OREANDA-NEWS. On 16 July 2009 was announced, that the Board of Directors of OGK-1 had discussed a number of key issues at the absentee meeting held on June 25.

Vladimir Khlebnikov, OGK-1 CEO, presented his report on the process of implementation of the integrated cost cutting programme. The main purpose of the programme is stabilization of the economic and financial activities of the Company and Company’s GRES (power plants).

The anti-crisis programme was effective at securing a stable economic and financial situation of OGK-1. The programme presents a good opportunity to increase Company’s profitability: the forecast for the net profit for the year of 2009 was raised from 4 million Russian rubles – initial net profit stated in the business plan – to 1 billion Russian rubles.

The following functional lines of activities are listed in the programme approved by the Administration of OGK-1:

Optimizing of settlements and conditionally-temporary expenses: fuel expenses, cutting accounts receivable and payable.

Cutting conditionally-permanent expenses, including management and consulting expenses, the volume of substandard repairs which do not affect the safety.

Optimizing investment costs. The programme of management of investment costs provides for cutting the following types of costs of the three priority projects which are being implemented at Kashirskaya, Nizhnevartovskaya and Urengoyskaya GRES: materials, equipment, construction and assembling works.

Maintaining the debt burden at a conservative level - 3-3.5 EBITDA. This is to be implemented through interest rate optimization and restructuring of the credit portfolio. The ratio of long-term to short-term credit in the credit portfolio was 40/60 at the beginning of the year. Currently the ratio has been shifted towards the long-term credit and amounts up to 55/45. Compared to the situation at the beginning of the year, the debt burden has also been lowered: it went down from 10.15 billion Russian rubles to 9.55 billion Russian rubles.

Optimizing the number of employees and employee expenses. Optimization includes closing the vacancies, staff transfers and staff reduction. These measures affect about 8% of Headquarters’ and GRES’ employees. These are mainly managerial and supplementary positions. The optimization is conducted in full compliance with the law and 2009 labor contract.

The agenda of the shareholders’ meeting of OGK-1 held on June 26 included the issue of transferring the powers of the sole executive body of the Company to the management organization – JSC INTER RAO UES. The transfer is conducted as part of the business integration process between OGK-1 and INTER RAO UES in order to provide financing for a large-scale investment programme of OGK-1.

Thus, at its meeting held on June 25 the Board of Directors decided in favor of early termination of powers of Vladimir Khlebnikov, OGK-1 CEO, starting on July 7, 2009. This was done under mutual consent of the parties.

We should mention that INTER RAO UES obtained the trust management of the rights over 61.9% of the ordinary shares of OGK-1, which were in possession of OAO FGC UES and JSC RusHydro. The duration of the trust management is 5 years and may be extended for the same period of time.