Annual Report of the Open Joint-Stock Company «Yenisei Territorial Generation Company (ТGC-13)»” for 2006 (стр. 9 )

2577 employees have higher professional training, among them:

792 managers, that makes 75 % of the total number,

1082 specialists, that makes 77 % of the total number,

19 office workers, that makes 32 % of the total number,

684 workers, that makes 15 % of the total number.

2158 employees have secondary professional training:

249 managers, that makes 23 % of the total number,

299 specialists, that makes 21 % of the total number,

20 office workers, that makes 34 % of the total number,

1590 workers that makes 36 % of the total number.

Organization of work with managing staff reserve in 2006

In 2006 the Company formed the reserve for each possible rotation of the managing and operating personnel. The reservists passed the professional expert evaluation, psychological evaluation of personal and intellectual resource.

Educational level of

the JSC “Yenisei TGC (TGC-13)” personnel

- higher professional training - secondary professional training

Managers

Specialists

Office workers

Workers

Educational level of the JSC “Yenisei TGC (TGC-13)” personnel

Individual programmes of the reservists’ training, considering functional duties assigned to each position the reserve is being trained, was developed. The system of corporate seminars on economic and legal issues, on administrative competence development was organized for the managing staff reserve.

Personnel and Social Policy 54

With the aim of the effective training of the top-manager personnel reserve the three-year program of managing competence development has been worked out and is being implemented. In the interactive form the reservists get knowledge and form the skills which are the basement for key administrative competence: understanding of business, strategy, influence, leadership, analysis and problem solving.

“JSC Yenisei TGC (TGC-13)” personnel training

(OJSC “Khakass Generation Company”) in 2006

In the reporting period 126 employees of the Company were trained.

In the system of corporate training of the personnel for each category of workers the following priority directions had been defined:

·  Managers - industrial safety, enhancing professional skills at NWEM seminars

·  Specialists - industrial safety, labour protection, economy and finance.

·  Workers – safety arrangements and precautions, labour protection.

Prospects of “JSC Yenisei TGC (TGC-13)” personnel training

In 2007 the Program of workers’ professional training and development has been developed and put in action. It provides the following basic directions of a professional training:

·  Training and improvement of professional skills of the industrial technological personnel;

·  Development of administrative resource of the Company;

·  Improvement of professional skills of specialists and managers;

·  Managers and specialists’ training on drawing up financial reporting according to international standards of the financial reporting;

·  Training the personnel connected with the work on WEM.

Cooperation with the leading educational institutions of Siberian region, Moscow and St.-Petersburg is intended.

Development Prospects 55

DEVELOPMENT PROSPECTS

The Company’s Mission

“Conducting effective, profitable business, attractive to investors. Reliable and uninterrupted providing population and business community with qualitative and ecologically pure energy. “

The Company’s Strategic Targets

The purpose of the corporate strategy

·  Creation of the operating Company with high liquidity of shares, attractive for investors. This strategic goal is put in a context of reforming of the industry. Its achievement shall allow to get an access to the financial resources necessary for the realization of investment projects, including IPO.

Business strategy purposes

·  Increase in a market share of thermal energy and raising thermal business efficiency. Growth of a market share of thermal energy should provide an increase in heat production at the own sources and increase in realization of the electric power generated in the heat production cycle, in the wholesale market.

·  Increase in a market share of the electric power and raising efficiency of the electric power business.

Corporate strategy

For the realization of the purposes of the corporate strategy implementation of the following projects and measures is supposed:

·  maintenance of liquidity of shares of the operating company and increase of its capitalization;

·  involvement of investment resources by means of share placement.

Measures on increase of capitalization and liquidity of the Company’s shares

The problem that the management of the JSC “Yenisei ТGC (ТGC-13)” faces is the transformation of the Company in technologically advanced, profitable and attractive for investors, bringing it in conformity with today’s, and what is more important, tomorrow’s requirements. For the successful solving of this problem carrying out of a complex of measures, directed to introduction of modern principles of work, accepted by the leading world companies, is planned.

Development of the Corporate Governance System

The Company will aspire to be as transparent as possible for the investment community, to have the adjusted system, allowing to involve the interested persons in the Company’s activity and to receive a constant feedback.

For this purpose the Company adopted the internal Code of Corporate Governance. The principles put in its basement are to provide:

·  real possibility for all shareholders, irrespective of the owned stake, to exercise their rights related to the participation in the Company;

·  realization by the Board of Directors of the strategic operation management of the Company and effective control of the executive bodies from its side, and also accountability of the Board of Directors to the General Meeting of Shareholders;

·  necessity for the executive bodies to reasonably and conscientiously manage the current activities of the Company; their accountability to the Board of Directors and the General Meeting of Shareholders;

Development Prospects 56

·  Timely and full disclosing of the information on the Company, including information on its financial situation, economic indicators, property and management structure;

·  Effective control of financial and economic operation of the Company;

·  The rights of the Company’s workers provided by the legislation, development of partner relationship between the Company and the workers in the settlement of social issues and regulation of working conditions;

·  Active cooperation of the Company with investors, creditors and other interested persons with the view of increase the Company’s assets, value of its shares and other securities.

Transition to the international standards of the financial reporting

The requirement on preparation of the financial reporting not only according to the Russian standards, but also with ISFR is one of the most essential obstacles for the Company to pass the listing on the Russian exchange floors and needs involving of highly skilled experts, not to say of the high price of the counseling services on transformation of the financial reporting of the emitter. At present the Company carries out preparation of financial reporting for 2006 according to ISFR requirements. Publication of reporting is planned for July, 2007.

Placing the Company’s shares on the Russian exchange floors

As of today the share market is one of the most effective instruments for attraction of permanent investments for the development of the Company.

The planned date of placing of the Company’s shares on the major Russian exchange floors ( OJSC “RTS”, CJSC “MICEX SE”) is March-April, 2007. The Company’s shares will be included into the list of unlisted securities. Despite the fact that the unlisted securities do not provide sufficient liquidity of the Company’s shares, to provide execution of the requirements for listing passage (regarding the system of corporate governance, reporting on ISFR) in the shorter period of time is not possible.

After the listing procedure on the Russian exchange floors the Company plans to make an agreement with one of the leading professional participants of the stock market on performing functions of the market-maker.

Dividend policy of the Company

As for calculating dividend payments the Company’s policy will be based on the balance of interests of the Company and its shareholders, and also on strict observance of the shareholders’ rights,

Development Prospects 57

provided by the current legislation of the Russian Federation, the Charter and the internal documents of the Company.

The Company will aspire, along with capitalization growth, to increase the amount of dividends paid to shareholders proceeding from:

·  the amount of the received net profit for a year;

·  demands of the Company for maintenance of the required level of financial and technical condition, provision of prospects of the production development;

·  the Company’s investment activity;

·  the necessity of increase of investment attractiveness of the Company.

Dividend payments terms will be:

·  availability of net profit of the Company;

·  absence of restrictions on dividend payments, provided by the Russian Federation legislation;

·  recommendations of the Board of Directors on the amount of dividends;

·  resolution of the General Meeting of Shareholders of the Company on dividend payments.

Complex of measures on IR and PR

An important factor for all-round estimation of the Company’s activity by shareholders and prospective investors is the information policy carried out by the Company, first of all, by means of IR and PR.

Main principles of IR and PR policy of the Company:

·  execution of requirements of the current legislation and satisfaction of interests of shareholders regarding disclosing information on the Company’s operation.

·  creation of positive image of the Company for the advancement of the projects in the regions of its presence.

·  creation and maintenance of positive image and high level of recognition of Management of the Company and its branches.

Effective IR and PR policy promotes establishing trust of investors and shareholders to the Company’s activity, approval of prospects of its development, perception of the Company as a reliable, dynamically developing partner, and also creation of favorable public conditions in the external and internal environment in the process of the Company’s development.

Development Prospects 58

The basic devices for the implementation of IR and PR policy of the Company are as follows:

·  Creating long-term partner relations with the most influential printing and electronic mass media providing the possibility to reach the political and business elite and also representatives of the investment community of the regions of the Company’s presence. Regional representations of federal printing editions and news agencies, correspondent's offices of the federal television channels, the most influential inter-regional editions, leading regional business mass-media are the priority mass-media for cooperation.

·  Regular review of the working meetings, meetings with participation of management of the Company and its branches in mass-media.

·  Arranging image-making interviews in the leading printing (business papers) and electronic (TV, news agencies) mass-media.

·  Holding special events for journalists: briefings, press conferences, press-tours, etc. on a regular basis.

·  Arranging joint events with the press-servic6es of the regions’ administrative bodies.

·  Creating and timely updating (publication of press releases, news, information on corporate events and so forth, placing of photo materials) of the corporate web-site of the Company. The corporate site is also a platform for carrying out of public opinion polls allowing to learn the point of view of the community on the processes occurring in the Company with high-scale of accuracy.

·  Arranging and carrying out regular corporate events for the employees of the Company.

·  Holding round tables and presentations with the participation of the Company’s managing staff for submitting the results of activity and prospects of the Company’s development to the investment community.

·  Submitting information on the Company’s activity (sending out press releases, brochures, reports) to the leading analytical agencies of the industry.

Information for Shareholders 59

INFORMATION FOR SHAREHOLDERS

Addresses, phone numbers, contacts, bank requisites, the Company’s Internet address, brief information on the Auditor, the Registrar and the Appraiser

Full name of the Company

In Russian:

Открытое акционерное общество «Енисейская территориальная генерирующая компания (ТГК-13)»;

In English:

Joint-Stock Company “Yenisei Territorial Generating Company (TGC-13)”.

For Short

In Russian: ТГК (ТГК-13)»;

In English: JSC “Yenisei TGC (TGC-13)”.

Location

Russian Federation, Krasnoyarsk, 144 A Bograda Street

Telephone (39; fax (39

E-mail: info@*****

Web-site: http://www. *****

Bank requisites of the Company

Set/acc in the East-Siberian bank of the Savings Bank of the Russian Federation, Krasnoyarsk

cor/acc

BIK

Information on the Auditor of the Company

Closed joint-stock company “ENPI Consult”

Location: 115191 Moscow, 14 Dukhovsky per.

Telephone (4; fax (4

License number: Е004289

Date of issue: 15.05.2003

Period of validity: 5 years

Issuing body: Ministry of Finance of the Russian Federation.

Information on the Registrar of the Company

Closed joint-stock company “Register A-plus”

Location: Novosibirsk, 50 Kommunisticheskaya Street

Branch name: Krasnoyarsk Branch of the Closed Joint-Stock Company “Register A-plus”

Location: Krasnoyarsk, Suite 504, 117 Uritskogo Street

License number: № 000

Date of issue: 17.09.2002

Period of validity: not limited

Issuing body: Federal Commission on the Securities Market of Russia.

Information on the Appraiser of the Company

Closed Joint-Stock Company “Russian Appraisal”

Location: Moscow, Bldg. 2, 23 Matrosskaya Tishina Street

Telephone: (4; fax: (4

License number: 000024

Date of issue: 06.08.2001

Period of validity: 06.08.2007

Issuing body: Ministry of Property Relations of the Russian Federation.

Audit Report 60

AUDIT REPORT

Appendix #1

FIABCI-Russia POO Institute of Professional Auditors IPAR ENPI Consult

115191 Moscow, 14 Dukhovsky per.

(4

AUDIT REPORT #

on financial (accounting) reporting

of the Open Joint-Stock Company “Yenisei Territorial Generating Company (ТГК-13)”

for the period from January, 1st till December, 31st, 2006 inclusive

Moscow 2007

Independent company “ENPI Consult”, in association with

"Moor Stevens International Limited",

member companies in the major cities of the world;

in association with AKG – “МООR STEVENS BalEN ”.

Audit Report 61

To Shareholders of the Open Joint-Stock Company

“Yenisei Territorial Generating Company (ТGC-13)”

Information on the Auditor:

Name	Closed Joint-Stock Company “ENPI Consult”
INN/KPP	/
State Registration	Date of the state registration-24.12.1992 Certificate of State Registration Number - 427.526 Registering body - Moscow Registration Chamber Basic state registration number recorded in the Uniform State Register of Legal Entities (USRLE6 Date of entering the record in USRLE - 07.10.2002
Location	Moscow, 14 Dukhovsky per.
Mailing address	Moscow, 14 Duhovsky per.
Telephone	(4,
Fax	(4
Licenses	- On Auditing Activity # Е004289 issued according to the order of the Ministry of Finance of the Russian Federation from 15.05.2003 # 140 for a term of five years; - On execution of works related to the use of information making the state secret, # B347955 from 09.06.2006, issued by the Department of Federal Security Service in Moscow and Moscow Area, valid through 29.12.2010
Membership in the accredited professional auditor association	Non-profit partnership “Institute of Professional Auditors” (IPAR)
	Information on the Company:
Name	Open Joint-Stock Company “Yenisei Territorial Generating Company (ТGC-13)”
INN/KPP	/
State Registration	Date of the state registration - 01.07,2005 Certificate of State Registration Number - Registering body - Interdistrict Inspectorate of RF Ministry on Taxes and Levies #1 of Khakass Republic Basic state registration number recorded in the Uniform State Register of Legal Entities (USRLE0 Date of entering the record in USRLE - 01.07.2005
Location	Krasnoyarsk, 144 A Bograda Street
Mailing address	Krasnoyarsk, 144 A Bograda Street
Telephone	(39
Fax	(39

Audit Report 62

We have audited the attached financial (accounting) reports of the Open Joint-Stock Company “Yenisei Territorial Generating Company (ТGC-13)” (hereinafter - the Company) for the period from January, 1st till December, 31st 2006, inclusive. The financial (accounting) reports of the Company consists of:

-  Balance Sheet (form # 1);

-  Profit and Loss Account (form # 2);

-  Statement on Capital Changes (the form # 3);

-  Cash Flow Statement (form # 4);

-  Supplement to Balance Sheet (form # 5);

-  Explanatory Notes.

Responsibility for accounting, preparation and representation of this financial(accounting) reports bears the Management of the Company. Our duty is to express an opinion on reliability in all material respects of these reports and on whether the accounting is conducted in accordance with the Russian legislation based on our audit.

We conducted our audit in accordance with:

-  The Federal Law “On Auditing Activity”;

-  Federal Auditing Rules (Standards);

-  Intercorporate Standards of the Auditing Activity.

The audit was planned and performed to obtain reasonable assurance on whether financial (accounting) reports of the Company are free of material misstatement.

The audit was conducted on a selective basis and included examining on a test basis, evidence supporting the amounts in the financial (accounting) reports and disclosing the information on financial and economic activity, assessing compliance with accounting principles and rules of financial (accounting) reports preparation, evaluating significant estimates made by the management of the entity passing the audit, and also an assessment of representation of the financial (accounting) reports.

We believe that the conducted audit gives reasons enough for expression of our opinion on reliability in all material respects of the financial (accounting) reports and conformity of the accounting to the legislation of the Russian Federation. At the same time we did not observe carrying out of property inventory, the rights and obligations of the Company as of the date of reorganization as our participation had not been coordinated properly. At the moment of completion of the audit the Company had not finished the procedure of documentary registration of property, rights and obligations received in the course of reorganization.

In the result of the audit we found out infringements of the requirement of the Order of the Ministry of Finance of the Russian Federation from 20.05.2003 # 44n regarding disclosure of the information provided by the participants of reorganization in the reporting, to wit: the explanatory notes to the accounting reports did not contain data on changes in the structure and value of property and liabilities from the date of drawing up of the assignment, and also on the events which had caused subsequent alterations in assets and liabilities.

In our opinion, except for corrections (if available) which could appear necessary if we were able to check up the completed process of assigning property, rights and obligations of the Company received in the course of reorganization and get the required explanations on changes in the structure and value of property and liabilities, - the financial (accounting) reports of the Open Joint-Stock Company "Yenisei Territorial Generating Company (ТGC-13)" reflect true financial position of the Company

Audit Report 63

as of December, 31st, 2006 and the results of its financial and economic activity for the period from January, 1st till December, 31st, 2006 inclusive, in all material respects in accordance with the requirements of the legislation of the Russian Federation regarding preparation of financial (accounting) reports.

Not changing the opinion on reliability of the financial (accounting) reports, we draw attention to the fact that in 2006 the reorganization in the form of joining OJSC “Krasnoyarsk Generation” and OJSC

“Territorial Generating Company # 13” with the JSC “Yenisei Territorial Generating Company (ТGC-13)” took place with the assignment of all rights and obligations of OJSC “Krasnoyarsk Generation” and OJSC “Territorial Generating Company # 13” to the JSC “Yenisei Territorial Generating Company (ТGC-13)”.

The reliability of the financial (accounting) reports of OJSC “Krasnoyarsk Generation”, reflecting its financial position as of December, 30th, 2006 and the results of financial and economic activity from October, 01st, 2005 till December, 30th, 2006 inclusive, had been confirmed by the Auditor’s Firm CJSC “Independent Consulting Group “2К Audit-Business Consulting”.

The reliability of the financial (accounting) reports of OJSC “ Territorial Generating Company # 13”, reflecting its financial position as of December, 30th 2006 and the results of the financial and economic activity from January, 01st till December, 30th 2006 inclusive, had been confirmed by the Auditor Firm CJSC“ "KPMG”.

Besides, we note the fact, that the record in the Uniform State Register of Legal Entities regarding changes of the authorized capital value reflected in the financial (accounting) reports as of December, 31st, 2006, had been made on February, 28th, 2007.

Deputy Director General

of CJSCT “ENPI Consult” signature Skobarev V. U

Head of the Audit Seal of

(Qualifying Certificate on Auditor Activity CJSCT “ENPI Consult”

in general auditing #К 017753

with unlimited period of validity) signature Tischenko V. S.

April 06, 2007

Generating Capacities 64

GENERATING CAPACITIES

Characteristics of turbine units of TES

JSC “Yenisei TGC (TGC-13)”

(OJSC “Khakass Generation Company”)

Plant #	Type (mark) of turbine	Plant-manufacturer	Year of putting into operation	Installed electric capacity, MW	Heat capacity, Gcalh
t/u # 1	PT-60/75-130/13	LMZ	1982	60	131
t/u # 2	T-100/120-130	TMZ	1985	100	175
t/u # 3	T-110/120-130	TMZ	1989	110	175

Characteristics of boiler units