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The Open Joint-Stock Second Generation Company of the wholesale electricity market

OGK-2_____________UBS. NY. M2008

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OGK-2

Fuel: gas Electricity production: 1,9

TWh

PSKOVSKAYA GRES430 MW/121 Gcal/h

Fuel: coal, gas Electricity production: 3,2

TWh

SEROVSKAYA GRES526 MW/220 Gcal/h

Fuel: gas Electricity production: 24,1

TWh

SURGUTSKAYA GRES3,280 MW/958 Gcal/h

Fuel: gas Electricity production: 9,8 TWh

STAVROPOLSKAYA GRES2,400 MW/220 Gcal/h

Fuel: coal Electricity production: 9,0 TWh

TROITSKAYA GRES2,059 MW/315 Gcal/h

North-Western Grid

Central Grid

Southern Grid

Middle Volga Grid

Urals Grid

Siberian Grid

Far Eastern Grid

Russian company OGK-2 founded at

March, 2005.

OGK-2 generates and trades energy at the wholesale

electricity market.

Overall installed capacity

is 8,695 MW

OGK-2 is one of the largest sellers

on the free market.

OGK2 was the first Russian

wholesale genco whose shares were

publicly offered on the London

Stock Exchange.

OGK-2’s share are listing also on the Russian

Stock Exchanges (MICEX and

RTS).

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OGK-2 and market positioning

9 531

9 052

8 695

8 672

8 630

8 487

OGK-1

OGK-6

OGK-2

OGK-5

OGK-4

OGK-3

MW

364

346 345

336

331

326

300

310

320

330

340

350

360

370

OGK-6 OGK-3 OGK-2 OGK-5 OGK-1 OGK-4

equ

ival

ent

fuel

, g/K

Wh

OGK-2 is the third largest company in Russia in terms of installed capacity

OGK-2 has an ambitious investment program that is aimed at commissioning 2,780 MW by end 2012 at its current production sites and modernizing and reconstructing existing equipment.

It is the country’s second most modern OGK

3032

38 38

4244

0

5

10

15

20

25

30

35

40

45

50

OGK-4 OGK-2 OGK-3 OGK-6 OGK-1 OGK-5

year

s o

ld

68

63

57

55

41

41

OGK-4

OGK-2

OGK-1

OGK-5

OGK-3

OGK-6

средний КИУМ в %

…and second largest in electricity generation

The company has high fuel efficiency standards

Source: OGK’s data

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Competitive Advantage OGK2 is a predominantly gasfired genco. Gas

constituted 73% of its total fuel balance structure.

However, coal also plays an important role, accounting for 26%, nearly the entire remainder, and the share is set to increase as a result of the planned investment program. We expect coal prices to grow at a slower pace than gas prices.

The company's key fuel suppliers are Surgutneftegaz (33%), Gazprom (26%) and Access Industries (27%).

High growth rates for consumption of electricity at the regions

Forecast Deficit in generation capacity in 2011 г, GW

9,8 9,2

6,0 5,44,1

0,4

02468

1012

Urals IES CenterIES

SiberianIES

Nothern-West IES

SouthernIES

MiddleVolga

IES

*without taking new generation capacity

Second place in the nomination “Best Social report”

“Program for Implementing the EnvironmentalPolicy” of OGK-2 took first place in the nomination “The Best

Environmental Policy of the Holding RAO UES Russia”

«Best annual report»

«Best manager of corporate governance practice at electric generation companies»

«Best account of Russia»

…have been proved to be true an external

estimation

System of ecological management

Corporative governance practice

Automation of administration systems based on SAP R/3

Enterprise Content Management

Quality management system (ISO 9001:2000)

High corporative standards

Coal26%

Fuel mix

*on-balace volume of equivalent fuel

independent suppliers

Gas73%

Black-oil0,6%

2007

Gas60%

Black-oil0,5%

Coal39,5%

2015

Source: OGK-2, RAO UES of Russia

5,4% 5,3% 4,9% 4,7%4,3%

3,0%

0%

1%

2%

3%

4%

5%

6%

Nothern-West IES

SouthernIES

SiberianIES

CenterIES

Urals IES MiddleVolga

IES

Average annual growth rates (2007-2011)

Some 76% of its total electricity output is generated at capacities located in the already energy-deficient Urals Integrated Energy System (IES).

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Investment projects

OGK-2’s investments is aimed at commissioning new capacity at its current production sites in the energy-deficient and heavily industrialized regions. All new electricity volumes will be sold at free market prices. The

free average electricity market price is above than electricity tariff.

Commissioning2780 MW

(by end 2012)Stavropolskaya GRES

+ 800 MWTroitskaya GRES

+ 1320 MW

Serovskaya GRES+ 660 MW

OGK2 offers strong exposure to the liberalization of Russia’s electricity market and expectedprofit growth.

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Electricity

Starting from 2008, all regulated tariffs will be indexed with the tariff formula: the electricity wholesale tariff formula will make it possible to pass inflation, fuel costs and other expenses through to the end-tariff as of 1 January 2008.

New consumption not written into electricity balance for 2007 going directly on to the free market; and new capacity introduced after 1 January 2008 being 100% free from tariffs.

15-20

35-40

45-50

65-70

70-75

80-85

85-90

90-95

80-85

60-65

50-55

30-45

25-30

15-20

10-15

5-10

100

1H2007

2H2007

1H2008

2H2008

1H2009

2H2009

1H2010

2H2010

2011

Regulated sector Liberalizated sector

New capacity

Liberalization scheme

All energy is being traded according to predefined tariffs (two-sided agreements subject to regulations)

• Under the regulated agreement, the company has to sell the amount of electricity defined by the FST balance at the FST tariff

Capacity market

2012 - ...

2008 - 2011

2006 - 2007

Transition model• Gradual liberalization of capacity trading (total

capacity distributed through regulated agreements is reduced). The process is synchronized with electricity trading liberalization.

• Available capacity is sold at the free market with no price regulations

Targeted capacity trading• All output is being sold at the free market either

through non-regulated two-side agreements or through the automated distribution system (ATS)

Source: RAO UES of Russia

In 2007 OGK-2 sold 17 122,3 mln

KWh at the free market.

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795,

1

753,

9

760,

9

841,

0

877,

0

562,

2

708,

9

712,

5 1 25

4,4

1 55

9,0

1 18

7,6

864,

5

1 01

2,7

1 45

7,6

1 34

4,3

1 38

6,2

1 37

0,4

945,

9

1 24

5,1

1 43

6,9

1 36

4,7

2 13

7,8

1 82

4,1

1 59

6,5

0,0

500,0

1 000,0

1 500,0

2 000,0

2 500,0

Jan Feb March Apr May Jun Jul Aug Sep Oct Nov Dec

Purchase Sell

488 536 606 437 299

0

200

400

600

800

Pskov Stavropol Serov Troitsk Surgut

Electricity tarif f in 2007 Average price in 2007

Free-market orientation

OGK-2 is one of the largest sellers on the free market.

In 2007 30% of all generated electricity was sold on the free market.

The company actively trades the energy produced by other power generation firms

Sale electricity in 2007Electricity tariffs and prices (RUB/MW.)

Purchase and selling electricity on the free-market in 2007 (mln. KWh)

Source: OGK-2

Source: OGK-2Source: OGK-2

Mln. KWh

649 634 626

555521

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Operating results1735,4

3087,2 9

703,9

9026,3

48022,1

48083,6

24469,3

8987,6

24147,5

9830,2

3228,3

1890

0

10000

20000

30000

40000

50000

60000

Psko

vska

ya G

RES

Sero

vska

ya G

RES

Stav

ropo

lska

ya G

RES

Surg

utsk

aya

GRES

-1

Troi

tska

ya G

RES

OGK-

2

2007 2006

60 103

80

1733

516

2492

2523

492

1781

81

109

60

0

500

1000

1500

2000

2500

3000

Psko

vska

ya G

RES

Sero

vska

ya G

RES

Stav

ropo

lska

ya G

RES

Surg

utsk

aya

GRE

S

Troi

tska

ya G

RES

OGK-

2

2007 2006

Heat output, th. GcalElectricity output, mln. KWh

Source: OGK-2

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Financial results

Growth of revenue,(mln RUB)

19 397

25 434

33 759

2005 2006 2007

Electricity 75.5%

Heat 1.8%

Other 0.2%Capacity

22.5%

Structure of proceeds in 2007

Source: russian financial report

  2005 г. 2006 г. 2007 г.*

Revenues 19 396 553 25 433 668 33 759 235

Operation expenses: (18 286 647) (21 874 546) (33 090 137)

Reversal of impairment of property, plant and equipment, net 1 140 481 4 307 159 -

Depreciation of property, plant and equipment (856 310) (855 823) (621 556)

Other operation income 229 077 97 827 (109 263)

Operation profit 1 338 983 3 656 949 559 835

Finance costs (186 395) (267 558) (134 000)

Profit before income tax 1 152 588 3 389 391 425 835

Total income tax charge (598 342) (955 378) (386 551)

Profit for the year 554 246 2 434 013 39 284

EBITDA 2 195 293 4 512 772 1 181 391

EBITDA’ ** 1 054 812 205 613 1 714 391

EBITDA’ / Revenues, % 5 1 5

Sales, (mln KWh)*

48 204

56 353

2006 2007

Total expenses without Reversal of impairment of property ,

(mln RUB)

19 385

26 351

33 333

2005 2006 2007

Source: 2005-2006 – IFRS; 2007 – non-audition russian financial report

* Non-audition russian financial report; ** EBITDA before Reversal of impairment of property, plant and equipment, net and IPO costs

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Assets and liabilities

Liabilities** (1H 2007)

accounts payable22%

long-term debt13%

deferred tax28%

floating debt31%

other liabilities6%

$375 mln

Assets** (1H 2007 г.)

permanent assets; 75%

stok; 9%

cash assets; 3%

debt receivable; 7%

пother assets; 6%

$904 mln

* Fx average rates (rur / $): 2005 г. – 28,31; 2006 г. – 27,09; 2007 г. – 25,55

Debt*

177

114

19,6

41

48 238,8

0

50

100

150

200

250

300

2006 1H 2007 2007

US$,

млн

short-term long-term

** Source: MSFO

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IPO on LSE

ОГК-2’s shares are traded on Russian MICEX and RTS stock exchanges and OGK-2 strives for best practice in corporate governance and investor relations.

Are traded on RTS (T+0 market) since July 17, 2006, listed as b-sharesAre traded on MICEX since July 19, 2006, listed as b-sharesAre traded on RTS (classic market) since July 20, 2006, listed as b-shares

OGK-2 GDR shares are traded on LSE since October 4, 2007

OGK-2 IPO results: 6.25 bln shares, 24.967 bln RUB (>50% of the planned 42 bln roubles) – remarkable result considering tough market conditions.

Placement price: $0.16 ($16 for GDR, multiplier = 1:100).Expectations: between $0.1475 and $0.18

Underwriters and bookrunners Со-manager

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OGK-2 Shareholder’s Equity structure

Post-IPO (at present)

Ordinary shares: 32 732 921 913.

Charter capital: 11 872 mln RUB (rounded).

Post-reorganization of RAO (from 1.07.2008)

Ordinary shares: 32 757 822 542.

Charter capital: 11 881 mln RUB (rounded).

4,22%1,90%

12,84%

2,16%

13,41%

65,47%

RAO UES of Russia

Westmead Limited

Schoeni Enterprises Ltd

«Gazenergoprom-Invest»

UFGIS Trading Ltd

Other

52,84%47,16% Gazprom

Minority shareholders

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RAO UES of Russia reorganization

AntitrustRegulatorsgive green lightto OGK-2reorganization

As a result of the second stage of the restructuring a number of independent companies (OGK, TGK, FSK etc.) will be created and the RAO UES will be

liquidated

Dec 2007

AdditionalOGK-2 stockissue andissue prospectare registered

OGK-2 Holding is created as a part of former RAO UES

AdditionalOGK-2 stockissue reportis registered

March 2008

1 Jul 2008

Aug 2008

OGK-2shares tocommencetrading on theexchange

Aug 2008

RAO UES liquidation

Main andadditionalissue aremerged

Oct 2008

OGK-2 additional issue shares give the same rights as the main ones

OGK-2 Holding shares converted to OGK-2 shares are treated as additional issue OGK-2 shares until they are

merged with the main issue in October 2008

OGK-2 Holdingbecomes a

part of OGK-2OKG-2 Holding

shares are converted into OGK-2 shares

RAO UES shares are

converted to OGK-2 shares