Moscow, 18 April 2006. RAO "UES of Russia" and the System Operator have approved a list of project sites for the construction of energy facilities using the guaranteed investment mechanism.

The list includes five territories in which six energy facilities with an aggregate capacity of 2,850 MW are to be built. Project sites for another 2,150 MW of capacity will be approved upon completion of the analysis which is currently underway. Power units with an aggregate capacity of 5,000 MW are expected to be built in the next few years using the guaranteed investment mechanism.

As part of the process to prepare proposals for tenders to select investors for the construction of energy facilities using the mechanism of guaranteed investments, RAO "UES of Russia" has started development of pre-feasibility studies and performance of technical audits involving international engineering companies. The results will be submitted to the Ministry of Industry and Energy of Russia.

The sites listed below are included in the List based on the analysis of forecast energy balances intended to identify the energy systems that are likely to experience shortage of generation capacity due to increased electricity consumption, depreciation of plant assets, and insufficient transmission capacity of the existing power lines.

Area (energy system, energy district)	Capacity, MW	Project site
1. Tyumen energy system, Northern energy district	200	Urengoiskaya TPP
2. Tyumen energy system	600	Site of Tarko-Sale Substation (500 kV)
3. Tula energy system	400	Shchekinskaya TPP
4. Sverdlovskaya energy system, Serovsko-Boroslovsky energy center	600	Serovskaya TPP
5. Kuzbas energy system, Southern energy district	600	Kuznetskaya CHPP
6. Tomsk energy system	450	Tomskaya CHPP-3
TOTAL GENERATING CAPACITY	2,850

The investment guarantee mechanism was approved by the Resolution of the Russian Government dated 7 December 2005 and is one of the ways of raising funds needed to build new generating facilities in the areas where capacity shortages are anticipated.

The essence of the mechanism is that an investor will be compensated for the difference between the market price for electricity and the price needed for a project to break-even. The funds needed for such compensation are expected to be included in the tariffs of the System Operator as a capacity surcharge.

Investors will be selected through a tender process. The tenders will be organized by the System Operator with the participation of regional governments' representatives in accordance with the methodologies and on the conditions currently being developed by the Ministry of Industry and Energy of Russia.

The tender will be held in two stages. The principal requirement for investors is that the proposed power project should employ advanced power generation technologies, and the length of the construction project should be no more than three years. The key criterion for determining the tender winner, all technical factors being equal, will be the lowest capacity charge that the investor will offer the System Operator.