OREANDA-NEWS. The Board of Directors of RAO “UES of Russia” recommended that the shareholders vote to omit the dividend for 2006.

This recommendation was given because, after the revaluation of its holdings in the subsidiaries and dependent companies whose shares are traded on the RTS and MICEX stock exchanges the Company posted net income of RUB745,088 million. Of that amount, RUB717,657 million was revaluation income which is actually "paper profit" without any actual cash gain.

In light of the need to ensure reliable and uninterrupted electricity supply and ensure balance of capacity in the area of the UES of Russia, the Company needs to bring more generating capacity on line, which requires to increase investments in new generation construction projects on an annual basis.

The implementation of the investment programme is one of the key drivers of the Company's capitalization growth. This means that the payment of dividend out of the Company's net income not fully supported by actual receipts of funds will lead to a failure of the Company's investment programme and adversely affect the financial position of RAO "UES of Russia".