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Russia establishes NW power company

2 March 2005 – Russia’s power sector reform process moved forward this week with the establishment of an important regional power company covering with shareholders including Finland’s Fortum group.

The establishment of TGC-1 creates a power company serving north-west Russia and the company will initially lease generating assets from local energos, Lenenergo, Karelenergo and Kolenergo.

The shareholders of Lenenergo, Kolenergo and RAO UES agreed on the formation of the regional power generation in which Fortum has a ten per cent stake. Assets will transfer into TGC-1 by 1 May and the company will commence operation on 1 July 2005.

“This is an important step forward in the Russian power sector reform, and we are very pleased to be part of it”, Tapio Kuula, President of Fortum’s Power and Heat Sector said.

RAO UES will retain its controlling interest in TGC-1, and minority shareholders of the generating companies, Kolenergo and Lenergo-OAO “MMC Norilsk Nickel”, Fortum, and Warwick Holdings International Limited, will receive more than a blocking interest in TGC-1.

The shareholders have supported the appointment of Andrey Likhachev as Director General of TGC-1 and the Member of the RAO UES Management Board, Chief of the Center for Implementation of Restructuring Plans of RAO UES” Alexander Chikunov as the Chairman of the Management Board. It is expected that the Board of Directors will have eleven members.