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POLAR LIGHT

POLAR LIGHT. GENERAL OUTLOOK. The largest power company in the North-West Russia Installed capacity 3244.5 MW Franchise to 6.4 mln. people in St.Petersburg and Leningrad region covering 85.9 thousand sq.km We distribute 99% of electricity and 55% of heat consumed in the region

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POLAR LIGHT

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  1. POLAR LIGHT

  2. GENERAL OUTLOOK • The largest power company in the North-West Russia • Installed capacity 3244.5 MW • Franchise to 6.4 mln. people in St.Petersburg and Leningrad region covering 85.9 thousand sq.km • We distribute 99% of electricity and 55% of heat consumed in the region • Export access to Finland and Estonia Transmission lines by voltage less than 220kV 97% 330kV 1% 220kV 2%

  3. 900 800 700 600 500 400 300 200 100 0 90 75 60 45 30 15 0 -15 WHERE WE STAND – FINANCIAL POSITION Revenue/net profit (mln. USD) Growth rate (2000-2002) 860 718 580 481.3 % 40.8 34.5 363 10.0 2001 2002 2003E 2000 -10.7 THE HIGHEST RESULT AMONGST OTHER REGIONAL AO-ENERGO Revenue Net profit

  4. 90 400 65 300 45 Electricity, kop./kWh 200 25 100 5 0 EFFECTIVE TARIFF SETTING SCHEMES Leningrad Region St.Petersburg 90 850 650 65 450 45 Heat, RUR/GCal Electricity, kop./kWh Heat, RUR/GCal 250 25 5 0 31.05.00 31.08.00 30.11.00 28.02.01 31.05.01 31.08.01 30.11.01 28.02.02 31.05.02 31.08.02 01.02.03 31.01.00 30.04.00 31.07.00 31.10.00 31.01.01 30.04.01 31.07.01 31.10.01 31.10.02 30.04.02 31.07.02 01.02.03 2003 2003 Electricity, kop/kWh Heat, RUR/GCal DUE TO EXPIRY OF KIRISHY LEASE Electricity 88.9 kop/kWhElectricity86.6 kop/kWh Heat average294.56 RUR/GCalHeat average302.33 RUR/GCal

  5. 12 882 501 38.9 5 075 273 53.8 3 495 193 55.2 14 900 1908 128.1 8 263 180 21.8 4 750 273 57.5 2 625 125 47.6 1 884 136 72.2 59.4 3 253 444 136.5 10 146 1 617 159.4 13 000 4 982 383.2 4 547 1 472 323.7 5 555 1 545 278.1 47 000 10 831 230.4 275.0 42 000 12 133 288.9 27 000 9 980 369.6 13 000 5 454 419.5 34 000 32 998 970.5 512.1 LENENERGO IS AN EXPENSIVE COMPANY COMPARISON OF INSTALLED CAPACITY COST Market Capitalization(mln US$),as of 14.11.03 Cost of InstalledCapacity (US$ / kW) Installed Capacity(MW) AO-energo Irkutsk Bashkir Samara Mos Sverdlov Kuzbass Novosibirsk Chelyab RUSSIAN AVERAGE LENENERGO CEZ (Czech) Huaneng Power (China) Copel (Brasil) Cemig (Brasil) Korea Electric Power (Korea) Developing Markets Average Endesa (Spain) Entergy (USA) Cinergy (USA) E-ON (Германия) Developed Markets Average

  6. WEIGHTED VALUE OF LENENERGO BUSINESS LINES Marketcapitalization ~ 500 mln. USD 300 150 50 Generation Transmission Sales & non-coreassets

  7. NEW REGIONAL GENCO COMPOSITION • Share of regional energos in the composition of the GenCo • Installed capacity composition (MW) 60% 25% 15% LENENERGO KOLENERGO KARELENERGO 3 218 MW + 2 876 MW 6 094 MW = TPP HYDRO

  8. VALUATON OF GENERATION • Valuation of the GenCo generation (sum of the parts)based on conservative capacity costs 3 218 MW 150 USD/KW = 482.7 K USD * TPP + 2 876 MW 400 USD/KW = 1 150.4 K USD * HYDRO Value ofgeneration 1 633.1 K USD

  9. SO –IS LENENERGO EXPENSIVE? • Generation value of the GenCo • 60% LE share in the GenCo composition • Value of LE’s shareholders in GenCo generation in 2005 • Today’s LE value 1633.1 K USD 980 K USD Given the assumption that the value of transmission & sales business is zero, the upside for current LE shareholders = 1.96 500 K USD

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