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Unified Energy System

December 4, 2003

Audit Committee reviews RAO UES Audited Consolidated Financial Statement according to IFRS for H1 2003

Moscow, 4 December 2003. At its regular meeting, the Audit Committee of RAO "UES of Russia" considered the Audited Consolidated Financial Statement of RAO "UES of Russia" according to the IFRS for the first six months of 2003 and recommended that the Management Board of RAO "UES of Russia" make available to the public, as soon as practicable, the financial details of the purchase of Georgian electricity assets from AES Corp. under the agreement signed in the summer of 2003.

The Audit Committee also approved the proposal of RAO UES management for the Committee to proactively participate in giving assignments to the auditors appointed to audit the annual financials of RAO UES subsidiaries and dependent companies (SDCs) for the Year 2004 according to the IFRS. The Committee stated it was necessary, among other things, to define the deadlines for and extent of information disclosure in order to ensure maximum comparability and uniformity of the SDCs' financials prepared according to the IFRS.

In 2003, 16 major regional energos (RAO UES subsidiaries) started preparing their financials according to the IFRS.

The Audit Committee of the Board recommended the Company's Auditors, KPMG, to include, when preparing an auditor's report in respect of RAO UES 2003 financials, ASO "Lider" on the list of RAO UES SDCs audited in the process of preparing the annual financial statements of RAO "UES of Russia" according to the IFRS. This recommendation is given because, despite the fact that ASO "Lider" is not one of RAO UES SDCs in terms of cash flows, it plays an important role in the overall risk management system at RAO "UES of Russia", as it is the only insurance company to provide insurance coverage against risks to the Company. The meeting also decided to examine of the insurance system of RAO "UES of Russia" from the viewpoint of operational efficiency and risk management.

The Committee also heard the report previously requested from KPMG regarding the possible impact of the "Czech deal" on RAO UES financials according to the IFRS for the Year 2003 and the subsequent years, and assessed these consequences as insignificant for the Company's financial reports.

The Audit Committee of the Board of Directors of RAO "UES of Russia" was established on 29 August 2003 pursuant to the resolution of the Board of Directors of RAO "UES of Russia". The Committee consists of the following members: Seppo Remes (Committee Chairman; Executive President, Vostok Nafta Investment Ltd.), Sergey Kosarev (Deputy Minister of Property Relations of the Russian Federation), Alexander Kazakov (Member of the Federation Council of the Russian Federation),Alexander Kirsanov (Project Manager, "Eurosibenergo"; representative of the member of the Board of Directors of RAO "UES of Russia" D. Geovanis), and Sergey Skatershchikov (Managing Director, IndexAtlas Ltd.)





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