Moscow 1 August. - The Board of Directors has approved the Draft Restructuring Plan of OAO "Voronezhenergo", which is in compliance with the basic restructuring plan, and resolved as follows:

- to approve that the restructuring of OAO "Voronezhenergo" be carried out through spin-off of the following companies (while preserving the current capital structure):

• OAO "Voronezh Management Energy Company";
• OAO "Voronezh Generation Company";
• OAO "Voronezh Power Distribution Company";
• OAO "Voronezh Trunk Grid Company", with shares in Central ITC as its only asset;

- to approve that the functions of the one-man management bodies (i.e. Directors General) of the following companies be transferred to OAO "Voronezh Management Energy Company":

• OAO "Voronezhenergo";
• OAO "Voronezh Power Distribution Company";
• OAO "Voronezh Generation Company".

- to approve the establishment by OAO "Voronezhenergo" of wholly-owned subsidiaries: OAO "Voronezhenergoremont", OAO "Voronezhenergoproekt", OAO "Voronezhelectrosetremont", and Non-Profit Educational Institution "Voronezh Training Center "Energetik";

- to approve the transfer of the power grid facilities owned by OAO "Voronezhenergo", which are part of the Unified National (All-Russian) Power Grid (UNPG), and the disbursement of funds in payment of the additional shares in Central Interregional Transmission Company (Central ITC) pursuant to the decision of the Board of Directors of RAO "UES of Russia" of 15 August 2002, and full payment of the additional shares in Central ITC being acquired by OAO "Voronezhenergo" prior to approval of the resolution to reorganize OAO "Voronezhenergo".

The Board of Directors has pointed out that, in the event that OAO "Voronezhenergo" fails to transfer the UNPG-related power grid facilities as consideration for the additional shares in Central ITC before the decision is taken to reorganize OAO "Voronezhenergo", OAO "Voronezhenergo" is to spin off OAO "Voronezh Backbone Grid Company" in the course of restructuring, and the UNPG-related power grid facilities are to be transferred to said spin-off company in accordance with the separation balance sheet.

At the same time, the power distribution networks that are not part of the UNPG must remain the property of OAO "Voronezhenergo".

The Board has also approved the principle of pro-rata distribution of shares in Central ITC owned by OAO "Voronezh Backbone Grid Company" among its shareholders using the procedure of liquidation of OAO "Voronezh Backbone Grid Company" or its merger with and into Central ITC.

Restructuring of OAO "Voronezhenergo" is expected to occur in three stages.

During the first stage (before the launch of restructuring), the following wholly-owned subsidiaries: OAO "Voronezhenergoremont", OAO "Voronezhenergoproekt", OAO "Voronezhelectrosetremont", and Non-Profit Educational Institution "Voronezh Training Center "Energetik" are to be established; the power grid facilities, which are part of the Unified National (All-Russian) Power Grid (UNPG), are to be transferred as consideration for the additional shares in Central ITC.

During the second stage, steps will be taken to prepare and submit for shareholder approval the proposal to separate OAO "Voronezhenergo" by line of business, with shares [in the newly established companies] to be distributed pro-rate to shareholders in OAO "Voronezhenergo".

During the third stage, preparations will be made for, and resolutions will be taken on the establishment of interregional companies integrated by line of business pursuant to the resolutions taken by the Russian Government and the Board of Directors of RAO "UES of Russia".

The Draft Restructuring Plan of OAO "Voronezhenergo" has been approved by the Restructuring Committee under the Board of Directors of RAO "UES of Russia", and by the Working Group for considering the restructuring plans under the Electricity Reform Commission of the Russian Government. The Plan has also been consented to by the regional administration and by most minority shareholders.

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The Board of Directors has postponed considering the amendments to the Draft Restructuring Plans of regional energy systems in Tula Region, Orel Region, Kaluga Region, and Bryansk Region, and decided to return to the issue after it is reviewed by the Electricity Reform Commission of the Government of the Russian Federation.

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The Board of Directors has broadly approved the Draft Restructuring Plan of OAO "Vladimirenergo" and resolved as follows:

- to approve that the restructuring of OAO "Vladimirenergo" be carried out through spin-off of the following companies (while preserving the current capital structure):

• OAO "Vladimir Generation Company";
• OAO "Vladimir Power Distribution Company";
• OAO "Vladimir Trunk Grids", with shares in Central ITC as its only asset;

The Board of Directors decided to submit for the approval by shareholders in OAO "Vladimirenergo" two alternative methods for establishing OAO "Vladimir Management Energy Company": 1. establishment of the management company may as a wholly-owned subsidiary of RAO "UES of Russia"; 2. establishment of the management company through spin-off, while preserving the share capital structure.

- to approve that the functions of one-man management bodies (i.e. Directors General) of the following companies be transferred to OAO "Vladimir Management Energy Company":

• OAO "Vladimir Generation Company";
• OAO "Vladimir Power Distribution Company";
• OAO "Vladimirenergo".

- to approve the establishment by OAO "Vladimirenergo" of the following wholly-owned subsidiaries: OAO "Vladimirenergoremont", OAO "Vladimirspetsenergoremont", and OAO "Vladimirelectrosetremont";

- to approve the transfer of the power grid facilities owned by OAO "Vladimirenergo", which are part of the Unified National (All-Russian) Power Grid (UNPG), and the disbursement of funds in payment of the additional shares in Central Interregional Transmission Company (Central ITC) pursuant to the decision of the Board of Directors of RAO "UES of Russia" of 15 August 2002, and full payment of the additional shares in Central ITC being acquired by OAO "Vladimirenergo" prior to approval of the resolution to reorganize OAO "Vladimirenergo";

The Board of Directors has pointed out that, in the event that OAO "Vladimirenergo" fails to transfer the UNPG-related power grid facilities as consideration for the additional shares in Central ITC before the decision is taken to reorganize OAO "Vladimirenergo", OAO "Vladimir Trunk Grids" is to be spun off from OAO "Vladimirenergo" in the course of restructuring, and the UNPG-related power grid facilities are to be transferred to said spin-off company in accordance with the separation balance sheet.

At the same time, the power distribution networks that are not part of the UNPG must remain the property of OAO "Vladimirenergo".

The Board has also approved the principle of pro-rata distribution of shares in Central ITC owned by OAO "Vladimir Trunk Grids" among its shareholders using the procedure of liquidation of OAO "Vladimir Backbone Grids" or its merger with and into Central ITC.

Restructuring of OAO "Vladimirenergo" is expected to occur in three stages. During the first stage (before the launch of restructuring), the following wholly-owned subsidiaries: OAO "Vladimirenergoremont", OAO "Vladimirspetsenergoremont", OAO "PSKh Luchinskoe", OAO "Vladimirelectrosetremont", are to be established; the operational dispatch functions currently performed by RDA of OAO "Vladimirenergo are to be transferred to the Branch of OAO "UES SO-CDA"; the UNPG-related power grid facilities are to be transferred as consideration for the additional shares in Central ITC; OAO "Vladimir Management Energy Company" is to be established as a wholly-owned subsidiary of RAO "UES of Russia".

During the second stage, OAO "Vladimirenergo" will be reorganized through separation by line of business.

The third stage will see interregional integration of the established companies.

The Draft Restructuring Plan of OAO "Vladimirenergo" has been approved by the Restructuring Committee under the Board of Directors of RAO "UES of Russia", and by the Working Group for considering the restructuring plans under the Electricity Reform Commission of the Government of the Russian Federation. The plan has also been consented to by the regional administration and by the major minority shareholder.

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The Board of Directors has approved the Draft Restructuring Plan for OAO "Kirovenergo", which complies with the basic paln and resolved as follows:

- that the restructuring of OAO "Kirovenergo" be carried out through spin-off of the following companies (while preserving the current capital structure):

• OAO "Kirovenergo Management Company";
• OAO "Vyatskaya Electricity and Heat Company";
• OAO "Kirovenergosbyt" (a power distribution company);
• OAO "Kirov Trunk Power Grids", with shares in Urals ITC as its only asset;

- to approve that the functions of one-man management bodies (i.e. Directors General) of the following companies be transferred to OAO "Kirovenergo Management Company":

• OAO "Kirovenergo";
• OAO "Vyatskaya Electricity and Heat Company";
• OAO "Kirovenergosbyt";

- to approve the establishment by OAO "Kirovenergo" of wholly-owned subsidiaries, OAO "Kirovelectrosetservis", OAO "Kirovenergoremont", OAO "Kirovenergospetsremont", OAO "Kirovenergo Auto Transport Company";

- to approve the transfer of the power grid facilities owned by OAO "Kirovenergo" which are part of the Unified National (All-Russian) Power Grid (UNPG), and the disbursement of funds in payment of the additional shares in Urals Interregional Transmission Company (Urals ITC) pursuant to the decision of the Board of Directors of RAO "UES of Russia" of 15 August 2002, and full payment of the additional shares in Urals ITC being acquired by OAO "Kirovenergo" prior to approval of the resolution to reorganize OAO "Kirovenergo";

In the event that OAO "Kirovenergo" fails to transfer the UNPG-related power grid facilities as consideration for the additional shares in Urals ITC before the decision is taken to reorganize OAO "Kirovenergo", OAO "Kirov Trunk Power Grids" are to be spun off from OAO "Kirovenergo" in the course of restructuring, and the UNPG-related power grid facilities are to be transferred to said spin-off company in accordance with the separation balance sheet.

At the same time, the power distribution networks that are not part of the UNPG must remain the property of OAO "Kirovenergo".

The Board has also approved the principle of pro-rata distribution of shares in Urals ITC owned by OAO "Kirov Trunk Power Grids" among its shareholders using the procedure of liquidation of OAO "Kirov Trunk Power Grids" or its merger with and into Urals ITC.

During the preliminary stage of restructuring of OAO "Kirovenergo", subsidiaries and dependent companies are to be established. These will be companies engaged in businesses that are non-core for the energy company. Later on, the companies are to be disposed of. Also, property of the RDA of OAO "Kirovenergo" will be leased out to OAO "UES SO-CDA".

During the first stage, OAO "Kirovenergo" will be reorganized through spin-off; shares in the newly-established companies are to be distributed pro-rata among shareholders in OAO "Kirovenergo". The spin-off companies are to be registered, and the powers of these companies' one-man executive bodies (i.e. Directors General) are to be transferred to OAO "Kirovenergo Management Company". Steps are be taken to prepare for interregional integration.

The second stage will see interregional integration of the companies separated from regional energos:

The restructuring plan of OAO "Kirovenergo" has been approved by the Restructuring Committee under the Board of Directors of RAO "UES of Russia", and by the Working Group for considering the restructuring plans under the Electricity Reform Commission of the Russian Government. The plan has also been consented to by the regional administration.

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The Board of Directors has approved the Draft Restructuring Plan for OAO "Yarenergo", which complies with the basic plan, and resolved as follows:

- to approve that the restructuring of OAO "Yarenergo" be carried out through spin-off of the following companies (while preserving the current capital structure):

• OAO "Yaroslavl Management Energy Company";
• OAO "Yaroslavl Energy Company";
• OAO "Yaroslavl Distribution Company";
• OAO "Holder of ITC Shares", with shares in Central ITC as its only asset;
• OAO "Yarenergoremont-Holding", whose only asset is shares in the wholly-owned subsidiary, "Yarenergoremont";
• OAO "Yarenergo-Holding Auto Transportation Company", whose only asset is shares in the wholly-owned subsidiary, "Yarenergo Auto Transportation Company".

- to approve that the functions of the one-man management bodies (i.e. Directors General) of the following companies be transferred to OAO "Yaroslavl Management Energy Company":

• OAO "Yarenergo";
• OAO "Yaroslavl Energy Company";
• OAO "Yaroslavl Distribution Company";

- to approve the establishment by OAO "Yarenergo" of the following wholly-owned subsidiaries: OAO "Yarenergoremont" and OAO "Yarenergo Auto Transportation Company";

- to approve the transfer of the power grid facilities owned by OAO "Yarenergo" which are part of the Unified National (All-Russian) Power Grid (UNPG), and the disbursement of funds in payment of the additional shares in Central Interregional Transmission Company (Central ITC) pursuant to the decision of the Board of Directors of RAO "UES of Russia" of 15 August 2002, and full payment of the additional shares in Central ITC being acquired by OAO "Yarenergo" prior to approval of the resolution to reorganize OAO "Yarenergo";

In the event that OAO "Yarenergo" fails to transfer the UNPG-related power grid facilities as consideration for the additional shares in Central ITC before the decision is taken to reorganize OAO "Yarenergo", OAO "Holder of ITC Shares" is to be spun off from OAO "Yarenergo" in the course of restructuring, and the UNPG-related power grid facilities are to be transferred to said spin-off company in accordance with the separation balance sheet.

At the same time, the power distribution networks that are not part of the UNPG must remain the property of OAO "Yarenergo".

The Board of Directors has also approved:

- the pro-rata distribution of shares in OAO "Yarenergoremont" held by OAO "Yarenergoremont-Holding" among the latter's shareholders using the procedure of liquidation or merger.

- the pro-rata distribution of shares in OAO "Yarenergo Auto Transportation Company" held by OAO "Yarenergo-Holding Auto Transportation Company" among the latter's shareholders using the procedure of liquidation or merger.

- the pro-rata distribution of shares in Central ITC held by OAO "Holder of ITC Shares" among the latter's shareholders using the procedure of liquidation of OAO "Holder of ITC Shares" or its merger with and into Central ITC.

The restructuring will be implemented in two stages. At the first stage, the wholly-owned subsidiaries, OAO "Yarenergoremont" and OAO "Yarenergo Auto Transportation Company" will be established on the basis of property of the corresponding units of OAO "Yarenergo"; its trunk power grids will be transferred to Central ITC as consideration for the additional issue of shares in Central ITC, and transfer of these shares to OAO "Yarenergo"; the RDA [of OAO "Yarenergo"] will merge with and into OAO "UES SO-CDA"; OAO "Yarenergo" will be reorganized, and companies engaged in core activities will be established and become participants of Yaroslavl Region's heat and electricity markets.

The second stage will see interregional integration of the companies by line of business in accordance with the approved strategy of RAO "UES of Russia".

The Draft Restructuring Plan of OAO "Yarenergo" has been previously approved by the Restructuring Committee under the Board of Directors of RAO "UES of Russia" and by the Working Group for considering the restructuring plans under the Electricity Reform Commission of the Russian Government. The Plan has also been consented to by the regional authorities and by a group of minority shareholders owning a blocking interest in the regional energo.

Thus, the Board of Directors of RAO "UES of Russia" has altogether approved 17 draft restructuring plans covering 21 energy systems.

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The Board of Directors has approved the establishment by RAO "UES of Russia" of wholly-owned subsidiaries, OAO "Saratovskaya HPP" and OAO "Nizhegorodskaya HPP".

The plants' conversion into independent juristic persons (corporization) is being carried out in accordance with provisions of the Russian legistlation, viz. Resolution of the Government of the Russian Federation No. 793 of 12 July 1996, whereunder only juristic persons may act as participants in the Federal Wholesale Electricity Market (FOREM).

In December 2000, the Board of Directors of RAO "UES of Russia" approved the establishment by RAO "UES of Russia" of two wholly owned subsidiaries of RAO "UES of Russia", OAO "Saratovskaya HPP" and OAO "Nizhegorodskaya HPP". Contributions to the capital of these subsidiaries will be made in the property of Saratovskaya HPP and Nizhegorodskaya HPP, respectively. Pursuant to the above Board resolution, the small pilot power plant, Khoborovskaya HPP, is to be put into operation and its property is to be assigned to Saratovskaya HPP. Horobrovskaya HPP was built with the investment funds provided by RAO "UES of Russia" in the settlement of Khorobrovo in Yaroslavl Region.

Saratovskaya HPP is the seventh step in the Volga chain of hydroelectric plants. Saratovskaya HPP has 24 hydroelectric generators having installed capacity of 1,360 MW and producing, on the average, about 5.4 TWh of electricity.

Nizhegorodskaya HPP is the fourth step in the Volga chain of hydroelectric plants. The electricity generation volume depends on the rainfall and water level in a specific year and the need to ensure the Volga river navigation. In a year with an average rainfall and water level, the power plant generates about 1,500 million kWh of electricity (installed capacity of 320 MW).

The share capital of OAO "Saratovskaya HPP" is RUB12,365,000,000 and is divided into ordinary shares having a par value of RUB 1,000 each. Consideration for the shares is to be paid in the property of Saratovskaya HPP, which is a branch of RAO "UES of Russia", at the market value of RUB12,364,669,082 determined by an appraiser, and in cash in the amount of RUB330,918.

The Board of Directors has determined the money value of the property contributed by RAO "UES of Russia" to the capital of OAO "Saratovskaya HPP" at RUB12,364,669,082, based on the appraisal report prepared by an independent appraiser.

The share capital of OAO "Nizhegorodskaya HPP" is RUB 4,739,199,000 and is divided into ordinary shares having a par value of RUB 1,000 each. Consideration for the shares is to be paid in the property of Nizhegorodskaya HPP, which is a branch of RAO "UES of Russia", at the market value determined by an independent appraiser, Deloitte & Touche, accredited with RAO "UES of Russia", at RUB 4,739,199,000.

The Board of Directors has determined the money value of the property contributed by RAO "UES of Russia" to the capital of OAO "Nizhegorodskaya HPP" at RUB 4,739,199,000, based on the appraiser's report.

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The Board of Directors has approved participation of RAO "UES of Russia" in OAO Verkhne-Mutnovskaya Pilot Geothermal Power Plant (GeoPP)" .

Pursuant to the program to protect investments made by RAO "UES of Russia", a decision was taken to establish an open joint-stock company, OAO "Verkhne-Mutnovskaya Pilot GeoPP". So far, the share capital of OAO "Verkhne-Mutnovskaya Pilot GeoPP" has not been formed as it is necessary to put the project into operation, register its ownership and determine the market value of the plant's property, and complete verification of the founders' capital contributions to the newly established company.

OAO "Geotherm", which owned the incomplete project, had the appraisal company "Business-Expert ltd." determine the market value of the property of Verkhne-Mutnovskaya GeoPP. The market value of the plant's assets is RUB277,610,649, whereas the book value is RUB293,163,317.

The share capital of OAO "Verkhne-Mutnovskaya Pilot GeoPP" is RUB 277,610,649 and is divided into ordinary shares having a par value of RUB1 each. RAO "UES of Russia" will have a 48.04% stake in the newly established company, whereas OAO "Kamchatskenergo" will hold 36.61%, OAO "Geotherm" 11.16%, and ZAO "Nauka" 4.19%. Consideration for the shares will be paid in form of property in accordance with the calculation of actual contributions of participants in the joint construction project of Verkhne-Mutnovskaya GeoPP, based on the market valuation report.

The Board of Directors has determined the money value of the property contributed by RAO "UES of Russia" to the capital of OAO "Verkhne-Mutnovskaya GeoPP" at RUB133,364,156, based on the report prepared by an independent appraiser.

The construction project of Verkhne-Mutnovskaya Pilot GeoPP is the first step in the implementation of a project to provide environmentally safe energy sources. The research in the area was financed by the European Bank for Reconstruction and Development (EBRD). To date, the first production unit of the plant has been put into operation. The plant construction project is funded with a loan provided by the EBRD (USD99.9 million), and the funds provided by Russian investors: RAO "UES of Russia", OAO "Geotherm", OAO "Kamchatskenergo", and the Administration of Kamchatskaya Region. The installed capacity of the power plant is 12 MW.

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The Board of Directors has reviewed proposals on interregional integration and stepwise lowering of the affiliation level of repair and maintenance companies in relation to regional energos, AO-power plants, and RAO "UES of Russia".

The Board of Directors deems it necessary to lower the degree of affiliation of repair companies being established on the basis of regional energos and AO-power plants' repair units, in relation to the regional energos, AO-power plants, and RAO "UES of Russia" by 2005, except for those companies which are involved in monopoly repair and maintenance services.

The Board of Directors has noted that these measures are primarily intended to improve efficiency of the regional energos and AO-power plants' core business; to derive income from the sale of repair companies established on the basis of the regional energos and AO-power plants' personnel and property; to establish a competitive market environment in repairs and technical reequipment services; to protect the interests of shareholders in RAO "UES of Russia", regional energos, and AO-power plants in the course of restructuring their repairs businesses.

The Board has defined the following possible ways to reduce the affiliation level of repair companies:

- repair companies or companies holding 100% interest in repair subsidiaries are to be spun off in the course of regional energos' restructuring; subsequently, shares held by RAO "UES of Russia" are to be disposed of;

- regional energos and AO-power plants are to sell 100% of their shareholdings in the repair companies established on the basis of personnel and property of regional energos and AO-power plants;

- integrated companies will be established on the basis of repair companies of regional energos and AO-power plants (shares in the integrated companies held by regional energos and AO-power plants are to be sold or distributed [among shareholders];

The Board of Directors has instructed the Company's Management Board to develop and submit for approval by the Board of Directors a procedure for taking decisions (during the transition period) with respect to lowering the level of affiliation of repair companies, containing the methodology and ways to implement the decisions taken, taking into account the opinion of minority shareholders in the regional energo or AO-power plant being restructured.

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The Board of Directors has decided to change the name of the Restructuring Committee under the Board of Directors of RAO "UES of Russia" for the "Strategy and Restructuring Committee" under the Board of Directors of RAO "UES of Russia".

This is due to the expansion of the Committee's activities, which now handles, along with restructuring issues, the issues of implementing the Company's strategy.

The Board of Directors has approved the relevant amendments and additions to the Regulation on the Committee.

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The Board of Directors has reviewed a report on the establishment of the Management Incentivization Committee under the Board of Directors of RAO "UES of Russia" and decided to postpone the review of this item until one of the next Board meetings upon its additional discussion.

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The Board has put Pavel Pustoshilov, Director for Corporate Development at "Evrosibenergo", on the Valuation Committee under the Board of Directors of RAO "UES of Russia".