OREANDA-NEWS. On August 22, 2007 RAO "UES of Russia" has closed the transaction to purchase 26,188,772 ordinary shares (3,34%) in OAO "Lenenergo" previously held by Fortum Power and Heat Oy, reported the press-centre of RAO "UES of Russia".

This purchase was approved by the Board of Directors of RAO "UES of Russia" on 27 July 2007.

The acquisition of the 3,34% stake in OAO "Lenenergo" will enable RAO "UES of Russia" preserve its controlling interest (50 percent plus one share) in the company after the additional share issue of Lenenergo.

The new shares of Lenenergo are to be issued in accordance with the understandings set forth in the Agreement on Cooperation between the city of Saint Petersburg and RAO "UES of Russia" in the implementation of measures aimed at ensuring stable electricity supply and creating the conditions for connecting the city's customers to the power grid, dated 27 July 2006, and in the Minutes of the Meeting of 26 October 2006 between representatives of OAO "UES FGC" and the Saint Petersburg City Government.

It is planned that the additional shares will be sold to the Saint Petersburg City authorities in exchange for power grid facilities. This will help create a unified power grid company operating in the city of St. Petersburg and the Leningrad Region with the St. Petersburg Government holding a blocking stake (25 percent plus one share) in the company.

The stake in OAO "Lenenergo" held by the city will ensure that the city authorities are interested in a coordinated approach to developing the grid facilities, financing the construction and modernization of energy facilities, raising the Company's investment attractiveness, and guaranteeing implementation of its investment plans. Another factor contributing to Lenenergo's greater investment attractiveness will be the new tariff regulation system based on setting a rate of return on the capital employed.

If Lenenergo shareholders approve the new share issue, the shares offering may start in Q4 2007. The EGM of OAO "Lenenergo" to decide on the new issue is scheduled for 23 August 2007.