1

RAO UES

Anatoly Chubais, CEO

November 14, 2007

Russian Power Sector:Competitive market

and new investment opportunities

2

4,254

2,834.4

1,150.3981

726.7 635.8 584.4 571.1 419.1 415.9

0

1000

2000

3000

4000

5000

US China Japan Russia India Germany Canada France Brazil SouthKorea

Russia: # 4 electricity producer in the world

TWh

Ten Largest Electricity Markets in 2006

Sources: BP Statistical Review of World Energy (June 2007), CIA World Factbook (2007)

22.4%Share of Total 14.9% 6.0% 5.2% 3.8% 3.3% 3.0%3.1% 2.2% 2.2%

GDP Real growth rate(2006 est.)

2.9% 11.1% 2.2% 6.7% 9.4% 2.8% 2.2%2.8% 3.7% 5.0%

3

Basics of the Reform: Separation of Monopolistic and Competitive Sectors

Mon

opol

istic

sec

tors

Dispatching

Transmission and Distribution grids

Com

petit

ive

sect

ors

Supply

Generation

Private propertyand

market

Government propertyand

Government regulation

4

Competitive wholesale market:Supply/Demand Equation Prices

Source: Administrator of Trade System (ATS)

Average prices (Europe+Urals and Siberia), Rb/MWh

Day (Apr 07)

200

300

400

500

600

1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24200

300

400

500

600

700

01.10.07 08.10.07 15.10.07 22.10.07 29.10.07

Week and month

Sept06 Oct06 Nov06 Dec06 Jan07 Feb07 Mar07 Apr07 May07 Jun07 Jul07 Aug07 Sept07 Oct07200

300

400

500

600

700

800

Year

5

Power Market DevelopmentPace of liberalization: government’s plan and actual progress

All new capacity and consumption commissioned after 2007 go to the free market

0%5%

10%15%

25%30%

50%

60%

80% 100%

0%

20%

40%

60%

80%

100%

Jan 1, 2007 Jul 1, 2007 Jan 1, 2008 Jul 1, 2008 Jan 1, 2009 Jul 1, 2009 Jan 1, 2010 Jul 1, 2010 Jan 1, 2011Sept 1, 2006

~18% (Sept 06)

~19% (Sept 07)

Excluding electricity consumption by households

actual pace of liberalization (facts and estimates)mandatory increase of the liberalized market share

~ 25%~35%

~40%

~60%

~70%

~90% 100%

6

Functional unbundling Legal unbundling Ownership unbundling

The issue is not settled yet for the majority of EU countries: Ownership unbundling of VICs and spin-off of distribution grids

EU countries

Deadline for ownership unbundling of RAO UES (Federal Law No. 250, November 4, 2007)

Russia July 1, 2008

??

Power Sector:Functional, Legal and Ownership Unbundling

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Two final chords of the reform

Corporate and legal actions taken according to the plan

UES Extraordinary General Meeting (October 26, 2007)

RAO UES EGM approved the final reorganization

(more than 95.43% of the attending shareholders voted for).

Deadline for reorganization: UES ownership unbundling by July 1, 2008.

UES shareholders will receive shares in all target companies on a pro rata basis

Federal Law No. 250 to adjust power sector laws

in connection with RAO UES reorganization.

Transitional period of the power sector reform

will end by July 1, 2008 (date of completion of the RAO UES

reorganization).

Federal Law No. 250(November 4, 2007)

CoordinatedAgreed

Synchronized

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Private propertyand

market

Government propertyand

Government regulation

Mon

opol

istic

se

ctor

sC

ompe

titiv

e se

ctor

s

• Thermal Wholesale GenCos (OGKs)

• HydroOGK

• Territorial GenCos (TGKs)

• INTER RAO

• Federal Grid Company

• System Operator

• Interregional Distribution Companies (IDC Holding)

• Far East Energy Systems

Competitive and Monopolistic Sectors: Target Structure Companies

9

Unlocking the value through unbundling

Source: broker reports, Bloomberg. Market data as of November 8, 2007¹ As per RAO 2006 full year consolidated IFRS financials

(bn Euro net to RAO UES)

OGK

TGK36

14

14

ThermalGenCos

9

Hydro GenCo

5

FederalGrid Co.

1

Inter RAO

8

Distr'n

1

SupplyMiscellaneousassets

2

54

RAO Sum

Of Parts

Currentmarket

cap.

10

0,313

2,108

0,308

1,601

1,0380,646

3,998

1,958

0,68

1,125

0

1

2

3

4

5

Nov 06 Mar 06 May 07 May 07 Jun 07 Sep 07 Sep 07 Sep 07 Oct 07 Oct 07

Euro in billions

OGK-5 OGK-3 TGK-5 TGK-3 OGK-5 OGK-4 TGK-1 OGK-2 TGK-8OGK-3

Total: ~ 13,8 bn Euro (average price: ~397 Euro/kW)

+ Other OGKs/TGKs planned share placements and competitive sales:~ 14 billion Euro by April 2008

Funds raised From share placements and competitive sales to strategic investors

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Schedule: OGKs/TGKs Share Placements and Competitive Sales

Schedule for placing additional shares in OGK-6 to be specified

TGK-13TGK-7

Apr 08Mar 08Feb 08Jan 08Dec 07Nov 07

34%TGK-14

25%TGK-3 (LSE)

76%TGK-1053%TGK-1132%47%52%TGK-650%TGK-268%OGK-1

56%TGK-434%TGK-1255%

Stake offered, %

Apr 08Mar 08Feb 08Jan 08Dec 07Nov 07

20082007

TGK-9

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Prospects until 2030:Target Concept, General Scheme, Investment Programs

2006

2010

2020

2030

General Scheme for locating power capacity until 2020

Target Concept for Development of the Russian Electricity Power Sector until 2030

2006-2010 Investment Program

of UES Holding Company

5-year investment programsof energy companies

from 2008

2006 2010 2020 2030

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Electricity demand growth outlook: Mid-term and long-term view

Mid-term Long-term

Source: Ministry of Industry and Energy (Minpromenergo); UES estimates

kWh, bln

900

1,000

1,100

1,200

1,300

981

1,030

1,082

1,133

1,197

2006 2007 2008 2009 2010

Average annual increase in 2006-10: 5% (basic scenario) 5%

5,6%

3,7%

5,3%

3,9%

5%

0

2

4

6

2006-2010 2010-2015 2015-2020

Basic scenario Optimistic scenario

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2006-2010 RAO UES Capacity Commissioning Program

MW 2006 2007 2008 2009 2010 2006-2010

Thermal generationOGKs, TGKs, RAO UES

1 186 1 545 2 050 5 788 14 364 24 934

Hydro OGK 67 690 420 1 224 1 612 4 013Total commissioning 1 253 2 235 2 470 7 089 15 919 28 947

0

5,000

10,000

15,000

20,000

MW

2006 2007 2008 2009 2010

15

2006-2010 Sources of financing

~28.5 (31%)

~15 (16%)

~4.8 (5%)

~22.8 (24%)

Private investmentsState budget financing

Credits and loans Companies’ funds

Other

Euro, bn

~22.9 (24%)

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RAO UES Investment Program for 2006-2010: Higher Demand for Suppliers’ Products and Services *

Power SectorDevelopment

Program

2010 vs. 2006 Generation equipment(Procurements of solely primary generation equipment for OGKs and TGKs):~ 21.6 bn Euro

8-fold

Electrical equipment(Procurements solely for FGC):~ 7.6 bn Euro 4-fold

Coal:~ 731 milliontonnes of coal

40%

Gas:~ 848 billioncub.m. of gas

30%

Construction materials(Solely cement expenses of TPPs and HPPs): ~ 0.3 bn Euro

R&D(Solely in thermal power sector):~ 2 bn Euro

Construction and installation(Solely in thermal power sector):~ 9 bn Euro

4.5-fold

4-fold

8-fold

* Expert estimates

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New Investors, New Market

New Opportunities