Creation of the united grid area

Creating united grid area using our facilities we eliminate grid “patchwork”, liquidate unfair regional gridcos ensuring the reliability of the grid complex. Besides, we expand energy transmission and distribution market. We shall be able to control load upsurge and timeliness of measures taken to reconfigure networks and to commission new facilities as well as to prepare and approve plans aimed at the development of the energy system and public utilities.

We execute our strategy of the united grid area by concluding rental and concession contracts, acquiring grid complexes and isolated grid assets as well as accepting no-man’s grids located on municipal territories into ownership, maintenance and exploitation. In 2012 the Company increased its market share in terms of conventional units by 10 604.6 c.u. (+2.06% in comparison to the beginning of the year), including 1 665.8 km of lines (+1.39%) and 392.8 MVA of installed capacity (+1.36%). In 2013 we plan to take into maintenance over 25 000 c.u. under purchase and sale contracts and rental agreements.

Key problems of consolidation plans lie in large regional grid companies that are affiliated with state and municipal authorities and use administrative resources for consolidation. These companies are our main competitors. Besides, there exist a high percentage of municipal grids that have not currently registered the rights for property and land plots. In addition, regional, municipal and other state budgets have no resources planned on spending on registration for forthcoming years (2013-2017). Several owners of grid assets also cancel the deals in violation of earlier agreements or change their plans for the property.

Key problems of consolidation plans lie in large regional grid companies that are affiliated with state and municipal authorities and use administrative resources for consolidation

We can underline the following solutions:

1. Introduction of changes, regarding the adoption of resolutions on the acquisition of energy facilities included into the investment program, with the value not exceeding 2% or less (now – 5%) of the book asset value as of the last reported date, and submission of reports on the transactions to the Board of Directors by the sole executive body, into the Charter that will hasten consolidation on the service area;

2. Interaction with federal and regional authorities to hasten privatization by implementing the corresponding legislative initiative.

3. Negotiations with the owners of grid facilities.