Presentation by Anatoly Chubais

Chief Executive OfficerRAO «UES of Russia»

October 2001 Moscow

2

RAO «UES of Russia» in the Russian economy

407 thermoelectric and hydraulic plants 668,200 employees 72.1 % of the total generation 96.3 % of the total length of trunk transmission lines

Rating of RAO “UES of Russia” (Expert-200 Russian poll)

September 2001

Indicator Number of Rating Indicator companies amount

Capitalisation, US$ mn 200 5 4,420.2

Sales volume, US$ mn 200 3 11,942.1

Profit, RUR mn 20 8 28,698.0

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Based on the 2000 results RAO «UES of Russia» Group posted a profit …

*) All 1999 and 1998 figures are recalculated to adjust for the Rouble purchasing power as of 12/31/2000

-100

20 1998 1999 2000

-80

-60

-40

-20

0

7.9- 28.2

- 91.3

Operational profit of the Group, RUR mn

In 2000 the Group for the first time posted an operational profit of RUR 7.9 bn and net profit of RUR 0.5 bn

Complete set of financial reports of both JSC and Group RAO «UES of Russia», audited by international agencies, is prepared

for the third time running

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Synchronised operation - base of energy safety

Kazakhstan and Central Asia

In the USSR, synchronised operations were carried out with its 11 internal republics

… decisions of RAO «UES of Russia» resulted in the resumption of synchronised operation with 14 out of 15 countries - former members of the USSR

Strategic task – to start synchronised operation with European energy associaitons

R U S S I A N

F E D E R A T I O N

Transcaucasian republics

Belarus

and

Ukraine

Baltic countries

5

Electricity export continues to grow

US$ mn

458.0

271.8217.2

304.0

18.5

13.9 14.115.5 *

0

100

200

300

400

500

1998 1999 2000 2001

0

5

10

15

20

bn kwh

* - forecast for year end 2001

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Georgia

Finland

40%

Belarus32%

Turkey5% Poland 4%

Latvia 6%

2% China1%

Kazakhstan

10%

Total: 15,525 mn kwh

Key markets for electricity export from Russia

Estimated electricity export structure, 2001

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Most countries opted for a competitive model of the sector’s development

Deregulation

Pri

vati

sati

on

Russia (2000)

France (2000)

Hungary (1999)Thailand (1996)

Italy (1999)

California (1995)UK (1990)

Ukraine (1997)

Scandinavia (1992)

Private property

State property

EU Electricity Directive

Argentina (1990)

Brazil (1995)

South Africa (2000)

Greece (2000)

Kazakhstan (1998)

Moldova (1999)

State regulation Competitive market

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Reforms are based on the division of monopoly and competitive sectors

GenerationGeneration

Competitive sectorsCompetitive sectors

Natural monopoliesNatural monopolies

Liberalisation of pricing mechanisms and stimulation of

market participation

Market rules

Production control

Backbone and distribution networks

Sales

Regulated tariffs

Ensuring equal access to networks.Reorganisation of market support infrastructure.

9

«5,000 MW» program offers significant investment opportunities

* - volume of investment in brackets

Kaliningrad heat plant-2 (US$ 437.0 mn)

Surgut federal plant (US$ 177.7 mn)

Berezov federal plant-1 (US$ 113.5 mn)Krasnodar heat plant (US$ 166.8 mn)

Upper Volga hydraulic plant cascade (US$ 31.2 mn)

Ivanovo federal plant (US$ 273.6 mn)

Dzerzhinsk heat plant (US$ 37.6 mn)

Schekino federal plant (US$ 275.8 mn)

North-Western heat plant (US$ 230.0 mn)Pskov federal plant (US$ 32.5 mn)

10

Greenhouse gas emissions by RAO «UES of Russia»

400

500

600

700

800

1990 1991 1992 1993 1994 1995 1996 1997 1998 1999 2000

CO2

30% of the total volume of emission reduction were achieved in 1990-2000 due to special measures and projects aimed at an improvement in energy efficiency.

Remaining 70% of greenhouse gases emission reduction achieved by RAO “UES” over the same period resulted from energy consumption saving within the framework of target governmental programs of demilitarisation, liberalisation and restructuring of national economy.

, mn tons

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Power Carbon Fund of RAO «UES of Russia»

A progressive finance mechanism to implement the projects aimed at reduction of greenhouse gas emissions in the Russian Federation

Completed inventory of СО2 emissions at the JSC enterprises

Organised an independent international expert appraisal of inventory results (error

level no more than 4%)

Started implementation of a pilot monitoring system

At present the Fund:

develops corporate strategy of emission reduction and develops the quotas

assignment scheme

takes part in the developing international standards for the carbon loan market

formation

prepares a database (portfolio) of Mutual Implementation projects

Established by decision of the Board of Directors of RAO «UES of Russia»15 February 2001

THANK YOU FOR YOUR ATTENTION