On Monday, September 3, 2007, the Board of Directors of OAO MOSENERGO approved the Company’s performance for the first six months of 2007, as well as the business plan implementation report.

In the first six months of 2007 the Company’s performance was affected by abnormally warm weather conditions: average ambient air temperature in the first quarter of 2007 was +2.7°?; whereas the usual average temperature is estimated at -4.2°?. The share of energy yield under condensed conditions grew from 37.8% to 39.3%.

31.7957 billion kWh of electric power was produced by OAO MOSENERGO’s power plants during the first six months of 2007. The planned level of electric power production was 33.1057 billion kWh, the actual electric energy generation for the same period of 2006 was 32.8462 billion kWh.

The output of heat energy from power plant collectors over the first six months of 2007 amounted to 37.593 million Gcal, against a planned 38.560 million Gcal (at the actual 44 million 002.3 thousand Gcal for the same period of 2006).

The revenue from the sales of OAO MOSENERGO products (services) over the first six months of 2007 totalled 40.828 billion rubles, i.e. 197 million rubles higher than the business plan parameter and 1.650 billion rubles over the  parameter of same period of 2006.

The profit from sales reached 2.493 billion rubles at the planned value of 2.561 billion rubles.

The Board of Directors of OAO MOSENERGO heard information on implementation of the first and the second stages of the Company’s Investment Programme for 2007 – 2011.

The Board of Directors of OAO MOSENERGO gave general approval to the third stage of the Investment Programme of the Company for the period 2007 – 2011 and entrusted the Company’s management with completion of the third stage of the mid-term Investment Program, taking into consideration the preparation of investment feasibility studies, production of electric power, gas supply, as well as coordination of plans for putting into operation of the Company’s capacities with the Moscow municipal government’s energy sector development programme.

At present the first stage of the energy sector Investment Programme of OAO MOSENERGO, that is the construction of four combined-cycle power units (PGU) with a total installed capacity of 1770 MW at combined heat and power plants CHP-21, CHP-26 and CHP-27, is being financed from the funds attracted in April 2007 from the issue of additional Company shares for the Gazprom group.

The second stage of OAO MOSENERGO Investment Programme, that is the construction of combined-cycle power units in the existing buildings of CHP-9 and CHP-12 is financed in the volume of 6.519 billion rubles from the internal funds of the Company (depreciation and profit), as well as loans.

The construction of fourth-generation combined-cycle power units with efficiency up to 59% at power plants located in the centre of the city and at places with high residential density, is being planned as part of the third stage of OAO MOSENERGO Investment Program.

The Board of Directors of OAO MOSENERGO heard information on preparation of the Agreement for reserving the production and engineering capacities of the Altsom concern for the production and delivery of equipment for the four PGU-420 power units on the basis of the functioning TPPs of OAO MOSENERGO.

The agreement on reserving Alstom’s production capacities to ensure equipment deliveries in 2009-2010 is targeted at minimising the risks connected with the shortage of capacity among power-engineering equipment manufacturers. The main producers of power engineering equipment are currently accepting orders for equipment deliveries in 2011-2012.

The Board of Directors of OAO MOSENERGO approved the terms of reference for selecting a technical advisor of the Company, and also entrusted the Company’s management with holding a tender to select a technical agent in accordance with the tender procedure.

The main functions of the technical advisor are as follows:

• analysis of investment projects implemented by OAO MOSENERGO,
• analysis of chosen variants for power plants construction,
• quality control of implemented work; monitoring compliance with the overall network construction schedule,
• legal analysis of concluded contracts,
• preparation of monthly, quarterly and annual reports for the Board of Directors.

The Board of Directors of OAO MOSENERGO approved the establishment of a wholly-owned subsidiary, which is supposed to provide mainly services on heat sales. Such a company will allow OAO MOSENERGO to improve heat sales figures through cooperation with specific clients; control the connection of new customers, enhance control over heat and heat carrier consumption, and to raise the share of OAO MOSENERGO on the heat power market.

The installed heat output of the OAO MOSENERGO generating company is 39 GW. OAO MOSENERGO’s combined-heat and power plants (CHPs) satisfy 76% of Moscow heat needs . ??O MOSENERGO is the largest district heating system in the world. In 2006 the heat generated by the Company’s CHPs provided for the needs of 15,228 customers.

The generating company of OAO MOSENERGO comprises 17 electric power plants with installed electric capacity of 10.6 GW and heat capacity of 39 GW. OAO MOSENERGO’s power plants provide 85% of the electrical power for Moscow and the Moscow Region..  OAO MOSENERGO is the largest heat generating company in Russia.

The strategy of technical development of OAO MOSENERGO is targeted at satisfying the foreseeable demand for electric power, based on the introduction of high-efficiency heating combined-cycle power units with an efficiency factor in the condensation cycle of 57-59% (at plants with combined-cycle power units the efficiency factor does not exceed 38%), and also on replacement of obsolete heating equipment with specifications of 90 bars or less for combined-cycle type equipment. High-efficiency combined-cycle power units make it possible to save up to 25% of gas and also reduce hazardous emissions by one-third.

At present OAO MOSENERGO is involved in the construction of four modern combined-cycle power units with 1770 MW capacity at CHP Nos. 21, 26 and 27; this work is part of the first stage of the Programme for Development and Technical Upgrading, and is also preparing sites and design work for the installation of gas turbines and combined-cycle power units at CHP Nos. 9, 12, 16 and CHP-20 in the second and third stages of the Programme.

Start-up operations are under way at power unit No. 3 of PGU-450T at CHP-27. At the same time, preparations are in progress for laying the foundation of power unit No. 4 of PGU-450T at CHP-27. Metal constructions and wall panels of the main housing are currently being installed at CHP-21; and foundations for turbines of the generating unit PGU-450Tare under construction.