Moscow. 25 July 2007. The Board of Directors of RAO "UES of Russia" approved the disposal of the Company's shares in OAO "Neftyanoy Dom" and instructed the Management Board to submit proposals on such disposal to the Board of Directors during Q4 2007.

This resolution is part the process to sell the office building owned by OAO "Tsentr Energetiki"*. Previously, at its meetings of 9 February 2007 and 25 May 2007, the Board of Directors approved the consolidation of its 100% stake in OAO "Tsentr Energetiki" and reorganize it by spinning off OAO "Neftyanoy Dom". In the course of the reorganization, the office building slated for sale will be transferred to OAO "Neftyanoy Dom".

The consolidation of shares of OAO "Tsentr Energetiki" will significantly expand the pool of potential buyers, including foreign investors, and the separation of the property intended for sale into a separate legal entity will maximize the profit from its sale.

The experience in selling large real estate properties also shows that in order for the transaction to generate maximum proceeds it is necessary to position the property effectively on the market prior to its sale, and to fully inform the potential buyers about the property offered for sale.

The Board's decision to sell the property will make it possible for RAO "UES of Russia" to start informing the potential buyers about the sale of OAO "Neftyanoy Dom" as soon as the company is registered. RAO "UES of Russia" will then sign an Agency Contact to retain a specialized firm which will handle the property sale.

The Board of Directors of RAO "UES of Russia" instructed the Management Board to have the contract concluded with an asset sale agent by 15 August 2007.

* OAO "Tsentr Energetiki" is a subsidiary of OAO RAO "UES of Russia". Its key asset is a Class B office building, located at 101, Prospekt Vernadskogo, bldg. 3, Moscow, together with the adjacent land. The company's authorized capital is comprised of 5,710 ordinary shares of RUB1,000 par value each.

At its meeting of 24 June 2005, the Board of Directors classified the stake held by RAO "UES of Russia" in OAO "Tsentr Energetiki" as a non-core asset intended for sale. On 17 January 2007, the RAO UES Assets Disposal Commission decided that the asset was to be sold in Q4 2007 – Q1 2008.

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The Board of RAO "UES of Russia" approved the proposed mechanism to finance the construction of a new dispatching centre for OAO "UES SO-CDA" in 2007.

In 2007, the System Operator will need RUB469.3 million in funds to finance the design activities and obtain technical specifications for its dispatching centre project. In order to finance the project, the Board of Directors approved the purchase by RAO "UES of Russia" in Q2 2007 of two 7% promissory notes worth a total of RUB469.3 million issued by the System Operator (with the interest paid on a quarterly basis). The payment for the first RUB369 million promissory note should be paid by 30 September 2007, and for the second RUB100.3 million note, not later than 31 December 2007.

The Board of Directors has also approved the purchase by RAO "UES of Russia" of additional 289,439,436 shares in the System Operator at the placement price of RUB3.55 per share set by the System Operator's Board of Directors, with the total transaction amount making RUB1,027,509,997.8. In return for the System Operator's shares, RAO "UES of Russia" will transfer its 100% shareholding in OAO "Scientific and Research Institute for High Voltage DC Transmission of Electricity" (OAO "NIIPT").*

This transaction will be effected subject to approval of the Russian Government, as the 100% holding in OAO "NIIPT" was contributed to the capital of RAO "UES of Russia" at the time of its establishment.

The Board of Directors instructed the RAO UES representatives to vote for these resolutions at the System Operator's Board meeting and extraordinary general meeting of shareholders.

* The Scientific and Research Institute for High Voltage DC Transmission of Electricity" (OAO "NIIPT") was created pursuant to the resolution taken by the Soviet Government back in 1945. Its mission was to address issues relating to the implementation of DC technologies in electricity transmission and those relating to the creation of the country's Unified Energy System. OAO "NIIPT" has unique advanced scientific research potential and technologies needed to conduct studies in the energy systems development, managing operational modes, and ensuring reliable and stable operation of the UES.

At present, a specialized scientific and technical center is being created at the Institute, which will serve as the key scientific facility to research and study problems of operational dispatching, systemic reliability and antifault control, and to train personnel in this field. The scientific and technical center will help ensure management of the UES using cutting-edge technologies and procedures, which will significantly enhance the UES of Russia reliability.

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The Board of Directors approved some resolutions relating to the sale by RAO "UES of Russia" to OAO "UES FGC" of the power grid facilities relating to the Unified National Energy Grid (UNEG) which were previously owned by OAO "Sevkavkazenergo" and OAO "Kabbalkenergo".

At its meeting of 19 January 2006, the Board of Directors approved by acquisition by RAO UES of the grid facilities from OAO "Kabbalkenergo" and OAO "Sevkavkazenergo" to set off their debt on the subscription fee payments. The acquired facilities were to be transferred to OAO "UES FGC" at a later date.

As provided by Russian laws, contributions to the FGC's authorized capital are to be made in form of the UNEG-related property owned by RAO "UES of Russia".

The Board of Directors set the value of the property to be disposed of at RUB107,901,742 and approved its sale to OAO "UES FGC".

As several Board members of RAO "UES of Russia" (Victor Khristenko, Anatoly Chubais, German Gref, Alexander Voloshin, Andrey Dementyev, Vladimir Rashevsky) and some members of the Company's Management Board (Andrey Rappoport, Boris Ayuyev, and Yury Udaltsov) are simultaneously Board members of OAO "UES FGC", the transaction to sell the property to the latter is treated as an interested party transaction under Russian law.