Russia".

An important component of the Investment Programme is the consolidated forecast of the demand that RAO UES companies will have for batch-manufactured thermal power equipment. This document is, in fact, an order to power engineering companies which will determine the long-term demand for their equipment. During the period until 2011, over RUB690 billion in funds will be spent on procurement of principal thermal power equipment (generators, turbines, etc.). The expenses on procurement of high-voltage equipment and materials for bulk transmission grids during the period will make about RUB200 billion.