Moscow, 16 December 2005. RAO UES and RUSAL today signed the Basic Conditions of Partnership Agreement, a document which contains key parameters of the Boguchanskaya energy and metals complex project, including the structure of its implementation and the principles of cooperation between the partners. The two parties plan to sign the partnership agreement itself in the first quarter of 2006.

According to preliminary estimates, total investment for this project will amount to over $4 billion, which includes the creation of an infrastructure for the power plant and the smelter. The project should take about seven years to complete.

The basic conditions of partnership agreement were developed in accordance with a Memorandum of Understanding signed by RUSAL and RAO UES in July, 2005. The Memorandum stipulates that the parties take equal part in the realization of the project. HydroOGK (a subsidiary of RAO UES) and RUSAL will complete the Boguchanskaya HPP and build a new aluminium smelter, which will become the primary consumer of electric power generated by the HPP.

As specified in the basic conditions of partnership agreement, the first stage of the greenfield aluminium smelter and the initial complex of the Boguchanskaya HPP will be completed in 2009. The installed capacity of the Boguchanskaya HPP will be 3,000 MW, generating annually 17.6 billion KW/h. The smelter’s capacity will amount to 600,000 tonnes of aluminium per year. The cost of completing the Boguchanskaya HPP is estimated at $1.5 billion (not including the cost of developing the inundation zone). The construction of the smelter will cost $2.1 billion. RUSAL and HydroOGK intend to finance the project with their own, as well as attracted funds. An independent financial consultant will be appointed to develop the most efficient funding scheme.

Boguchanskaya HPP construction will be launched in January 2006. The Russian Government has committed part of the funds in RAO UES’s 2006 investment programme for the HPP construction in 2006 – a total of 2.6 billion roubles ($91 million). In total, 4.5 billion roubles ($157 million) will be invested into constructing the Boguchanskaya HPP through the RAO UES investment programme and funds obtained by HydroOGK

The feasibility study of the aluminium smelter construction should be completed in 2006. RUSAL has allocated about 3 billion roubles ($100 million) of its investment budget for next year to fund the study and other project activities in 2006.

In January, RAO UES, RUSAL, and HydroOGK will develop and coordinate the draft partnership agreement. In February, the draft will be presented to the companies’ management boards.

The project will boost the economy of the Lower Angara region, creating over 10,000 jobs and channelling additional tax revenues of approximately 2.4 billion roubles ($84 million) into the budgets of all levels. Following the commissioning of the hydropower plant and the launch of the aluminium smelter, contributions to state budgets will reach 3.19 billion roubles a year ($111 million).

RUSAL is the world’s third largest primary aluminium producer, providing primary aluminium and value-added cast-house products to customers in 40 countries. With operations in 9 regions of Russia and 12 countries globally RUSAL now accounts for 75 per cent of aluminium production in Russia and 10 per cent internationally. RUSAL was established in March 2000 through a merger of several largest aluminium smelters and alumina refineries in the CIS is headquartered in Moscow and has 47 000 employees.