PRESENTATION FOR INVESTORS

1. Unified Energy System of Russia PRESENTATION FOR INVESTORS

2. Contents Overview of Russia and Russian Electricity Sector RAO “UES of Russia” Today RAO “UES of Russia” Restructuring

3. Positive Consumption Trend 4th Largest Power Producer in the World in2003 1,750 1,545 1,500 Optimistic Scenario 1,315 1,250 1,135 1,073 945 Pessimistic Scenario 897 1,000 888 1,200 841 828 863 875 879 1,100 832 813 809 911 1,020 750 1990 1995 1996 1997 1998 1999 2000 2001 2002 2003 2004 2005 2010 2015 2020 Overview of Russia and Russian Electricity Sector TWh 5,000 3,864 4,000 3,000 1,472 2,000 1,033 889 588 580 577 546 1,000 383 328 0 US China Japan Russia Canada Germany India France UK Brazil % of World Total 25.0% 9.5% 6.7% 5.7% 3.8% 3.7% 3.7% 3.5% 2.5% 2.1% TWh Severe economic downturn in the 90s resulted in material over-capacity currently estimated at around 28%.

4. Key Facts Estimated Capex Requirements(1) Capacity Distribution (by MW) Overview of Russia and Russian Electricity Sector By Type(1) • Total installed generation capacity of 214.5 GW • Average age exceeding 30 years • 60%-70% of thermal capacity is co-generation • Gas prices controlled by the government and are significantly lower than in the West • Russian government estimates that up to a half of total capacity needs to be replaced in the next 10 years • Due to overcapacity, age of assets does not immediately pose a threat to continuity of supply • Electricity consumption in Russia is expected to grow at rates below GDP growth as the country’s economic structure is changing towards less energy – intensive sectors • Except for nuclear capacity and several large independent generators, UES controls the electricity industry in Russia • 72% of Russia’s installed generation capacity • 69% of Russia’s electricity output • 32% of Russia’s heat production • 96% of Russia’s power transmission lines Nuclear 11% Hydro 21% Thermal 68% (US$bn) 5.8 6 5.2 5 3.8 4 3.0 3 2 1 0 2003E 2004E 2005E 2006E Hydro Nuclear Fossil Fuel

5. Capacity Distribution(by MW) Overview of Russia and Russian Electricity Sector Structure of the Sector RussianFederation Government Minority Shareholders of the Parent Company IndependentAO-Energos: RosEnergoAtom Irkutskenergo $998m 52% 48% 9 NuclearStations LeningradNuclearStation RAO UES of Russia$13,667.7m Tatenergo From 49% to 100% 100% 100% From 50 to 100% Bashkirenergo $354m System Operator Federal Grid Company 44 FederalPower Stations (inc 8 under construction) 73 Regional Power Companies - AO-Energos Novosirbirskenergo$149m Generation Transmission &Distribution Grids Supply DispatchingServices Listed AO-EnergosMarket Value ($m) Mosenergo 2,321 Ros Energo Atom 10,3% Samaraenergo 385 Sverdlovenergo 225 Other 17,3% UES 72,4% Total 2,931

6. Priorities of Territorial Electric Power Development Structure of Electricity Production in Russia Overview of Russia and Russian Electricity Sector Energy Strategy of Russia till 2020(1) • European part of Russia • Maximum nuclear power plants development • Replacement of steam power turbines by combined cycle units • Development of coal-fired power thermal plants in the Urals region • Siberia • Coal-fired thermal power plants and hydro energy development • Far East • Hydro power plants • Coal-fired plants and in some regions – nuclear power plants Year 2020(1) – 1,375 TWh Year 2003 – 900 TWh Nuclear 23% Nuclear 17% Thermal 62% Hydro 17% Hydro 16% Thermal 66% ____________________ Source: Ministry of Energy Presentation on the Energy Strategy (1) Optimistic scenario with Russian GDP growth 4.7%-5.2% annually until 2020

7. RAO “UES of Russia” Today

8. US$ m 9 months ended 30 Sept 2001 9 months ended 30 Sept 2002 9 months ended 30 Sept 2003 Revenue 8,474 10,328 13,720 Operational Profit 103 67 1,216 Operating Highlights Key Financial Data Net Profit 909 669 543 EBITDA 1,070 1,494 2,720 EBITDA Margin 12.6% 14.5% 19.8% Operational Margin 1.2% 0.6% 8.9% Net Margin 10.7% 6.5% 4% Fixed Assets 24,201 25,834 29,293 Net Debt 865 1,624 1,359 Shareholder Equity 14,404 16,730 19,733 RAO “UES of Russia” Today Key Facts • One of the world’s largest power companies • Serves the area of 17 million square kilometres • Comprised of 72 local AO-Energos (with primarily controlling interest), 32 federal power stations (inc 8 under construction), and a recently formed Federal Grid Company (“FGC”) and System Operator (“SO”) • Installed capacity of 156 GW (72.4% of Russian electricity generation capacity in 2003) • 2.5 million km of power transmission lines • Each of local AO-Energos is a vertical integrated company comprising regional generation, transmission, distribution and supply assets • The largest employer in Russia with a number of employees reaching 577.6 thousand people • Heat supplies in 2003 amounted to 468.8 million Gcal (32.4% of the total heat supplies in Russia) ____________________ Source: Annual Report 2002

9. RAO “UES of Russia” Today Ownership Structure of AO-Energos

10. RAO “UES of Russia” Restructuring

11. RAO “UES of Russia” RestructuringResults achieved • Package of laws regarding the energy reform approved and came into effect in April 2003 • Government resolution # 865-p of 27 June 2003 “Action Plan for the Power Sector Reform for 2003-2005” approved • Government resolution # 1254-p on the “Structure of Generation Companies in Wholesale Power Market” signed on September 1, 2003 • Government resolution # 643 “On Rules and Regulations of the Wholesale Power Market during the Transition Period” signed on October 24, 2003 • Competitive wholesale power market launched with the first “5-15%” spot market trades on November 1, 2003 • Government resolution # 1939-p of December 29, 2003 “Concerning Participation of the State in the Creation of Interregional Grid Companies” approved • Seven Inter regional power distribution companies set up on February 26, 2004 Reform

12. RAO “UES of Russia” Restructuring Objectives & Constraints Restructuring of the industry is required in order to improve efficiency and attract investment Objectives Optimal Industrial Structure • Create transparent and competitive market place • Improve overall economic efficiency of the system • Ensure financial viability of individual enterprises • Secure affordable end consumer electricity price • Competition • Efficiency • Durability • Attract capital • Strategic • Equity • Debt Attractive Investment Profile • Encourage capex into areas where new build is required • Raise economic competition and quality through involvement of foreign strategic investors • Establish clear and effective regulatory framework • Enhance shareholder value of UES, in the process ensuring fair treatment for minority shareholders • Appropriate retail price • Security of supply Constraints Social Considerations • Ensure smooth transition to deregulated market with minimal price shocks • Ensure durability of new system

13. Reform Basics RAO “UES of Russia” Restructuring Market rules Competitive Sectors Generation Sales • Free price-setting • Stimulating to enter into market Natural Monopolies Transmission Distribution Dispatching • Securing equal access to grids • Setting up market infrastructure Regulated tariffs

14. The Reform plan envisages the following structural transformations being completed by 2008 RAO “UES of Russia” Restructuring Minorities to get direct access to UES assets by 2008 Minority Shareholders < 25% 48% 65% - 100% <48% 48% < 25 % 75% -100% FGC 1 IDC 6 Thermal- GenerationBased WGCs 4 Hydro - Generation Based WGCs Holding of GSs, Isolated AO-Energos System operator TGCs Up to 20 49% 5 IDCs 49% - 100% 100% 100% GSs RGC Isolated AO-Energos DC1 DCN FGC – Federal Grid Company IDC – Interregional Distribution Company WGC – Wholesale Generation Company RGC – Regional Generation Company GS – Guaranteeing Supplier TGC- Territorial Generation Company

15. Structure RAO “UES of Russia” Restructuring

16. Structure RAO “UES of Russia” Restructuring

17. RAO “UES of Russia” Restructuring The “5+5” Strategy Concept was unanimously approved by the Board of Directors in May 2003 • System Operator established (centralized dispatching unit) • Federal Grid Company established • AO-Energo restructuring has begun • 40 AO-Energos are under the restructuring • April 1, 2004 – first unbundled companies were established • Mechanisms for the creation of wholesale generation companies are being developed • Competitive wholesale power marketlaunched with the first “5-15%” spot market trades on November 1, 2003 (Trading vol. – 12.870 Mln.KWh, Average Price – 264.20 Rub/MWh)

18. RAO “UES of Russia” Restructuring Setting up the legal and regulatory framework In 2004, the following issues will continue to be addressed • Establishing of WGCs and TGCs • Passing the Governmental decision on methods and schedule of WGCs’ separation (including the mechanism of auctions) • Establishing of Interregional Distribution Companies (IDCs) • Developing the monopoly regulation for the consolidated network companies • Amending the Rules of the wholesale market. Developing retail energy market rules • Optimization of the management structure of UES

19. RAO “UES of Russia” Restructuring Factors that may affect Company’s capitalization growth in 2004 WGC separation Sale of the pilot WGC at auction (after the auction procedure is approved) Tendering in competitive sector of wholesale electricity market Tendering up to15% of the wholesale electricity market Tariff policy Tariffs settings based on “price cap” principle Reform at the regional level Restructuring regional power companies