Moscow, 2 August 2005. RAO "UES of Russia" is deeply concerned about insufficient funds allocated by the Federal authorities for purchase of electricity by units of the Defence Ministry of the Russian Federation. By year end 2005, the total shortfall in funding nationwide may reach RUB2 billion.

In particular, the situation with electricity payments by military units located in the Khabarovsky Kray needs to be resolved as soon as possible.

Thus, the budgetary appropriations approved at the time when the contract was made with OAO "Khabarovskenergo" for power supply to the facilities of military unit 31711 of the Defence Ministry of Russia for year 2005 had been used up by 10 July 2005. The budgetary appropriations were enough to pay a mere 40% of the anticipated energy consumption of that unit. The deficit of budgetary funds for payment of electricity consumed by the unit in 2005 is in excess of RUB 130 million.

A similar situation with insufficient financing of energy supply to Defence Ministry units is seen in the Moscow Region, Saratov Region, Voronezh Region, Omsk Region, Amurskaya Region, and other regions of Russia.

RAO "UES of Russia" believes that, in order to solve this problem in the very near future, adjustments should be made to the federal budget with regard to financing Defence Ministry units taking into account the H1 2005 results.

RAO "UES of Russia" and the Defence Ministry have on numerous occasions requested the Government of the Russian Federation to settle the problem of electricity and heat payments by units of the Defence Ministry of Russia, including through making additional appropriations for these units for year 2005 already in Q3. However, this issue still remains outstanding.

The executive authorities are not taking any steps to ensure full and timely payment for the energy consumed, which seriously complicates preparations at energy companies of RAO "UES of Russia" located in these areas for the autumn-winter peak load, thus jeopardizing reliable and uninterrupted power supply to Defence Ministry units.