2006 Social Responsibility and Corporate Sustainability Report (стр. 4 )

- LIOUVILLE Ltd (2,10 %).

- CJSC "CAPITAL-INVEST" (1,11 %).

- OJSC "Krasnoyarskenergo" (0,81 %).

- Romos Ltd (0,33 %).

- Greenpark Investments Ltd (0,29 %).

- Roinco Enterprises Ltd (0,29 %).

- Lancrenan Investments Ltd (0,22 %).

As the JSC “Yenisei TGC” operational activity began rather recently, the stakeholders’ chart is not complete and is subject to updating and correcting

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with allowance for a changing state of the market and further comprehending the situation. Planning of the content and concrete dates of the events directed to interaction with the stakeholders is also to be worked out.

The Company’s approach to interaction with the stakeholders is based on understanding of the fact that the relations with them should be:

- partner;

- public;

- mutually beneficial;

- transparent;

- based on regular and meaningful dialogue.

In this connection the Company seeks to put in the basis of the given mutual relations (determined by the AA1000SES standard of interaction with the stakeholders) the following principles:

- Completeness of the provided information;

- Materiality of the information to be disclosed;

- Respond to the stakeholder demands.

The Company considers that the relations with the stakeholders should be based on a regular and meaningful dialogue, and their material terms are to be secured by signing agreements.

Non-financial reporting is one of the mechanisms of interaction with stakeholders, as there the Company can not only tell about itself and its initiatives, but also show the responsibility to the stakeholders. Besides, in the course of non-financial reporting preparation the Company holds dialogues with the stakeholders, which also positively influences the content of non-financial reporting.

The Company feels it necessary to consistently raise the stakeholders’ trust to the non-financial reporting. In 2007 the Company plans to introduce in its corporate governance practice public approval of non-financial reporting.

Interaction with the stakeholders in 2006

The basic directions of PR-activity of the Company in 2006 have been generated pursuant to the Company’s development priorities. Attraction of investments became the strategic direction of the Company’s performance at the new stage of reform. In this connection the basic efforts of PR-activity were directed at formation of the positive reputation among the prospective investors and information support of investment projects, informing primary audiences on reliability, profitableness and capitalization growth of the Company.

It should especially be noted that in the course of working out the development strategy the JSC “Yenisei TGC (TGC-13)” based on the conformity of its strategic initiatives with the Program of social and economic development of the Krasnoyarsk region. The Company’s Director General is a member of the Council on strategic development of the Krasnoyarsk region and also the co-chairman of the working group on creation of the unitary heating system in Krasnoyarsk, uniting actives of the city and the TGC.

As a result of interaction of the Company with the regional authorities in 2006 an agreement on cooperation of the JSC “Yenisei TGC (TGC-13)” and the Council of the Krasnoyarsk region administration was prepared (signed in May 2007) within the framework of social partnership.

The agreement determines major directions of cooperation of the Council of the Krasnoyarsk region administration and the JSC “Yenisei ТGC (ТGC-13)” on creation of new power capacities

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and solving perspective problems of heat and electricity supply of the region. Great attention in the agreement is given to the cooperation directed to implementation of the Yenisei TGC investment program. The program aimed at meeting the region territories’ needs in power supply, enhancing power safety, development of the Krasnoyarsk heating system and creation of power capacities’ reserve was approved by the regional administration, found expedient and recommended for implementation. The agreement does not provide financial participation of the region in the Yenisei ТGC investment projects’ implementation; however, administrative support of the regional authorities creates the most favorable conditions for the investment activity stimulation. The legislative ground for cooperation of the power industry and the regional authorities in this area is the Law of the Krasnoyarsk region dated 30.09.2004 “On the state support of investment activity in the Krasnoyarsk region».

Within the framework of the agreement the JSC “Yenisei ТGC (ТGC-13)” undertakes to provide stable and reliable heating of the region’s consumers, gain of thermal loads of the housing and utilities services of the regional center and other municipal establishments of the region; to implement projects of the investment program, having developed and carried out the scheme of involving funds from non - tariff and non- budgetary sources. The JSC “Yenisei ТGC (ТGC-13)” is willing to increase tax potential and volumes of tax payments of the Company in the consolidated budget of the region and to participate in the social programs being performed by the Council of the Krasnoyarsk region administration.

The regional administration in its turn incurs obligations to assist the JSC “Yenisei ТGC (ТGC-13)” in the issues of the region’s power industry development and acceptance of strategic decisions and prompt measures directed to augmentation of the power Company’s performance reliability. The regional administration Council expressed its intention to promote realization of the power company’s investment program, in particular, to notify on the plans of the region’s territories development related to the prospect of power consumption increase, to promote expansion of the electric power commodity markets on the basis of economic cooperation with the RF subjects. The most significant issues the stakeholders were informed on in 2006:

• “Completion of the Company’s reorganization”.

• “Investment attractiveness of the Company, reliability, development”.

• “Prospects of the development of the power industry of Russia and the power complex of the region”.

• “Stabilization of heat payments as the basis of the Company’s stability and power safety of the region”.

• “Growth of power consumption and development of social and economic sphere of the region”.

• “Passing the heating season and the autumn winter maximum of loads”.

• “Summer repair-reconstruction campaign”.

• “Social responsibility of business”.

• “Liberalization of the wholesale and retail electric power markets”.

The Company uses various forms of informing the stakeholders. Besides regular press conferences and briefings, covering the Company’s current activity in mass-media, responding to the inquiries of the investment community, analysts and shareholders, a number of PR-activities on the most significant, strategically important informational occasions were held in 2006:

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• Presentation of the Company’s development plans, in particular, the project of the 5-year investment program: “Investment stage of the reform of the power industry of Russia and TGC-13 Investment program” to business circles, government bodies, public organizations and media community of the region.

• Presentation “Final stage of the Krasnoyarsk region power industry reform: Establishment of the JSC “Territorial Generating Company № 13” to business circles, representatives of government bodies and public organizations, mass media.

• Presentation of the Government decisions “On prospects of the electric power industry development” (based on the materials of the RF Government meeting dated June, 7th, 2006 and speeches of RAO “UES of Russia” Management Board Chairman A. B. Chubais) and related to them development prospects of the heat generating complex of the Krasnoyarsk region and the Republic of Khakassia to the business community, municipal and regional authorities, public organizations and regional mass-media journalists.

• Presentation “Launching the new liberalized model of the wholesale and retail electric power/capacity markets - a way to quality improvement and profitability of power saving” to the business community, consumers, representatives of government bodies and public organizations, mass-media

• Meeting of the Krasnoyarsk region governor A. G.Khloponin with the Company’s employees at Krasnoyarsk CHP-2 with the participation of the regional mass-media.

• Meeting of the Company’s management, the governor of the Krasnoyarsk region A. Khloponin and representatives of the European Bank for Reconstruction and Development with the participation of journalists of the regional mass-media and federal mass-media correspondents at Krasnoyarsk CHP-3, completion of which is the priority investment project of the Company’s 5-year investment program.

• Press tour of Krasnoyarsk journalists included in the delegation of the Company’s governing bodies and administration of the Krasnoyarsk region to Kansk CHP in connection with the commissioning of the new heating main.

• Participation of the Company’s governing bodies in public hearings “Reforming of the OJSC “Krasnoyarskenergo” and social and economic consequences for the region’s manufacturers and population” initiated by the Central-Siberian Chamber of Commerce and Industry and the Union of commodity producers and businessmen of the Krasnoyarsk region and covering this event in mass-media.

• "Round tables” and press conferences in the Krasnoyarsk region and the Republic of Khakassia “Importance of the power industry reform for the region’s development” following the first year activity results of the power companies allocated from the structure of the OJSC “Krasnoyarskenergo” and the OJSC "Khakassenergo”, with the participation of all the allocated companies’ leaders, business representatives, authorities and mass media.

• Special expanded press conference for regional mass-media journalists and federal mass-media correspondents on the decisions of General meetings of shareholders of the OJSC “Krasnoyarsk Generation”, the OJSC “Khakass Generating Company” and the JCK "ТGC-13" on reorganization in the form of joining.

• Series of press tours of the regional mass-media journalists to the towns of the Krasnoyarsk region and the Republic of Khakassia to the Company’s enterprises - Kansk CHP, Minusinsk CHP, Nazarovo SDPP, Abakan CHP.

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• Photo-exhibition “Energy of Moments”, devoted to the Power Industry Day and to the 50th anniversary of "The United Power Grid of Russia”, in the opening ceremony of which the Company’s executives, representatives of business community and government bodies, journalists took part.

Plans and commitments of the Company

The Company strives to expand the practice of interaction with the stakeholders through working out intracorporate policies and procedures, that will make it regular and systematic.

At present the Company is elaborating the basic regulating document - the concept of the corporate policy on interaction with the stakeholders, including government bodies in the regions of its presence, shareholders and investors. It will comprise basic approaches to interaction, principles, requirements to revealing material issues that need to be coordinated, and other aspects.

Development of relations with the stakeholders in 2006 is the starting point of creating a non-financial risks management system. The first stage of this work includes arranging the process of non-financial reporting and starting the dialogues of the Company and stakeholders. The schedule and subjects of meetings with the stakeholders are going to be posted on the corporate web-site.

For 2007 the Company is making plans on interacting with environmental organizations on the issues associated with the Company’s impact on the climate change and reduction of greenhouse gases’ emissions. Within the framework of this activity a number of meetings with the stakeholders will be held to estimate environmental risks of the Company and plan actions treating them. Besides, in the course of the investment projects’ implementation the Company will use public hearings for the assessment of the environmental impact (AEI) as a way of stakeholder interaction.

Regular (no less than once a quarter) informing the mass-media of the regions of its presence on socially significant initiatives and expenses for social and ecological activities is planned.

The Company will consider possibilities of participation in the initiatives of the local and regional authorities of the regions of the Company’s presence on public hearings ( attracting other companies of electric power sector), devoted to problems of regional power supply and power consumption.

In 2007 it is planned to develop principles of information openness and transparency, strengthening non-financial assets - business reputation, the Company’s brand and the system of effective communications with the public and mass media.

Non-financial risk management

At present the Company is developing principles and elements of work with non-financial risks. The basic characteristic of non-financial risks is that the damage from them cannot be evaluated in financial indexations, or this evaluation is indirect and random. Similar risks, first of all, are a consequence of political, social, ecological, demographic and other macrotendencies which, being projected to the Company’s development situation can damage the Company’s cost and investment appeal.

The key feature of the JSC “Yenisei ТGC (ТGC-13)” from the point of view of non-financial risk management and mutual relations with stakeholders consists in the following: the JSC “Yenisei ТGC (ТGC-13)”,

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actually being a monopolist supplying the region with thermal energy, is one of the key entities ensuring conditions of sustainable regional development.

The goal of policy in the domain of non-financial risk management is:

• finding out whether the stakeholders have the needs to develop their capabilities in interaction with the Company, both resource (for example, personnel, financial and time), and professional (for example, competence level, availability of experience);

• estimating these needs;

• assuming responsibilities satisfaction of these needs so that to raise the efficiency of interaction with the stakeholders. It means that the following processes have been developed in the Company:

• determining and understanding the place the Company takes in social, ecological and economic environment and the influence that its activity, manufactured products or rendered services exert on it;

• understanding what problems the stakeholders are interested in, i. e. understanding of their needs, expectations and opinions related to those or other issues;

• reflecting this understanding in the policy and practical work, consecutive reaction to similar problems;

• informing the stakeholders on the accepted decisions, undertaken activities and their consequences.

Non-financial reporting of the Company

Since 2006 the Company publishes the annual report on social responsibility and corporate sustainability. The basis of the Report is the public position characterizing the Company as the entity of socially responsible business and the principles the Company is guided by at the acceptance of strategic decisions.

The Report is being prepared on the basis of the Guidelines on reporting in the area of sustainable development GRI (G3 Guidelines), and also the project of GRI branch power protocol.

For the account of stakeholders’ interests and wishes: regional and local authorities, ecological associations, investment community, major shareholders of the Company and others the Report is approved in the form of public hearing.

The Company’s plans and obligations on non-financial reporting

The Company will continue preparing on a regular basis annual non-financial social responsibility and corporate sustainability Report according to international recommendations and standards (GRI, АА1000).

Within a month after the Report for 2006 being approved the Company will make amendments to the structure and contents of the corporate web-site of the Company, in particular:

• it will state the public position of the Company on corporate sustainability and social responsibility;

• till the end of 2007 on each item of the Company’s public position it will present plans and obligations of the Company on its realization;

• on each item of the public position the Company will provide current information on its realization (regular updating).

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To survive in the Antarctic ice king penguins have to flock together and warm up each other.

The temperature inside the king penguins’ flock is +35 C.

Activity of the Yenisei TGC (TGC-13) enterprises allows them to maintain the temperature inside the houses not lower than the established rate of + 18 C… + 22 C.

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THE COMPANY’S ENVIRONMENTAL POLICY

The situation existing in the domain of preservation of the environment

In the regions of its activity the Company strives to reduce to minimum the environment impact during the whole operation cycle of its enterprises - from thorough engineering estimation till decommissioning and territory recultivation. We aspire not only to fulfill legislation requirements, but also to lower to minimum the effect on the environment and public health, reducing the quantity of waste and emissions and being more responsible when using natural resources.

Yenisei TGC has all the necessary licenses in the field of water use and waste treatment. The Company regularly carries out control of air emissions, including that under adverse meteorological conditions. At the same time the discharge of pollutants into water reservoirs is being supervised according to the approved schedule; the passports of waste have been developed, contracts on waste utilization and storage have been concluded. Thanks to timely repairs and reconstruction of the nature protection equipment in 2006 the Company had no failures that caused essential environmental damage.

The Company takes voluntary commitments to organize production activity so that the inevitable production impact on the environment and public health would be reduced uninterruptedly and consecutively.

Yenisei TGC constantly raises its production ecological safety at the expense of introduction of economically effective nature protective technologies and measures directed to the prevention of harmful impact on the environment.

In 2006 the Company managed to lower harmful air emissions by 17 %.

Table 5. Dynamics of air polluting emissions

Indicators	Unit of measurement	2005	2006
Gross harmful air emission, in total, including	thousand tons	139,335	118,646
solid fuel ashes	thousand tons	43,809	38,035
gaseous and liquid	thousand tons	94,425	79,508
sulfur dioxides	thousand tons	54,672	44,539
carbon oxides	thousand tons	6,639	6,523
nitrogen oxides	thousand tons	33,053	28,067
Specific air emissions
ashes (on a solid fuel)	kg/t f. e	7,47	7,48
sulfur dioxides	kg/t f. e	9,32	8,76
nitrogen oxides	kg/t f. e	5,63	5,52
Water used for industrial needs	million m3	849,338	612,856
Volume of loose water	million m3	275,261	271,874
Discharge of polluted sewage	million m3	0,597	0,6

The JSC «Yenisei TGC(TGC-13)» annually reduces emissions of greenhouse gases in the Krasnoyarsk region. This is carried out due to the replacement of heat developed on Krasnoyarsk electric boiler houses (consuming the electric power generated in the condensation mode), with heat developed

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in Krasnoyarsk CHP-2 (generating electric power in the combined heat and electricity production mode).

In comparison with 2002 the JSC «Yenisei TGC (TGC-13)» impact to water basins has essentially decreased: water intake from natural reservoirs was reduced by 184,36 million m3, sewage discharge - by 38,77 million m3.

Material effect on emission reduction was rendered by the nature protective actions introduced on the JSC «Yenisei TGC(TGC-13)» TES.

At the same time tightening-up of requirements to the environment preservation at the state and regional levels, availability of ineffective nature protective equipment in TES lead to the situation when MPE standards on a number of components in the Company branches are not reached. Excess of maximum permissible discharge standards takes place at two of eight stations.

Ecological payments for the environmental contamination in 2006 made 29,378 million rbl.; 39 % of those for the excess of MPD and MPE norms (excess of MPD norms at a rate of 10,772 million rbl. occurred in Krasnoyarsk CHP-1).

For the performance of the environmental legislation and restraint of TES technogen impact on the environment at power generation increase modern nature protection technologies (nitrogen absorbing installations, highly efficient ash trapping installations, sewage purifiers ) should be introduced.

Environmental policy principles

The JSC «Yenisei TGC (TGC-13)» recognizes its civil responsibility for preservation of favorable ecological conditions and efficient use of natural resources. The Company’s activity is directly connected with the use of natural resources and affects the environment. Therefore the Company understands ecological consequences of its activity and takes all possible measures to decrease harmful impact on the environment.

The scale of the Company’s environmental impact depends on many factors: technologies of electrical and thermal power generation, state of equipment and structure of the used fuel, application of results of scientific and technical development in the branch, etc. Finally the efficiency of ecological impact management should be expressed in reducing the negative effect on the environment calculated per a final production unit.

The goal of the JSC “Yenisei TGC (TGC-13)” environmental policy shall be increasing the level of environmental security, raising the capitalization by ensuring reliable and environmentally safe generation, transportation and distribution of energy and an integrated approach towards the use of natural energy resources.

For that the program on reducing the negative effect on the environment should be implemented and a system of environmental management should be introduced.

On February 16, 2007 “The Program of realization of the JSC “Yenisei TGC (TGC-13)” ecological policy for the years of ” was approved by the Decision of the Board of Directors of JSC “Yenisei TGC (TGC-13)”.

Reducing the negative impact of the JSC “Yenisei TGC (TGC-13)” TES on the environment

The Company’s activity is carried out in several directions:

•  Reducing the level of air emissions:

- nitrogen oxides;

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- solids;

- sulphur oxides;

- greenhouse gases.

•  Reducing the discharge of pollutants into water bodies.

•  Efficient use of water resources by thermal power plants.

- Reducing the level of production waste.

- Increasing the use of ash and slag waste.

•  Reducing specific emissions, discharge of pollutants per ton of fuel equivalent (kg/tfe) or unit of production (kWh, Gcal).

•  Reducing power losses in heat networks.

The principal areas for the accomplishment of the task shall be as follows:

·  modernization and step-by-step decommissioning of outdated equipment, implementation of the best available technologies of the generation, transportation and distribution of heat and electricity;

·  improvement of the engineering processes of generation, transmission and distribution of electricity, implementation of measures for energy conservation and reduction of power losses during transportation;

·  implementation of measures for the improvement of fuel supply efficiency;

·  reduction of production waste and promotion of its safe treatment, implementation of waste treatment measures;

·  economically and environmentally sound decentralization of power generation, optimization of the system of power supply to small customers.

Improvement of the Company’s management system in the domain of environmental protection. Implementation of environmental management system in compliance with the requirements of international standard ISO 14001.

The environmental management system shall become an element of the corporate management system and an essential component of the non-financial risk management system applied by the Company. Its creation shall necessitate ensuring:

-  creation of specialized environmental division as a part of the executive device of the JSC “Yenisei TGC ( TGC-13)”;

·  creation of corresponding structural divisions in all branches of the JSC “Yenisei TGC( TGC-13)”:

·  acceptance of environmental programs containing concrete actions, terms and coordination with resource maintenance;

·  regular environmental audits of the existing electricity enterprises;

·  implementation of measures for the prevention and response to accidents having negative environmental effects;

·  planning economic operations with the account taken of environmental targets, assessment and control of their achievement;

·  development of power facility personnel responsible for industrial and environmental security;

·  environmental monitoring and preparation of environmental reports;