Moscow, 26 April 2005. At its regular meeting held today, the Board of Directors of RAO "UES of Russia" considered issues relating to the conduct of the Annual General Meeting of the Company's shareholders.

In accordance with the AGM agenda approved by the Board of Directors earlier, shareholders of RAO "UES of Russia" will be asked to approve the dividend payment on the Company's shares. The Board of Directors approved the correction factor K1 at 0.10675 (zero point one zero six seven five) to be used for the calculation of dividend on the Company's ordinary shares in respect of 2004. This factor was calculated based on the analysis of the Company's financial and business performance in 2004. With this value of K1, the dividend payments will total RUB2,757,611,000 (up 15% on 2003), including RUB1,290,935,000 on the shares held by the Government (up 18.5% on 2005).

Taking into account the K1 value, the Board of Directors recommended that the shareholders approve the following dividend amounts for 2004:

• on ordinary shares: RUB2,294,230,816.18, or RUB0.0559 per share;
• on preferred shares: RUB463,380,239.58, or RUB0.2233 per share.

The Board of Directors recommended that the dividends on ordinary and preferred shares are to be paid by 1 December 2005.

The Board of Directors submitted draft amendments and additions to the Charter of OAO RAO "UES of Russia" for shareholder approval at the AGM.

The Board of Directors recommends, among other things, to include a provision in the Charter that, during the period when the Wholesale Generation Companies (WGCs) are wholly-owned subsidiaries of RAO "UES of Russia", the functions of WGC shareholder meetings are to be performed by the Board of Directors of RAO "UES of Russia".

It is also proposed to include a provision in the Charter under which the Board of Directors will not be required to determine the Company's position regarding the items of business to be considered by general meetings of shareholders and Board meetings at subsidiaries and dependent companies (SDCs) of RAO "UES of Russia", if the functions of general meetings of shareholders at such SDCs are performed by the Board of Directors of the Company.

Further, the Board of Directors decided to submit for shareholder approval at the AGM draft amendments and additions to the Regulation on Remuneration of Members of the Board of Directors of RAO "UES of Russia".

It is proposed, in particular, to make changes to the criterion for payment of remuneration to Board members for "capitalization increase" of the Company. The criterion proposed to be used is the weighted average price per ordinary share throughout the period of work of the Board members compared to weighted average price per ordinary share during the previous term of office of the Board members. (The criterion currently used is the weighted average price per ordinary share as of the date of the General Meeting of shareholders at which the Board members are elected as compared to the weighted average price per ordinary share as at the date of the General Meeting of shareholders at which their powers are terminated).

Besides, the Board of Directors approved the form and text of the ballots for voting at the AGM and the voting instructions. These documents have been drawn in accordance with the requirements of the Federal Law On Joint-Stock Companies and the Regulation on Additional Requirements to the Procedure for Preparation, Convocation and Conduct of the General Meeting of Shareholders as approved by the Resolution of the FCSM of Russia dated 31 May 2002.

The AGM of RAO "UES of Russia" will be held on 29 June 2005 in the Zelenograd Palace of Culture located in the administrative district of Zelenograd, Moscow, Russia. The list of persons entitled under the laws of the Russian Federation to take part in the AGM of RAO "UES of Russia" will be made as at the record date of 10 May 2005. Pursuant to Clauses 5.6. and 5.6.1. of Article 5 of the RAO UES Charter, holders of preferred shares are not entitled to vote at this Meeting.

* * *

The Board of Directors noted the information on the draft Investment Programme of RAO "UES of Russia" for 2006 and until 2008.

The Board of Directors recommended that the Management Board of the Company submit the draft Investment Programme for approval to the Government of the Russian Federation by 20 May 2005.

The Board of Directors also commissioned the management of RAO "UES of Russia" to prepare, within three months, a programme determining the procedure and mechanism for ensuring legal succession on the Investment Programme projects, and the terms and conditions for the transfer and financing principles of the construction projects in progress after RAO "UES of Russia" is reorganized.

In 2006, OAO RAO "UES of Russia" plans to allocate RUB20.8 billion in funds for the construction of priority energy projects, including RUB18.1 billion in funds earmarked for investment and RUB2.7 billion in borrowed funds.

The Board of Directors decided that it would be inexpedient to include in the Company's Investment Programme any new construction projects whose completion dates are beyond the expected timeframe for the Company's unbundling without defining a precise mechanism which will be used to complete the projects without receiving a subscription fee and a legal succession mechanism.

Under the draft three-year Investment Programme of RAO "UES of Russia", RUB20.1 billion in funds will be allocated for the construction and commissioning of generating facilities in 2007 (RUB17.6 billion in funds earmarked for investment, and RUB2.5 billion in borrowed funds), with a further RUB12.6 billion earmarked for 2008. It is expected that the investment guarantee mechanism will be used to finance capital investments in 2008, as the reorganization of RAO "UES of Russia" will have been completed by that time.

The priority projects scheduled for commissioning by RAO "UES of Russia" for 2006-2007 are the Bureyskaya HPP, Irganayskaya HPP, Zelenchukskaya HPP, and Ivanovskaya TPP.

In 2006, it is planned to spend RUB3.2 billion in own funds and RUB1.9 billion in borrowed funds to raise the dam at the Bureyskaya HPP to the target height of 265 m and to launch two hydropower units (Units 5 and 6) at the power plant scheduled for 2007. In 2007, the Company plans to allocate RUB4.9 billion in targeted funds and RUB2.5 in loans for these projects. Moreover, the funding of the works to prepare the inundation area, including the project to move the railroad linking Izvestkovaya and Chegdomyn railway stations, will amount to RUB1.5 billion in 2006 and RUB6.2 billion in 2007 (the projects are financed jointly with OAO "Russian Railways" on a parity basis).

In 2006-2007, the construction of the Irganayskaya HPP is to be continued. In particular, the power plant's dam will be raised to the target height of 551 m. RAO "UES of Russia" will provide RUB1.2 billion in 2006 and RUB2.4 billion in 2007 for these purposes.

To complete the construction of the water intake facilities at Zelenchukskaya HPP, which will raise the electricity output without increasing the power plant's installed capacity, the Company will allocate RUB1.1 billion in 2006 (RUB0.8 billion in own funds and RUB0.3 billion in borrowings), and RUB0.3 billion in 2007.

In 2006, RUB5.1 billion in earmarked funds will be allocated to the project to build the Ivanovskaya TPP, which will be equipped with the first Russian-made PGU-325 combined-cycle gas turbines.

The Company plans to invest in 2006-2007 RUB6.1 billion in funds earmarked for the project to build the Kaliningradskaya CHPP-2. This power plant is of great importance for energy security in the Kaliningrad Region.

Besides, RUB0.4 billion will be allocated in 2006-2007 for the construction of the Zaramagskie HPPs and another RUB0.4 billion for the construction of the Nizhne-Cherekskie HPPs.

Implementation of the joint project between Russia and Tajikistan to complete the construction of Sangtuda HPP-1 will be financed with RUB0.5 in borrowed funds in 2006 and RUB1.5 in earmarked funds in 2007.

As a measure to develop non-conventional energy sources, it is planned to spend RUB0.3 billion in 2006 on the construction of the Malaya Mezenskaya Tidal Power Plant with orthogonal hydraulic units of up to 10 MW.

The Board of Directors noted the Financial Plan of RAO "UES of Russia" for 2005 presented by the Management Board of the Company. The Management Board was instructed to continue the efforts to reduce costs and increase revenues of RAO "UES of Russia" in 2005.

The budget is based on the Company's economic targets for 2005 approved by the Management Board, with account taken of the adjustments made in Q1 2005 and the new subscription fee for the services of RAO "UES of Russia" relating to the organization of the operation and development of the UES of Russia (RUB43.88 per '000 kWh) as adopted by the Federal Tariffs Service of Russia on 1 December 2004 (prior to 1 January 2005, the subscription fee was RUB45.26 per '000 kWh).

* * *

The Board of Directors approved the steps taken by the Company's Management Board to implement the resolutions adopted by the Russian Government at the meeting held 24 December 2004 on the item of business "On the Process of Electricity Reform in the Russian Federation".

RAO "UES of Russia" has done the following work in accordance with the assignment given by the Government with respect to restructuring of the electric power sector:

• proposals have been prepared on the formation of a Comprehensive Reform Plan for 2005-2008. In particular, the current results of the reform have been reviewed, and deadlines have been set for the key measures to reform the electricity sector of Russia for the period 2005-2008.
• proposals have been formulated to improve the model for the operation of the Federal Wholesale Market for Electricity and Power (FOREM), including the creation of a system of bilateral contracts to purchase/sell electricity (power) in the regulated segment of the wholesale market, expansion of the share of the free market segment and its coverage, and development of a mechanism for payment of the power, reserves, deviations, and system services.
• the Company produced and submitted to the Federal Tariffs Service of Russia proposals for measures designed to remove the accumulated cost imbalance in the regulated segment of the wholesale electricity market, as well as steps to eliminate the causes of such imbalance.
• an action plan has been proposed to liquidate cross-subsidization in the electricity industry. It is proposed to address the cross-subsidization problem by introducing a non-tax levy, which should be done by adopting a special law. By now, these proposals have been agreed with the Ministry of Economic Development and Trade and the Ministry of Industry and Energy of Russia.
• the management has explored the possibilities for and terms of making long-term fuel supply contracts (mainly, for coal and natural gas supplies), including the procedure for calculation of prices to maintain reliability of energy supplies and reduce price risks for electricity consumers.
• proposals have been formulated to improve the organizational and financial mechanisms for attracting investments in the electricity industry. A series of measures have been proposed that seek to create favourable conditions for investment both during the transitional period of the sector reform (investment guarantee mechanism to cover the expected shortage of generation capacity; Government support to investment projects; regulated long-term contracts to supply electricity (power) on the wholesale market and contracts to supply fuel (natural gas); the investment component in the transmission tariffs should ensure an economically sound level of return on the invested capital; and connection fee), and in a competitive market for electricity and power – the so-called "target model" (i.e. mechanisms to attract investments in electricity generation, and the market for financial rights to transmit electricity and power).
• proposals have been presented to secure the rights and interests of energy companies, their shareholders, creditors, and employees in the course of reorganization of energy enterprises.
• risks associated with the measures to reform the electricity industry have been assessed, and measures have been proposed to reduce or compensate for the possible negative impact. The following groups of risks have been analyzed: social risks, energy enterprises' risks, consumer risks, risks of power supply interruption, and macroeconomic risks. The analysis suggests that the greater part of the potential risks was taken into account at the start of the energy reforms in the Russian Federation, and the measures to reduce these risks have already been implemented or are underway.

* * *

The Board of Directors approved the Regulation on the Personnel and Remunerations Committee under the Board of Directors of RAO "UES of Russia".*

Under the Regulation, the Personnel and Remunerations Committee is an advisory and consultative body under the Board of Directors of RAO "UES of Russia". Its resolutions are of a recommendatory nature. The Committee consists of 3 members. Only independent members of the Board of Directors of RAO "UES of Russia" may be appointed to the Committee.

On 25 March 2005, the Board of Directors elected Andrey Bugrov, member of the Board of Directors of RAO "UES of Russia" and Managing Director of Interros Holding Company, as the Committee Chairman. Today, the Board of Directors resolved to appoint two Board members—Alexander Abramov, President of OOO "EvrazHolding", and Vladimir Rashevsky, Director General of OAO SUEK (SIBENCO), as members of the Committee. Vadim Galka, Head of HR Management Department of the Corporate Center, RAO "UES of Russia", was appointed the Committee's Executive Secretary.

The functions of the Personnel and Remunerations Committee will include working out the principles and criteria for determining the amount of remuneration and incentives to members of the Board of Directors, Chairman and members of the Management Board.

* * *

The Board of Directors approved the proposed mechanisms to finance the construction of the second power unit at OAO "Severo-Zapadnaya CHPP", which involve the acquisition by ZAO "Inter RAO UES" of a stake in the power plant's charter capital.

Severo-Zapadnaya CHPP is a power plant using the state-of-the-art combined-cycle technology. Since September 2004, the power plant has been run by the international consortium, OOO "Enel ESN Energo", which won the tender held by RAO "UES of Russia". The Management Contract does not prohibit consideration and adoption of mechanisms to finance the construction that are different from those proposed by the management company.

As proposed by the Company's Management Board, ZAO "Inter RAO UES", a subsidiary of RAO "UES of Russia", will provide up to RUB3,542 million in funds to complete the construction of the second power unit at the Severo-Zapadnaya CHPP.

According to this proposal, which has been approved by the Board of Directors of RAO "UES of Russia", during the first phase of the project, in order to minimize the risks and reduce the cost of construction, ZAO "Inter RAO UES" will purchase 25% plus one share worth over RUB2.71 billion in the third additional issue of shares in OAO "Severo-Zapadnaya CHPP" currently being placed. The shares will be purchased using own and borrowed financial resources.

In order to ensure the servicing and subsequent refinancing of the loan raised for the purpose, the Board of Directors of RAO "UES of Russia" deemed it advisable to assign the rights under the electricity export contract with Fortum Heat and Power Oy from FGUP "VO Technopromexport" to ZAO "Inter RAO UES". The Management Board of RAO "UES of Russia" was instructed to negotiate the transfer of the export contract.

This arrangement provides for the obligation of ZAO "Inter RAO UES" to sell an option for shares in OAO "Severo-Zapadnaya CHPP" so purchased to any third party in a public tender. The tender to sell the option is to be held before 1 September 2006, with the option exercise period from 1 January 2007 to 31 December 2012.

The final terms of the option agreement and the tender to sell the option will be prepared by the Management Board of RAO "UES of Russia" and submitted for consideration by the Board of Directors of the Company not later than 1 October 2005.

According to the Board of Directors, the proposed mechanism to finance the completion of the construction of the plant's second power unit appears to be the most suitable one. In particular, it will help shorten the timeframe for raising finance, construction and payback of the project. At the same time, it will be possible to ensure profitability of the Severo-Zapadnaya CHPP not lower than that observed during the previous calendar year of the plant's operation in a regulated electricity market. This arrangement involves a minimal debt load for OAO "Severo-Zapadnaya CHPP", as the power plant's budget will not be burdened with the need to pay the principal and interest on the borrowed funds, and it will not be necessary to pledge the plant's property.

The Board of Directors approved the transaction between RAO "UES of Russia" and ZAO "Inter RAO UES" to implement the project to complete the second power unit at the Severo-Zapadnaya CHPP.

Representatives of RAO "UES of Russia" on the Board of Directors of ZAO "Inter RAO UES" were instructed to vote FOR acquisition of a stake in the power plant's capital.

Besides, representatives of RAO "UES of Russia" on the Board of Directors of ZAO "Inter RAO UES" were instructed to vote at the Board meeting of ZAO "Inter RAO UES" FOR the adoption of the agenda of the General Meeting of Shareholders of ZAO "Inter RAO UES" including the item of business relating to the approval of the Agreement on the Implementation of the Investment Project between RAO "UES of Russia" and ZAO "Inter RAO UES", which constitutes an interested party transaction.

The Board of Directors of RAO "UES of Russia" also resolved that the obligations of the Management Company of the Severo-Zapadnaya CHPP under the Management Contract dated 28 June 2004 to present to the Board of Directors a detailed and reasoned proposal regarding the financing of the completion of the second power unit at OAO "Severo-Zapadnaya CHPP" are deemed to have been performed.

* * *

The Board of Directors of RAO "UES of Russia" noted the results of the review by the Management Board of the recommendations presented by the Audit Committee under the Board of Directors.

Earlier, at the meeting held 25 February 2005, the Board of Directors instructed the Management Board to consider the recommendations of the Audit Committee and present the results of such consideration. Among other things, the Board of Directors was commissioned to explore the possibility of preparation, effective 2006, of IFRS financial statements by subsidiaries and dependent companies of RAO "UES of Russia", primarily, by OAO "UES FGC" and ZAO "Inter RAO UES", in-house, without hiring outside organizations.

In this connection, the Management Board together with the Audit Committee prepared a standard Accounting Policy for SDCs of RAO "UES of Russia" in accordance with IFRS, guidelines for drawing up such policies, and a draft order regarding the creation of the relevant departments for SDCs of RAO "UES of Russia", and the programme to train the companies' staff to draft such policy.

As part of the efforts to implement the recommendations on the creation of a single controlling service within the Company's executive arm, the Company created the position of Head of Controlling at the Corporate Center of RAO "UES of Russia".

The controlling service will analyze efficiency of the internal control systems, oversee the application of production and financial standards, control and review the quality of business processes, coordinate and synchronize various internal control systems, and present the relevant recommendations to the Company's management. Furthermore, the Service will endeavour to ensure prompt response to comments and suggestions of the Audit Committee and the Company's Independent Auditors, to prepare proposals and ensure subsequent implementation of an advanced risk management system in the companies established in the course of the sector reform.

* * *

The Board of Directors approved the establishment by RAO "UES of Russia" of a wholly-owned subsidiary, ZAO "Agentstvo po prognozirovaniyu balansov v elektroenergetike" ("Agency for Power Balance Forecasting").

The principal goal pursued in establishing the Agency is the creation of an effective system to forecast operations and development of the electricity industry based on the market principles. The Agency will be engaged in the preparation of short-, medium-, and long-term power balance forecasts, supplying the federal and regional bodies of executive power with information needed to ensure that timely decisions are taken in the area of technological, tariff, investment, and fuel policy.

The Agency will focus on the activities currently undertaken by RAO "UES of Russia" which relate to the preparation of power balance forecasts, presentation of reports and analysis of the operations of the UES of Russia.

The Agency's services will be used by the entities of RAO "UES of Russia" Holding Company, other electricity industry members and their associations, infrastructure organization of the energy sector, fuel suppliers, major consumers of electricity, regional bodies of executive power, and investors.

Pursuant to the resolution of the Board of Directors, the Agency will comprise three departments: department of short-term power balances in terms of volume and cost, department of medium- and long-term power balances and investment, and information and analysis department.

The charter capital of ZAO "Agency for Power Balance Forecasting" will be RUB3.5 million, and will be divided into ordinary shares of RUB1 par value.

* * *

The Board of Directors of RAO "UES of Russia" noted the report on the activities of the Management Board of the Company in Q1 2005 and approved the work plan for Q2 2005.

The Board of Directors also approved the securities issuer's quarterly report of RAO "UES of Russia" for Q1 2005.

* * *

The Board of Directors noted the information on the liquidity of securities of RAO UES subsidiaries and dependent companies in the course of the electricity sector reform and measures taken by the Management Board to ensure their liquidity.

This issue was considered by the Management Board of RAO "UES of Russia" on 9 March 2005. The Management Board then approved the Action List to maintain liquidity of SDCs' securities and gave instructions to the appropriate departments of the Company.

In particular, the Management Board instructed these departments to bring, as soon as possible, shares of the spin-off companies and the companies established in the course of interregional integration to the organized market, which is to be followed by raising the trading status (i.e. listing) of shares in such consolidated companies and preparation for their entry into the western markets.

Shares of 50 SDCs of RAO "UES of Russia" have been admitted to trading on the organized securities market. Of these, shares of 12 energy companies are listed on the RTS and MICEX: Astrakhanenergo, Dagenergo, Mosenergo, Samaraenergo, Sverdlovenergo, Rostovenergo, Udmurtenergo, Yakutskenergo, Zeyskaya HPP, Kostromskaya TPP, Pechorskaya TPP, and Cherepetskaya TPP. Moreover, shares of 20 more SDCs of RAO "UES of Russia" are included in various OTC systems, specifically, in the RTS Board indicative quotations system.

35 regional energos of RAO "UES of Russia" have virtually completed the unbundling process and state registration of the spin-off companies. In the course of reorganization of regional energos by spinning off new companies, shares in the spin-off companies will be distributed among the shareholders of the regional energo so reorganized. With respect to each share of each category (class) of shares of the reorganized regional energo, shareholders will receive shares of the same category (class) in each of the newly established companies in the quantity determined by the reorganization resolution.

The shares of the reorganized regional energo will have the same formal characteristics (such as the type, issuer name, par value, date of issue registration, etc.), and will be de facto shares of the company owning the "brand name" of the regional energo concerned, i.e. an essentially new company from the viewpoint of assets structure, kinds of activities, membership of the management bodies, etc.

Circulation of shares of the spin-off companies and the companies established as a result of interregional integration (WGCs, TGCs, ITCs, and IDCs) will only be possible after the necessary steps are completed to have the shares admitted to trading on an exchange. One of the prerequisites for such admission is the availability of issue prospectuses registered with the FSFM of Russia. In this connection, the Management Board of RAO "UES of Russia" decided to seek registration of issue prospectuses of all newly established companies.

It should be noted that 6 SDCs being reorganized— OAO "Mosenergo", OAO "Samaraenergo", OAO "Rostovenergo", OAO "Kuzbassenergo", OAO "Lenenergo", and OAO "Kostromskaya TPP"—have Depositary Receipts programs. In this connection, the Management Board of RAO "UES of Russia" instructed the appropriate departments to deal with the transformation of the existing DR programs for shares of the SDCs being reorganized. This process should take into account the peculiarity of each SDC and the wishes of the DR holders.

Also, RAO "UES of Russia" is exploring the advisability of and the mechanisms for converting the preferred shares into ordinary shares or preferred shares of another type in the course of interregional integration of the companies spun off from the regional energos. This issue is to be submitted to the Board of Directors of RAO "UES of Russia".

* * *

The Board of Directors of RAO "UES of Russia" made amendments to the restructuring plan of OAO "Krasnoyarskenergo" approved by the Board on 3 September 2004.

Under these amendments, OAO "Krasnoyarsk Energy Management Company" will be removed from the list of companies to be established in the course of restructuring of OAO "Krasnoyarskenergo".

Previously, at the meeting held 28 January 2005, the Board of Directors of RAO "UES of Russia" decided that the functions of the one-man executive body (i.e. CEO) of the companies spun off in the course of the regional energos' restructuring will be transferred to management companies only in individual cases, when such transfer is deemed advisable. Such decisions on whether or not it is expedient to transfer the management functions are to be taken by the Management Board of RAO "UES of Russia".

The Management Board deemed it inexpedient to establish OAO "Krasnoyarsk Energy Management Company" as, under the restructuring schedule for OAO "Krasnoyarskenergo", such contract with the management company is to be made on 15 February 2006. By that time, integration of companies by lines of business will have been started. The establishment of OAO "Krasnoyarsk Energy Management Company" to perform the functions of the one-man executive body (CEO) only for OAO "Krasnoyarskenergosbyt" does not appear advisable.

Accordingly, OAO "Krasnoyarskenergo" will be restructured in accordance with the basic plan, with the following companies spun off:

• OAO "Krasnoyarskaya Generatsia";
• OAO "Krasnoyarskenergosbyt";
• OAO "Krasnoyarsk Trunk Grids", whose only asset is shares in OAO "Siberia ITC";
• OAO "Tyvaenergo-Holding", whose principal asset is shares in OAO "Tyvaenergo".

* * *

The Board of Directors relieved Mikhail Abyzov of his position as a member of the Management Board of RAO "UES of Russia" and Managing Director of Business Unit 1 in connection with his resignation from the Company effective 3 June 2005.