ANNUAL REPORT 2012

Grid Company

ANNUAL REPORT 2 0 1 2

Grid Company APPROVED BY:

Annual general meeting of shareholders JSC “Grid Company” (“Сетевая компания”) June 27, 2013 Protocol No. 30 of July 1, 2013

PRELIMINARILY APPROVED BY:

Board of directors JSC “Grid Company” (“Сетевая компания”) May 23, 2013 Protocol No.12/05-2013 of May 24, 2013 Table of contents

Appeal of the Chairman of the Board of JSC “Grid Company”...... 4

Appeal of Director General of JSC “Grid Company”...... 6

1. Key Events of 2012 ...... 8

2. General information about the Company ...... 14

3. Analysis of financial state and results of activities ...... 22

4. Production activities...... 30

5. Investment activity and innovation development ...... 48

6. Corporate management ...... 58

7. Internal control and risk management system ...... 76

8. Human resource policies and social responsibility...... 82

Schedules ...... 98

Book-keeping (financial) statement of JSC “Grid Company” for 2012...... 100

Data on compliance with Corporate Code of Conduct ...... 109

List of transactions considered according to the federal law “On Joint-Stock Companies” transactions with a self-interest and approved by the Company’s management bodies in 2012...... 118 4 Grid Company 5

Dear shareholders!

By the end of 2012 the industrial output in the Republic of Around 9 billion rubles has been invested into the renovation of the has increased by 7% thus showing a growth which is power grid in 2012. The investment program targets primarily the nearly twice as strong as that in overall. The republic has republic’s most important facilities: reconstruction of the substations thus claimed the sixth position on the list of the most productive Kinderi 500 KV, Central 220 KV and construction of sub- industrial regions of the Russian Federation. Equally noteworthy are station 500 KV. the social-economic developments in the republic in 2012. Work- The company’s decision to encourage investment and intro- force productivity has grown by 6.4% as compared to 2011. GRP duce innovative technological solutions to the power grid of the reached 776 000 RUB per person. republic challenges us to implement projects in the near future that The republic has been consistently tackling issues of supporting would be relevant both for the country and the republic and inter- and developing real economy; major projects of federal and republic esting from a professional point of view, particularly in the sphere significance are successfully implemented in various fields of econo- of smart energy. my; preparations are nearly finished for Universiade 2013, the The company has continued its effort to develop a “Digital Sub- world’s biggest sports forum for students. station”. This technology is planned to be introduced to the power The positive developments and implementation of new projects grid of Tatarstan as part of the long-term target-oriented program are directly linked to the strong performance of the power grid of “Power supply and energy efficiency improvement” in the Republic the Republic of Tatarstan. Despite the difficulties in attracting invest- of Tatarstan from 2011 to 2015 and up to 2020.” The program was ments, the performance of the republic’s power grid infrastructure approved by Act No. 604 of the Cabinet in the Republic of Tatarstan has been stable and reliable, and its development – consistent. from 29.07.2010 as part of the project “Regional Smart Energy Net- Today we are facing the challenging task of creating a brand- work at the JSC “Grid Company” (“Сетевая компания”). In 2012 new image for the republic’s power grid. The fast growth in the the Company took preparatory steps to carry out the pilot project consumption of electric energy dictates the necessity for new in- “Digital Automated System of Energy Accounting.” It is noteworthy vestment projects for JSC “Grid Company” (“Сетевая компания”): that the project is implemented in collaboration with the leading construction of new substations and lines, reconstruction of the ex- companies of the Russian Federation and that the key equipment isting substations involving an increase in capacity and reliability of used is produced in Russia. networks. Among the most important strategic tasks faced by the com- In 2012 the Company management has focused on increasing pany in 2013 are further improvement of company management reliability and quality of power supply for the republic’s consumers efficiency, extensive effort to boost energy efficiency, and bringing as well as full-fledged implementation of the investment program. customer service to a new level.

Prime Minister of the Republic of Tatarstan, Chairman of the board of directors of JSC “Grid Company” (“Сетевая компания”) I.Sh. Khalikov 6 Grid Company 7

Dear shareholders!

Development and strong performance of infrastructure-based • The Company was reaccredited to comply with the JSC “Grid Company” (“Сетевая компания”) is a necessary condi- international requirements ISO 14001:2004 environmental tion for progress within all areas of economy and social sphere of management system. the Republic of Tatarstan. Equally important is the Company’s customer-oriented policy. In 2012 the Company focused on its investment program in or- JSC “Grid Company” (“Сетевая компания”) website launched der to fulfill its priority task – to provide stable and high-quality power in 2012 a new electronic service “Customer’s Profile” that allows supply to the consumers in the Republic of Tatarstan and further de- users to apply for technological connection to electric lines online velop the power grid. Capital investments for the past year reached and track the application status. 8.6 billion rubles, which is 45% of the Company’s gross profit. As Innovation is an important part of the Company’s development part of the investment program and with the purpose of providing policy. In 2012 the Company took preparatory steps to carry out reliable power supply to facilities involved in 2013 Kazan Universi- the pilot project “Digital Automated System of Energy Accounting.” ade, Kinderi 500 kV and Central Substations have been renovated. In 2013 the technical component of the project is expected to be Overhead power line 110-500 kV and distributive network facilities brought to life and tested at a test site that is under construction have been repaired. Another important undertaking of 2012 was the at the Company’s branch Kazan Power Network. The project beginning of the construction of Yelabuga Substation 500 kV, that involves such leading enterprises of the Russian Federation as is supposed to be connected to such important enterprises in the CJSC “PROFOTEK” (“ПРОФОТЕК”), engineering and technical republic as JSC “SEZ Alabuga”, JSC “Ammoniy”, JSC “TANECO” company “Systems and Technologies” (“Системы и техноло- and a few other companies. гии,”) LLC “R.V.C.” (“Р.В.С.”) A key component of the project is To sum up the Company’s output for 2012: installation of optical-fiber current and voltage transformers at the cable overhead transmission line 110 kV Magistralnaya-Kazanka • Output of electric energy transmitted through electric lines of at the Magistralnaya Substation 220 kV. The project also envisions JSC “Grid Company” (“Сетевая компания”) to consumers mounting of modern accounting meters, data acquisition and in the Republic of Tatarstan, reached a point of 22 440 transmission devices, and switchboards that comply with IEC million kWh, which is 3.6% higher than the output of the 61850. previous year. We have a challenging year ahead of us – Kazan hosts • Technological power consumed to transmit the energy Universiade, an event of a global scale. Tatarstan’s image and through electric lines totaled 1 537 million kWh or 7.7%, status depends on how confidently and reliably each and every which is 1.8% lower than the regulatory standard and 0.4% one of us works. The Company is facing a most important task of lower than the power consumed last year. providing stable and fail-safe power supply to Universiade facilities, • 20 452 applications were submitted for technological enterprises and republic residents. I believe that the Company’s connection of the applicants’ power receivers to the staff will tackle the problem professionally and honorably, with company’s electric lines, which is 23.6% more than in 2011. dignity characteristic of Tatarstan’s energy workers; and thus live 18957 contracts were signed to provide a total of 733522 up to the expectations of the republic’s leadership and its residents. mW. The number of contracts signed in 2012 is 25.6% higher In 2013 the Company will continue applying modern solutions than that of 2011. 16362 contracts with a total of 303758 and innovative technologies to reduce depreciation of power supply mW were fulfilled, which is 22.9% more than in 2011. equipment. Among the envisioned measures is implementation • Gross income, EBITDA and net profit increased 3,6%, 2,2% of a three-year investment program designed to modernize and and 2,1% respectively as compared to last year’s numbers. renovate electric lines. Even today use of modern equipment, • The Company took quality measures to prepare for the Fall- materials and next-generation technologies; and launch of brand- Winter critical peak period. Prompt receipt of Certificates new facilities shape a new image of the republic’s power grid. of readiness by the company’s branches and strong The Company’s performance confirms that 2012 was a success performance during the Fall-Winter period indicate that the as the Company fulfills its tasks and achieved strong economic power grid is prepared to function steadily and reliably. and industrial results.

Director General of JSC “Grid Company” (“Сетевая компания”) I.Sh. Fardiev From natural energy

KEY EVENTS OF 2012

From natural energy to modern technologies

JSC “Grid Company” is an infrastructure-based company of the Republic of Tatarstan. Its progress is an important constituent of economic and social development of the republic. Stable increase in power consumption in the Republic of Tatarstan over the last few years indicates a dynamic economy growth as well as improvement in the welfare of the residents.

In 2012 the Company’s development followed the same directions as the development of the republic overall. Last year was full of events that played a significant role for the Company and, in the end, formed a positive development trajectory in all spheres of the Company’s activities.

10 KEY EVENTS OF 2012

02.02.2012 14.02.2012 05.03.2012

January RES” to the Sabinski RES of the Company’s Yelabuga electric network branch. 19.01.2012 — the JSC “Grid Company” (“Сетевая компания”) had a meeting with the representatives of the Birds Protection Union 26.03.2012 — the Board of Directors approved the Statute of of Russia, who indicated the locations of electrocution vulnerable goods, works and services acquisition for the JSC “Grid company” birds in the Republic of Tatarstan, safety methods of avifauna (“Сетевая компания”). protection with various types of transmission towers. Top priority tasks of the birds protection and aspects of coordinated actions 29.03.2012 — regular meeting of the coordinating scientific and of ornithologist and power engineering specialists were among the technical board of the Company devoted to the realization of the discussed issues. general technical strategy in the electrical network complex, aimed at the enhancement of the efficiency of energy transmission and February participation of the Company in the socially oriented development of the republic. 02.02.2012 — meeting of the heads of power supply companies of Tatarstan and Bashkortostan. On the agenda: aspects of price 30.03.2012 — meeting of the Board of Directors of the JSC setting, development of power supply network and shaping of “Grid company” (“Сетевая компания”) on issues of financial coordination between power engineering specialists of the two and investment activity of the Company. republics. April 14.02.2012 — the Company’s Board of Directors approved Inno- vation Development Program for 2011–2015, and Strategy of In- 05.04.2012 — reconstruction of the protective relaying of the novation Development of the JSC “Grid Company” (“Сетевая double-chain OHL 110 kV in the Company’s Yelabuga branch in компания”). Toima‑2 Setyakovo.

20.02.2012 — the Company’s Board of Directors examined the 09.04.2012 — the JSC “Grid Company” was ranked second in the shareholders’ proposals for the agenda of the annual Shareholders’ fundamental efficiency rating of the leading real economy companies Meeting of the JSC “Grid company”, as well as the list of potential of the Russian Federation presented by the international information candidates to the Board of Directors and Auditing Commission. services group Interfax. The assessment published refers to the period from 2005 to 2010. March May 05.03.2012 — meeting with the representatives of the “Executive Direction of the XXVII World Summer Universiade 2013 in Kazan”. 03.05.2012 — the Federal Financial Market Service registered a Issues on the agenda: preparation for the Universiade, providing report on additional common stock nominal shares issue of nominal stable power supply, safety systems and compliance with the FISU shares of the Company issued by private placement. The Company requirements for the power supply of sports facilities. distributed 702 828 383 nominal shares, the total make estimated (at par) 351 414 191,5 rubles 13.03.2012 — the Company assessed its work with media in 2011. The first prizes were awarded in the following nominations: 14.05.2012 — meeting of the Company’s Board of Directors on “Best Article” — to the Tukaevski RES of the Company’s preparation, calling and implementation of the annual shareholders’ electric network branch, “Best TV Reel” to the meeting of the JSC “Grid Company” (“Сетевая компания”). Nurlatski RES of the Company’s Chistopolsk electric network branch, “Best Media Cooperation — Branch” to the Company’s 21.05.2012 — the Board of Directors decided to appoint Ilshat Chistopolsk electric network branch, “Best Media Cooperation — Fardiev Director General of the JSC “Grid Company” (“Сетевая компания”). Grid Company 11

21.05.2012 27.07.2012 08.08.2012

25.05.2012 — the Company hosted the sixth annual All-Russian engineering specialist gave special attention to the preventive seminar “Installation and modernization of the automated electric work in school and children’s health camps. power accounting system. Metrological equipment”. 17.08.2012 — the Company’s Board of Directors discussed 28.05.2012 — the Demarche “Safe Holidays” started in the the candidates proposed by the shareholders for the Board of Republic of Tatarstan. It has been carried out by power engineering Directors and the Audition Committee of the “Grid Company” specialists since 2006 in the framework of a comprehensive (“Сетевая компания”). program for prevention of children’s traumatism which is realized by the Company under the aegis of the Ministry of Science and 21.08.2012 — the meeting in the Government House of the Education of the Republic of Tatarstan. Republic of Tatarstan on power supply to facilities of the summer Universiade 2013, with the Minister of Energy of the June Russian Federation Alexander Novak, the President of Tatarstan Rustam Minnikhanov, the Prime Minister of the Republic of 18.06.2012 — annual meeting of the shareholders of the JSC “Grid Tatarstan Ildar Khalikov and other official persons participating. company” (“Сетевая компания”). The shareholders analyzed, The Company’s Director General Ilshat Fardiev presented one of considered and approved the annual report and the annual the major reports of the meeting. account including the report on profits and losses and the allocation of profits based on the financial results of the fiscal year 2011. The September meeting elected the Board of Directors, the Auditing Committee and the Auditor for the fiscal year 2012. 112.09.2012 — the Company was named the winner of the competition “ECOleader” in the category “Effective ecological 21.06.2012 — the new format of applications for engineering management”. electrical connection services was introduced — external website got Private Office service. 14.09.2012 — the Company’s Board of Directors appointed the Audition Committee, Human Resources and Awards Committee, 28.06.2012 — meeting of the Company’s Board of Directors on and Innovation Committee of the Board of Directors, approved preparation, calling and implementation of the special meeting of the plan of the Board of Directors’ activity, and the Statute the shareholders of the Company with the agenda including the of Internal Control System of the JSC “Grid Company” (“Сете- revocation of authority and election of the new Board of Directors вая компания”). and the Audition Committee of the Company. 19.09.2012 — the Requirements for the Birds Protection Devices July applied at the High Voltage Power Line 6–10 kV in the distribution networks of the JSC “Grid Company” were adopted. They defined 24.07.2012 — regular meeting of the coordinating scientific and the basic methods of birds protection from the negative influence technical committee of the Company on the implementation of of the power lines of 6–10 kV. events according to the plan of the R&D department of the JSC “Grid Company” (“Сетевая компания”). 24.09.2012 — technical meeting on the realization of the first stage of the pilot project “Digital Record of the Electric 27.07.2012 — the first of the recently assembled power transformers energy” — the testing of the system took place at the testing was put under load at the Central substation 220 kV. ground of the active object of the Company’s branch Kazan Power Network. August 28.09.2012 — the company starts the general reconstruction of 08.08.2012 — the Company is carrying out large-scale events for the Gorodskaya Substation 110 kV in Almetievsk in the framework preventing children’s electric power traumatism. The Tatar power of enhancement of power supply reliability. 12 KEY EVENTS OF 2012

12.09.2012 01.11.2012 09.11.2012

October 22.11.2012 — regular meeting of the coordinating scientific and technical board of the Company about the implementation of pilot 02.10.2012 — company’s branch Bugulminsk Electric Network projects of launching new equipment and events to be carried out completed the second construction stage of the substation 110 kV according to the R&D plan. Konogorovka. 23.11.2012 — meeting of the Board of Directors of the Company 05.10.2012 — meeting of the Board of Directors of the Company to discuss the results of the financial and business activity of the on preparation, calling and implementation of the special meeting Company for a 9‑month period of 2012, and to approve the Code of the meeting of shareholders of the JSC “Grid company” (“Се- of Business Ethics, the Corporative Conduct and the Statute of the тевая компания”), with the agenda including the last Draft of the corporative Secretary of the Company. Charter of the Company and the drafts of the inner documents of the Company aimed to improve the system of corporate December management. 04.12.2012 — managed maintenance of the new autotransformer 15.10.2012 — replacement of the autotransformer group 500 kV at the substation Kutlu-Bulkash of 220 kV in the Rybno-Slobodskoy АТ‑4 with the power 501 MVA at the Kinderi substation. region was completed.

November 05.12.2012 — the Company organized a campaign for energy saving and energy resources efficiency increase and participated in 01.11.2012 — the new power transformer put under load at the this campaign and also took part in the International Exhibition Gorodskaya substation 110 kV in Almetievsk. “Power Engineering. Resource-saving” and International Symposium “Energy Resources Efficiency and Energy Saving” with the President 01.11.2012 — the Company was ranked fifth in the fundamental of the Republic of Tatarstan R. Minnikhanov and the Prime Minister efficiency rating of the leading real economy companies of the of the Republic of Tatarstan I. Khalikov. Russian Federation presented by the ecological energetic inter national information services group Interfax-Era. The assessment 18.12.2012 — the meeting of the Human Resources and Awarding published refers to the period of 2005–2010. Committee which approved the Plan of Operation of the Committee and examined personal training, retraining and refresher training in 07.11.2012 — replacement of phase A of the autotransformer JSC “Grid Company” (“Сетевая компания”). group of 500 kV АТ‑5 а at the Kinderi substation. 26.12.2012 — the Audition Committee approved the Plan of 09.11.2012 — the final meeting of the Ministry of Energy of the Operation of the Committee and worked out recommendations Russian Federation on maintenance readiness inspection of the on the selection of independent audition institution for organizing a JSC “Grid Company” for the fall and winter period presented the contest of financial statement (accounting) for 2013. Company the license for maintenance readiness for the fall and winter period of 2012–2013. 27.12.2012 — the Board of Directors approved the Strategy of Risk Management of the JSC “Grid Company” (“Сетевая компания”) 12.11.2012 — regular meeting of the shareholders of the Company approved the last Draft of the Charter of the Company, Statutes of the meetings of the Shareholders, of the Board of Directors and Director General of the JSC “Grid Company” (“Сетевая компания”). Grid Company 13

05.12.2012 23.01.2013 18.02.2013

Events after the accounting date 19.02.2013 — the Company was presented with the certificate of compliance with the requirements of the ecological management of January the international standard ISO 14001:2004.

22.01.2013 — the Company adopted the Program of development March and improvement of the system of ecological management in 2013–2014. 13.03.2013 — the construction of the testing ground “Substation 110/10 kV” was launched at the facilities of Kazan State Power 23.01.2013 — operational testing of the software and hardware Engineering University in the framework of collaboration of the complex “Automated monitoring system” started at the center of University with the JSC “Grid company” and the leading local the network control. electrical equipment manufacturers.

February 26.03.2013 — Director General of the Company llshat Fardiev was announced the winner of the Republican Contest “Benefactor 2012” 01.02.2013 — the Russian Institute of Directors raised the rating in the nomination “Long-term Partnership”. The Republican Charity of the corporate management of the JSC “Grid Company” up Committee announced the director of the Company’s branch Buinsk to level 6 “Developed Practice of the Corporate Management” electric network Vladimir Chechkov “Benefactor 2012”. according to the National Ranking of the Corporate Management. April 01.02.2013 — the first autotransformer (AT‑2) 220 kV (АТ‑1) with the capacity 250 MVA was launched at the Central substation in 02.04.2013 — special meeting of the shareholders of the JSC Kazan. “Grid Company” decided to enlarge the authorized capital of the Company by the private placement of additional shares. 18.02.2013 — the power engineering specialists of Tatarstan fixed the special transmission of the power transmission line 500 kV Nk 16.04.2013 — completion of the reconstruction stage of the Central Hydropower Udmurtskaya across the -river. substation (the second autotransformer 220 kV (АТ‑1) with the capacity of 250 MVA was put into operation). Cyclic development

GENERAL INFORMATION ABOUT THE COMPANY

Cyclic development stable results

JSC “Grid Company” is a regional company transmitting power in the Republic of Tatarstan. The Company’s services cover a territory of 67836,2 square meters. Among the Company’s main activities are power transmission and technological connection.

The Company is among the top ten power networks in Russia in terms of transmitted power capacity and among the leaders in terms of overall length of overhead and cable lines, number of substations, transformer stations and distribution points. The Company owns distributive power grid facilities as well as transmission systems.

GENERAL INFORMATION 16 ABOUT THE COMPANY

Brief history of the company

11.12.2001 — the Joint Stock Company “Grid Company” (“Сетевая acts of the Russian Federation to confirm that certain regulatory компания”) was created in the framework of the reformation of the acts of the Russian Federation ceased to be in force due to the electrical power complex of the Russian Federation in compliance newly adopted law “On Power Engineering” the Company sepa- with the Government Regulation No. 526 of the Russian Federation rates from and leaves the vertically integrated Holding JSC “Taten- dated June 11, 2001 “About Reformation of the electrical power ergo” producing, transmitting, distributing and selling electric and industry of the Russian Federation” and the Decree of the Presi- thermal energy on the territory of the Republic of Tatarstan. As a dent of the Republic of Tatarstan #PD-673 dated 08.08.2011 “Fur- result the Republic of Tatarstan represented by the Ministry of Land ther steps of the reformation of the electrical power industry of the and Property Relations of the Republic of Tatarstan becomes the Republic of Tatarstan”. The founders of the JSC “Grid Company” Company’s main shareholder. (“Сетевая компания”) were State Unitary Enterprise “TatEnergo” and the V. Shashin JSC “TatNeft.” 01.03.2011 — the Company is reorganized: the affiliated public limited company “Central Control Room” (“Диспетчерский центр”) 03.07.2006 — in order to create the united network distribution joins the company to optimize the operation, maintenance, general company in the Republic of Tatarstan in accordance with Resolu- overhaul and capital development of the power network’s objects. tion of the Cabinet of Ministers of the Republic of Tatarstan No. 504 dated September 22, 2003 “Creation of the State Unitary Enterprise At the moment the JSC “Grid company” (“Сетевая компания”) in- “TatElectroset” the Company was reorganized by adding JSC “Tat- volves nine affiliated branches, each of them performing the func- Electroset” which was the owner of the distribution networks of the tions of transmitting electrical energy, technological connection, op- largest cities of the Republic of Tatarstan. As a result almost all the eration and service of the objects of the electrical power network distribution networks of the republic were united in the JSC “Grid according to their territory distribution. Each of the nine affiliated Company” (“Сетевая компания”). branches involves solitary structural units: electrical power regions, city electrical power regions, and the regions of the high-voltage 01.09.2009 — for the purposes of bringing the Company into com- substation. pliance with the requirements of the Federal Law No.36-FZ dated 26 March 2003 “On peculiar features of power engineering function- The Company does not have any subsidiaries or association com- ing during the transition period and amendment of certain regulatory panies.

Company’s Branches

Yelabuga power supply network 423603, Elabuga, Chapaeva Str, 48 • REN • Yelabuga REN Privolzhsk power supply network • Yelabuga HREN 420108, Kazan, Magistralnaya Str. 23 • REN • REN • REN • Atninsky REN • Mendeleevsk REN • REN • Sabinsk REN • Vysokogorsky REN • Tyulyachi REN • Zelenodolsk REN • REN Kazan power supply network • Prigorodny REN 420021, Kazan, Tukaya Str., 109 • North REN • Pestrechinsk REN • Central REN • REN • West REN power supply network • South REN 423810, Naberezhnye Chelny, Pr. Moscovski, 114 • East REN • Avtozavodsky REN • Pribrezhny REN Nizhnekamsk power supply network • Borovetsk REN 423570, Nizhnekamsk, Akhtubinskaya Str.,14 • Komsomolsk REN • Aktanysh REN power supply network • REN 422980, Chistopol, К.Marx Street,.36 • REN • Aksubaevo REN • Nizhnekamsk REN • Alekseevsk REN • Nizhnekamsk HREN • Alkeevsk REN • Tukaevo REN • Novoshesminsk REN Buinsk power supply network • REN 422430, Buinsk, Kosmovskogo Str., 190 • Spasskoe REN • REN • Chistopolsk REN • Buinsk REN • Verkhny Uslon REN Almetievsk power supply network • Drozhanovsk REN 423400, Almetievsk, Shevchenko Str, 13 • Kaibitsy REN • Almetievsk REN • Kamskoe Ustie REN • Almetievsk HREN • Tetyushi REN • Aznakaevo REN Bugulminsk power supply network • Sviyazhsk REN • Muslyumovo REN 423233, , Turgeneva Str., 29А • Sarmanovo REN • REN • Bugulma REN • Bugulma HREN • Leninskogorsk HREN • Cheremshansk REN • Yutazi REN Grid Company 17

The Company’s activity region and place in the industry

The Joint Stock Company “Grid Company” is a territorial network The Company is among the top ten power networks in Rus- providing electrical power supply services on the territory of the Republic sia in terms of transmitted power capacity. The Company is also of Tatarstan. Its area of services covers 67 836,2 square meters. among the leaders in comparison with other territorial companies The main activities of the Company include: of the Inter-regional High-Voltage Grid Company, in terms of total mileage of overhead and cable power transmission lines as well • electric power transmission; as the number of substations, transformer substations and dis- • technological connection. tribution points. Besides, the Company has become the only ter- ritorial network in Russia which owns facilities with voltage profile At present the Company owns the following objects of economy from 0,4 kV to 500 kV. of the electric power distribution network and the super grids: The market of the services provided by the Company is limited by the territory of the Republic of Tatarstan which is why the net • 10 000 km of the overhead power transmission line 35-500 kV; supply of the company is considerably smaller than that of such big • 48 833,5 km of power distribution network; companies as the JSC “ Inter-regional High-Voltage Grid”, the • 9 395 km of cable power transmission line; JSC “Ural Inter-regional High-Voltage Grid”, the JSC “The Center • 373 substations 35-500 kV with design capacity of and Volga Region Inter-regional High-Voltage Grid”, the JSC “The 16 488,3 MVA; Center Inter-regional High-Voltage Grid” which consist of several • 17 192 transformer substations (packaged transformer regional networks. substations, distribution points) with design capacity of However, in terms of efficiency, the JSC “Grid Company” is sec- 5 932,2 MVA. ond to none of the large network companies. Thereby, in 2012 the Company’s power loss was 7,7%, i.e. 0,43 lower than the figure of At the order of the Federal Tariff Service No. 423-e dated 2011. Only one of the above mentioned companies has a power 08.09.2005 the joint stock company “Grid Company” is included loss figure less than that of the JSC “Grid Company”, notably the into the government regulated natural monopoly register of the fuel- JSC “Volga Inter-regional High-Voltage Grid” with its power loss of energy complex. 7,05%.

billion kWt-h % billion rubles %

80 12 70 5,1 6,1 1,5 9,4 4,3 6,6 8,6 5,9 9,2 19,1 57,9 57,3 51,3 15,8 69,4 45,7 22,4 59,9 54,5 80 50 70 10 70 60 40 45% 60 8 9,53% 50

8,62% 50 30 7,87% 40 7,70% 6 40 7,05%

30 20 4 30 23%

20 20% 20

16% 10 2

10 10 13%

0 0 0 0 IDNC IDNC IDNC of the Center IDNC Grid IDNC IDNC IDNC of the Center IDNC Grid of the Volga of the Ural and the Volga region of the Center Company of the Volga of the Ural and the Volga region of the Center Company

effective supply of energy general loss of energy energy loss proceeds of services rendering capital investment level of capital investment in the structure of proceeds

The stable reduction of power loss is the result of sizeable companies, whose profit is 2-3 times the size of the revenue of the investment in maintenance and renovation of the electrical network Company. In 2012 the Company’s investments made up 45% of the equipment and regular measures aimed at the reduction of the loss. gross receipt. The total investment of the JSC “Grid Company” in 2012 was 8,6 The Joint Stock Company “Grid Company” is the largest billion rubles, which is comparable to the level of the leading network power supply network company on the territory of the Republic GENERAL INFORMATION 18 ABOUT THE COMPANY

of Tatarstan. There are about 50 other companies on the territory kWh, i.e. – 1 251 million rubles. The Company makes up 93,3% of the republic that provide power transmission services and have of the power transmission market in the Republic of Tatarstan, the status of co-operating network companies. whereas the share of the co-operating network companies is The scope of power transmission services in 2012 was 6,7%. 22 439,7 million kWh, i.e. – 18 632 million rubles. The scope of The Joint Stock Company “Grid Company” settles accounts with power transmission services provided by the Company to the other companies – co-operating networks power supply companies co-operating network companies in 2012 was 4 207,2 million and consumers.

The first six months The last six months Item of 2012 of 2012

JSC “Tatenergosbyt” LLC “Rusenergosbyt” JSC “Tatenergosbyt” LLC “Rusenergoresurs” Power supply companies to settle accounts with for power supply services LLC “Rusenergosbyt” LLC “Regional Power Supply Company” LLC “PES” LLC “MagnitEnergo”

The quantity of consumers made a power supply services — JSC “KazanOrgsintez” contract with JSC “Grid Company”

Major tendencies of industry development

Construction of New Power Supply Network Facilities and Efficiency improvement of regulated companies, including Renovation of the Old Ones reliability and quality improvement, cost reduction, synchro- nization of planning processes and implementation of invest- At the moment the wear of the industry facilities makes up 60- ment programs, appliance of the most energy-saving and 70%, which threatens the power supply stability of many regions environmentally-friendly technologies, switching to long-term of the country. Construction of new objects and renovation of the agreements and regulation periods old ones are essential for the output of the power-production units under construction, dismantling of the “blocked” ones and for the Development strategy of the power network complex of the enhancement of the inter-system connections. Russian Federation establishes licensing principles for network companies. The companies that do not comply with these prin- Providing availability of the produce and services for the cus- ciples will not be able to get a license, thus inefficient companies tomer as part of unimpaired and equal-opportunity access to providing low-quality services are cut off. It has been planned to the regulated goods and services of the regulated companies get out of business about 1,5 thousand such organizations, 10% of the network complex revenue, by 2017. In pursuance of these purposes the Government of the Rus- It has been planned to introduce international standards to sian Federation approved the Plan of Activities (the so-called the activities of power supply network companies, with secured “road-map”) No. 1144-r “Enhancement of Availability of the Ener- measures of quality and reliability, such as the number of dis- getic Infrastructure” dated June 30, 2012. Realization of the “road- connections of a consumer per year, duration of disconnection map” is aimed to facilitate the connection of the customers to the periods. Russian energetic infrastructure, i.e. to make the connection pro- These measures will be introduced on the basis of law and cedure easier, faster, more transparent and less costly. taken into consideration during the assessment of the Company’s The realization of the “road-map” will allow to cut down the activity. The companies will be compared based on their reliability, number of connection stages (from ten to five), shorten the time investment as well as other factors. of going through all these stages (from 281 to 40 days), and to reduce costs of power supply access (from 1 852 to 25 percent of Improvement of the regulation system through improvement the gross domestic product per capita) by 2018. The realization of of efficiency and transparency of regulating organizations’ the “road-map” started in 2012. activity by enhancing the transparency and consistency of Grid Company 19

regulating processes. Creating new environment for network • the rules of fully or partially restricted consumption of electric companies on the basis of the long-term regulating defined power, for the long term of regulation (3-5 years) • modification of the service payment policy regarding the consumers settling accounts according to the two-part tariff. The Resolution of the Government of the Russian Federation No. 442 dated May 4, 2012 approved: In 2012 the rules of the commercial record of the electric power were adopted. These rules prescribe the procedure of taking elec- • the basic principles of the functioning of electric power retail tricity meter readings and submitting them to the guaranteeing sup- markets, plier and subsequently to a network company.

Mission and strategy of company’s development

Mission of the company – to provide reliable and high-quality Company’s Development Strategy Principles power supply to customers connected to the power supply net- work of the Company, creating comfortable and safe living con- • enhancement of the efficiency of the primary activities of ditions and implementation of statute purposes by legal entities the Company; • creating the most comfortable conditions for the custom- Strategic purposes of the Company ers in the region of the Company’s activities; • enforcement of rights and safeguarding of legitimate inter- • uninterrupted and high-quality supply of electric power to ests of all the shareholders of the Company; consumers; • improvement of the corporate guidance, enhancement of • possibility of technological connection for every customer; the financial and logistics management transparency; • further enhancement of the Company’s efficiency and man- • enhancement of the Company’s social responsibility. agement quality.

Priority lines of company’s activity

The Company’s priorities include: • meeting long-term and short-term demands for electrical power; • preventing of depreciation of the electrical network equip- • providing conditions for maintaining long-term production- ment, appliance of up-to-date technological methods and consumption balance in the electric power system of the innovation technique; Republic; • achievement of the guaranteed reliability and high-quality standards of services, provided by the Company; • preventing forecast deficit of the electric power in the most • securing development of the power supply network complex efficient ways, all the predicted operating modes of Ta- to the extent adequate to the purposes and enhancing the tarstan’s power systems with on- and off-peak loads con- economic development of the region; sidered; • further enhancement of the Company’s management effi- • creating the background for reliable power supply to the ciency, transparency and quality; consumer; • human resources and skills development based on the • enhancement of functioning efficiency and providing stable Company’s priorities. development of the power supply system of Tatarstan based on high technologies; Production of new power supply network facilities and renova- • eliminating environmental damage. tion of the depreciated ones Energy efficiency enhancement The capital costs of the JSC “Grid Company” of the gross re- ceipt reached 27% in 2010, 2011. However, in 2012 it was 45%. In pursuance of the Federal Law No.261-FZ “Energy Conservation Company’s capital expenditures are channeled into the following and Efficiency and Introduction of Amendments of Certain Acts of Law activities: of the Russian Federation” the Program of Energy Conservation and Efficiency Enhancement was worked out with the aims at the following: • D evelopment of the network infrastructure of the Republic of Tatarstan; • minimization of energy loss; • efficient energy use. GENERAL INFORMATION 20 ABOUT THE COMPANY

Implementation of the Program of Energy Conservation and Efficiency Enhancement by the JSC “Grid Company” in 2012

Cost reduction Expenditures (thousand Cost Impact (thousand rubles) rubles)

Energy conservation and efficiency enhancement event Planned economic Actual economic impact impact on 01.01.2013 Planned Actual Planned Actual Thous. Thous. Thous. Thous. rubles kW-h rubles kW-h Energy conservation events Restoration (introduction) of automatic heating equipment and utility box sealing 268,63 359,63 746,15 853,28 208,00 199,24 193,59 151,28 Disaggregation of TS (SIW, additional CTS, including poles) 2 135,72 2 744,52 19 414,48 31 595,24 932,07 892,78 920,06 836,16 Usage of balanced transformers 393,46 493,27 724,19 4 024,54 285,80 273,76 233,63 173,97 Appliance of transformers with low loss at no-load run 41,96 49,89 281,71 3 491,98 22,30 21,36 19,08 17,82 Switching off the transformers at the SS with 2 or more transformers in light-load condition 7 361,24 11 231,31 7 361,24 7 058,65 11 231,31 7 239,47 Optimization of working voltage in the subfeeders of the radial systems 2 950,17 3 301,62 2 950,17 2 789,07 3 301,62 2 835,89 Switching off the transformers with seasonal load 531,87 647,24 531,87 509,45 647,24 509,36 Load leveling in the power lines with 0,38 Kv 280,04 278,30 280,04 264,72 278,30 255,91 TOTAL FOR THE ENERGY CONSERVATION EVENTS 13 963,09 19 105,78 21 166,53 39 965,04 12 571,49 12 009,04 16 824,83 12 019,86 Energy curtailment events Insulation of the Company’s buildings and facilities 300,85 232,42 4 145,21 3 673,49 74,87 54,10 39,00 57,79 Usage of motion sensors to cut down the power used for the electric light in the administration and on-site buildings 36,62 36,28 7,50 7,43 29,00 9,67 28,73 9,58

Elimination of glow lamps in the Company’s facilities 520,65 267,80 574,01 497,61 232,83 77,61 128,16 42,72 Transition of THN 2,3 from hot reserve to cold reserve 21,02 21,02 16,82 5,60 16,82 8,63 Appliance of LED for central alarm system at SS 9,65 18,18 18,15 30,40 6,99 2,33 9,68 3,22 Installation of long-wave heaters in the garages 45,87 45,87 576,00 576,00 13,66 4,55 13,66 4,55 Replacement of the DRL by LED and installation of automatic “Evening-Night regime” 65,46 65,46 21,33 21,33 51,51 17,17 51,51 17,17 Installation of cold water and thermal energy meters in the building and constructions 369,39 346,16 400,00 195,00 279,51 255,16 Minimization of specific fuel an lubrication consumption through identifying the optimum traffic route 78,15 14,48 78,15 14,48 Minimization of power consumption at SS 906,48 883,70 906,48 584,36 883,70 603,17 TOTAL FOR THE ENERGY CURTAILMENT EVENTS 2 354,14 1 931,37 5 742,20 5 001,26 1 689,82 755,40 1 440,89 746,82 TOTAL FOR THE COMPANY 16 317,23 21 037,14 26 908,73 44 966,30 14 261,31 12 764,43 18 265,72 12 766,68

Quality and Reliability Improvement power networks” which defined the procedure of assessment of power supply reliability and quality levels. The fundamental purpose of power production industry is reliable The reliability and quality level is defined as a generic integrated and money-saving power supply of proper quality to consumers. index and consists of the ratio of reliability of the services and the ratio of Order of the Ministry of Energy of the Russian Federation No. 296 quality of the services provided by a territorial network company (TNC). dated June 29, 2010 approved “The Methodical Guidelines of defining The ratio of reliability (RR) of the services provided by a TNC is the reliability and quality standards of provided goods and services for defined as an average duration of power transmission break with regard the managing organization of the Federal Grid Company and regional to consumer services over a certain period. Grid Company 21

The ratio of the quality (QR) of the services provided by a TNC is networks to minimize the time of solving the problems, optimization of defined for power network companies with regard to electric power consumers’ expenditures and, on the whole creation the most favorable transmission and technological connection to the power supply network environment of their interaction with TNC. facilities of the TNC and characterizes the degree of specialization of the The Company reached the planned figures of reliability and TNC in providing power supply services and technological connection quality of electric power supply services in 2012. of consumers’ (subscribers’) power receivers to the power supply

Planned figure, Actual figure Ratio name Ratio 2012 2012

Index of average duration of power transmission break RR 0,03702 0,017

Index of quality of the services provided by the company QR 1,0102 0,985

Board of directors’ report on the results оf the development following the priority lines

In the framework of the performance of the general management issuing recommendations on preparation of internal power circuits of function entrusted to the Company’s Board of Directors by the Federal the objects of Universiade 2013 to ensure uninterrupted electric power Law “On Corporations” in 2012 the Board of Directors considered supply of the planned events and other connected ones. the Company’s priority lines concerning infrastructure development and ensuring reliable performance of the electrical power grid of the Enhancement of energy efficiency Republic of Tatarstan, enhancement of power efficiency and innovative development. In the framework of the priority direction the Board of Directors decided to submit its application to the Ministry of Energy of the Construction of new and renovation of the worn facilities of the Republic of Tatarstan to launch the second stage of the project “Events power supply network of realization of the projects in the sphere of infrastructure renovation” (“Digital Substation”) on the list of events of the Republic of Tatarstan In 2012 the Company’s Board of Directors considered the technical aimed at enhancement of energy saving and efficiency, financed with condition of the power supply facilities, reliability of the power supply to the subsidies of 2012. the customers, attraction of investors into the development of certain units of the distribution points of the power networks of the cities and Innovative development regions of the Republic. The Company’s Board of Directors adopted the Investment Project With the purpose of creating a unified system of innovative activities for 2013-2015, approved the methods of defining the sources of its the Company’s Board of Directors approved documents regulating financing. The Investment Project for 2013-2015 of the JSC “Grid innovative activities of JSC “Grid Company” (“Сетевая компания”) Company” is aimed at resolving complicated problems of the functioning with regard to the Decision of Government Commission for Advanced of the electrical network complex of the Republic of Tatarstan. During its Technology and Innovation of the Russian Federation (Protocol No. development the tear and wear of the backbone network and distribution 4 dated 03.08.2010) and the Decree of the Ministry of Economic network equipment and its condition were taken into consideration as Development of the Russian Federation dated 02.02.2011. As a result well as the objects of the Investment Memorandum of the Republic of the following documents were approved: Tatarstan in 2012. The strategy of renovation includes several basic directions: • program of innovative development for 2011-2015; • nnovative development policies. 1. preservation of reliability of the operational electric power network, its modernization and recreation of the segments with For the purposes of efficient usage of resources of the Company a high degree of tear and wear; to provide its stable intensive innovative development and to ensure 2. development of the facilities where new connections are the efficient activity of the Board of Directors concerned its innovative required. development, the Company formed and put to work the Innovative Committee of the Board of Directors. The Board of Directors of the Company approved the Plan of capital construction of the JSC “Grid Company” (“Сетевая компания”) of 2012, based on the investment program of JSC “Grid Company” (“Се- тевая компания”) for 2012-2014, adopted by the Order of the Ministry of Energy of the Russian Federation No. 476 dated 24.10 2011. The aspect of carrying out the preparation for the autumn-winter period of 2012-2013. It was decided to continue the work of the company aimed at providing reliable and effective power supply of the power circuits of the Universiade 2013 facilities and implementation of coordination with Natural wealth

ANALYSIS OF THE FINANCIAL STATE AND RESULTS OF THE COMPANY’S ACTIVITIES

Natural wealth energy sources

The Company’s revenue for services provided in 2012 totaled 19 159 million rubles, cost of good sold – 13 194 million rubles, net profit for the fiscal year – 4 094 million rubles. Gross income, EBITDA and net profit increased 3,6%, 2,2% and 2,1% respectively as compared to 2011. Analysis of the statistical data on the financial and economic activities of the Company indicate its stable development.

ANALYSIS OF THE FINANCIAL STATE AND 24 RESULTS OF THE COMPANY’S ACTIVITIES

TARIFF REGULATION

Tariff establishment, the basis of tariff regulation electric energy transmission, established with the method of the long-term indexation of the required gross receipt”, the long-term The regulation of tariffs for providing power is carried out by the tariffs are determined on the basis of the following regulating method of the long-term indexation of the required gross receipt. parameters. In compliance with the Order of the Federal Tariff Service of The Resolution of the State Tariff Committee of the Republic the Russian Federation No.98-e dated 17.02.2012 “On adoption of Tatarstan No.3-7/e dated 12.07.2012 sets the following long- of Methodical guidelines on establishment of the tariffs for term parameters of regulation:

Characteristics 2012 2013 2014

Baseline of the costs under control, thousand of rubles 7 896 292,46 8 291 238,09 8 641 854,07

Efficiency index of the costs under control, % 1 1 1

The ratio of elasticity of the expenditures under control according to the quantity of assets, % 75 75 75

Worst possible correction of the essential gross revenue subject to the achievement of the established level of 1 2 2 reliability and services quality,%

Payments rates for the connection to the electric power network Tariffs development facilities (technological connection) is implemented by the regulating authorities according to the aims and principles of the government Electric power transmission tariffs are set by the regional regulation, provided by the Federal Law No.35-FZ “On power industry” authorities for a year. The tariffs are differentiated according to rate dated 26.03.2003 and statutes and regulations. classes: The technological connection is accomplished under the contract with a network authority within the terms set in the Guidance of • group “Population”; technological connections. • group “Other consumers”

Power transmission development for the tariff group Power transmission development fot the tariff group “Population” in 2011 – 2012, rubles/thousand kWt-h “Other Consumers” in 2010 – 2012, rubles/thousand kWt-h

1 000 974,25 3 000 523,61 920,98 2 198,77 2 655,86 71,72 471,72 4 829,71 829,71 2 392,67 1 980,87 2 392,67 2 500 1 980,87 800 743,33

2 000 600 81,03 42,90 4 673,95 0 488,96

487,74 1 1 1 500

400

1 000

200 500

0 0 2011 2012 2012 2010 2011 2012 2012 (01.01.2012 – 30.06.2012) (01.07.2012 – 31.12.2012) (01.01.2012 - (01.07.2012 - НВ СН-1 СН-2 НН 30.06.2012) 31.12.2012) Grid Company 25

Payments rates were set by the Resolution of the technological connection to the distribution networks of the SCRTT No.6-1/tp dated 01.02.2010 “On regulating rates for JSC “Grid Company”. The payment rates were valid up to technological connection and standardized payment rates for 31.12.2012.

1. Payment rates for technological connection to the distribution networks of the JSC “Grid Company”

Voltage level Capacity connected, kWT Payment for the technological connection, rubles./kWt (net) Up to 30 8 814 0,23–1 kV From 30 up to 100 8 148 More than 100 12 766 Up to 100 8 384 6–10 kV From 100 up to 750 12 402 More than 750 6 250 2. Standardized payment rates for technological connection towards the expenditures on the technological connection of consumers’ power receivers for the events, excluding construction and renovation of the network facilities

Voltage level Capacity connected, kWT Standardized payment rates, rubles/kWt (net) Up to 30 367,7 0,23–1 kV From 30 up to 100 122,6 More than 100 10,8 Up to 100 122,0 6–10 kV From 100 up to 750 28,0 More than 750 34,5

3. Standardized payment rates for technological connection towards the expenditures on the technological connection of consumers’ power receivers for the events, excluding construction and renovation of the network facilities, the expenses on the construction and reconstruction of the overhead power lines according to voltage class

Voltage level Capacity connected, kWT Standardized payment rates per 1 km of lines rubles/km (net) Up to 30 299 250 0,23–1 kV From 30 up to 100 302 082 More than 100 302 987 Up to 100 303 457 6–10 kV From 100 up to 750 305 212 More than 750 308 987 4. Standardized payment rates for technological connection towards the expenditures on the technological connection of consumers’ power receivers for the events, excluding construction and renovation of the network facilities, the expenditures of construction and reconstruction of the cable power transmission lines according to the voltage class

Voltage level Capacity connected, kWT Standardized payment rates per 1 km of lines rubles/km (net) Up to 30 397 575 0,23–1 kV From 30 up to 100 409 993 More than 100 448 803 Up to 100 397 575 6–10 kV From 100 up to 750 471 504 More than 750 507 419 5. Standardized payment rates for technological connection towards the expenditures on the technological connection of consumers’ power receivers for the events, excluding construction and renovation of the network facilities, the expenditures of construction and reconstruction of the substations according to the voltage class

Voltage level Capacity connected, kWT Standardized payment rates per every line rubles/piece (net) Up to 30 25 748 0,23–1 kV From 30 up to 100 112 422 More than 100 810 371 Up to 100 80 009 6–10 kV From 100 up to 750 266 705 More than 750 1 251 710 ANALYSIS OF THE FINANCIAL STATE AND 26 RESULTS OF THE COMPANY’S ACTIVITIES

Major results of financial and economic performance

Basic financial indexes of the Company’s performance in Analysis of the Company’s assets and liabilities structure 2010-2012 (mln.rubles) Company’s assets structure, mln. rubles

25 000 31.12.2010 31.12.2011 31.12.2012 4 010 4 010 4 035 4 094 16 613 613 16 19 159 159 19 13 194 13 12 257 12 10 575 10 20 000 491 18 Intangible assets 16 21 29 Research results 21 28 22

15 000 Fixed assets 15 238 19 087 25 779 Financial investments 848 357 297

10 000 Deferred tax assets 180 147 694 Other non-current assets 407 596 155 Resources 99 147 344 5 000 Input value-added tax 8 1 1

0 Accounts receivables 1 819 2 599 3 725 2010 2011 2012 Financial investments (excluding money revenues cost net profit 1 549 2 440 3 198 equivalent) Regarding the results of 2012 the Company’s revenue for services providing made up 19 159 mln. rubles, i.e. 15% more than Monetary assets и money equivalent 2 586 3 633 2 126 in 2010, and 4% more than the same index in 2011. The prime cost of the services provided by the Company in Other current assets 101 30 38 2012 went up by 8% in reference to the level of 2011 and made up 13 194 mln. rubles. Fixed assets prevail in the Company’s capital structure. As of 31.12.2012 its ratio to the total balance of the fixed assets and Company’s produce cost structure, 2012 construction in progress makes up 70,8%.

Assets structure development (in % to the total balance) 33% 2010 – 2012, % 6%

80,0 70,8 65,6 66,6

70,0 15% 60,0

50,0

40,0

14% 30,0

32% 20,0 5,8 11,3 12,5 8,4 8,0 8,9 6,8 8,8 10,0 10,2 7,3 4,4 material costs reimbursement of losses salary plus required premium costs depreciation costs 4,6 other costs

0 fixed assets receivables investments monetary funds other assets Following the results of the financial and economic performance in 2012 the Company received net profit equal to 4 094 mln. rubles, % of the balance currency as of 31.12.2010 % of the balance currency as of 31.12.2011 % of the balance i.e. 2% more than in 2011 and 1% more than in 2010. currency as of 31.12.2012 Grid Company 27

Company’s liabilities structure, mln.rubles Accounts Receivable Structure in 2010-2012, mln. rubles

31.12.2010 31.12.2011 31.12.2012 4 000 19 25 94 8 7

3 3 Authorized capital stock (share capital, authorized fund, 6 189 6 189 6 541 99 1 549 5

3 48

contributions of partners) 2 3 000 Capital surplus (without value 485 485 809 adjustment) 19 85 8

Reserve capital 323 325 327 1 366

1 2

Net surplus (retained loss) 9 921 13 952 18 044 2 000

Deferred tax liabilities 551 807 1 088

Other liabilities 2 030 3 154 231 1 000

Bill payable 2 627 3 751 8 997

Deferred revenues 0 0 0

Estimated liabilities 744 423 369 0 Other liabilities 2 0 2 2010 2011 2012 general bill receivable short-term bill receivable long-term bill receivable

The own funds, i.e. authorized capital, make up the largest ratio The Company’s large contractor-debtor with the debt equal to in the Company’s liabilities structure, whereas net surplus is not 1 207 712 thousand rubles at the end of 2012 is the JSC “Tatenergosbyt”. more than 67,5%. In an aggregate amount of the accounts receivables for the fiscal year is 2,2%. Liabilities structure development (in % to the total balance) 2010 – 2012,% Accounts Receivable Structure in 2010-2012, mln. rubles.

10 000 231 9 227 8 996 49,6 43,4 48,0 50,0 3 751 3 154 40,0 7 500 6 905

30,0 2 627 2 029 4 656 27,1 18,0 21,3 23,7 20,4 25,3 5 000

20,0

2 500 7,1 7,0 10,0 9,1

0 capital surplus authorized capital bill payable other liabilities 0 stock 2010 2011 2012

% of the balance currency as of 31.12.2010 % of the balance currency as of 31.12.2011 general contractor bill receivable short-term contractor bill receivable % of the balance currency as of 31.12.2012 long-term contractor bill receivable ANALYSIS OF THE FINANCIAL STATE AND 28 RESULTS OF THE COMPANY’S ACTIVITIES

Financial Ratios The increase of the Company’s net assets value which made up 23,8% or 4 033 mln. rubles in 2011, and 22,7% or 4 769 mln. rubles caused by the realization of the Company’s scaled program Regular Factor 2010 2011 2012 of capital construction. figure Ratio of own and borrowed Net asset value, assets of the Company — 16 918 726 20 951 797 25 720 850 thousand rubles

The ratio between own — 0,3 0,3 0,4 Factor 2010 2011 2012 and borrowed assets

Current liquidity ratio 1,5–2 1,8 2,1 1,0 Own assets, thousand 16 918 663 20 951 797 25 720 850 rubles

Absolute liquidity ratio 0,2 1,2 1,5 0,6

Borrowed assets, 4 656 360 6 904 581 9 227 394 Equity ratio 0,5 1 0,7 0,7 thousand rubles

The account of the company’s Net Assets Value was made in accordance with the Corporation Net Assets Value Estimation Procedure adopted by the Order of the Ministry of finance of the Russian Federation and FCSM #10n/03-b/pz dated 29.01.2003. Ratio of the own and borrowed assets 0,3 0,3 0,4 The dynamics of the Company’s net assets value in 2010 – (R=BA/OA) 2012, thousand rubles 32 50 7 8

30 000 40 20 7 5

6 The ratio of own and borrowed assets characterizes 25 18 97 the financial viability of an enterprise. The measure of that 3 7

25 000 89 51 characteristics shows the financial and logistics management of 1 9

6 the Company. 20 18 3 7

20 000 89 Liquidity and financial viability ratio 1 9

6 16 18 26 The figures of the liquidity and financial stability ratio for a three-year period demonstrate the high level of current position 15 000 and solvency of the Company and the Company’s capability to repay its short-term obligations. One of the factors affecting the decrease of the current liquidity ratio in 2012 in comparison 10 000 with 2010 and 2011 is the sizeable increase of the number of technological connections and the specific character of their recording. The analysis of the development of these figures which 5 000 characterize the financial and logistics management of the Company in 2010-2012 bring us to the conclusion of its stable development. 0 000 2010 2011 2012 net asset value authorized capital stock Grid Company 29

Introduction of International Standards of Financial The process of preparation of the first Financial Statement Accountancy

n order to enhance the transparency of business and, consequently, the enhancement of the quality of corporate management the Financial Statement Draft 2011 was prepared in full conformity with the principles and standards of IAS on the date 28.11.2012. Authenticity of the draft in question was acknowledged 01.01.2011 of the first preliminary by the closed corporation “КPМG”. application financial The first Financial Statement of the JSC “Grid Company” of statement 2012 based on IAS has been planned for July of 2013. of 2011 31.12.2011 comparable data

reporting 31.12.2012 date of the first statement Taming energy

PRODUCTION ACTIVITIES

Taming energy lighting your way

A total of 22 440 million kWh was transmitted to consumers in 2012. In comparison with the similar period of the previous year the reported loss reduced by 88 million. 20 452 applications for connection of the applicants’ energy receivers to the power network of the Company with the total capacity of 975,458МW were received in 2012. 18 957 contracts on technological connection with the total capacity of 733,522МW were signed.

32 PRODUCTION ACTIVITIES

Characteristics of the company’s power facilities

Basic technical specifications

Total length of overhead power lines (along the route), km, 58 833,5

including:

OHL 35-500kV, km 10 000,0

OHL 0,4- 6(10) kV, km 48 833,5

Total length of cable power lines, km 9 395,0

Total number of substations of 35-500 kV, piece 373

Substation transformer capacity of 35-500 kV, MVA 16 488,3

Total number of TS (PTS, RS), piece 17 192

Substation transformer capacity of 6-10 kВ, MVA 5 932,2

High-voltage line and substations Length correlation of high-voltage lines (along the route) according to the voltage level The total length of high-voltage lines owned by the Company is 10 000 km along the route, and 12 290 km along the lines. 13% In comparison with 2011 the total length of high-voltage lines of 35-500 kV has not undergone significant changes. 6%

Length Length along Changed by along the Changed by Voltage level the route, 2011, km. networks, 2011, km. km. km.

OHL 500 kV 629,2 — 629,2 — 47%

OHL 220 kV 1 280,3 — 1 542,4 +28,3

34% OHL 110 kV 4 694,3 –4,3 6 465,4 –10,4

OHL 35 kV 3 396,5 +12,09 3 652,9 +6,3 OHL-35 kV OHL-500 kV OHL-220 kV OHL-110 kV

High-voltage overhead lines maintained by the Company’s branches, along the route, km.

AES BES BuES EES KES NkES NchES PES ChES

OHL-35 kV 875,7 465,1 345,9 212,8 4,0 357,1 0,00 448,1 687,42

OHL-110 kV 417,38 632,14 652,20 836,45 149,77 515,73 109,42 766,48 614,70

OHL-220 kV 184,84 102,12 219,72 47,52 46,66 300,01 0,00 263,40 116,12

OHL-500 kV 200,60 0,00 0,00 0,00 158,13 270,48 0,00 0,00 0,00

Total 1 678,54 1 199,39 1 217,82 1 096,75 358,57 1 443,32 109,42 1 477,95 1 418,23 Grid Company 33

The total length of cable lines of 35-110 kV owned by the Company is 128,01 km along the route, including cable lines of 35 kV – 8,81 km, and cable lines of 110 kV – 119,2 km.

High-voltage cable lines maintained by the Company’s branches, km.

AES BES BuES EES KES NkES NchES PES ChES

CL-110 kV — — — 0,48 48,63 — 68,77 1,32 —

CL-35 kV — — — — — — — 6,67 2,14

Total — — — 0,48 48,63 — 68,77 8,00 2,14

The number of substations of 35-500 kV, used by the Company did not change in 2012.

High-voltage substations maintained by the Company’s affiliates, piece

AES BES BuES EES KES NkES NchES PES ChES Total SS 35 kV 30 21 14 11 0 17 1 18 23 135 SS 110 kV 18 28 27 35 25 25 12 33 19 222 SS 220 kV 4 1 1 1 2 2 0 2 1 14 SS 500 kV 0 1 0 0 1 0 0 0 0 2

All in all there are 740 power transformers (АТ) at the SS of 35-500 kV with the total capacity of 16 488,3 MVA.

Power distribution networks

Variation of the capacity of the Company’s power distribution networks

01.01.2011 01.01.2012 01.01.2013 OHL-6(10) kV, km. 23 717,0 23 353,0 22 791,5 OHL-0,4 kV, km. 28 056,0 28 301,0 26 042,0 CL-6(10) kV, km. 4 173,0 4 263,0 4 242,1 CL-0,4 kV, km. 4 792,0 4 926,0 5 024,9 TS (CTL, RS), piece 16 935 17 130 17 192 OHL-0,38 kV with self-supported insulated wire (SSIW) make up at present 19,72% (5135 km) of total length OHL-0,38 kV (26042 km).

Power distribution networks maintained by the Company’s branches

AES BES BuES EES KES NkES NchES PES ChES TS 6-10/0,4 kV, it. 1 896 1 404 2111 2 190 1 837 2 089 592 2 637 2 241 RS, it. 9 11 2 4 93 20 34 21 1 OHL-6(10) kV, km * 1 893,2 2 073,3 3 848,9 3 659,2 323,6 2 968,6 100,6 4 006,9 3 917,2 OHL-0,4 kV, km * 2 695,0 2 031,3 3 883,0 3 999,6 1 549,7 2 941,7 152,9 4 700,2 4 088,6 CL-6(10) kV, km 258,1 112,9 52,0 163,3 1 910,8 396,1 984,7 274,9 89,4 CL-0,4 kV, km 256,0 240,3 55,5 318,7 1 397,8 1 387,6 1 154,9 144,5 69,5

* along the route 34 PRODUCTION ACTIVITIES

Protective relay and automatics Total amount of power supply, history of losses in electric power networks, mln. kWt-h As of 01.01.2013 there were installed 53 018 devices of protective equipment, automatic protective devices and emergency control system (as of 01.01.2012 – 50 727 devices) in the Company’s networks of 6÷500kV. The increase in number of protective devices 73 93 56 68 totaled 2 291 pieces in 2012. 90 5 9 4 0 6 3

00 84 84 1

During the reconstruction of the existing protective relay devices 1 19 18 5 9 4 17 19 58

and the construction of new substations the microprocessor-based 1 20 000 17 relay protective devices are preferred. 19 As of 01.01.2013 there are 17469 microprocessor-based and microelectronic protective relay devices (32,95% of the total number of protective relay devices) and 35 549 electromechanical devices 15 000 (67,05%).

Number of Protective Relay Devices according to the element base 10 000

Total, it. % of total number Protective relay devices 01.01.2012 01.01.2013 01.01.2012 01.01.2013 5 000 Electromechanical 35 851 35 549 70,67 67,05 devices 0 Microelectronic and 2010 2011 2012 14 876 17 469 29,33 32,95 microprocessor devices power supply to the network effective power power losses

TOTAL: 50 727 53 018 100 100 The reported loss of the Company at large reached 7,69% of the supply to the network whereas the norm is 9,51%, the economy The number of Protective Relay Devices according to the amounted to 363 million kWh. In comparison with the similar period element base at the Company’s facilities, pieces of the previous year the reported loss reduced by 88 million kWh or 8,13% (the loss of 2011 is shown at the moment of grid output in 51 76 69 2012). 8 8 5 4

The reported loss of the distribution power network of 10-0,4 kV

40 000 14 17 35 35 49 in 2012 made up 9,37% whereas the norm is 10,44%. The economy 35 000 amounted to 108,5 million kWh. In comparison with 2011 the loss of the distribution network of 10-0,4 kV reduced by 51,8 million kWh. 30 000

25 000 The history of power losses in the distribution network of 10-04 kV, mln. kWt-h 20 000

15 000 1 100 54 0 946 10 000 1

5 000 27 972 0

0 1 050 1 as of 01.01.2012 as of 01.01.2013 electromechanical devices microelectronic and microprocessor protective relay devices 976 During 2012 the protective relay devices at the Company’s 980 facilities went off 8 432 times (in 2011 – 9 346 times), including 1 000 proper operation 8 387 times (the percentage of proper operation – 99,47%), improper – 45 times (the percentage of improper operation – 0,53 %).

950 Electric power transmission

In 2012 the supply of electrical power to the networks of the Company amounted to 19 993 million kWh. Meanwhile 18 456 million kWh were transmitted to consumers and adjacebt network 850 companies at the boundary line of balance inventory. To compensate 2010 2011 2012 the losses in electric lines the Company acquired 1 537 million kWh. standard losses actual losses Grid Company 35

The power loss reduction was made due to realization of the Supplier started working on the market of the Republic of Tatarstan logistical plan in the following directions: signing a power consumption agreement at the wholesale and retail markets and direct service consumers purchasing electric energy • technological loss reduction: switching off in the regime of and power on their own for their own use on the wholesale market slack hours of the transformers in the substations with two for electricity and power. or more transformers; optimization of the joints of double- In 2012 the JSC “Grid Company” concluded agreements of end feed lines; optimization of the working voltage in the electric power transmission with five utility companies: subfeeder of star networks; switching off transformers with season-depended load; balanced loads in the electrical • LLC “RUSENERGORESURS”; networks; • LLC “RUSENERGOSBYT”; • the reduction of business losses: detecting unauthorized • LLC “PEST”; and unlicensed energy consumption; • LLC “Regional power supplier”; • improvement of electric power metering: installment of • LLC “Magnet-Energo”; metering devices at the border line; replacement of power metering devices with multifunctional ones with power profile; And the direct power consumer – the JSC “KazanOrgSyntez”. introduction of distant monitoring systems; introduction of The range of power transmission services to the Consumers automated electric power accounting systems and automated of the Guaranteeing Supplier in 2012 made up 18 251 million systems of electrical power technical record-keeping. kWh, consumers of other power supplying companies and the JSC “KazanOrgSyntez” – 4 188 million kWh. Thereby 81,34% of Loss reduction is also achieved due to the construction, the overall service scope are the services of power transmission reconstruction, major and minor repairs of network units. to the consumer of the Guaranteeing Supplier and 18,66% – to In 2012 other power supply companies, acquiring energy for the consumers of other energy sales organizations and the JSC benefit of the customers of the Republic, besides the Guaranteed “KazanOrgSyntez”.

The shares of other energy sales companies in the overall Shares of the SSO in 2012, power transmission companies made up in 2012, million kW million kWh

12,5% 1,5% 1,5% 81,34% 1,7% 3,2%

5,1% 46,3%

9,9% 0,01%

8,23%

1,36% 5,4% 18,2% 0,01% 3,6%

the JSC “TESb” the LLC “REK” the LLC “RESb” the LLC “RER” the LLC “PEST” the LLC “M-E” The LLC “Kamaz-energo” The JSC “Tatneft” The JSC “Nizhnekamskneftehim” the JSC “KOS” The LLC “PES” SRR – the affiliate JSC ЭКК”RRR” The JSC “The Gorbunov KAPO” The JSC “The Karpov Himzavod” The JSC “Kompressormash” Other CCO (42 enterprises)

There were 49 agreements signed on paid services of the JSC “Grid Company” with co-operating network companies. The power supply scope of services provided by the co-operating network companies made up 4 207 million kWh. 36 PRODUCTION ACTIVITIES

Technological connection

20 452 applications for connection of the applicants’ energy 2. Generating units of small capacity, the total capacity receivers to the power network of the Company with the total amounts to 48, 356 MW: capacity of 975,458 МW were received In 2012. In comparison with 2011 the number of the applications increased by 23,6%. • 3 Mini-HP the V. Shashin JSC “Tatneft” Oil Refinery 18 957 contracts on technological connection with the total Board Control “Alimetievneft” in Alimetievsk with the capacity of 733,522 МW were signed in 2012, including: total capacity of 24 MW; • Gas Turbine Station JSC “Tatnefteotdacha” in the set- 1. the JSC “TANEKO”, a complex of oil refineries and petro- tlements Usaevo and Shigaevo in the Sarmanovsk re- chemical plants – 87,6 MW within the voltage level 220 kV; gion, the total capacity amounts to 860 kV. 2. High-Tec Industrial Park “IT-park” – 2,465 MW within the voltage level 110 kV; 15 404 contracts with individuals and 3 553 contracts with le- 3. the JSC “Real Estate Agency RT” comprehensive develop- gal entities were entered in 2012. The number of contracts entered ment along the highway “Кazan-Zelenodolsk” – 9,0 MW; in 2012 increased by 25,6% in comparison with 2011. 4. reconstruction of Republic’s Clinical Hospital and Chil- 16 362 contracts (22,9% more than in 2011) were performed in dren Republic Clinical Hospital in Kazan, the total capacity 2012, including 13 696 with individuals and 2 666 with legal enti- amounts to 5 MW (power increase). ties, total capacity amounts to 303,758 MW. 50 units passed the procedure of coordinating engineering The contracts on technological connection of the following specifications with the transmission system operator in the frame- generating units were entered: work of pre-contract work in 2012, the total capacity amounts to 189,408 MW. 1. With the affiliate of the JSC “Generating Company” Kazan CHP-2 on the technological connection of MTD, the total maximum capacity amounts to 220 MW;

The change of the number of applications for technological The change of the number of applications for technological connection and performed contracts, pieces connection and performed contracts, pieces, MW 52 57 62 9 4 3

21 000 18 16 20 62,540 407,781 321,758 801,082 240,520 975,458 303,758 733,522 0 684,900

13 1 89 3 0 5

1 100 13 15 16 46 26 02 68 0 4 5

11 13 14

880

14 000

660

440 7 000

220

0 0 2010 2011 2012 2010 2011 2012 applications, qti. contracts signed, qti. contracts executed, qti. applications, qti. contracts signed, qti. contracts executed, qti. Grid Company 37

Work with individuals and legal entities. Customer feedback

Customer feedback, whether it comes from an individual The majority of applications come through the web-site of the or a legal entity, has been the only instrument to assess the Company – 51%, through the “hot-line” – 41%, an insignificant part – work of the Company and to plan its further actions in terms of from the JSC “Tatenergosbyt”- 8 %. preventing situations mentioned in the customers’ applications, particularly when they are systemic complaints. The feedback Classification of applications submitted does not only make the Company more customer-oriented but in 2012 according to basic categories, % also contributes to the development of the infrastructure of the Republic of Tatarstan. Such work should result in reliable functioning of the network infrastructure, whether it concerns quality and reliability of the system or the prompt performance of all the operations 29% entrusted to the network, from technological connection to the preparation of contracts of free-lance consuming. The applications arrive at the Company through three major channels: by postal service or direct submission to the 30% department/group of documentary service of the Company; since 2009 the reception of electronic messages has been performed on the official web-site of the Company via the communicative resource “Feedback” and since October of 2010 through the hot line, which is now functioning as a free “united” phone 8-800-2000-878. On the official site of the Company in the section “To Clients” every client can read 7% about the normative legal documents regulating the Company’s activity, learn about the procedure of making an agreement, 18% and transmission of electrical power. 16%

technological connection unauthorized connection to the network quality of the power and condition of the networks the schedule of measuring devices installation other

The analysis of submitted applications makes it possible to name Applications, channel type, % the following basic categories:

• terms of technological connection (29% of the total number of applications); 8% • non-authorized connection to the power network (18%); • the quality of the energy supplied and the network condition (16%); • the procedure of metering devices installment (7%); 51% • other problems (construction and removal of electric power lines, pylons, standard transformer stations, appeal against the actions of officials).

In 2012 there was an increase in the number of applications related to removal of overhead power lines and transformer substations (14% of the total number of applications). In 2012 the Company received 12 letters of acknowledgement from the customers, related to the prompt handling of their requests through the services “Hot –line” and “Feedback”. 161 phone inquiries were made through the Hot-line service; 41% each of those received comprehensive answers. With the purpose of improving customer feedback service a public opinion poll was undertaken among the customers who applied through the Hot-line to find out their opinion on the quality of services provided by the staff of the company, the quality and reliability of power supply in 2012. On the basis of web-site of the JSC “Grid Company” hot line of the JSC “Grid Company” the questionnaire analysis a plan of actions on improvement of the JSC “Tanenergo”, the JSC “Tatenergocbyt”, letters the quality of service and the services provided was worked out. 38 PRODUCTION ACTIVITIES

Comparative analysis of applications in 2010-2012 An applicant who decided to apply for the technological according to their categories connection to the power supply network of the Company can do it after signing up on the Company’s official site http://www.

177 gridcom-rt.ru in the section “For Customers”. The service in 402 455 500 question can provide the following additional services:

• to learn about the status of applications submitted 400 earlier; • to arrange an appointment with an expert of the Technological

300 connection branch or the Company’s electrical supply region for an emergency consultation or immediate application for a technological connection. 37 82 115 130 102 200 134 The new electronic service is a mutually beneficial instrument

74 which simplifies the interaction between the Company and provides 14 24 60 85 84 100 maximum transparency of technological connection service. 20 33 40 The Company developed and published a guide to technological connection. All the details on technological connection are thoroughly 0 covered on the official web-site of the Company in the section “For total number quality of unauthorized technological measuring other Customers/Technological Connection”. There are also necessary electric power consumption of connection devices electrical power application forms to fill in and other necessary information which is constantly being updated. According to the “Yandex-Metrica 2010 2011 2012 service” this section is the most popular one on the official website of the Company. Transparency, openness and client-centered approach are For more on information subject to disclosure according to the Company’s fundamental principles of cooperation with the requirements of the Disclosure Standards for participants in consumers and applicants. the wholesale and retail power engineering market, approved Since 2012 the Company has dealt with the inquiries through by Decree No.24 dated 21.01.2004 of the Government of the a new format – in electronic writing on its official site. The Private Russian Federation Информации, go the Company’s official Office of the customers has been tested on the testing server website http://www.gridcom-rt.ru, section “About the Company/ and is available now on the official site of the Company. Disclosure Standards.”

Maintenance and repairment

Maintenance of the Company’s facilities • fireproof treatment of 2286 square meters of cables on substations; Maintenance is one of the Company’s fundamental activities • acoustic assessment of the condition of stick-pedestal performed to sustain the power supply network in operating insulators of the switchgear of 110-500 kV, 3669 pieces in total; condition. • condition monitoring of the ground loops of 78 substations, In accordance with operating rules and “The rules of maintenance electromagnetic environments assessment of 19 substations; engineering and renovation (СО 34.04.181-2003)” for providing restoration of the ground loops of 9 substations; uninterrupted power supply to the consumers the Company is • integrated survey of 33 power transformers; monitoring constantly carrying out engineering maintenance of the electrical of the partial charges of 313 pieces of equipment (power power networks. transformers, metering transformers and coupling In 2012 the engineering maintenance of high-voltage networks capacitors); and the equipment of the substations of 35-500 kV in the branches • acoustic monitoring of 197 porcelain columns of oil circuit of the Company was accomplished in accordance with the schedule breakers. of maintenance engineering. The preventive maintenance planned for 2012 was fully Key events of engineering maintenance of OHL of 35-500 kV: completed. The overall budget for engineering maintenance of power transmission lines of 35-500 kV and the equipment of the • right-of-way clearing of OHL of 35-500 kV was done, total substations amounted to 225,8 mln. rubles in 2012 (in 2011 – area 271,1 hectares; 220,158 mln. rubles). • 7 003 signboards and billboards were restored; • alignment of 732 supports; Key events of engineering maintenance of substations of 35- • monitoring of condition of 941 supports; 500 kV: • checking of corrosion coating of 641 metal support, crossarms; • herbicide chemical treatment of 99,7 hectares on the • checking of operating condition of support construction and substation switchgear; foundations of OHL of 35 kV and more, 3831 pieces. Grid Company 39

In 2012 the affiliate of the JSC “Grid company”, Kazan Electric The share of non-contracted work done in 2012 in monetary Networks, for the first time in the history of the Company undertook terms amounted to 147 385 thousand rubles, or 11,77% of total malfunction diagnostics of 6 cables of 110 kV insulated with cross- funding for repairs. linked polyethylene, to determine the wear-out rate in partial load mode. History of repair expenditures To provide reliability of switching units there were introduced 14 gas-insulated switches of 110 kV and 225 switches of 10 kV, Type of object 2010 2011 2012 2 vacuum-operated switch of 35 kV and 229 vacuum-operated switch of 6-10 kV. Backbone network 358 256 315 056 400 200 The expert maintenance management system “Albatros” implemented by the Company allowed to systematize the Distribution network 416 315 470 139 641 848 diagnostics of oil-filled high-voltage equipment and contributed to malfunction control and taking preventive measures at the earliest Facilities 139 597 157 065 151 067 stages. Other 52 155 59 135 58 833 Distribution network maintenance TOTAL: 966 323 1 001 395 1 251 948 In order to keep the distribution networks in operating condition between overhauls the Company’s branches implement constant maintenance. Accomplishment of actual volume of overhaul of the In 2012 engineering maintenance plan of the Company’s Company’s fixed capital assets in 2010-2012 distribution networks was implemented, which included contract Metric work for a total amount of 210 mln. rubles (in 2011 – 165 mln. Objects repaired 2010 2011 2012 rubles). The costs for materials, protection, tools in 2012 made up units 109,74. mln. rubles (in 2011 – 94,6 mln. rubles). BACKBONE NETWRORK:

Fundamental distribution networks maintenance events: Integrated repair of substations ieces 16 16 10 of 35-500kV • right-of-way clearing of OHL of 0,38-10 kV was done, total area 876,3 hectares; Equipment overhaul thousand 129 984 102 328 174 856 • restored 11833 lead-ins into residential houses; of substations of 35-500kV rubles • updated the numeration on OHL and transformer substations, 60680 pieces; Overhaul (medium) of power • fire-protection paste coverage of CL of 10 kV, total amount pieces 38 35 12 10115 square meters; transformers of 35-500 kV • installation of 3 286 distribution devices in apartment buildings. Overhaul of OHL of 35-500kV km 440 443 1 200,7 (standard) In 2012 there was organized heat monitoring control of the Replacement of defective concrete distribution network equipment (a training session, monitoring of 2 pieces 112 149 77 679 units, malfunction found in 998 ones). Heat monitoring control poles of OHL of 35-500kV allows to assess the current state of the elements on the OHL and Replacement of defective ground TS at the earliest stages. km 236 124 178 wearer of OHL of 35-500kV The usage of such up-to-date techniques reveals even minor defects, which might cause severe accidents of the networks, and Replacement of defective insulators thousand 10,2 9,5 12 allows the experts of the Company rule out the possibility of such of OHL of 35-500kV pieces events. DISTRIBUTION NETWORK: Repair activity Overhaul of TS (RS) 6-10/0,4kV pieces 449 592 198 Structure of repair costs in 2010-2012, thousand rubles Overhaul of OHL of -10kV km 563 586 6 167 Kind of repair 2010 2011 2012 Overhaul of OHL of 0,38kV km 590 519 465 Repair of transfer devices 403 564 404 457 726 405 km 37,3 37 36,5 Repair of equipment 388 981 405 800 342 301 Overhaul of Cable Lines of 0,38-10kV rep 884 816 1 172 Repair of facilities 139 597 157 065 151 067 Overhaul of power transformers pieces 231 205 198 Repair of vehicles 34 181 34 073 32 175 of I-III dimension mln. FACILITIES 139,597 157,065 151,067 TOTAL: 966 323 1 001 395 1 251 948 rubles 40 PRODUCTION ACTIVITIES

Including the repair of the backbone network units – • reducing the conductor sag of OHL of 35-500 kV in Substations of 35-500kV: accordance with с Electrical Safety Rules with foundation of 15 additional supports; Overhaul of the SS of 110 kV in Bishbatman, SS of 35 kV in Tat. • replacement of the defective overhead ground-wire cable on Burnashevo (BuEN); SS of 35 kV in Biryuchevka (BEN); SS of 110 kV the на sections of the OHL , total length 178 km (including in Mirnaya (KEN); SS of 110 kV in Poisevo, SS Gigant, SS Alachevo 14 km at the section of the OHL of 500 kV of ZaiGRES – and SS of 35 kV in Tl. Tamak (NkEN); SS of 35 kV in Burmetievo and Bugulma); SS Kolchurino (ChEN). • replacement of 77 defective concrete supports of the OHL There was implemented a standard overhaul of 2 power trans- on the base of the pre-overhaul analysis; formers, including the work at AT-2 of SS of 220 kV in Kutlu- • replacement of 12 thousand defective insulators; Bukash (PEN); medium overhaul with the lead-in replacement of • repair of 246 foundation and 1071 grounding devices of the 6 transformers of 110-220 kV; medium overhaul with LTC inspec- supports of OHL of 35-220 kV; tion or LTC gear – 1 transformer; medium overhaul eliminating oil • in compliance with the prescription of the Federal Service leak (with opening transformers by replacement of rotary selector for Ecological, Technological and Atomic Supervision there switch) – 3 transformers. 14 high-voltage lead-ins of 110-220 kV was accomplished the painting of metal joints and details were replaced. of 87 supports of the OHL of 220 kV of the Kazan power distribution system. In the framework of the overhaul of the facilities of SS of 35- 500kV the following works were carried out: Including the repair of the objects of the distribution network of 0,38-10kV: • repair of 280 switches of 6-220kV; • repair of 161 circuit breakers of 35-500kV; • during the overhaul of OHL of 6-10 kV there were replaced • replacement of 46 phases of discharges and SPD on SPD 6812 supports and 326 km of the wire (along the route); of 6-110kV; • during the overhaul of OHL of 0,38 kV there were replaced • replacement of 6 PT of 6-110kV; 2 989 supports and 71 km of non-insulated wire (along the • replacement of 148 phases CT of 6-110 kV; route), 68 km on the Still Insulted Wire (along the route), • replacement of 104 support polymer insulator on the open replaced 4 066 leading-in connections into the residential distributor gear of 35-110 kV and 78 wall tube insulators in houses; the distributor gear of 6-10 kV. • repair of 75 units of closed Transformer Substation of 6-10/0,4 kV, 14 units of regional substations of 6-10/0,4 kV, 109 units of Besides: packaged transformer substations of 6-10/0,4 kV (including factory repair of the case – 96 units); • repair of Main control Panel with the replacement of the bat- • 850 repairs of CL of 6-10 kV, 322 repairs of CL of 0,38 kV, tery units elements on the SS “Aktash” of the NPS; including that during the overhaul of the CL of 0,38-10 kV • repair of the alternating current devices in the SS of 110 there were replaced 6,5 км defective sections of the cable, kV in Makulovo, SS in Apastovo and SS in Kuralovo of the herewith there were assembled 2244 units, outdoor cable BuEN; sealing ends – 76 pieces, terminations – 156 pieces; • repair of the MV protection of the transformer with the re- • horizontal directional drilling at the sections of the total length placement of the accumulator battery in the SS of 220 kV 2979 м; Pismianka and SS of 110 kV in Potap-Tumbarly, repair of • after the repair on CL – land improvement, the total area 39 the direct current devices in the SS of 110 kV in Neftyanik 165 м2; BEN; • overhaul of 38 units of main switch room in residential • repair of the direct current devices in the SS of 110 kV in apartment buildings (NChEN). Kulushchi and SS in Kirmeni EEP; • repair of 9 КS-500 SS Kinderi-500, 7 В-110 in the SS of Including facilities: 110-220 kV with the replacement of 8 high-voltage lead-ins, repair of the CL of 0,4-10 kV in-house needs in 5 SS of KEN; • overhaul of industrial, administration and amenity buildings • restoration repair on the opening distributing devices ОРУ- at 83 substations, 27 REN; 110 kV и ОПУ ПС 220 kV at Kutlu-Bukash (PEN); • overhaul of the constructional part of the facilities of TS-RS • repair of direct current devices in the SS of 110 kV B.Mataki 637 units; and SS of 110 kV Antonovka of ChEN; • repair of oil-receivers under power transformers – 35 pieces. • repair of round loops in 58 distribution devises of SS of 35- • repair of the perimeter fence at 31 SS, total length 7 502 220 kV; lineal meters; • repair of the local back-up protection during the restoration • overhaul of inner production space – 89 objects; in the SS of 220 in K.Bukash; • overhaul of the fronts of 153 objects, total area 16946 • repair in 1735 switchgear cells of 6-10 kV with restoration of м2; the systems of high-speed protection of arcing fault. • overhaul of roofing at 258 objects, total area 21108 м2, • repair fire and security alarm systems and video surveillance Including the repair of the objects of the backbone line – ETL at 18 objects; of 35-500 kV: • overhaul of inside passages, improvement and paving of the territory at 160 objects of the affiliates JSC “SK”, total area • standard overhaul of 129 OHL 35-500 kV; 11549 м2; Grid Company 41

• repair of engineering lines (water supply system, heating Major repair of the fiscal year: system, sewage system) at 25 units, total length 2541 km.; • engineering certification of building and structures at 3341 • goal-oriented program “Adjustment of school and pre- units; school facilities to the requirements of the technical standard” • by special organizations there was accomplished survey of (35 objects); 1865 constructions with a lifetime of more than 25 years. As • goal-oriented program “Repair of TS with replacement of the a result of the survey there were determined 285 buildings transformers of I-III dimensions” (42 transformers); in limited operation condition and 12 buildings of TS-RS in • goal-oriented program “Repair of direct current devices like pre-emergency condition. BPT, BPN, BPNS, UPNS” (at 9 SS).

Maintainenance and development of power energy accounting and metering. Metrological guarantee of production

The relationship between the buyer and the seller is primarily Level of automation of power accounting in the Company based on quantity, quality and price assessment of the product. Electrical energy is a product, consequently it should be paid for, which means that we cannot function without strict accounting. The Data of the substations key device used for energy accounting is an electric meter. Organization of electric power accounting is conditioned by the requirements of the Federal Law No.261-FZ “On Energy Conservation and Efficiency and Introduction of Amendments to Certain Acts of Law of the Russian Federation” dated 23.11.2009. Article 13 specifically indicates that produced, transmitted, consumed energetic resources are subject to mandatory accounting by applicable electric power metering devices. As of today there is a wide choice of metering devices by both 44% domestic and foreign manufacturers. Each of them has its own technical characteristics besides the standard ones, and also various sets of functional capability. Recently, modern multifunctional power 56% metering devices have become more and more popular. They can also be used as part of automatic power accounting systems. This tendency is taken into consideration at the time of accomplishment of administrative and technical measures applied for improvement of power accounting in the Company.

Maintenance of electric power metering devices

To support the accounting devices and means in proper condition a work package is provided for their maintenance and Switched on to the АИИС КУЭ и АСТУэ not switched on to the АИИС КУЭ и АСТУЭ metrological support. In 2012 as part of maintenance 11,1 thousand metering devices Data of DS (TS) were replaced, 21,3 thousand metering transformers of 0,4 kV, 3,8 10% thousand external metering boards were installed. Priority is given to distant-reading metering devices. In 2012 the share of such metering devices was 38%. Afterwards this proportion will be kept. We accomplish annual maintenance of the equipment of automatic information and measuring systems. In 2012 maintenance was carried out on 197 substations of the Company and 9650 units of the distribution network.

Development of information and energy measuring systems

Every year we can observe the growth of automatic measuring of energy. In 2012 there was introduced equipment of automatic data measuring systems in ADMS CMS on 15 substations, including renovation on 1 SS, ADMS are used in 2289 units. As of January 1, 2013 122 substations enter the ADMS CMS of the Company’s branches. 192 controllers are installed, 3423 90% objects are included into the data-measuring system. ADMS was installed in 10081 electric power units (SS – 92 pieces, RS -112 pieces, TS -1231 pieces, etc.). included in the ADMS not included in the ADMS 42 PRODUCTION ACTIVITIES

Meanwhile the level of automation on the substations with the • testing of measuring means – 6 671 pieces; voltage of 35 kV and more amounted to 56%, and in the distribution • calibration of measuring means- 25 661 pieces; system – 6-10/0,4 kV – 10%. • testing of CT - 895 pieces; In 2012 the Company management introduced into operation • calibration of CT- 1 575 pieces; data acquisition and processing center of the united corporative • testing of VT – 732 pieces; automatic electric power data-measuring system of the JSC “Grid • calibration of MC of EMS – 2 859 pieces; Company” on the platform of the software of the data-measuring • checking of elements in MC ASCAPC – 2 465 pieces; system “Pyramid”. • calibration of elements in MC ASCAPC – 5 460 pieces; The developing of the united corporative automatic power data- • repair of measuring means – 5 446 pieces. measuring system on the platform of the software of the data- measuring system “Pyramid” is going on. At the second stage of Testing of modern measuring means and electric power adaptation of installation of this software there were accomplished measuring systems synchronization of the branches’ and the Company Management databases and other algorithms, which help to enhance the Taking into consideration the last amendments in the law of the authenticity of the data and save efforts on system configuration Russian Federation and appearance of advanced means and system and creating reporting and graphic forms. In 2012 an algorithm of of power measuring we faced the need to work out new approaches the peak-load assessment was introduced into the software of the to energy saving and improvement of measuring. Nowadays the data-measuring system “Pyramid” in accordance with paragraph decision on financial placements are taken to maximize the profit 15.1 of the “Rules of non-discriminated access to the services of of a certain business unit in the field of electric power industry, electric power transmission and providing these services”. achievement of planned levels of production profitability, distribution, Since 01.07.2012 in compliance with the agreements on transmission and consumption of energy. providing power transmission services, agreements on data The advanced means and system of measuring are introduced exchange and confidential disclosure agreement there was only if they have shown good results at their pretesting on the base organized the data exchange between the automatic power data- of the affiliates. It helps to assess the efficiency of the event for measuring system of the JSC “Grid Company” and automatic taking a balanced resolution for realization of prospective projects. power data-measuring system of the participants of the electric One of the urgent question concerned energy measuring is power wholesale market (EPWM): the reduction of unaccounted consumption of energy, including taking the devices out of the households. In 2011 – 2012 there • The JSC “Tatenergosbyt”; were tested the ADMS of such Russian producers as LLC “Matrix” • The LLC “RUSENERGORESURS”; (Zheleznodorozhny) and CJSC “RiM” (Novosibirsk). • The LLC “PEST”; The characteristic feature of the systems in question is that the • The LLC “RUSENERGOSBYT”; meter devices are installed directly at the transmission support (on • The JSC “KazanOrgSintez”; the border of balance responsibility and operational responsibility). • The LLC “Regional RETAIL ENERGY SALE COMAPNY”. This circumstance entirely eliminates an unauthorized connection for unaccounted energy consumption. At present data exchange between the participants of the During the testing period of ADMS NU-05 IMS produced by EPWM and REM is carried out through 4 439 channels. LLC “Matrix” as soon as the system was installed the actual loss of electrical energy was determined. Besides it is worth mentioning that Metrological guarantee of production the system is quite reliable, the equipment did not fail a single time. Since 2006 in the branches of the Company such devices as The following activities were performed in 2012 in the framework “SOEB-2PDR-65” and “СТEB-04N/1-ZDR” (and their analogues) of metrological guarantee of production during transmission and produced by CJSC “RiM” (the so-called meters “Squealer”) spread, distribution of electric power: the data of which one can take with a portable reader. At the moment there are 6200 meter devices in operation. 1. An extraordinary inspection of metrological services of the In the framework of testing the system RMS 2150 produced company to control elimination of defects, determined by CJSC “RiM” there was estimated the possibility of remote during scheduled inspections in 2011. transmission the data from both the old (like metering devices SOEB 2. Scheduled recertification of the staff of the metrological services and STEB) and the new bars of metering devices made by RiM. The of the affiliates to perform the work of meter devices calibration. stable enquiry of all the metering devices within a untied automatic All in all there were 15 people recertified in 7 affiliates. system was noticed, whereas the usage of the devices of the new 3. The program of technical re-equipment of the metrological system allows organization of the network of data transmission cervices of the branches with up-to-date standard without additional channeling equipment, while the devices like machines and devices of monitoring (calibration) the SOEB and STEB require the installation of special concentrators. measuring means and data measuring systems on-site in In 2012 the republican enterprise CJSC “Vostok-Sky” issued the authorized accreditation scope. a series of advanced multifunctional metering devices with an 4. In the framework of the approved Program of technical re- integrated GSM modem and a modification with an electronic equipment of the substations of the Company with the up-to- USB-key. The devices were tested in the “Chistopol electric power date digital panel-mounted instruments, 3427 digital panel- network” branch of the Company. mounted devices were installed in the affiliates’ substations. In the Company’s branch “Yelabuga Electric Power Network” a 5. The following works were accomplished for the technical new bar of the data measuring equipment “Pyramid” produced by and metrological services of measuring means and data- the CJSC of the ITPh “Systems and Technologies” (Vladimir) was measuring systems: tested. It was done for the purpose of estimating the possibility of Grid Company 43

the equipment of ADMS applied for electric power accounting in to check whether they meet the requirements of the technical the distribution network of the Company. As a matter of course standard documents. the merits and demerits of the system were determined and During 2012 there were undertaken 248,5 thousand of checking improvement proposals were put forward, which were taken into of the metering devices at legal entities’ site and 1 152 thousand of consideration and corrected during the testing. As a result it was checking of the metering devices at the individuals’ sites. decided to use the equipment in question to build the ASCAPC in In accordance with the Federal Law No.107-FZ “On Computation the distribution network in Yelabuga. of Time” dated 07.08.2011 10,4 thousand metering devices were The decision of the introduction of metering devices is reprogrammed on the territory of the Republic of Tatarstan in 2012. taken on the basis of positive results of the testing as part of Among them 4,6 thousand metering devices were reprogrammed maintenance of the electric power measuring means and by the Company’s employees, wherefrom 805 electric power construction of ADMS. metering devices were reprogrammed on request of the consumers. In accordance with the Federal Law No.261-FZ “Energy Conservation Interaction with the consumers of electric power and Efficiency and Introduction of Amendments of Certain Acts of Law of the Russian Federation” dated 23.11.2009 consumers were provided Engineering survey of customers’ metering devices (both of with the chargeable service of programming, installation, replacement, individuals and legal entities) was accomplished for the purposes of dismantlement and putting into operation metering devices. In 2012 compliance with the law concerned accounting the electric power, about 18 thousand consumers’ requests were executed.

Energy conservation and resource efficiency

Cost Management Program • environmental protection cost saving; • facilities maintenance cost saving; In the framework of implementation of the program “Lean • court cost saving; Manufacturing” and Company’s work on cost reduction the JSC • auditing services cost savings; “Grid Company” launched the Program on Cost Management in • acquisition of income due to effective placement of 2005. In 2012 the following events were added to the Program: temporarily disposable monetary resources; • saving on efficient acquisition procedures. • process loss reduction; • revenue loss reduction; Economic impact of the above events in 2012 made up • repair cost saving ; 5,7% of cost of sales. • management cost saving; • non-productive services cost saving; • surplus property storage cost saving; Information about the quantity of all the types of power resources used by the Company during the fiscal year

48% The information about the quantity of all the types of power energy used by the Company in the year under report in physical and monetary terms is shown for the purpose of implementation of the Federal Law No.261-FZ “Energy Conservation and Efficiency and Introduction of Amendments of Certain Acts of Law of the Russian Federation” dated 23.11.2009 in accordance with the Regulation on public disclosure of the information by the issuer of securities, approved by the Order of FFMS of Russia No. 06-117/ pz-n dated 10.10.2006. Physical indicators Monetary indicators Name Unit Quantity thousand rubles Thousand 1% Thermal energy 23 838 26 772 Гкал Thousand 4% Electric energy 38 838 79 462 kWt.h 43% 1% Gasoline ton 2 266 66 789 2% Diesel fuel ton 1 191 34 225 1% Compressed gas thousand м3 — — Condensed gas thousand l — — reduction of the technological power loss reduction of the commercial power loss Other kinds of fuel ton — 5 813 reduction of the cost related to the superfluous property maintaining TOTAL - — 213 061 reduction of costs related to environmental activity acquisition of revenue from outside regular business activities (from efficient placement of spare cash) efficient acquisition procedure saving Other kind of power resources, beside those shown in the table, other events were not used during the fiscal year. 44 PRODUCTION ACTIVITIES

Acquisition

Acquisition policies, regulating documents • independent acquisition by the Company’s affiliate or entering a direct contract; Proper organization of acquisition process enables the Company to satisfy its requirements for goods and services, contributes to rom 100 up to 500 thousand rubles, WAT included: acquisition transparency, attracts new participants and enhances • purchase through registration of competitive cards; competition between them, and consequently enables additional capital saving. from 500 thousand rubles, WAT included: The Company’s acquisition is regulated by the Federal Law • contest; No.223-FZ “On acquisition of goods and services by a certain group • auction; of entities” dated 18.07.2011, the Federal Law No.94-FZ “On order • offers; placement for goods and services for government and municipal • bid; requirements” dated 21.07.2005, the Regulation on acquisition • competitive negotiation; of goods and services for the JSC “Grid company”, approved by • single sourcing purchase; the Company’s Board of Directors dated 26.03.2012 (record of • purchase through the procedures organized by the sellers proceedings No. 9/2012 dated 28.03.2012), and other regulating of the produce. documents applied by the Company. Company’s acquisition is divided into three groups according The year package acquisition program of 2012 was realized to to the price. Each group predetermines a potential acquisition the full extent. procedure: The total number of purchases in 2012 made up 574 items, i.e. 27% more than in 2011. The total amount of acquisition amounted Up to 100 thousand rubles, WAT included: up to 8,6 billion rubles.

Structure of purchases undertaken in 2012 according to activity

Quantity, Total sum, thousand rubles Economic efficiency, Activity pieces (net of WAT) thousand rubles

Capital construction 190 5 386 081,2 477 520,8

Overhauls 184 1 114 302,6 264,4

Maintenance 83 542 145,3 7 453,3

Information technology 33 187 890,7 1 760,8

Transport, administrative support 22 881 466,4 1 367,3

Execution of lease relation, entitlement and technical specifications for the 19 163 552,1 26 120,4 power supply network facilities

Accounting and metrology 13 185 727,4 263,8

Other 16 169 569,3 55 986,1

TOTAL 560 8 630 735,0 570 736,9 Grid Company 45

Activity Quantity, pieces Total sum, thousand rubles Structure of purchases undertaken (net of WAT) Economic efficiency, thousand rubles in 2012 according to activity in monetary terms, %

15% 34% 63%

6%

3% 6% 2%

4% 2%

33% 2% 10% 3% 13% 2% 2% transport, logistics transport, logistics registering and metrology registering and metrology execution of rent, legal documentation and technical specifications execution of rent, legal documentation and technical specifications repair repair maintenance maintenance capital construction capital construction information technology information technology other other

The major quantity of purchases were made in the following In 2012 63% of the sum of all the purchases made up the capital directions: capital construction – 33,93%, repair – 32,86%, construction: delivery of equipment and materials, accomplishment maintenance – 14,82%. of planning and surveying, building and construction, start and adjustment work.

Structure of the economic impact due to the acquisition procedure according to the activity, % The biggest economic effect was reached in the capital construction, which is natural, taking into consideration the total sum of the purchases in this sphere. For more information on competitive acquisition procedures go to the official site of the Republic of Tatarstan where certain legal entities can place information about purchasing of goods, works, services – http://zakupki.gov.ru, or the official site of the Company 84% http://www.gridcom-rt.ru, section “Acquisition”.

0,3%

10%

0,2% 0,05% 5% 0,05% 1% transport, logistics registering and metrology execution of rent, legal documentation and technical specifications repair maintenance capital construction information technology other From conquering nature

INVESTMENT ACTIVITY AND INNOVATION DEVELOPMENT

From conquering nature to global transformations

The Company’s capital investment for 2012 amounted to 8606 million rubles. Among the most important projects were the reconstruction of SS Kinderi 500 kV, SS Central 220 kV and construction of SS Yelabuga 500 kV.

One of the major directions of the Company’s investment policies is extensive introduction of new technologies into the construction and re-construction of power facilities. In 2012 the Company carried out preparations for one of its most important projects of the year – the pilot project “Digital Automated Energy Accounting System”, which was tested on a testing ground at Kazan Electric Network.

INVESTMENT ACTIVITY 50 AND INNOVATION DEVELOPMENT

Investment Activity

Fundamental parameters of investment In the context of the change of the quantity of source of finance in 2012 the investment program of 2012 was updated. The Company’s investment program for 2012-2014 approved By the Order of the Ministry of Energy of the Russian Federation by Order No.476 of the Ministry of Energy of the Russian Federation No.467 dated 28.09.2012 the dimension of the Investment program dated 24.10.2011. of the Company in 2012 was changed and amounted to 528,43 The Company’s investment program for 2012-2014 considered mln. rubles (net of WAT) with the distribution of funds as follows: and approved by: • Reconstruction and construction of SS and OHL of 35-110 kV • The Ministry of Energy of the Republic of Tatarstan and the – 545,8 mln. rubles. Ministry of Energy of the Russian Federation; • Reconstruction and construction of SS and OHL of 220-500 • JSC «SO EES»; kV – 2109,05 mln. rubles. • Branch of JSC «SO EES» RDO of the power system of • Reconstruction and construction of distribution networks of 0,4- Tatarstan; 10 kV – 1789,79 mln. rubles. • Federal service of tariffs of the Russian Federation; • Assembling of automatic system for commercial measurement • Federal antimonopoly service of the Russian Federation; of power consumption- 214,99 mln. rubles. • The Ministry of Finance of the Russian Federation; • Reconstruction of protective relaying and automation – 93,13 • Economic Development Ministry of the Russian Federation; mln. rubles. • Ministry for Industry and Trade of the Russian Federation; • Organization of channels of communication and high-speed • Regional Development Ministry of the Russian Federation. digital channel – 288,53 mln. rubles. • Ready-to-operate equipment – 94,41 mln. rubles. The Company’s Investment program volume for 2012-2014 • Design and survey work – 104,63 mln. rubles. amounted to 22 763,4 mln. rubles (including WAT) or 19 291 mln. rubles • Other (ecology, network control center and site protection) – (net of WAT). 288,1 mln. rubles. The Company’s Investment program volumes in 2012 – 2014:

• 2012 – 7 192,8 mln. rubles (net of WAT – 6 095,6 mln. Investment rubles); Investment projects net WAT % • 2013 – 7 655,4 mln. rubles (net of WAT – 6 487,6 mln. (mln.rubles) rubles); • 2014 – 7 915,2 mln. rubles (net of WAT – 6 707,8 mln. Reconstruction and construction of SS and rubles). 545,8 10 OHL of 35-110 kV The Company’s Investment program volumes Reconstruction and construction of SS and in 2012 – 2014, mln. rubles 2 109,05 38 OHL of 220-500 kV

Reconstruction and construction of 87,6 07,8 7 4 1 789,79 32

0

6 6 distribution networks of 0,4-10 kV 6 95,6

Assembling of automatic system for 6 800 commercial measurement of power 214,99 4 6 700 consumption

6 600 Reconstruction of protective relaying and 93,13 2 6 500 automation 6 400 6 300 Organization of channels of communication 288,53 5 6 200 and high-speed digital channel 6 100

6 000 Ready-to-operate equipment 94,41 2 5 900

5 800

5 700 Design and survey work 104,63 2 2012 2013 2014 Other (ecology, network control center and 288,1 5 site protection) The volume of the approved investment program in 2012 was 7 192,8 mln.rubles. (including WAT), or 6 095,59 mln. rubles (net Total net of WAT: 5 528,43 100% of WAT). Grid Company 51

The Company’s Investment In the framework of the investment program the Company realized Program Structure for 2012, % the following projects in 2012. Reliable and non-interrupted power supply of Kazan region and erected and reconstructed Universiade 2013 facilities:

• Reconstruction of SS of 500 kV Kinderi; 32% • Reconstruction of SS of 220 kV К.Bukash; 11% • Reconstruction of OHL 220 kV Nizhnekamsk-К.Bukash; • Reconstruction of SS of 220 kV Central; • Liquidation of T-connector К.Bukash-Kinderi-Central with construction of OHL of 220 kV К К.Bukash-Central; 9% • Reconstruction of OHL of 220 kV TPP-3-Kinderi; • Reconstruction of OHL of 110 kV Central-East with transition to CL of 110 kV; • Construction and reconstruction of distribution networks of 6-10 kV.

Reliable and non-interrupted supply of energy to consumers:

10% • Reconstruction of SS of 110 kV Konogorovka; • Reconstruction of distribution networks of 0,4-10 kV.

Providing reliable and non-interrupted supply of energy to 38% industrial establishment, oil production, petrochemistry and automobile industry:

• Reconstruction of Open Distributing Gear of 500 SS of 500 kV Bugulma; reconstruction and construction of SS and OHL of 35-110 kV reconstruction and construction of SS and OHL of 220-500 kV • Reconstruction of SS of 110 kV Gorodskaya (Almetievsk), reconstruction and construction of SS and OHL of 0,4-10 kV Promkomzona (Naberezhnye Chelny); монтаж AMSS, RPA, CCSCS other objects of power industry • Reconstruction of SS of 35 kV Laishevo.

Input – extraction of the power in 2012 made up:

Power Power Project name input extraction

Reconstruction of SS of 220 kV Central 250 МВА 125 МВА

Reconstruction of SS of 110 kV Konogorovka (second phase of the project, 2,5 МВА, 0 construction of sealing off from OHL of 110 kV) 2,8 km

Reconstruction of SS of 35 kV Laishevo 12,6 МВА 8 МВА

The Company’s investment program of 2012 provides for a number of upcoming loads at the objects of main and distribution network of measures to improve the reliability of power supply to the consumers of the Company, and also the need of construction of electrical of the Republic of Tatarstan, aimed to solve the complicated problems power supply networks to the objects of technological connection of electric network complex of the Republic of Tatarstan functioning. of consumers, the plan of capital construction made up 8 794 mln. Taking into consideration sizeable wear and condition of the rubles in 2012. objects of JSC “Grid Company”, the need of providing the power INVESTMENT ACTIVITY 52 AND INNOVATION DEVELOPMENT

Plan of capital construction in 2012 History of assimilation of capital expenses for 3 years, mln. rubles

Plan of the year, 10 000 10 mln. rubles 94 7 9 7

4 19 4 8 9 000

JSC “Grid Company”, 8 000 5 683 objects of primary activity 7 000

6 000 President-sponsored objects of SHF 115 5 000

4 000

Technological connection 2 976 3 000

2 000

1 000 Objects of SUE “Electric Networks” 20

0 2010 2011 2012

TOTAL 8 794 The plan of capital construction within the budget provided by the plan of fundamental activity of the Company in 2012 was approved for the sum of 5 683 mln. rubles and included 855 units, including 126 units of the backbone network, 679 units of the Implementation of the plan of fact in 2012 amounted to 8 606 distribution network, of 0,4-10 kV, 37 design and survey work, 13 mln. rubles, i.e. 98 %. units of acquisition of fixed assets.

Execution of plan of capital Construction in progress construction in 2012 On the whole in the Company there has been an increase in construction in progress in 2008-2012, caused by the realization of Plan, Actual, a massive project – construction of the SS of 500 kV Yelabuga, total mln. mln. % value 5,1 bln. rubles. rubles rubles At the beginning of 2013 the volume of construction in progress makes up 3 792,2 mln. rubles.

TOTAL: 8 794 8 606 98 History of volumes of construction in progress in 2010-2012, mln. rubles

JSC “Grid Company”, objects of 4 000 5 683 5 574 100 3 792,2 primary activity NZS, total CIP on OD 3 500

3 000 Objects of SHF of the President of the 115 108 94 Republic of Tatarstan 2 500

2 000 1 368,4 1 372,5 1 500 Technological connection 2 976 2 906 98

1 000 1 168,4 485,3 500 854,9 Objects of SUE “Electric Networks” 20 18 90 0

01.01.2011 01.01.2012 01.01.2013 Grid Company 53

Innovation development

Innovation Policy of the Company • integration of innovation activity with investment and economic activity of the Company, coordination of efforts Company’s Innovation policy was developed in accordance and resources; with the following documents: • coordinated management of the innovation projects portfolio inside the Company and also along the other innovation • the record of proceedings of the Conference of the projects of the Republic; Government Commission on Advanced Technology • documenting and patenting of decisions, technologies and and Innovation No.4 dated 3.08.2010, approved by the the experience of their creation; Chairman of the Government of the Russian Federation V. • collegial working out of key innovative decisions in the Putin; process of innovation activity planning, including ap- • guidance materials on the evolvement of programs of proval by the scientific and technical committee of the innovation development of corporations with public company; ownership, public corporations and federal state unitary • creation of the cultural mode of the organization, encouraging enterprise approved by the prescription of the Ministry creativity, incentive schemes to motivate the staff, taking part of Economic development and Trade of the Russian in the innovation process. Federation on 02.02.2011; • the program of energy saving and efficiency in the Republic Innovation policy of the JSC “Grid Company” was approved of Tatarstan in 2011-2015; by the Board of Directors of the Company on 14.02.2012 (minute • the conception of development of smart grids on the No.7/2012 dated 17.02.2012). territory of Republic of Tatarstan, adopted by the Science and Engineering Board of JSC “Grid Company” on Innovative development of the Company 30.09.2011; • recommendations of the technological platform “Smart The Company actively introduces new technologies, which Energy System of Russia” at the FSU “Russian Energy help to take practical environmentally-oriented decisions. Agency”; Narrow-based supports and screw pile supports are introduced. • “Guidance on evolvement of programs of innovation Directional boring is used for installing cable lines. The above development of corporations with public ownership” by the mentioned methods reduce the time spent on installation work, Institution of Electrical Energy Integrated Research. significantly reduce the costs for recreation and improvement of the land. The targets of the Company’s Innovation Strategy are During the reconstruction of substations air and oil-circuit improvement of reliability, quality, efficiency of power supply to breakers were replaced with vacuum and gas-insulated consumers due to accelerated appliance of innovation methods breakers which are compact, explosion- and fire-proof and and technologies; improvement of usage of assets in place more endurable. These characteristics provide for reduction of due to introduction of international systems of management consumers disconnections, reduction of the time of restoration and staff training; organization of efficient management of the of the electrical power supply. At present in the Company there innovation activity itself, creating a model of innovation growth; are 352 gas-insulated of 35-500 kV, i.e. 20% of the overall development, testing and introduction of innovations and their number of breakers of 35-500 kV; and 3670 vacuum breakers replication. with the voltage of 6-10 kV – 36% of overall number of breakers Priority guidelines of innovations strategy of the Company of 6-10 kV. are: Nowadays package unit transformer substations of 6(10)/0,4 kV are widely installed during reconstruction and new • advancement of technical and technological development; construction, self-supporting insulated wires are introduced, • acquisition of knowledge, its application for the benefit cables with cross-linked polyethylene insulation, heat shrinkable of the Company and the Republic of Tatarstan; termination, insulated wires on OHL of 6(10)kV, self-supporting • creation of conditions for enhancement of own designs, insulated cable. At present the Company’s branches use more and also registration of other intellectual property than 5 135 km of OHL of 0,4 kV with self-supporting insulated rights, commercialization of the patents and intellectual wires (about 20% are OHL of that voltage) and 755 km OHL 6(10) property; kV. • preparing the proper requirements for improvement In big cities overhead power transmission lines are replaced the quality of research, design, project and submitting with underground cable lines. This problem is urgent at the them to the specialized organizations of the Republic of reconstruction of the objects of cultural heritage of the Republic. Tatarstan. Since 2004 the Company has started the erection of closed city substations which fit into the residential quarters in the towns of The innovation activity of the Company is controlled in compliance the Republic of Tatarstan, their construction saves the building with the following fundamental principles: area. At the moment a number of regions of the Russian Federation • correspondence to the key purposes and characteristics of implement the government program of energy efficiency and the Company, constant monitoring over the quality of the energy saving “Smart Grid”. At the time there is a feasible innovation activity; technical basis to realize this program: INVESTMENT ACTIVITY 54 AND INNOVATION DEVELOPMENT

• More than 22 metering points were added to the au- management, coordination of development and introduction of new tomatic system of data measure (70% of which are machinery and technologies, aimed at enhancement of efficiency of fiscal metering points), which facilitates the fulfillment electric power network, cost saving and improvement of reliability the of a broad range of tasks: remote reading of metering Coordination Science and Technologies Committee was organized devices, monitoring the condition of the objects and (CSTC). On the committee are engineering managers, department parameters of the electrical power network, creating executives, leading engineers of the Company’s branches. characteristic diagrams of the load. The pilot project The key goals of CSTC are coordination of development and “Digital metering of electric power” is in full play. introduction of new machines and technology, determination of • Automatization of the distribution networks is fulfilled prospective tendencies and programs of innovation development, on the principle of automatic sectioning of the lines. taking technological decisions of technical re-equipment, The company started installment of sectioning reclosers reconstruction and new construction of the network objects, in the electric power networks of 6-10 kV, plans to per- discussion of production programs. form automatic sectioning in the networks of 6(10)-35 The following questions were considered at the meetings of the kV, including appliance of reclosers and transmission of CSTC JSC “Grid Company” (“Сетевая компания”) in 2012: information to the control centers applying innovation telecommunication technology PLC. 1. Preparation of the JSC “Grid Company” for Universiade • Systems of control on electric power networks. Soft- 2013. ware named “The controlling model of electric power 2. Electric power supply of the urban settlement Yudino in Ka- network” was created on the basis of the IS «e-Net» zan. (certification of power equipment), IS “e-Net” was inte- 3. Appliance of specialized machinery for clearing of forest cor- grated with the standard loss counting program “DTS- ridors of the OHL. 3”. The package “Measuring and Devices”, compatible 4. Problems of preparation the concept of distribution network with the system “Pyramid” and designated for reading construction. information from metering devices was developed. Sys- 5. Determination of breaks in tree networks of 6-10 kV. tems of monitoring and collection of emergency infor- 6. Usage of bird protection devices. mation from the devices RPAE and DBA were launched 7. Usage of production of the LLC “Tatkabel” on the objects of in the SS of 500 kV Kinderi, SS of 500 kV Bugulma, etc. the JSC “Grid Company” (“Сетевая компания”). Development of the pilot project of automatic energy 8. Working pattern of Automatic Recloser on the cable-over- management system, equipping with the monitoring head lines of 110 kV. systems SHC-DBA RPAE of the SS of 110-220 kV of 9. Appliance of the equipment of RPAE and DBA of the LLC the Company’s branches. “IC Bresler” on the objects of the JSC “Grid Company” • Technological elements of “Smart Grid” are the reactive (“Сетевая компания”). power compensation devices based on FACTS – tech- 10. Engineering solutions on the ASC produced by the LLC “IC nology, including scheduled for launching of the SS of Bresler”. 110kV of the South Affiliate of the Kazan Electric Power Networks based on controlled shunt reactor. The proj- ect is carried out in the framework of the implemen- tation of the Company’s target program of saving en- Innovation Committee ergy “Reactive Power” which is aimed at power loss enhancement, improvement of transmission capacity of The Innovation Committee of the Board of Directors of the power lines and transformers, reliability and stability of Company was created for realization of the Company’s innova- consumers. tion policy. Its major targets and objectives are development and • One of the essential elements of “Smart grid” is the presentation to the Board of Directors of recommendations on idea of “digital” substation (creation of systems of innovation development of the Company, determination of the control, protection and management of new genera- directions and priority projects of R&D, and analysis of the result tion, where all the information appears, processed and of their realization, working out recommendation in the sphere of controls the equipment digitally, which empowers with rational appliance and introduction of pilot projects, advanced in- the option of fast informational exchange between the novation technologies and materials on the facilities of the Com- devices which will reduce the number of cable con- pany to guarantee its stable and intensive innovational develop- nections). Certain elements of “digital” substation are ment. introduced in the objects of the Company: 2 000 sets In 2012 the Innovation Committee of the Board of Directors of microprocessing protection and automatic protec- worked out the Policy of Innovation development of the JSC tive devices were installed in the substations, electro- “Grid Company” for 2011-2015, implemented the following re- magnetic situation was estimated on the objects with search engineering project: “Providing regulatory power flow of digital devices, RPAE was put into operation in the SS the reactive power in the electric energy system of the Republic of 500 kV in Kinderi. of Tatarstan on the stages of its production, transmission and consumption”, evolvement of the technical specifications for the Coordination Scientific and Technological Committee of the object “Digital Substation” and the second stage “Creating of Company the model and operational training ground “Digital Substation”, started, issued “The Survey of power backup sources for the At the order of the JSC “Grid Company” (“Сетевая компа- consumers and recommendations of their appliance” for the enti- ния”) No.75 dated 05.05.2011 in aid of technological strategy ties - owners of sport facilities of Universiade 2013. Grid Company 55

Information technology and telecommunications

Information technology regards of displaying the information concerned the con- tracts concluded. Creation of the efficient corporation information control 4. The software product IBM Cognоs TM1 IBM Cognos BI system of the JSC “Grid Company” («Сетевая компания») be- was selected and acquired as the basis of the platform to came the major project realized in the sphere of information create an automatic budget accounting system and the technology. For its implementation the development program system of analytic accounting. The preparation work has for the period up to 2015 was worked out in 2012. been started for its introduction. To optimize the introduction of IT projects the new scheme of management of all projects was developed. This program Communication facilities of supervising and technological united all the projects into a single project of introduction of control an integrated information system of management and formed central working groups for automatization of business-pro- To enhance reliability and the efficient operation of the com- cesses under the leadership of Deputies Director General ac- munication facilities of supervising and technological manage- cording to their sphere of activity. Afterwards the work will ment in 2012 году the Company carried out the maintenance, proceed on the basis of six-month plans of events determined general overhaul, running maintenance of the equipment includ- in relation to the priority lines of automatization identified by ing the objects of dispatching of the operational area of the the manager of the central working group – Director General branch JSC «SO EES» RDO of the power supply system of Re- of the Company. public of Tatarstan according to the schedule. Regarding to the development of IT infrastructure the fol- The maintenance on the contracted basis was carried out lowing problems were solved in 2012: to the amount of 9012 thousand rubles, on the non-contracted basis – to the amount of 14753 thousand rubles. General over- 1. Organization of the core of the Corporate Data Transfer haul amounted to 18690 thousand rubles. Networks of the JSC “Grid Company” with multiservice routers Juniper SRX used by the Company’s manage- Telemechanics ment. 2. Organization (in cooperation with the operators the In 2012 37 advanced telecontrol digital devices were as- JSC “Tattelecom”, CJSC “Megaphon”) trunk sections sembled as part of capital construction, modernization, expan- of CDTN between the Management and the branches sion of the substations. of the JSC “Grid Company” with the appliance of fiber Installation of telecontrol digital devices was carried out optic links (the last mile), the pass band not less than through the replacement of moral and physical deprecated 10 Mbit/s. equipment which had the average life of 14 years and more, 3. Creating data processing centre for the ADCS of the inadequate to the qualifying standards of telecontrol devices, CCC of the Company with the appliance of the network- the telecontrol devices with low conversion accuracy without ing equipment of the company Juniper Network and the extensibility of information capacity, incapable with high speed server equipment of the company IBM. DLC unsupporting international standards of communication protocols. During the process of introduction of the information systems the At the end of 2012 the telecontrol systems grew by 9,8% following problems were settled in 2012: and made up 51,7% of the quantity of all telecontrol devices applied. 1. We introduced and put into operation the system of In 2012 two substations were telemechanised so the level electronic document management Praktika” which of telemechanics increased just by 0,6% and made up 83,4% united the data for all the branches and the manage- of the quantity of substations of 35 – 500 kV. At the moment ment of the Company. In the framework of introduc- 62 substations of the Company do not have any telecontrol tion of EDM on the basis of tablet computers there devices. The reason is that there are no digital communication were created about 150 mobile workstations with the channels, essential for transmission telemetric information to access to the EDM “Praktika”, corporation email, cor- the control center. poration portal and the system of corporation commu- Besides, a receiver-transmitter CRTS «Smart-FEP» developed nication Lync. by the LLC «RTSoft» (Moscow) was installed at the Company’s 2. Development and introduction of the consumer private of- CCS. fice on the official cite of the Company, so that the con- The receiver-transmitter CRTS «Smart-FEP» is intended for sumers could apply for technological connections and receiving, processing and retransmission of teleinformation make appointments with the specialists. coming through various telecontrol channels from the 3. We worked on the completion of the module of techno- power network units. The SRTS provides retransmission of logical connections MTC as part of its integration with the teleinformation to the superior control center: OIC CК-2007 consumer private office on the official site of the Com- DDC, OIC OCC of the branches of the Company, related power pany and executed the integration with the ICS «Parus» in supply systems. INVESTMENT ACTIVITY 56 AND INNOVATION DEVELOPMENT

The increase of the share of digital telecontrol devices Correlation of digital and analogous telecontrol devices at during 2010-2012 the end of 2012

60,0% 80 31,1% 51,7% 42,9%

70 50,0%

60

40,0% 50

30,0% 40

30 20,0%

20

10,0% 10

0,0% 0 2010 2011 2012 AENBEN BuEN EEN KEN NchEN NkEN PEN ChEN

quantity of the analogous TCD, qti. quantity of the digital TCD, qti.

Realization of the projects of СС SCS transmission from the SS KES to the affiliate of the «SO EES» RDO of Tatarstan. In the framework of implementation of capital construction 2. Construction of FOCL PEN - SS Yuzhnaya. the following work was completed in 2012: The bulk of the work preplanned for 2012 was put off to 2013, 1. Creation of the second stage of control technological given that the funds were appropriated only for EAD. connection and data transmission in the section of the CCS of the JSC “Grid Company” («Сетевая компания») Organization of communication channels – the branch of the JSC «SO EES» RDO of Tatarstan, or- ganization of control-technological connection and data Correlation of analogous and digital communication channels in the 4th quarter of 2012:

Circuit type AES BES BuES ЕES KES NKES NChES PES ChES TOTAL

Analogous, % 49,4 83,4 77,65 69,1 77,8 62,4 83,8 82,4 55,3 62,4

Digital, % 50,6 16,6 22,3 30,9 22,2 37,6 16,2 17,6 44,7 37,6 Grid Company 57

At the end of 2012 the quantity of digital communication channels Work with telecom carriers during the construction FOCL-OHL made up 37,6% of the channels used by the Company on the whole. Geographically dispersed channels were organized and put into For the purpose of organization of control-technological con- operation (main and back-up) between SS of 110 kV Pousevo, SS of nection and corporation data transmission network of the United 110 kV LIL and SS of 110 kV Sidorovka and the control center of the Technological Communication Network (UTCN) intensive efforts RDO of Tatarstan. were undertaken to build FOCL on the OHL with the possibility to The digital telecontrol channel was installed in the protocol of IEC create a trunk digital channel, both for the Company and the tele- 101 between the control center of the RDO of Tatarstan and the con- com carriers. trol center of the Company’s branch Kazan electric power networks The JSC «Megaphon» provided the research on building FOCL with the existing equipment FOX 515, providing disconnection of the on the OHL in the section SS Savinovo – KCHPP-2 – ТГК-16 analogous channel. (KCHPP-3) – SS Zapadnaya – SS Kirovskaya – SS Vodozabor. The The back-up digital telecontrol channel (stream Е1) was installed installation of FOCL is planned for 2013. between the control center of the RDO of Tatarstan and SS of 500 kV In 2012 the JSC «МТS» provided the research on building of Kinderi, transferring from CCL into its own FOCL. FOCL on the OHL in the section SS Kinderi - SS Arsk – SS Shem- The digital geographically dispersed telecontrol channel was in- ordan. The installation of FOCL is planned for 2013. stalled between the RDO of Tatarstan and the control center of the The LLC «TatAISEnergo» completed the installation of FOCL on affiliate of the Company Alimetievsk electrical supply network through the OHL in the section SS Kinderi – SS Bukash – SS Nizhnekams- the telecom carrier of the LLC «TatAISEnergo». kaya. Launcing of the FOCL is planned for 2013. Unity of purpose

CORPORATE MANAGEMENT

Unity of purpose basis of interaction

The Company follows the policy of constant development and improvement of corporation management practice. The corporation management rating “6” – “Developed Practice of Corporation Management”, referred to the Company by the NP “Russian Institution of Directors” indicates that the Company complies with the requirements of the Russian legislation regarding the corporation management, follows the basic recommendation of the Russian Corporation Conduct Code and certain recommendations of international practice of corporation management.

60 CORPORATE MANAGEMENT

Principles of corporate management

Corporate management means combination of processes principle of information disclosure is regularity and efficiency providing the management of the Company, control of its activ- of providing the information about the Company, information ity and regulation of the relationship between the shareholders, availability for shareholders and all concerned, its reliability and executives of the Company and all persons concerned, aimed comprehensiveness, as well as maintaining reasonable balance at providing the balance of mutual interests as well as the affi- between the openness of the Company and safeguarding its ance of the Company, its answering the national purposes and commercial interests. public interests. The Company adheres to the policy of constant improve- Accountability ment and development of the corporation management and considers it to be a tool to defense the legal interests of the The system of corporate management of the Company Company’s shareholders and a means of investment risks miti- ensures efficient control over the Independent Executive and gation and outside funds costs, enhancement of investment the management of the Company on the side of the Board of potential and its shareholder value, to maintain the goodwill of Directors and its accountability to the shareholders meeting the Company. which is the superior authority. Corporate management of the Company is being carried The Board of Directors of the Company provides the strategic out in compliance with the legislation of the Russian Federation, management of its activity, takes decisions on substantive Corporate Code of Conduct, recommended by the Federal Se- issues, concerned the providing of financial and business curity Russian Commission (Order No421/r dated 04.04.2002), management of the Company. the Charter and internal regulations of the Company, and ac- The meeting of the Board of Directors is carried out through knowledged international practice. a transparent procedure ensuring that the Board of Directors The basic principles of corporate management of the Com- meets the legal requirements and shareholders’ interests. pany are: Independent Executive of the Company carries out the management of its current practice and reports to the Justice shareholders meeting. Efficient control over financial and business management The Company provides its shareholders a viable possibility of the Company aimed at protection of the rights and legal to exercise their rights related to their shareholding in the interests of the shareholders is ensured by the activity of the Company, and fair and equal treatment of all shareholders, Auditing Committee as well as engagement of an independent regardless how many shares they own. auditor for account inspection. The right to take part in the management of the Company is realized by the shareholders by taking decisions on substantive Responsibility issues concerned the Company’s activity and is provided by the applicable legislation on corporations, as well as by the Charter The Company recognizes the rights of all concerned, of the Company. specified by the applicable law of the Russian Federation Shareholders have the right to make free use of their shares and take efforts to build the relationship on the ground of at their own judgment, take any actions if they don’t contradict mutual respect and accounting their rights with all concerned, the applicable legislation and don’t infringe the rights of other including its employees, and to cooperate with such people parties, participate in the profits of the Company, the right to for the purposes of its own development and ensuring financial be regularly and promptly informed about the Company and stability. other rights. The Company constantly cares about development and Realizable and efficient observation of shareholders’ rights improvement of the corporation management: is provided by maintenance of a share register by a specialized registrar licensed to maintain the register by the federal • On 31.05.2012 the Board of Directors of the Compa- executive authority of the equity market. ny approved of the new edition of the Regulation on Information Policy of the Company, which reflects the Transparency changes of the applicable legislation of the Russian Federation. The Company ensures timely disclosure of comprehensive • Special shareholders meeting of the Company of and reliable information on all the substantive issues of the 12.11.2012 adopted the new addition of the Charter company, including its finance situation, business management, and the Regulations on the Shareholders Meetings, the social and environmental indicators, ownership structure and Board of Directors and on Director General with amend- management of the Company, as well as the free access to this ments and additions, which consolidate the principles information of all concerned. The purpose of such disclosure is of the Corporate Conduct Code, recommended by Oder to inform all concerned to the extent necessary to take balanced No421/r of the FCSM dated 04.04.2002. and grounded decisions, or to take other actions which can • To provide efficient functioning of the Board of Directors affect the Company’s business. the Company formed the Auditing Committee, Staff and To realize the principle of transparency the Board of Directors Awards Committee and Innovation Committee of the approved of the Regulation information policy which declares Board of Directors. principles, rules and approaches of information disclosure • To ensure the efficient functioning of the system of con- concerned the Company and its activity. Thus the basic trol the Board of Directors dated 14.09.2012 adopted Grid Company 61

the Regulation on the internal control formulating the basic concepts of the internal Control of the Company. • The Board of Directors of 23.11.2012 approved the package of documents ensuring the proper functioning and improvement of the corporate management of the Company: • Corporate conduct code, establishing the basic prin- ciples of the corporate conduct, applicable in the Company, as well as the methods and ways of real- ization of these principles; • Business ethics code of the Company, formulating the basic principles and rules of business in the Com- pany, standards of conduct of the executives, based on moral and ethical values, industrial standards, globally accepted standards of business conduct and ethics and determining the principles of relationship within the Company, the relationship of the Company with its employees, investors, the government and the society, consumers, contractors and other legal The rating indicates that the Company complies with the re- entities and individuals; quirements of the Russian legislation regarding the corporation • The Regulations on the corporation secretary of the management, follows the basic recommendation of the Russian Company aimed to ensure the compliance of orga- Corporation Conduct Code and certain recommendations of in- nizations and officials with procedural requirements, ternational practice of corporation management. The growth of guaranteeing realization of rights and interests of the the rating confirms the efficiency of the company improvement shareholders. of the corporation management, as the company reached a • The Board of Directors of the Company, dated 27.12.2012, completely new level (rating of the Company in 2011 was «5» – approved of the Risks Management Policy, establishing Average practice of corporation management). the fundamental targets, tasks and principles of risks During monitoring the experts of the NP “Russian Institution management functioning. of Directors” noted the essential development of the practice of corporation management of the company. The highlights in the The Charter of the Company, and other internal documents, development of the practice of the corporation management regulating the corporation management, and activity of man- were: agement and control authorities are presented on the official • adoption of a number of corporation documents, such web-site of the company http://www.gridcom-rt.ru in the sec- as the Corporation Conduct Code, Code of Business tion «Shareholders and investors/Charter and internal docu- Ethics; ments»). • addition to the applicable documents of the Company The information concerned the Company’s compliance internal documents, regulating the activity of with the Corporate Conduct Code, recommended by the Fed- management, Charter, Regulation on Information Policy) eral Committee on the equity market (Order dated No421/r the articles facing the recommendations of the best 04.04.2002), is shown in the application of this Report. practice of corporation management; • creation of the Auditioning Committee and Staff and National rating of Corporation management Awards Committee of th board of Directors; • election of the corporation Secretary of the Company. Summing up the events of 2012 aimed at enhancement of the practice of corporation management the NP “Russian In- The Company intends to persist the improvement of the stitution of Directors” conferred the Company the rank of the practice of the corporation management, it has prerequisites corporation management rating “6” – “Developed Practice of to improve the rating, which reflects the level of the practice of Corporation Management”. corporate management and aspires to its further improvement.

Management and control authorities

The structure and competence of the management and control • Independent Executive (Director General). authorities of the Company are determined by the Federal Law “Corporations” and the Charter (articles of association) of the Financial and logistics control body of authorities is the Auditing Company. Committee. In correspondence with the Charter of the JSC “Grid Company” the following bodies of authority work in the Company: Shareholders meeting

• Shareholders meeting; The shareholders meeting is the Company’s superior body of • The Board of Directors; authority, taking decisions on the most important aspects of its activity. 62 CORPORATE MANAGEMENT

The principles of convocation, preparation, carrying out and profit and the increase of the assets of the Company, summing up of the shareholders meeting are determined by the enhancement of its investment appeal; Federal Law “On Corporations”, other legal acts of the Russian • ensuring the exercise and protection of the rights of the Federation, the Charter and Regulations on the shareholders shareholders of the Company, assistance in the settlement meeting of the JSC “Grid Company” («Сетевая компания»). of corporate conflicts; During the fiscal year the Company had a shareholders meeting • ensuring the completion, trustworthiness and the objective on the results of 2011, and two special shareholders meetings. character of information disclosure for shareholders and The shareholders meeting of 18.06.2012 discussed and others concerned; approved of the annual report, annual account, allocation of profit • creation of efficient mechanisms of internal control and of the fiscal year 2011, elected the new Board of Directors, Auditing providing control over the process of risks management Company and the Auditor of the Company. and determination of the direction of the internal The special shareholders meeting of 14.09.2012 discussed the control and purposes of the Company concerned risks early resignation of the Board of Directors and Auditing Committees management; and formation of the new ones. • estimation of the results of the Company’s performance The special shareholders meeting of 12.11.2012 approved the and its management departments, providing efficient revised version of the Charter, Regulations of the shareholders control over the financial and business management of the meeting, the Board of Directors and The Director General of the Company and the activity of the Independent Executive. Company. The Regulation on the shareholders meeting of the JSC “Grid To realize the above purposes and tasks the Board of Directors Company” is placed on the official site of the Company http://www. of the Company is guided by the following principles: gridcom-rt.ru in the section “Shareholders and Investors / Charter and internal regulations»). • taking decisions on the basis of reliable information about Company’s activity; Company’s Board of Directors • elimination of restrictions of the rights of the shareholders to take part in Company’s activity, dividend rights and the The Board of Directors is an authority body responsible for access to the information about the Company; providing the general management of the Company, excluding the • achievement of the balance between the different issues which are under the jurisdiction of the shareholders meeting, group of shareholders and adoption the most impartial and determines the strategy and the directions of development of decision by the Board of Directors for the benefit of all the the Company. shareholders of the Company. The activity of the Board of Directors is regulated by the legislation of the Russian Federation, the Charter and the Regulation on the The quantitative composition of the Board of Directors is Board of Directors of the JSC “Grid Company”. determined by the Charter, i.e. 9 people. In 2012 the Board of The fundamental targets and tasks of the Board of Directors of Directors was represented by three compositions. the Company are: The Regulation on the Board of Directors of the JSC “Grid Company” is placed on the official site of the Company http:// • determination of priority directions of activity and a strategy www.gridcom-rt.ru in the section “Shareholders and Investors / of the Company, aimed at the achievement of maximum Charter and internal regulations»). Grid Company 63

Operating composition of the Board of Directors of the company (elected by the special shareholders meeting dated 14.09.2012):

Khalikov Ildar Shafkatovich

Chairman of Board of Directors Born in 1967. Education: higher. Citizenship: Russia. Career for the last 5 years: • January 2006 – April 2010 – Head of municipality, Naberezhnye Chelny, mayor; • April 2010 – up to the present – Prime Minister of the Republic of Tatarstan Doesn’t hold shares in the Company. No family relations with the officials and the members of the Auditing Committee of the Company.

Fardiyev Ilshat Shaehovich

Deputy Chairman of the Board of Directors Born in 1960. Education: higher. Citizenship: Russia. Career for the last 5 years: • Februaryl 2002 – April 2010 – Director General of the JSC “Tatenergo”; • April 2005 – April 2010 - Director General of the JSC “Generating Company”; • April 2010 – May 2012 - First Deputy Prime Minister of the Republic of Tatarstan – the Minister of Energy of the Republic of Tatarstan; • May 2012 - up to the present – Director General of the JSC “Grid Company”. Doesn’t hold shares in the Company. No family relations with the officials and the members of the Auditing Committee of the Company.

Bagmanov Hamza Azalovich

Born in 1957. Education: higher. Citizenship: Russia. Career for the last 5 years: • October 2005 - June 2012 – Director General of the JSC “TANEKO”; • June 2012 - up to the present – Deputy Minister of Industry and Trade of the Republic of Tatarstan. Doesn’t hold shares in the Company. No family relations with the officials and the members of the Auditing Committee of the Company. 64 CORPORATE MANAGEMENT

Operating composition of the Board of Directors of the company (elected by the special shareholders meeting dated 14.09.2012):

Volodkevich Alexander Petrovich

Born in 1957. Education: higher. Citizenship: Russia. Career for the last 5 years: • June 2001 – September 2012 – Head of the Department of Industry of the Administrative Office of the Cabinet of Ministers of the Republic of Tatarstan; • October 2012г. - up to the present - Assistant Deputy Director General of the JSC “Kazan Helicopter plant” of the science and technology strategy оn the interaction with the government bodies. Doesn’t hold shares in the Company. No family relations with the officials and the members of the Auditing Committee of the Company.

Yevseev Alexander Nikolayevich

Born in 1954. Education: higher, Candidate of Technical Science, corresponding member of the International Academy of Ecology, Man and Nature protection Sciences and International Energy Agency. Citizenship: Russia. Career for the last 5 years: • January 2002 – up to the present – head of the Energy Department – chief power engineer of the JSC “The Shashin Tatneft”. Doesn’t hold shares in the Company. No family relations with the officials and the members of the Auditing Committee of the Company.

Nadyrshin Marat Gabdulbarovich

Born in 1970. Education: higher. Citizenship: Russia. Career for the last 5 years: • November 2007 – May 2009 – the head of the department of the regional representative office of the non-profit institution “Presidential State Housing Development Fund of the Republic of Tatarstan»; • June 2009 – up to the present – Executive Director of the Deputy non-profit institution “Presidential State Housing Fund of the Republic of Tatarstan» of the property management. Doesn’t hold shares in the Company. No family relations with the officials and the members of the Auditing Committee of the Company. Grid Company 65

positions held as of 31.12.2012

Pahomov Alexei Mihailovich

Born in 1945. Education: higher, Candidate of Economic Science. Citizenship: Russia. Career for the last 5 years: • June 2005 – December 2011 – a member of the Council of Federation of the Federal Assembly of the Russian Federation, a representative of the legislation body of the state power of the Republic of Tatarstan; • June 2010 – up to the present – Director General of the Regional Unit of Employers “Association of enterprises and entrepreneurs of the Republic of Tatarstan”. Doesn’t hold shares in the Company. No family relations with the officials and the members of the Auditing Committee of the Company.

Hamayev Azat Kiyamovich

Born in 1956. Education: higher. Citizenship: Russia. Career for the last 5 years: • December 2008 – March 2009 – First Deputy Minister, i.a. the Minister of Land and Property Relations of the Republic of Tatarstan; • March 2009 – up to the present – the Minister of Land and Property Relations of the Republic of Tatarstan. Doesn’t hold shares in the Company. No family relations with the officials and the members of the Auditing Committee of the Company.

Yurtayev Alexander Nikolayevich

Born in 1951. Education: higher, Doctor of Economics. Citizenship: Russia. Career for the last 5 years: • November 1998 – January 2011 – Head of the Information Analysis Department of the Cabinet of Ministers of the Republic of Tatarstan; • January 2011 - May 2012 – Head of the Information Analysis Department of the President of the Republic of Tatarstan; • May 2012 - September 2012 – General director Deputy of information technologies of the JSC “Grid Company”; • September 2012 – up to the present – Chairman of the Auditing Committee of the Board of Directors of the JSC “Grid Company”. Doesn’t hold shares in the Company. No family relations with the officials and the members of the Auditing Committee of the Company. 66 CORPORATE MANAGEMENT

Amendments in the composition of the Board of Directors in the fiscal year

The Board of Directors of the Company acting up to the annual shareholders meeting (term of office from 27.06.2011 to 18.06.2012):

Chairman of the Board of Directors - Halikov Ildar Shafkatovich Prime Minister of the Republic of Tatarstan Deputy Chairman of the Board of Directors - Fardiev Ilshat Shaehovich Director General of the JSC “Grid Company” («Сетевая компания») Yevseev Alexander Nikolaevich Head of the Energy Department - major power engineering specialist of the JSC “The Shashin Tatneft”.

Executive Director of the Deputy non-profit institution “Presidential State Housing Development Fund of the Republic of Tatarstan» of the Nadyrshin Marat Gabdulbarovich property management.

Pahomov Alexei Mihailovich Director General of the Regional Unit of Employers “Association of enterprises and entrepreneurs of the Republic of Tatarstan”.

Safiullin Damir Harunovich General Director Deputy of the corporation policy the JSC “Generating Company”

Fahrutdinov Aidar Rustamovich Chief Development Officer of the LLC «Managing Company «KER-Holding»

Haziev Razuil Magsumyanovich Director General of the JSC «Generating Company»

Hamayev Azat Kiyamovich The Minister of Land and Property Relations of the Republic of Tatarstan

positions held as of 31.12.2012

The Board of Directors, elected by the annual shareholders meeting (term of office from 18.06.2012 до 14.09.2012):

Chairman of the Board of Directors - Halikov Ildar Shafkatovich Prime Minister of the Republic of Tatarstan Deputy Chairman of the Board of Directors - Fardiev Ilshat Shaehovich Director General of the JSC “Grid Company” («Сетевая компания») Yevseev Alexander Nikolaevich Head of the Energy Department - major power engineering specialist of the JSC “The ShashinTatneft”.

Executive Director of the Deputy non-profit institution “Presidential State Housing Development Fund of the Republic of Tatarstan» of the Nadyrshin Marat Gabdulbarovich property management.

Pahomov Alexei Mihailovich Director General of the Regional Unit of Employers “Association of enterprises and entrepreneurs of the Republic of Tatarstan”.

Safiullin Damir Harunovich General Director Deputy of the corporation policy the JSC “Generating Company”

Fahrutdinov Aidar Rustamovich Director of the FSFI «State Regional center of standardization, metrology and testing in the Republic of Tatarstan»

Haziev Razuil Magsumyanovich Chief Development Officer of the LLC «Managing Company «KER-Holding»

Hamayev Azat Kiyamovich The Minister of Land and Property Relations of the Republic of Tatarstan

positions held as of 31.12.2012

Data of the meetings of the Board of Directors in 2012 2015, Policy of innovation Development of the Company, the Plan of Capital Construction, the Regulation on acquisition of The work of the Board of Directors is based on the approved Plans goods, works and services for the JSC “Grid Company”, the of work of the Board of Directors. The plan of work for the second half Board discussed the state of things with implementation of of 2011 – first half of 2012 was approved by the Board of Directors on events to prepare for the autumn and winter periods of 2012- 31.08.2011, The plan for the second half of 2012 – first half of 2013 – 2013, implementation of events to ensure reliability of power on 14.09.2012. supply of the Kazan region during the preparation and carry- There were 17 meetings of the Board of Directors (including meet- ing out the 27th World Summer Universiade 2013 in Kazan, the ings with physical presence - 8, meetings with remote presence – 9). realization of the plan of capital construction for the 9 months The following questions were considered: of 2012; • on financial-economic activity of the Company: the Board of • on production activity of the Company: the Board of Directors Directors adopted the budget of the Company in 2012, con- approved of the Program of Innovation Development in 2011- sidered the issues of charitable assistance, budget execution, Grid Company 67

and the results of financial and technological activity of the holders meeting, issues in relation with preparation and imple- Company in the corresponding periods of 2012, approved of mentation of shareholders meetings, adopted the Regulation the measures aimed at preventing and reducing bills receivable; on the system of internal control, new reduction of the Regula- • on investment activity: the Board of Directors considered the tion on the Information Policy of the Company, The Code of results of the implementation of the Company’s Investment Business Ethics, Corporation Conduct Code, the Regulation Program in 2011, approved the project of the Investment Pro- on the Corporation Secretary, the Risks Management Policy, gram of the JSC “Grid Company” («Сетевая компания») for approved 3 deals, related to alienation of immovable property, 2013-2015, approved the determination of funding sources; and 249 deals in which the Company holds an interest; • on corporation management: the Board of Directors consid- • other questions referred to the competence of the Board of Di- ered the suggestions of the shareholders of the Company on rectors by the Federal Law “On Corporations” and the Charter the schedule and the candidates for the Board of Directors and of the Company. Auditing Committee of the Company to be elected at the share-

Information about participation of the members of the Board of Directors in the meetings of the Board of Directors in 2012

Period from 01.01.2012 to 18.06.2012 Percentage of attendance Meeting with physical attendance Meeting with remote attendance of all the meetings Halikov Ildar Shafkatovich 4 3 100% Fardiev Ilshat Shaehovich 4 3 100% Yevseev Alexander Nikolaevich 3 3 85,7% Hadyrshin Marat Gabdulbarovich 4 3 100% Pahomov Alexei Mihailovich 4 3 100% Safiullin Damir Harunovich 4 3 100% Fahrutdinov Aidar Rustamovich 3 3 85,7% Haziev Razuil Magsumianovich 3 3 85,7% Hamaev Azat Kiyamovich 4 3 100% The period from 18.06.2012 to 14.09.2012 Percentage of attendance Meeting with physical attendance Meeting with remote attendance of all the meetings Halikov Ildar Shafkatovich 1 3 100% Fardiev Ilshat Shaehovich 1 3 100% Yevseev Alexander Nikolaevich 1 3 100% Hadyrshin Marat Gabdulbarovich 1 3 100% Pahomov Alexei Mihailovich 1 3 100% Safiullin Damir Harunovich 1 3 100% Tuhtarov Farid Haidarovich 1 3 100% Fahrutdinov Aidar Rustamovich 1 3 100% Hamaev Azat Kiyamovich 1 3 100%

The period from 14.09.2012 to 31.12.2012 Percentage of attendance Meeting with physical attendance Meeting with remote attendance of all the meetings Halikov Ildar Shafkatovich 4 2 100% Fardiev Ilshat Shaehovich 4 2 100% Bagmanov Hamza Azalovich 4 0 66,6% Volodkevich Alexander Petrovich 3 2 83,3% Yevseev Alexander Nikolaevich 3 2 83,3% Hadyrshin Marat Gabdulbarovich 4 2 100% Pahomov Alexei Mihailovich 4 2 100% Hamaev Azat Kiyamovich 4 1 83,3% Yurtaev Alexander Nikolaevich 4 2 100%

Participation of the members of the Board of Directors in the meetings of the Board of Directors made up 95,3% in 2012 on the average. 68 CORPORATE MANAGEMENT

Corporation Secretary of the Company The Committees are not command units of the Company and don’t have the right to act on behalf of the Company. For the purposes of the Company’s executive bodies and The Committees of the Board of Directors act on the basis officials’ compliance with corporation procedures, established of the Regulations on Committees, approved by the Board of by legislation, the Charter and other internal documents of Directors of the Company and determining the legal status, the Company, including those concerned preparation and targets and aims, rights, duties, structure and composition of carrying out shareholders meetings, the activity of the Board the Committees. of Directors, keeping disclosure and access to the information about the Company according to article 13 of the Charter of Board Audit Committee the Company the Board of Directors elected the Corporation Secretary of the Company. The Board Audit Committee ensures the real participation The fact that the Company has a position of Corporation of the Board of Directors in providing control over the financial Secretary in its structure meets the requirements of the and business activity of the Company, as well as its cooperation advanced practice of corporation management, and attributes with the Auditing Commission and the Auditor of the Company. to the growth of trust on part of shareholders and others The Board Audit Committee acts in compliance with the concerned. Regulation on the Board Audit Committee, approved by the The Corporation Secretary of the Company follows the Board of Directors of the Company on 05.07.2007 (record of Federal Law “On Corporations” and other regulatory and legal proceedings No10 dated 07.07.2007). The Board Audit Committee acts of the Russian Federation, the Charter and the internal is composed of the members of the Board of Directors. It documents of the Company, as well as the Regulation on the includes a member of the Board of Directors acknowledged an Corporation Secretary of the JSC “Grid Company”, approved independent director in compliance with the regulation of the by the Board of Directors of the Company on 23.11.2012 (record Corporation Conduct Code, recommended by Order of FCSM of proceedings No5/2012 dated 26.11.2012). of the Russian Federation No421/r dated 04.04.2002. The Corporation Secretary of the Company is elected by The Board Audit Committee was elected by the Board of the Board of Directors and reports to the Board on his/her Directors of the Company on 14.09.2012. The meetings of the activity. Board Audit Committee are carried out in accordance with the Plan of Activities approved by the Committee and worked out consistent with the Plan of Activities of the Board of Directors for Prozorova Valeriya Alexandrovna the corresponding period.

Born in 1974. The composition of the Board Audit Committee of the Education: higher. Company: Citizenship: Russia. Career for the last 5 years: • November 2006 – March 2009 – head of the Corporation Relationships Yurtaev Alexander Section of the JSC “Grid Company” («Сетевая компания»); Chairman of the Board Audit Committee • April 2009 - up to the present – head of the Corporation Relationships Nikolaevich Department of the JSC “Grid Company” («Сетевая компания»); • Elected: 23.11.2012 (record of proceedings of the Board of Directors No5/2012 dated 26.11.2012). Bagmanov Hamza Deputy Minister of Industry and Trade of the Doesn’t hold shares in the Company. Azalovich Republic of Tatarstan. No family relations with the officials and the members of the Auditing Committee of the Company. Executive Director of the Deputy non-profit institu- The Regulation on the Corporation Secretary of the JSC Nadyrshin Marat tion “Presidential State Housing Development “Grid Company” («Сетевая компания») is presented in the Gabdulbarovich Fund of the Republic of Tatarstan» of the property official web-site of the Company http://www.gridcom-rt.ru in management. the section “For Shareholders and investors/the Charter and internal documents». Director General of the Regional Unit of Employers Pahomov Alexei Committees of the Board of Directors of the Company “Association of enterprises and entrepreneurs of the Mihailovich Republic of Tatarstan”. For preliminary consideration of the most important issues and preparation of recommendations to the Board of Directors on making decisions on these issues there are the committees of the Board of Directors – consulting–deliberative body, Since the moment of its establishment at the end of 2012 ensuring the efficient performance of its functions by the Board there has been one meeting of the Board Audit Committee, when of Directors of the Company: the Committee approved the Plan of activities and discussed the process of working out the recommendations on the election of • Board Audit Committee; an independent auditing organization. • Board Staff and Awards Committee; The Regulation on the Board Audit Committee of the JSC • Board Innovation Committee. “Grid Company” («Сетевая компания») is presented on the Grid Company 69

official web-site of the Company http://www.gridcom-rt.ru in Board Innovation Committee the section “For Shareholders and investors/the Charter and internal documents». The Board Innovation Committee ensures working out and giving references to the Board of Directors of the Company Board Staff and Awards Committee in relation to the innovation development of the Company, determining the directions and priority projects of R&D as well The Board Staff and Award Committee ensures working as the results of their realization, consulting on the rational out and giving advice to the Board of Directors of the Company application and introduction of pilot projects, advanced innovation in relation to the personnel policy and awards, including technologies and materials in the Company’s units to provide its references on the directions of personnel policy, estimation stable efficient innovation development. of the efficiency of the personnel policy of the Company, The Board Innovation Committee acts in compliance with the monitoring the balance between the criteria of awarding policy Regulation on the Board Innovation Committee, approved by the of the Company and its financial situation, as well as the Board of Directors of the Company on 19.05.2011 (record of situation in the market, etc. proceedings No22 dated 20.05.2011). The Board Staff and Awards Committee acts in compliance During 2012 two compositions of the Board Innovation with the Regulation on the Board Staff and Awards Committee, Committee were working. approved by the Board of Directors of the Company on 05.07.2007 (record of proceedings No10 dated 07.07.2007). The composition of the Board Innovation Committee of The Board Staff and Awards Committee is composed of the the Company (elected 14.09.2012) members of the Board of Directors. It includes a member of the Board of Directors acknowledged an independent director Chairman of the Board Innovation Commitee Director Fardiev Ilshat Shaehovich in compliance with the regulation of the Corporation Conduct General of the JSC “Grid Company” Code, recommended by Order of FCSM of the Russian Federation No421/r dated 04.04.2002. Bagmanov Hamza Deputy Minister of Industry and Trade of the Republic of The Board Staff and Awards Committee was elected by Azalovich Tatarstan. the Board of Directors of the Company on 14.09.2012. The meetings of the Board Staff and Awards Committee are carried Deputy Technical Director of the JSC “Grid Company” out in accordance with the approved by the Committee Plan Vasiliev Yury Alexan- on preparation and carrying out the Universiade, of Activities worked out consistent with the Plan of Activities of drovich innovation development the Board of Directors for the corresponding period.

The composition of the Board Staff and Awards Vdovin Alexander Mi- Chief power engineering specialist of the JSC “Nizhneka- Committee of the Company: hailovich mskneftehim” Galeev Eduard Gen- Director of the affiliate of the JSC «SO EES» RDO nadievich of Tatarstan Chairman of the Board Staff and Awards Committee Pahomov Alexei Director General of the Regional Unit of Employers Galimzyanov Rashat Deputy General Director of the ОАО JSC “Grid Com- Mihailovich “Association of enterprises and entrepreneurs of the Hammatovich pany” - technical derector Republic of Tatarstan”. Director of the development of information sys- Karpenko Oleg Ivanovich tems of the JSC “Grid Company”

Assistant Deputy Director General of the JSC “Kazan Fahrutdinov Aidar Director of Development of the LLC “Managing Volodkevich Alexander Helicopter plant” of the science and technology strat- Rustamovich Company KER- Holding” Petrovich egy оn the interaction with the government bodies. First category engineer of the RP of the JSC “Grid Meer Valery Mihailovich Company” Hamaev Azat The Minister of Land and Property Relations of the Kiyamovich Republic of Tatarstan Nigmetzyanov Vildan Deputy Director General of the JSC “Grid Com- Savilevich pany” - Director of services realization

Since the moment of its establishment at the end of 2012 Suharnikov Mihail Alex- Director of the Volga Region affiliate LLC «Agency there has been one meeting of the Board Staff and Awards androvich on forecasting balances in electric power industry” Committee, where the Committee approved the Plan of activities of the committee and discussed the labour situation in the Rozhina Tatiana Kseno- Head of ОДСЭ УЭ JSC “The ShashinTatneft” Company. fontovna The Regulation on the Board Staff and Awards Committee of the JSC “Grid Company” («Сетевая компания») is presented Smirnov Alexander Director of the LLC “TatAISEnergo” on the official web-site of the Company http://www.gridcom-rt.ru Borisovich in the section “For Shareholders and investors/the Charter and internal documents». positions held as of 31.12.2012 70 CORPORATE MANAGEMENT

The Composition of the Board Innovation Committee of 1. Policy of Innovation Development of the JSC “Grid the Board of Directors of the Company, working from Company”; 31.08.2011 to 14.09.2012 2. Innovation Program for 2011–2015 of the JSC “Grid Company”. Fardiev Chairman of the Board Innovation Commitee Director • Completed the science research «Providing standard Ilshat Shaehovich General of the JSC “Grid Company” flux-distribution of reactive power in the energy system of the Republic of Tatarstan on the stages of its production transmission and consumption”. Safiullin General Director Deputy of the corporation policy the • Completed the science research “Development of Damir Harunovich JSC “Generating Company” specifications of the object “Digital substation” and started the second stage — “Creation of the model and operating testing ground” “Digital Substation”. Deputy Technical Director of the JSC “Grid Company” Vasiliev • Implemented the work on conclusion a contract “General on preparation and carrying out the Universiade, in- Yury Alexandrovich Agreement of Partnership and Strategic Cooperation” novation development between the JSC “Grid Company” and the leading Russian companies — the JSC «NIIPT» (S.-Petersburg), Vdovin Chief power engineering specialist of the JSC “Nizh- CC «Profotek» (Moscow), LLC RPE «EKRA» (Cheboksary), Alexander Mihailovich nekamskneftehim” CC «EnergoPromAutomatization» (S.-Petersburg), CC «Energozaschita» (Kazan). Galeev Director of the affiliate of the JSC «SO EES» RDO of • In the framework of the long-term target program «Energy Eduard Gennadievich Tatarstan Saving and the enhancement of energy efficiency in the Republic of Tatarstan for 2010–2015 and up to 2020» in the JSC “Grid Company” the Innovation Committee is taking Gizzatullin Deputy Director General of the JSC “TAIF” of part in the realization of the pilot project “Smart Network”. Ruslan Zagitovich energy and information technologies –– Investigation of the situation with the stream of react power and development of measures to compensate the react power in the power networks of the JSC “Grid Company”. Zhdanov Director General, CC “KAMAZ-Energo” –– Creation of the unit “Digital Substation” in the JSC “Grid Alexander Vladimirovich Company”. –– Development of the project “Smart technologies in the Zabelkin Independent Advisor distribution power complex JSC “Grid Company”. Boris Alexandrovich –– Connection of minor distributed generation to the electric power networks of the JSC “Grid Company”. Meer First category engineer of the RP JSC “Grid –– Development of an integrated automatic system of Valery Mihailovich Company” power accounting at the level of business units of the power supply networks. –– Introduction of the diagnostic complex of monitoring Nigmetzyanov Deputy Director General of the JSC “Grid Com- and estimation of the technical condition of the energy Vildan Savilevich pany” - Director of services realization equipment. –– Creation of the digital power measuring system. • For the purposes of successful work during the winter heating Suharnikov Director of the Volga Region affiliate LLC «Agency period of 2012–2013, and providing а reliable power supply to Mihail Alexandrovich on forecasting balances in electric power industry” the facilities of the Universiade 2013 the committee developed and introduced the following regulating technical documents: –– «Guideline on providing electromagnetic compatibility of Rozhina Head of ODC ED of the JSC “The ShashinTatneft” the secondary equipment and communication systems Tatiana Ksenofontovna of the facilities of the JSC “Grid Company”. –– Manual on providing electromagnetic compatibility at the Smirnov facilities of the electrical network economy of the JSC Director of the LLC “TatAISEnergo” Alexander Borisovich “Grid Company”; –– «Manual on providing remote and local backup of the Abdullazyanov relay protection in the networks of 6 (10)-500 kV of the Chancellor of Kazan State Energy University Edvard Yunusovich JSC “Grid Company”.

positions held as of 31.12.2012 As assistance to the enterprises owners of the sports facilities of the Universiade 2013 «The Review of power back-up supply to the The Board Innovation Committee of the Board of Directors of the customers and recommendations on their usage» was issued. Company implemented the following work during 2012: The Regulation on the Board Innovation Committee of the JSC “Grid Company” («Сетевая компания») is presented on the official • Worked out and submitted for the approval of the Board web-site of the Company http://www.gridcom-rt.ru in the section of Directors of the Company the logistics documentation “For Shareholders and investors/the Charter and internal documents». regulating the innovation activity of the Company: Grid Company 71

Independent Executive of the Company (Director General) Director General guaranties the achievement of the declared targets of the Company and is responsible for the realization of The management of the current activity of the Company is the adopted strategy. performed by the independent executive – Director General, who Rights and obligations of Director General are determined by reports to the shareholders meeting and the Board of Directors. the Federal Law “On Corporations”, other legal acts of the Russian In compliance with the Charter of the Company the election Federation, the Charter and Regulation on Director General of of Director General and early termination of the term of office is the Company, as well as the labour contract concluded by the implemented by the Board of directors. Director General and the Company.

Fardiev Ilshat Shaehovich

Born in 1960. Education: higher. Citizenship: Russia. Career for the last 5 years: • February 2002 – April 2010 – Director General of the JSC “Tatenergo”; • April 2005 – April 2010 - Director General of the JSC “Generating Company” ; • April 2010 – May 2012 – Deputy Prime Minister of the Republic of Tatarstan – the Minister of Energy of the Republic of Tatarstan ; • May 2012 - up to the present – Director General of the JSC “Grid Company” («Сетевая компания»). Doesn’t hold shares in the Company. No family relations with the officials and the members of the Auditing Committee of the Company.

The Regulation “On Director General” of the JSC “Grid The principles of incentive scheme of the independent Company” («Сетевая компания») is presented on the official executive of the Company is regulated by the applicable local web-site of the Company http://www.gridcom-rt.ru in the statements on General Director incentive, determining the section “For Shareholders and Investors/the Charter and internal dependence of the size of remuneration on the technical and documents”). economic indexes of the performance of the Company. In accordance with the terms of the labour contract Estimation criteria and information about premium payments concluded with the person, performing the obligations of an to the members of the Board of Directors and Independent independent executive the information about the size of the Executive of the Company. remuneration paid to him is confidential.

The criteria determining the remuneration and compensations Auditing Committee to the members of the Board of Directors of the Company are presented in the Regulation on costs, awards and compensations To provide the control on financial and business activity of the to the Board of Directors of the JSC “Grid Company”, adopted Company the shareholders meeting elects the Auditing committee at the special shareholders meeting on 12.11.2012 (record of on an annual basis. The Auditing committee is a continuing body proceedings No28 dated 14.11.2012). In accordance with of internal control of the Company, providing regular control on article 66 of the Federal Law “On Corporations” and the above the financial and business activity of the Company in respect to Regulation the remuneration to the Board of Directors is paid the correspondence between the applicable law of the Russian in accordance with the decision of the shareholders meeting Federation, the Charter and internal documents of the Company. and depends on the results of the activity of the Company and The activity of the Auditing Committee is regulated by the individual performance of the members of the members of the Federal Law «On Corporations”, the charter of the Company Board of directors during the period in question. and the Regulation on the Auditing Committee of the JSC «Grid The decisions on payment any remunerations and/or Company». compensations to the members of the Board of Directors during The Auditing committee (the quantitative composition - 5 their performance in 2012 were not taken. people) is elected at the shareholders meeting for the term to The determining criteria and the size of remunerations to the next annual shareholders meeting. Independent Executive of the Company are determined in his There were three compositions of the Auditing Committee labour contract concluded with the Company. in 2012. 72 CORPORATE MANAGEMENT

Operation Composition of the Auditing Committee of the Company (elected on 14.09.2012)

Valeeva Farida Faridovna positions held as of 31.12.2012

Born in 1960. Amendments in the composition of the Auditing Committee Education: higher. Career for the last 5 years: The Auditing Committee, working up to the annual shareholders • June 2005 – up to the present – leading accountant of the JSC «Grid meeting (term of office from 27.06.2011 to 18.06.2012): Company». Doesn’t hold shares in the Company.

Chief Accountant of the JSC «Grid Daminova Enge Nuriazdanovna Valeeva Farida Faridovna Company» Born in 1972. Education: higher. The Head of the Investment Project Career for the last 5 years: Kuzmishin Ilia Alexandrovich Department, the Ministry of Energy of the • October 2007 - June 2008 – the Head of the section of cooperation with CMI Republic of Tatarstan and land preservation of the Ministry of land and Property Relations of the Republic of Tatarstan; • June 2008г. - November 2009г. – head of Department of Reformation and Main Consultant of Economic Analysis Privatization the Ministry of Land and Property Regulation of the Republic of Urezov Dmitry Nikolaevich Department, the Ministry of Finance of the Tatarstan; Republic of Tatarstan • November 2009г. - up to the present - head of Department of Privatization and Strategy Planning of the Ministry of Land and Property Regulation of the The Head of the Financial Planning Sec- Hasanova Yulia Vladimirovna tion of the Financial Department, the JSC Republic of Tatarstan . “Grid Company” Doesn’t hold shares in the Company. Deputy manager of the financial and Urezov Dmitry Nikolaevich Shakirova Natalia Ivanovna analytical department of the JSC “Grid Company” Born in 1978. Education: higher. Career for the last 5 years: positions held as of 31.12.2012 • 2005 – up to the present – leading advisor of the economic analysis department of the Ministry of Finance of the Republic of Tatarstan. Auditing Committee, elected by the annual shareholders meeting Doesn’t hold shares in the Company. (Term of office from 18.06.2012 to 14.09.2012):

Giliazutdinova Alsu Ravilevna Chief Accountant of the JSC «Grid Valeeva Farida Faridovna Born in 1985. Company» Education: higher. Career for the last 5 years: Main specialist of the Internal Auditing Gilyazutdinova Alsu Ravilevna • August 2007г. - February 2008г. – accountant of the LLC «SUNLIGHT- Department, the JSC «Grid Company» GROUP»; • February 2008г. - April 2008г. – chief accountant of the LLC ПСФ «Transzhilstroy»; The Head of the Investment Project • April 2008 – May 2010 – auditor assistant, auditor of the LLC «Volzhsko- Kuzmishin Ilia Alexandrovich Department, the Ministry of Energy of the Kamskoye Auditing Agency»; Republic of Tatarstan • May 2010 – March 2011 – chief accountant of the LLC «Company Volga-ZITAR»; • April 2011 - up to the present – main specialist of the Internal Auditing section Main Consultant of Economic Analysis of the Auditing Department of the JSC «Grid Company». Urezov Dmitry Nikolaevich Department, the Ministry of Finance of the Doesn’t hold shares in the Company. Republic of Tatarstan Deputy Chief of the Financial Planning Shakirova Natalia Ivanovna Shakirova Natalia Ivanovna and Analysis Department, the JSC “Grid Company” Born in 1965. Education : higher. Career for the last 5 years: positions held as of 31.12.2012 • April 2005 – November 2006. – the head of the financial planning unit of the financial department of the JSC “Grid Company” The Regulation “On Auditing Commission” of the JSC “Grid • November 2006 – up to the present – deputy manager of the financial and Company” («Сетевая компания») is presented on the official web- analytical department of the JSC “Grid Company”. site of the Company http://www.gridcom-rt.ru in the section “For Doesn’t hold shares in the Company. Shareholders and Investors/the Charter and internal documents”). Grid Company 73

The information about the deals of interest and big deals the management of the Company in 2012 is attached as a Schedule to this Report. The list of deals acknowledged in the compliance with the The deals acknowledged in the compliance with the Federal Law Federal Law “On Corporations” the deals of interest approved by “On Corporations” big deals were not completed.

Company’s capital stock

The Company’s authorized capital as of 31.12.2002 totals Distribution of common registered shares 6 540 732 309 (six billion five hundred forty million seven hundred of the Company as of 31.12.2012 thirty two thousand three hundred and nine) rubles. Number of Name of the Shareholder % The Company has placed 13 081 464 618 (thirteen billion Shares eighty one million four hundred sixty four thousand six hundred The Republic of Tatarstan represented by eighteen) common registered uncertified shares with the nominal Ministry of Land and Property Relations of the 10 722 583 224 81,97 value of 0.5 rubles. Republic of Tatarstan The number of authorized shares totals 1 323 880 778 (one Presidential State Housing Development Fund billion three hundred twenty three million eight hundred eighty 1 240 097 292 9,48 of the Republic of Tatarstan thousand seven hundred seventy eight) common registered Other legal persons with less than 5% of shares with the nominal value of 0.5 rubles. 1 118 784 102 8,55 The Company has not placed any preferred shares. shares each The authorized capital structure of the JSC “Grid Company” TOTAL: 13 081 464 618 100 (“Сетевая компания”) does not involve cross-shareholdings. To find out more about the Company’s capital stock visit the Company’s official web-page http://www.gridcom-rt.ru (section “Shareholders and investors/Capital Stock”). 9,48%

8,55%

81,97%

Republic of Tatarstan represented by the MLPR (Ministry of Land and Property Regulations) the SHF (State Housing Fund) under the President of the Republic of Tatarstan About the Company’s Securities other legal entities

State Registration Number and Date Number Nominal Value, Method of Placement Status of Registration of Placed Shares, pc. RUB

Initial Offering of Common Registered Shares*

1-01-65007-D dated 26.02.2002 Distribution among Founders 4 777 778 000 1 cancelled

Second Offering of Common Registered Shares

1-02-65007-D от 03.08.2004 Conversion (splits) 21 681 464 618* 0,5 placed

The folloing additional offerings of securities were registered by the state:

1-02-65007-D-001D** dated 25.05.2006 Conversion (assimilation) 1 276 745 600 0,5 placed

1-02-65007-D-002D** dated 29.01.2008 Private Offering 1 055 180 239 0,5 placed

1-02-65007-D-003D*** dated 28.05.2009 Conversion (assimilation) 9 641 365 000 0,5 placed

1-02-65007-D-004D** dated 17.03.2011 Private Offering 702 828 383 0,5 placed * the number of shares listed includes placed shares from additional offerings, the individual numbers (codes) of which have been cancelled ** individual number (code) of the additional offering was cancelled due to the expiration of a three-month period since the date of the state registration of the additional offering place- ment report 74 CORPORATE MANAGEMENT

The number of common registered shares of the Com- www.gridcom-rt.ru (section “Shareholders and investors/Capital pany in circulation (the number of common registered shares Stock”). from the principal offering that have not been cancelled) totals 13 081 464 618 (thirteen billion eighty one million four hundred Registration of Rights for the Company’s Securities sixty four thousand six hundred eighteen) shares. Following the decision of the extraordinary general meeting of shareholders to To provide reliable registration of property rights for the Com- cut the stock capital as of 26.08.2010, 8 600 000 000 common pany’s securities, the Company has entrusted a specialized inde- registered shares were cancelled. The cancelled shares had been pendent registrar with maintaining a register of owners of common transferred to the Company as a result of re-organization (as- registered shares. similation of JSC “Holding Grid Company” (“Холдинг “Сетевая The decision to entrust a specialized registrar with maintaining a компания”) due to the separation from JSC “Tatenergo”) and register of owners of common registered shares, the choice of the not flogged over a one-year period after theri acquisition by the registrar and terms of the agreement were approved by the Board of Company. Directors as of 15.08.2005 (Report No.4 dated 18.08.2005). The Company is on the list of issuers (approved by Act No.08- 42/pz-n. dated 28.10.2008 of the Federal Financial Markets Service Information about the specialized registrar (FFMS)) that are registered by FFMS. Documents containing registered decisions about stock of- Name: Kazan branch of LLC “Eurasian Registrar” ferings (additional offerings) of the Company according to the re- (“Евроазиатский регистратор”). quirements of section 8.6 of the Disclosure Statute for Issuers of Legal address: 6 Vishnevskogo Str., Kazan, 420043. Issued Securities approved by FFMS Act No.11-46/pz-n. dated Mailing address: 6 Vishnevskogo Str., Kazan, 420043. 04.10.2011 can be found at http://www.e-disclosure.ru/portal/ Phone number: (843) 236-63-66, 236-27-52 (fax). company.aspx?id=1830. To find out more about the Company’s License: to maintain registers of owners of registered shares No.10- securities you can also visit the Company’s official page http:// 000-1-00332, issued by FFMS on 10.03.2005 for an indefinite term.

Company’s dividend policy

The Company’s dividend policy is based on accommodating and its shareholders’ interests as well as the necessity to both the Company’s and the shareholders’ interests while making provide reliable and stable power supply to consumers the decision about dividend payment (nondistribution of dividend) connected to the Company’s electric lines; and its value; as well as respecting shareholders’ rights envisioned by • the Company’s Board of Directors can give general meeting the existing legislation of the Russian Federation and the Company’s of the Company’s shareholders recommendations if it Regulations. The policy is designed to make the Company more has enough resources for implementation of investment appealing to investors and to capitalize the Company. programs and large-scale projects for technological Statute about the dividend policy of JSC “Grid Company” (“Се- connection of consumers to the Company’s transmission тевая компания”) (version approved by the Board of Directors as facilities; of 16.05.2011; report No.21 dated 17.05.2011) defines the main • as a rule, the dividend payment recommended by the principles and approaches for the Company’s Board of Directors for Company’s Board of Directors should not exceed the recommendations to general meeting of shareholders on dividend standard approved while defining power supply rates for the payments; ensures transparency of the mechanism for determining current year. dividend values and their payment and information distribution to the Company’s shareholders and other interested parties about the The Board of Directors for the most part gave recommendations Company’s dividend policy. for nondistribution of dividend to the annual general meeting The Company’s dividend policy is based on principles that of shareholders at the end of the fiscal year since the Company are conditioned by the specific character of the Company’s needs resources for implementation of investment projects aimed at activities that consists mainly in state regulations of rates for power renovation of key assets and ensuring a reliable performance of the transmission and technological connection, as well as the necessity republic’s power grid, as well as creating conditions fo technological for development, modernization, reconstruction and construction of connection of consumers. new power grid facilities. The principles include the following: The document containing the Statute about the dividend policy of JSC “Grid Company” (“Сетевая компания”) can be found on • he key factor for taking the decision about dividend payment the Company’s official web-page http://www.gridcom-rt.ru (Section (nondistribution of dividend) is a balance of the Company’s “Shareholders and Investors/Regulations and Internal Documents”). Grid Company 75

Dividend History

Period Event

No dividends were paid at the end of the fiscal years according to the recommendations of the Company's Board of Directors; 2002–2005 the profit was allocated for developing production.

At the end of 2006 the Company's annual general meeting of shareholders (for the first time since the beginning of the Com- 2006 pany's activities) took the decision to pay dividend for common shares at the rate of 10% of the Company's net profit for 2006. The total amount allocated for dividend payment for the Company's common shares was 6 789,6 thousand rubles.

Annual general meetings of shareholders took the decision not to pay dividend (not to declare) at the end of the corresponding fiscal 2007-2011 year according to the recommendations of the Company's Board of Directors. Joint efficiency

INTERNAL CONTROL AND RISK MANAGEMENT SYSTEM

Joint efficiency maximum safety

System of inner control and the Company’s Policy in the sphere of risk management have to ensure reliable activity of the Company in short-term and long-term perspective, and investors' trust for the Company and its management, to protect the shareholders' investments and to achieve the Company's strategic development objectives in the most effective fashion.

INTERNAL CONTROL 78 AND RISK MANAGEMENT SYSTEM

Internal control system structure

Internal control system is an important mechanism of JSC and principles of its functioning, internal control procedures “Grid Company” (“Сетевая компания”). It is one of the Company’s regulating the Company’s activities, as well as responsibility priorities to ensure its effective performance and continued of internal control subjects to comply with internal control improvement. procedures (approved by the Company’s Board of Directors The principal goals of the internal control system are to ensure as of 14.09.2012, protocol No.1/2012 dated 17.09.2012); investors’ trust for the Company and its management, to protect the • Management risk policy that defines main objectives, risk shareholders’ investments and the Company’s assets, to achieve management tasks in the Company and the principles of its the Company’s strategic development objectives in the most functioning (approved by the Company’s Board of Directors effective fashion, to manage the Company’s financial and economic as of 27.12.2012, protocol No.6/2012 dated 28.12.2012). risks, to effectively manage the Company’s financial and economic activities and its assets, to assist the Company’s management in its The following bodies are participants of the Company’s internal administrative functions. control and risk management system: The Company’s internal control system is designed to fulfill the following tasks: • The Company’s Board of Directors plays a key role in the internal control system and in carrying out key functions in the • ensuring the execution of the financial and economic plan; risk management process; defines main spheres of internal • establishing and enforcing effective internal control control and the Company’s objectives in risk management; procedures; approves internal regulatory documents governing risk • ensuring an effective and transparent management system management issues, assesses and ensures the effectiveness including prevention and suppressing misuse on the part of of risk management process; the Company’s executive bodies and officials; • Audit Committee of the Company’s Board of Directors • ensuring comprehensiveness, reliability and trustworthiness performs analysis and general estimate of the effectiveness of the Company’s financial, bookkeeping, statistic and of internal control and risk management system, controls managerial data and accounts; comprehensiveness and trustworthiness of the Company’s • revealing and mobilizing in-house possibilities and profit financial, fiscal, bookkeeping and managerial accounts, reserve; compliance with procedures of internal control of financial and • ensuring compliance with regulatory acts of the Russian economic activities, estimates their effectiveness, develops Federation, internal documents and the Company’s recommendations to the Company’s Board of Directors on management bodies; improving internal control and risk management system; • ensuring safety of assets and effective use of the Company’s • The Company’s Director General ensures compliance with resources; internal control procedures, introduction and development of • prevention, early recognition, analysis and reduction of risk management system, and is responsible for organization financial, operational and technological risks that can and effective performance of the risk management process in negatively affect achievement of the Society’s goals related the Company; to financial and economic activities. • The Company’s auditing management organizes continuous and periodical control of financial and economic activities, The Company’s activities are influenced by internal and analyzes and summarizes control activities, supervises external factors. To define the degree of their influence one needs rectification of violations revealed as a result of check-ups and to perform a complex analysis of probability of the occurrence of fraud investigations, takes measures to prevent violations; the event and its consequences. The Company is aware of the • Deputies of the Company’s Director General, branch managers importance of risk management as part of corporate management and heads of organization departments of the Management system that helps promptly identify and estimate risks in the and the Company’s branches perform continuous risk Company’s financial and economic activities and also minimize management activities (within the limits of their power and their negative consequences. functional duties) including establishing risks, defining key Important elements of risk management process include: risks, develops risk management activities, analyzes their potential influence on the Company’s objectives and tasks. • integration of risk management process with the Company’s principal activities and its business processes; In 2012 the Company’s auditing management carried out • analysis of objectives with the purpose of identifying risks and thematic and target auditing check-ups of the Company’s branches minimizing (elimination) of their consequences; that were primarily focused on the principal industrial and economic • improving management efficiency of key risks; activities that are particularly vulnerable to risks and that can lead • participation of each employee in the risk management to financial loss. The check-ups covered issues of technological process. connection, capital construction, maintenance and renovation, their planning and funding, compliance with accounting and fiscal To ensure the functioning of the internal control system and risk regulations, procuring activity, ensuring safety of the Company’s management the Company has developed and approved the following property, automation of accounting processes, etc. The management internal regulatory acts: established сause-and-effect relations for each of the found violations, connected them to compliance of the responsible executives with • Statute about internal control system that defines terms and internal regulatory documents, defined the role of the vertical objectives of the internal control system, its organization power structure with respect to the supervised business process, Grid Company 79

and gave recommendations on eliminating the negative factors in Along with its auditing activities the Auditing Management also the future. The Auditing management supervises elimination and performs methodological activities that are designed to improve subsequent prevention of violations with the help of target check-ups effectiveness of the internal control system, reduce probability of of compliance with the suggested corrective measures on the part of external and internal risks, and expedite the adaptation process of the branches. operational activities to new economic conditions.

Main risk factors related to the company’s activities

The Company relies on the Risk Management Policy, natural disaster-related risks: hurricanes, ice storms, heavy snow that defines risk management objectives and principles and showers, forest fires. These natural disasters can cause property pursues the purpose of improving reliability of the Company’s loss that will affect both residents and public utilities, disrupt activities in the near and distant future. The main directions in transport connection, heat and power supply. risk management sphere are risk identification, assessment In order to minimize force majeure risks (military conflicts, and ranking; risk manipulation with the purpose of ensuring strikes, natural disasters, states of emergency) the Company achievement of the Company’s strategic goals, conservation takes them into account in its contracting activities. of assets and maintating business effectiveness, as well as In the case of occurrence of one or several of the risks listed guaranteeing stable power transmission. above the Company will shall undertake all feasible measures to minimize their negative impact. Country and regional risks In order to compensate potential losses caused by force majeure, the Company has insured its property and carries out The Company is registered in the Russian Federation and preparatory activities: an emergency stock of materials has been performs its principal activities on the territory of the Republic stored, emergency response and restoration teams are being of Tatarstan, which implies that deterioration of the economic trained. and political situation in the country and the region is among the risk factors that could potentially have a negative impact on the Financial risks Company’s performance. Major changes have taken place recently in the Russian Inflation risk is related to a potential depreciation of capital Federation, both in the system of public administration and value and a decrease in income due to inflation. Russian economy in the economic environment. The legal framework is being is characterized by a high inflation level. The impact of inflation continuously improved, including legislation in the sphere of on the Company’s activities is quite significant since part of the electric engineering. Court practice is formed based on a large expenses depends on the average prices level in Russia. variety of economic arguments, tax administration is improved Particularly vulnerable are the following financial indicators: with the purpose of creating a clearer and better-defined framework of economic activities in the Russian Federation. • receivables and payables – an increase in turnover time; The Company’s main political risk consists in the probability • cash assets – a decrease in free funds; of changes in the current political direction of the country’s • a decrease in profit from the Company’s principal activities. leadership that can have affect the field overall. In case these changes take place, the Company is predicted to face the The negative impact of inflation on the financial and economic following consequences: establishment of rates that would activities of the Company can manifest itself in the potential risk be considerably lower than the economically justified level, of receivables increase, in the loss risk related to a decrease nationalization of the Company’s assets, a radical change in in the effective cost of receivables in case of substantial respite the existing model of distribution power lines management. As or delay of payment, in the risk of cost supplement due to an of today, the probability of these risks is estimated as low. The increase in prices of components, equipment and other materials Company has no control over political risks due to their large scale used by the Company in its activities, the risk of a decrease in the but in order to minimize them, the Company works extensively effective cost of investment resources. with superior and regulating organizations in the country’s best The Company takes into account inflation processes and interests. forecasts them in its scheduling activities taking into consideration There are also a number of other risks that are considered available statistic data about its level and rates and the stance of unlikely, those include military conflicts, state of emergency and the Government of Russia. large-scale strikes in the region where the Company carries out In order to optimize expenses for material acquisition it its activities. is purchased in compliance with the Anuual comprehensive The Republic of Tatarstan is one of the most appealing regions acquisition program, through competitive tendering. Contractors of Russia for investors, which can be accounted for by an optimal performing services/works are also selected by tender. Expenses combination of high investment potential and low investment risk. are optimized with the help of development and implementation According to the ranking agencies “Expert PA” (“Эксперт РА”) of the Cost Management Program. and “Forbes” the Republic of Tatarstan is among the leaders of Foreign Exchange Risk. The Company’s financial state, the Volga Federal Region in the category “minimal investment market liquidity, funding resources and performance are not risk”. In 2012 the Republic of Tatarstan was among the top ten significantly influenced by the changes in foreign exchange regions in terms of convenient conduct of business. rates since the Company operates only on the territory of the The Company’s activities are also affected by the climate and Russian Federation, does not have investments in foreign the geographic location of the region. There is a probability of companies whose net wealth cost depends on foreign exchange INTERNAL CONTROL 80 AND RISK MANAGEMENT SYSTEM

rate fluctuations, does not have income or expenses in foreign The amount of resources allocated for the implementation of the currency. Foreign exchange risk for the Company is limited to the investment program totals 12% of the Company’s necessary general dependency of the national and foreign currency rates, gross return for network maintenance. The Company thus which affects the economy of Russia overall and the Company’s cannot meet its need for investments aimed at ensuring reliability financial state due to the Company’s interconnection with various and safety of power transmission to consumers. structures of Russian economy. Thus foreign exchange rate Another risk factor is related to the rate fluctuation in increase risks are and their potential impact on the state of the technological connection to electric lines due to the release of Company are considered insignificant. Decree No.6-33/tp. of the State committee on tariffs of the Republic Interest Risk. Interest fluctuation risk consists in unforeseen of Tatarstan dated 25.12.2012. Since the decree establishes only change of interest rates at the financial market, which affects rates for services performed by the network organization in certain payment of interests cost if borrowed capital is used in the technical conditions and with a limited list of permitted equipment, funding resources structure of the organization. the Company can come across a situation where the fixed rate Since the Company does not own borrowed funds interest does not cover the expenses on construction of facilities with a risks do not have a significant impact on its financial and different nominal value in case it uses for technological connection economic activities. equipment that is not mentioned on the given list. As part of risk management policy the Company plans to In addition, since rates are applied without consideration for launch a program to reduce expenses and overall prime cost of consutrction scale, expenses of the network organization can its product in case of a fluctuation in foreign exchange or interest considerably exceed the cost of technological connection based rate. on the fixed rate if the Company has to install long power lines. Credit Risks. Risks related to failure of contractors to fulfill To minimize the risk the Company puts in continous effort their duties. Among risk factors that could affect the Company’s to work with the State committee on tariffs of the Republic ability to fulfill its obligations are changes in fiscal legislation and of Tatarstan on establishment of economically justified rates the political situation in the country. The current level of market that would compensate all of the Company’s expenses for liquidity suggests that the risk of the Company’s failure to carry maintenance and servicing of power lines. In order to reduce out its obligations in a comprehensive and timely manner is expenses the Company has developed and launched the “Cost insignificant. Management Program”. Deterioration of the contractors’ financial state and their failure to meet contract requirements will lead to a delay in meeting Risks Related to the Company’s Activities deadlines for the Company’s investment programs. Operational (mechanical) risks are risks related to depreciation, To hedge risks related to the failure of contractors to fulfill their challenge in service and critical changes in the operating conditions obligations and return the advances they received, the Company of the equipment. forces the contractors to provide adequate financial provision. Major factors within this risk group are physical depreciation of equipment and principal funds, operation of equipment with Industry risks maximum deviation from regulatory and engineering requirements, human factor, as well as the impact of natural disasters. Industry risks are risks related to a potential deterioration of Major operational risks: the state of affairs in the branch that can significantly affect the Company’s activities. Among industry risks are the following: 1. Failure to fulfill contract obligations for power transmission rate regulation risks and mechanical risks (risks related to the services. Company’s activities). 2. Deterioration of performance and economic indicators of power network equipment. Rate Regulation Risks 3. Negative ecological consequences. The newly introduced regulatory acts have a strong impact on 4. Threat of accidents leading to partial or complete failure to power supply rate regulations and have changed approaches to transmit power and potential negative social consequences rate regulation in the power transmission retail market, principles (customers’ complaints). of rate regulation and rate approval for powert transmission. 5. Punitive fines imposed by regulatory bodies, imposition of a As of 2012 consumers and guaranteed suppliers choose ban on use of equipment at a regular rate. power transmission rates on their own by sending a written 6. Risks related to delays in repair works or failure to complete notification to the network organization within a one-month period the scheduled repair works (reduction of efficiency of plant since the official release of the Statute about rates. The chosen assets; significant financial loss due to damage control; rate is applied to power transmission services from the activation undersupply of energy to customers, deterioration in power date of the indicated rates. Since the flat rate is calculated based quality; instructions from state regulatory bodies; tax losses on the average number of hours of capacity utilization (NHCU), for the Society; failure to meet contract obligations to consumers with an NHCU higher than the average seek to use contractors). the cost-efficient dual rate whereas consumers with a lower NHCU pick the flat rate which implies for the Company a potential In order to minimize the risk, the Company takes extensive shortage risk for income from power transmission. effort to complete all the works scheduled for maintenance of According to the legislation, network organizations that transmission devices and equipment. switched in 2012 to rate regulation through long-term indexation of In 2012 the Company developed and implemented a plan of gross turnover using long-term regulation parameters, are limited activities aimed at improving the quality of maintenance of the in the amount of resources allocated for the implementation of Company’s distribution lines that included contractors’ works in the the investment program, included in the power transmission rate. total amount 210 040,9 thousand rubles. Grid Company 81

Physical Expenses, 4. Technical reequipping, use of modern reliable equipment that Action volume thousand rubles does not require repair services throughout the whole product Clearance of overhead lines 0,38-10 life. 870,3 87 258,89 kV (ha) 5. Development of networks with the purpose of increasing reserve possibilities in emergency situations. Maintenance of package transformer 6. Constant monitoring of the equipment condition and substations, closed transformer 32 329,62 compliance with rules of operating power facilities, equipment, substations (pcs) buildings and constructions. 7. Analysis of reasons and preconditions of risk events; Renewal of number indicators on the 60 680 professional development and certification of employees. supports, transformer substation (pcs) 8. A comprehensive preventive program aimed at injury prevention of third parties (media publications of preventive Dimension renovations of the 329 73 379,1 nature, games and safety lectures in educational institutions, overhead line 6/10 kV (pcs) video spots on prevention of power-related traumatism of children and third parties, distribution of visual campaign materials about the life hazards of unauthorized meddling with Fireproofing of cable lines (m2) 10 115,1 8 776,3 electric power facilities, etc.)

Renewal of lines to apartment houses Investment Risks. Performance effectiveness of network power 11 833 35 357,03 (pcs) enterprises largely depends on how well they work with capital wealth – electric power transmission and transformers that form the basis of any power grid infrastructure – and how well they manage Maintenance of electrical distribution respective capital risks. Effective management of capital wealth 3 286 2 226,89 panels of apartment houses (pcs) is the key to achievement of the above mentioned goals and to increasing the appeal of the company for investors. The Company’s investment risks consist in potential failure to Other contract services 2 713,05 fulfill investment programs that will lead to an increase in probability of industrial accidents and disrupted power supply to customers. In order to minimize investment risks the Company has approved Total: 210 040,9 an investment program for 2014-2016 and endorsed approaches to finding resources for its funding. The JSC “Grid Company” (“Сетевая компания”) investment New diagnostic techniques are being introduced that do not require program for 2014-2016 is designed to tackle the challenging equipment shutdown – introduction of special teams that can carry out operation issues of the power grid of the Republic of Tatarstan and maintenance activities under voltage, without shutdown of electricity- was developed with regard to depreciation and state of equipment generating equipment; contractors are selected by tender with the at the facilities of transmission and distribution lines of the Republic purpose of improving service quality and contractors’ responsibility, of Tatarstan. and reducing cost per unit. The Company continously works with the State Committee on Mechanical and Technological Risks. The Company’s activities Tariffs of the Republic of Tatarstan in order to establish economically can potentially be linked to violations of operating conditions and justified rates that would compensate all the Company’s expanses critical changes in operating conditions of the equipment, as well as related to maintenance and servicing of lines. potential risks of emergency situations and accidents at the power The Company minimizes risks by supervising the fulfillment of grid facilities: contract obligations by the contractors, controlling construction processes as part of the implementation of the investment 1. Systematic violation related to ensuring safe use of prdouction program. facilities and reliability of power supply. The Company’s risks related to technological connection to 2. Risk of transition to mode of operation with forced overflows power lines. One of the Company’s main activities is providing (permissible in emergency situations). services linked to technological connection of applicants to the 3. Risk of a simultaneous peak load increase above the scheduled Company’s power grid facilities which entails risks related to failure limit, related to natural disasters. to meet technological connection deadlines due to the following reasons: The Company takes the following measures to minimize the probability of these risks: • Failure to meet contract obligations on the part of the Applicant, in case of timely execution of scheduled activities 1. Situation analysis with the purpose of foreseeing risks during by the Company. the implementation of the operational program and taking • Failure to agree on documents in a timely manner in case of measures that could protect from its impact. interaction with a Rostekhnadzor body (the Federal Service 2. Developing a maintenance and repair program to address the for Ecological, Technological and Nuclear Supervision). reconstruction of operating network facilities. • Failure of the contractors to meet deadlines for fulfillment of 3. Activities aimed at improving the power grid reliability including contract obligations. purchase control and quality inspection of the delivered • Failure to agree on documents in a timely manner in case equipment and material. of interaction with an operational-dispatch subject (branch INTERNAL CONTROL 82 AND RISK MANAGEMENT SYSTEM

of JSC “System Operator of the Unified Power System” of Occurrence grade is calculated based on real data about threats Tatarstan’s regional dispatching office). (or lack thereof) and opinions of ecology experts on the potential frequence of threat occurrence. To minimize the risk the Company has an automated control Detection grade is determined by efficiency (speed) of detection system to supervise fulfillment of technological connection contracts; and response to potential threat. procedures are being approved for interaction with third parties The obtained results were analyzed and were taken into account involved in agreements on documents related to technological in scheduling activities for 2013-2014 aimed at improving ecological connection. safety and reducing ecological risks. Thus a whole array of measures are taken to minimize the risks related to the Company’s activities, a number of measures are Corporate management risks taken to ensure adequate reliability of equipment: attaining certain indices of repair works and investment programs aimed at partial Corporate Management Risks are risks related to the functioning replacement and reconstruction; use of emergency control schemes, of the Company’s corporate management: interaction between modernization of power capacity through introduction of innovation the Company, its shareholders and regulatory bodies, compliance power equipment; introduction of an automated asset management with legal rights and interests of all the participants of corporate system (optimization of operating processes, maintenance, and management system, the Company’s compliance with the grid assets repairs); optimization of structure and volume of loose requirements of stock and securities legislation as well as introduction part purchases; tender-based selection of service and material of state-of-the-art elements of Russian and international corporate providers aimed at improving the quality of the provided services management practice. and materials, contractors’ responsibility and reducing cost per unit; Among the indicators of this risk for the Company are lack of activities aimed at professional development of staff members as claims and lawsuits on the part of shareholders related to violation well as compliance with legislation in the sphere of industrial safety of their rights, lack of instructions on violation elimination from the and functioning of the production supervision system according to executive branch of the government regulating the security market, industrial safety requirements. National Ranking of Corporate Management published by “Russian Institute of Directors” (“Российский институт директоров”). Ecological risks Among the sources of corporate management risk are the Company’s failure to comply with the legislation requirements, Another potential risk for the Company is an ecological risk which requirements of the Code of Corporate Conduct and regulations of can be classified based on the scale of its occurrence, admissibility, the Company’s internal documents that govern corporate procedures, possibility of prevention, prediction and insurance. disclosure of and supplying information about requirements for In order to develop coordination measures aimed at prevention the Company’s management bodies and the content of internal and localization of ecological risks the Company developed in 2012 documents, introduction into the Company’s internal documents of a unified procedure of ecological risk management that would be regulations that deteriorate management practice as compared to applicable in any situation. the previous editions. Processes of threat identification, assessment and risk To minimize the risk the Company continuously analyzes its management include the following: internal documents to ensure that they comply with the existing legislation and best corporate management practice; makes sure • identification of threats; that all the corporate procedures adhere to legislation requirements • assessment of risks including listing existing (suggested) on-site and the Company’s internal documents, seeks to become more risk control measures with regard to impact of special hazards, transparent and open, develops an annual plan aimed at improving probability of control failure and potential serious nature of the its ranking based on an analysis of the report on the National consequences; Ranking of Corporate Management. The Company strives to clearly • qualification assessment of residual risks; separate powers and responsibilities between the Board of Directors • identification of risk control measures and assessment of and the sole executive body, takes extensive effort to establish whether the measures taken are sufficient for reducing risks to communication with the shareholders and make sure that their rights an acceptable level; and interests are respected (a specialized registrar maintains a register • applicable legislative and other regulatory legal requirements; of the Company’s shareholders, information disclosure adheres to the • role and powers of the staff responsible for the execution of existing regulations, the Company strives to adhere to the principal processes; recommendations of the Code of Corporate Conduct and follow • staff proficiency requirements and the need to train empoyees; corporate procedures). • hazards related to the used material, plants and equipment, The Company develops internal documents that regulate the technical characteristics of which deteriorate with time if they work of management bodies, establish procedures of interaction are stored. between corporate management procedures, and clearly divides powers and responsibilities between the Company’s management The ecological risk was calculated based on the factor of risk bodies. priority number – a quantitative assessment of ecological risk which is a product of consequences significance, occurrence and detection Compliance Risks grades for a specific risk. To establish the grade of consequences significance particular The Company is prone to compliance risks as much as any other consideration was given to the fact that every type of threat can have business entity operating on the territory of the Russian Federation. various consequences depending on managerial capabilities and Compliance risks are related to ambiguos interpretation of Taxes and available industrial equipment. Fees Legislation, probability of fluctuations in tax regulations, rates, Grid Company 83

assessment and payment deadlines, changes in judiciary practice with In case changes are made in the current fiscal legislation they will regard to issues related to the Company’s activities as well as changes be taken into consideration with regard to the Company’s financial and in industry-specific legislation. economic activities. Changes in Fiscal Legislation. Among the principal factors of tax Change in Judiciary Practice connected with the Company’s risks are potential introduction of new taxes and fees, increase in structure and its activities are prone to risks related to the the current tax and fees rates, extension of taxable base, change of Russian legal system. These risks include the following: potential payment deadlines or regulations on tax payments and tax reporting. contradictions between the legislation of the Russian Federation and Since all tax payments are taken into account during power supply the regulatory acts of the executive branch of the constituent entities rate regulating procedures, a change in fiscal legislation, including and local governments, no previous judiciary practice with regard introduction of new taxes and fees, or fluctuation of rates, would not to implementation of certain regulations. Probability of changes in present a significant risk for the Company in the long term. judiciary practice in regard to issues related to the Company’s activities In order to minimize fiscal risks the Company controls procedures is insignificant. In case changes are made to the judiciary practice with of tax base calculation, applying tax rates as well as timely and full regard to issues related to the Company’s activities, the Company will payments of all taxes and fees envisioned by the fiscal legislation. plan its financial and economic activities accordingly. From preservation and renovation

H uMAN resource policies and social responsibility

From preservation and renovation to stability and growth

The main principles of the Company’s policy are long-term partner relationship with employees, unconditional fulfillment of the Company's obligations in the sphere of social protection, life and health protection; and investment into personnel development.

Social policies are aimed at resolving the most relevant issues related to personnel social development, improving working conditions and social protection of employees through implementation of social activities and programs.

HUMAN RESOURCE POLICIES 84 AND SOCIAL RESPONSIBILITY

Principles of social responsibility

The Company adheres to principles of continuous • responsibility to suppliers and contractors to create a development and strives to strike a balance between its transparent competitive environment and market pricing economic goals and its tasks in the social and ecological mechanism; spheres. • transparency with regard to disclosure of trustworthy The Company is responsible for providing reliable power information in media and creating a communication with supply to consumers. To achieve the goal it has to modernize interested parties; all the power grid facilities, develop and introduce innovative • consistency and meaningfulness – consistent and technologies to improve energy efficiency of the power grid and regular implementation of social programs in those areas effectively use the funds invested into the Company. that are particularly significant for the society at a given Among the most important aspects of the Company’s point of time. corporate social responsibility are the following: The Company’s corporate social responsibility includes • responsibility to the society to reduce negative impact a number of obligations to the interested parties in terms of on the environment; environmental, social and economic impact. The Company takes • responsibility to the personnel to create adequate these obligations voluntarily and fulfills them in cooperation with working conditions and opportunities for personal and the interested parties with a focus on continuous development professional growth; and implementation of the Company’s strategic goals.

Human resource management

Human Resource Policies • enhanced cooperation with educational institutions of middle and professional education with a focus on profile The Company’s human resource policies aim to fully and energy sector educational institutions and departments; promptly satisfy the Company’s quantitative and qualitative need • development of personnel training and retraining system for personnel and to create conditions for effective development with the use of training units and flexible teaching and use of personnel potential. techniques; The Company tends to consider its employees not as • extended work on securing psychological and physical labor force but rather as human capital. Investment into the safety of personnel activities. human capital is meant to increase capitalization and secure the Company’s appeal for investors. The main principles of Personnel Numbers and Structure the human resources policy are long-term partner relationship with employees, unconditional fulfillment of the Company’s As of 01.01.2013 the accountable number of employees obligations in the sphere of social protection, life and health was 7224 people including 3951 workers, 2293 experts and protection; and investment into personnel development. office workers, 980 managers. The accountable number The principal strategic tasks in working with the personnel of employees has increased 3% compared to 2011 and 6% are designed to secure: compared to 2010.

• quantitative and qualitative adequacy of personnel Personnel Structure, % structure to the Company’s needs with regard to 2012 the Company’s tasks and established competence requirements for power grid workers; 55 31 14 • providing continuance of traditions and business values 2011 of the Company for employing and training the personnel; 55 31 14

• an adequate level of content on the part of the employees 2010 in terms of their duties and working conditions at the 56 30 14 facility; • improvement of management and branches structure in 0% 20% 40% 60% 80% 100% terms of specific activities; workers experts and employees managers • medical examination and professional testing of the personnel with the purpose of ensuring reliable and safe An increase in the number of employees is related to a gradual work; strengthening of production departments with the purpose of • extended effort to work with candidates pool; improving equipment operating quality and maintenance, working • listing the employees whose work is particularly important on technological connection of power consumers, forming an for the Company; optimal structure of prompt customer service. Grid Company 85

Changes in the number Change in the number of employees with one or several of employees from 2010 to 2012 degrees from 2010 to 2012,% 46

7 300 2 46

7 24 43 44

42

7 100 40 12 0

40 7

38 07 8

36 6 900 6 2010 2011 2012

There has always been an increase in the amount of money spent per person on personnel training over the last few years.

6 500 Changes in the amount of money spent per person on 2010 2011 2012 personnel training from 2010 to 2012, rubles

The average age of the Company’s employees is 40 years (as of

8 000 0

62,9 7 27,43

the end of 2012). 3

6

Personnel Training 6 000 41,77 2

4 The Company’s personnel training policy is aimed at professional development of the personnel, establishment of general 4 000 requirements, norms and procedures of the system of professional amount of expenses on staff training per training and retraining of personnel. 2 000 worker, rubles Among the priorities in personnel training are reaching a high professional competence (adequate competence) level and maintaining it with regard to the Company’s requirements and 0 development prospects, modern technological achievements and 2010 2011 2012 creating conditions for professional and personal growth of the personnel. The Company’s Employees that Attended Professional Professional training and retraining of the Company’s personnel Training Courses in 2012,% are organized in compliance with the regulatory, industry-specific and local documents (Interaction with Personnel at Power Grid Organizations, Power Network Operating and Maintenance Rules of the Russian Federation, approved by Order No.229 of the Russian 22% Ministry of Energy dated 19.06.2003), as well as internal Company acts regulating the system of professional training and retraining of personnel. The qualitative level of personnel was maintained at a high level during 2012. The number of employees with one or several degrees has increased. As of today more than 700 of the Company’s employees are in the process of getting a university or a technical school degree, around 400 of them are part-time students at Kazan State Power Engineering University, 18 – at Kazan Power Engineering College.

53% 25%

workers experts and employees managers HUMAN RESOURCE POLICIES 86 AND SOCIAL RESPONSIBILITY

The Company’s Candidates Pool • training and experience level should meet the competence re- quirements on the job description for the prospective position The Company pays great attention to the formation and develop- (or ability to reach the necessary level within three years); ment of its candidates pool as part of its human resource policy aimed • a high level of professional competence in the field; at building an effective system of investment of personnel development, • a certain range of professional and personal qualities; timely filling of vacant positions, improvement of personnel selection • an understanding and acceptance of the Company’s main procedures and arrangement of senior executives, planning of profes- strategies, values and management principles; loyalty to the sional development on an individual basis for employees with compe- Company. tences that are of particular importance for the Company, reduction of risks in filling senior positions, motivating career development and The candidates pool is one of the Company’s priorities. Train- training. ing program for candidates pool are application-oriented and are To fulfill these tasks the Company seeks to improve employees’ focused on the development of necessary competences depend- knowledge level, develop their skills as well as personal and profes- ing on the functions of this or that employee and their prospective sional qualities with regard to the fact that each employee can only position. Employees from the candidates pool participate in the tackle a limited number of tasks at a given point of time depending on following training programs: his or her competence, experience and business qualities. A candidate is included into the candidates pool after an assessment of his or her • “Management” (“Менеджмент”), Presidential Management Train- performance. ing Program for National Economy Organizations of the Russian; The candidates pool is formed based on the following criteria: • MBA.

Social policies

Social policies constitute one of the most important directions sion Fund the Company ensures that its employees accumulate a and parts of the Company’s internal policies. Social policies are non-state pension that they could use after they retire. aimed at resolving the most relevant issues related to personnel The Company has fulfilled all of its payment obligations related social development, improving working conditions and social pro- to remuneration of labor, working time and time off work, social tection of employees through implementation of social activities benefits and protection according to the Sectoral tariff agreement and programs. and the collective agreements signed in the Company. As a responsible employer, the Company pays great attention to social protection of its employees, their families and unem- Recreation and Health Improvement for Employees and ployed seniors, promotion of healthy lifestyle and development of Families organizational culture in the Company. The Company’s social policies are the same for each of its or- The Company has always paid great attention to recreation ganization departments, and they are integrated into all of its finan- and health improvement of its employees and their family mem- cial and economic activities. bers. In 2012 the Company spent 61 million rubles on recreation and health improvement of its employees, including: Social Protection of Employees • acquisition of vacation packages to the medical spa resort The welfare and social security of employees and their fam- “Zolotoy Kolos” for 252 adults and 85 children; ily members are among the Company’s priorities. Each of the • acquisition of vacation packages to the medical spa resort Company’s branches follows the Collective Agreement. The “Balkysh” for 1 527 employees; Company offers its employees adequate benefits, which allows • acquisition of vacation packages to the medical spa resort the Company to remain an appealing employer and minimize “Balkysh” and providing financial aid for medical treatment staff turnover. of 128 unemployed seniors of the Company; In order to improve the housing conditions of the employees • acquisition of 124 health improvement trips to children’s the Company participates in the financing of social mortgage pro- health improvement camps “Priazovets” and “Vityazevo” gram. The Company annually allocates money for housing con- (Anapa) owned by the Ministry of Youth Affairs, Sports and struction in the Republic of Tatarstan. The Company’s employees Tourism of the Republic of Tatarstan; receive housing as part of reduced-price social mortgage. In 2012 • acquisition of 286 trips to children’s health improvement 33 families received housing through the social mortgage system, camps of the Republic of Tatarstan. 31 employees received cheap loans for improvement of housing conditions. Overall, 1858 recreation and health improvement trips were The Company supports young families, mothers and children purchased in 2012 to medical spa resorts of the Russian Federa- by providing financial aid to families upon child birth, to women on tion and the Republic of Tatarstan for the Company’s employees maternity leave and to families with many children. and members of their families. The Company also makes one-time bonus payments to em- ployees after they receive an internal, industry-related or state Physical Fitness and Sports Promotion award and bonus payments dedicated to anniversaries. The Company seeks to develop non-state pension coverage The Company also promotes physical fitness and sports as for its employees. In cooperation with the National Non-State Pen- part of a healthy lifestyle. In this framework the Company held in Grid Company 87

2012 the 13th Spartakiad among production leaders of power net- 2 at KSPEU receiving scholarships who will be soon employed by work companies of the Republic of Tatarstan and the 14th Sparta- the Company. kiad among the bodies of “Power Engineering Trade Union” of the Republic of Tatarstan, organized a rafting tour across the Kama Seniors and Veterans river, a bike tour, a kart race, paintball contests, quiz-type games, etc. The Company takes part of the social responsibility for the wel- fare not only of its employees but also unemployed seniors. Work Youth Outreach with veterans of the field is an important area of the Company’s social activities. The Company has veteran unions that function as Youth outreach is one of the Company’s priorities in terms of a link between the seniors and the Company’s branch managers. its social policies. In November 2012 the Company held an annual The Company’s human resource policies are aimed at retaining youth theoretical and practical conference aimed at developing the best traditions started by the veterans and strengthening of creative potential in young experts and encouraging them to par- continuity of generations. A few branches have opened work merit ticipate in theoretical and practical innovative activities to resolve museums. The Company makes extensive effort to help its veter- the most relevant technical, technological, economic, ecological ans – it provides financial supports, organizes tours, shows, and and organizational issues faced by the Company. The Company’s festivals, purchases trips to medical spa resorts and newspaper youth committees have always initiated socially useful projects that subscriptions, etc. are implemented with the purpose of supporting the Republic’s residents. Youth committees have already organized an ecological Charity Work campaign aimed at clean-up of parks in the Republic, “subbotniks” on the territory of orphanages, the campaign “Save a life – be- As a socially-oriented organization, the Company does not come a donor!” dated for World Health Day, and that was support- only seek to improve social protection for its employees and create ed by more than 3000 employees. As part of “Safe summer break” conditions for comprehensive development and corporate solidar- campaign the Company’s young experts held open energy-safety ity but also implements charity and sponsorship projects. lessons in the republic’s schools during the summer break. In 2012 the Company donated money for the development Among the priorities of the Company’s human resource poli- of physical fitness and sports, formation and development of cies is attracting young experts with degrees in power engineering, material and technical resources of educational institutions, de- development and retention of qualified personnel, and motivating velopment of health care system, strengthening of patriotic and employees. moral education of children and young people in the Republic of The Company cooperates with Kazan State Power Engi- Tatarstan, etc. neering University (KSPEU), Kazan Power Engineering College The Company has always supported orphans, low-income (KPEC), Privolzhsk Training Centre “Energetik” as part of Agree- families and the underprivileged. In 2012 the Company col- ment on State and Corporation Partnership in Professional Edu- lected money and provided financial support to those who filed cation and Training as Part of Power Engineering Educational special requests, it also volunteered to collect money to help Cluster of the Republic of Tatarstan. In order to provide quality the victims of the flooding in Krymsk. The Company has been training the Company performs professional orientation activi- in charge of Menzelinsk special boarding school for more than ties among students of KSPEU and KPEC on open days with 10 years. The Company’s Director General I.Sh. Fardiev and the purpose of personnel renewal combined with retention of Buinsk Branch Director V.A. Chechkov won the republican con- employee loyalty. test “Benefactor of 2012” which can serve as proof that the In 2012 the Company employed three students of KPEC and Government of the Republic of Tatarstan values the Company’s 27 students of KSPEU. There are 14 more students at KPEC and social activities.

Industrial and occupational safety

Industrial and Fire Safety SS Bugulma 500 of BES), elevators (administrative building located at 3 Bondarenko Str.); The Company performs its activities in the area of industrial • 8 areas of hazardous material transportation (tank trucks security in compliance with the requirements of the Federal Law for transformer oil transportation) at AES, BES, BuES, YeES, No.116-FZ dated 21.07.1997 “On Industrial Safety of Hazardous KES, NkES, NchES, PES, ChES branches. Production Facilities” and other industrial safety regulations. The Company has 28 hazardous industrial facilities registered Based on the established classification these hazardous objects in the state registrar of Fire Safety Unit (FSU) (certificate No.А43- belong to Hazard Type 2. 04106 dated 16.04.2012 issued by Privolzhsk branch of According to article 4 of the Federal law No.225-FZ dated Rostekhnadzor). The hazardous facilities include: 16.07.2010 “On Compulsory Civil Liability Insurance for Owners of Hazardous Facilities for Harm Caused as a Result of an Accident • 3 areas using pressure vessels (air collectors – at Central SS at a Hazardous Facility” all of the Company’s hazardous facilities of KES branch, at Zavodskaya SS at NkES branch, at SS are annually insured. In 2012 the Company insured its hazardous Bugulma 500 of BES); facilities with Tatarstan branch of LLC “Rosgosstrakh”. • 17 FSU areas, lifting constructions – transportation In 2012 the Company performed its activities in the area of departments and areas (all the Company’s branches use industrial safety under license No.VP-43-004189 for use of explosive cranes, remote manipulators, hoists, overhead cranes (at and flammable industrial facilities (use (operation) of equipment HUMAN RESOURCE POLICIES 88 AND SOCIAL RESPONSIBILITY

operating under pressure of more than 0,07MPa; transportation of to Federal Law No.116-FZ dated 21.07.1997). The license expires explosive, oxidizing and flammable substances (listed in Appendix 1 on 18.06.2015.

Principal Indicators of Industrial Control of Compliance with Industrial Safety Requirements: 2011/2012

Boiler Overall, in the Hazardous Lifting Reporting indicator Inspection Company Materials Constructions Facilities

Number of hazardous facilities, including those 377/28 357/8 3/3 17/17

Insured in compliance with Article 15 of the Federal law “On Occupational Safety” of FSU 377/28 357/8 3/3 17/17

Equipment that requires a certificate about its compliance with industrial safety requirements, 360/11 357/8 3/3 0 including

Equipment with a certificate about its compliance with industrial safety requirements 360/11 357/8 3/3 0

Number of equipment check-ups and tests 922/154 793/0 23/7 119/147

Number of the Company's employees who were trained and certified in the area of industrial 738/590 129/2 19/13 634/575 safety during the last year

Number of violations of industrial safety requirements discovered by Rostekhnadzor bodies, 96/9 91/0 0 5/9 including

Number of eliminated violations 94/9 89/0 0 5/9

Number of employees working at hazardous industrial facilities 2 940/2 359 839/82 24/38 2 077/2 239

Number of employees performing industrial supervision 23/48 14/6 6/12 17/30

Number of accidents for the past year 0/0

Number of incidents for the past year 0/0

Number of preventive and monitoring check-ups performed by Industrial Safety Control Service 500/264 318/14 14/23 168/227

Number of violations of industrial safety discovered by Industrial Safety Control Service 824/371 462/0 34/15 329/356

Number of suggestions made by Industrial Safety Control Service to the Company managements 77/33 13/0 10/4 54/29 (branch management) on ensuring industrial safety

Number of suspensions of work in hazardous conditions (as a result of industrial safety control) 0/0

Number of employees accountable for violations of industrial safety requirements (established 20/22 10/0 0/2 10/20 by industrial safety control) Grid Company 89

There was one fire at the Company’s facility in 2012 which was • encouraging the Company’s employees to take active part caused by a short circuit in electric equipment. No one was killed in organization, planning, implementation and improving or injured as a result of the fire, a total of 10.5 thousand kW·h occupational safety management system; was undersupplied. There were no fires at the Company’s facilities • establishing a committee on occupational safety and throughout 2010 and 2011. ensuring its effective performance. The Company takes extensive effort to provide fire safety. The Company holds annual check-ups and chooses a branch with the In 2012 the Company spent 152.5 million rubles on activities best fire safety measures in order to make its facilities fireproof related to occupational safety. and involve a large group of employees in fire-preventive activities. In 2012 the winning branch received a bonus of 572764 thousand Money allocated for activities related to occupational safety, rubles. million rubles In 2012 more than 185 million rubles was allocated for improving fire safety of power network equipment, buildings and constructions of JSC “Grid Company” (“Сетевая компания”). 152,5 Among the most significant fire preventing measures are: 160

• clearance of overhead power lines from trees and bushes; • fireproofing of cables and constructions;

• clearance of vegetation at substations: cutting the grass or 107,3 120 chemical herbicide treatment; 99,8 • cleaning and check-ups of oil drains and oil-sump devices at substations; • equipping facilities with emergency fire-fighting equipment (including recharging of fire extinguishers); 80 • maintenance of fire alarm systems and automatic fire suppression systems.

Occupational Safety 40

Among important components of the Company’s effective performance are industrial and occupational safety indicators at workplace. The Company’s policies on occupational safety are aimed at providing safe and healthy working conditions and a 0 decrease in the number of industrial traumas and occupational 2010 2011 2012 diseases. The Company’s activities in the area of occupational safety are based on the following principles: In 2012 the Company held technical, organizational and edu- cational events aimed at prevention of traumas and training em- • compliance with the exisiting legislation in the sphere of ployees in the area of occupational safety. occupational safety for power distribution and transmission, In 2012 all of the Company’s branches held 12 Safety and and prevention of any activities that could harm the Health at Work Days in compliance with the law of the Repub- participants’ life, health or property; lic of Tatarstan “On Occupational Safety in the Republic of Ta- • ensuring safety and health protection of all employees by tarstan”. As part of these events the branches performed check- preventing accidents and occupational diseases at the ups of working conditions and occupational safety in order to facilities; discover and prevent violations of Intersectional regulations on • continuous monitoring and impact assessment of occupational safety and other regulatory documents. occupational safety in the Company’s activities, making As a result of the annual check-up-contest the following decisions aimed at consistent improvement of occupational branches were named among the best in terms of best organiza- safety management system with the purpose of adapting tion of occupational safety management: to the continously changing conditions; • ensuring compatibility or unification of Occupational Safety 1 place – Naberezhnye Chelny Power Lines; Management System with other organization management 2 place – Privolzhsk Power Lines; bodies; 3 place – Buinsk Power Lines. • continuous improvement of industrial processes aimed at replacement of old equipment with their newer and safer The Company pays special attention to protecting its employ- versions, use of safe technologies and personal protection ees from the impact of hazardous and noxious industrial factors. techniques to reduce the risks; In order to eliminate the impact of those factors on employees • continuous work aimed at training employees and informing during maintenance procedures the Company introduces new them about different aspects of occupational safety related improved personal protection devices. As of today all the Com- to their work including elimination of possible accidents; pany’s employees have a special uniform. All of the power line • encouraging suppliers (contractors) to develop and apply operators have uniforms made of NOMEX, a flame-resistant ma- their own occupational safety management systems; terial. HUMAN RESOURCE POLICIES 90 AND SOCIAL RESPONSIBILITY

The following activities are performed in order to comply with In compliance with Rules of Operation and Rules of Cer- the existing requirements of labor legislation on health protection tification of Voluntary Certification of Management Systems of employees: “Register of management systems”, the Company’s existing occupational safety management system was inspected with • preliminary and regular medical examinations in compli- the purpose of checking whether it complied with the manage- ance with the regulations of Procedure for Compulsory ment system OHSAS-18001-2007. As a result of the inspection Preliminary (at the commencement of employment) and the Company’s occupational safety system was found effective, Regular Medical Examinations of Employees Performing and its license was renewed. Hard Work or Working in Hazardous or Noxious Working In 2012 the Company developed and introduced Regula- Conditions (approved by Order No. 302n dated 12.04.2011 tions on Admission of Contractors in order to ensure safety and of Ministry of Health of the Russian Federation); strengthen control of procedures for admittance of construction • industrial control of compliance with sanitary regulations and and installation companies to the Company’s power facilities. performance of sanitary antiepidemic (preventive) activities; To prevent accidents the Company has introduced video • measurement of physical factors at workplaces with PCs; recording of workspace preparations and admittance of con- • registering employees working in noxious, hazardous and tractors to power facilities. NkES and AES are currently testing hard conditions. a regulation on disciplinary responsibility of industrial service personnel for violations of occupational safety requirements. In The Company’s employees including its newly-employed per- compliance with the prescriptions of accident investigations at sonnel take part in obligatory training and testing on the require- AES and NkES the Company has revisited its guide to compila- ments of occupational safety. tion of power workers’ fireproof uniform sets.

Environmental protection and rational use of natural resources

The Company performs its nature protection activities in cal Management System overall as well as its separate compo- compliance with the existing legislation on rational use of natu- nents. ral resources and considers them an important component of The main goals of the Ecological Policies include manage- its stable and consistent development as well as one of its pri- ment of negative environmental impact, improving ecological orities. safety of production processes, preservation of favorable envi- Although striving to improve its industrial and financial per- ronment, biological diversity and natural resources by ensuring formance, the Company is aware of the impact of its production reliable and ecologically safe power transportation and trans- and commercial activities on people’s health and environment mission and a comprehensive approach to rational use of natu- and thus seeks to minimize any possible negative consequenc- ral resources. es through rational use of natural resources and introduction of Image on the right: “Policies of JSC “Grid Company” modern technologies. (”Сетевая компания”) on nature protection” The Company’s nature protection activities included in 2012 the following directions:

• Compliance with the existing legislation in this area: –– preservation of soil and land resources; –– water supply conversation and rational use of water resources; –– waste management; –– atmospheric air protection; –– forest and biodiversity preservation. • Unification of policies on ecological management; • Minimization of ecological risks of the Company’s pro- duction activities; • Improving effectiveness of techniques used to protect nature and rationally use natural resources.

In order to improve ecological effectiveness and following the principles of minimization of human impact on environment caused by production and economic activities, the Company has identified its intentions and directions with regard to envi- ronmental issues in “Policies of JSC “Grid Company” (”Сетевая компания”) on nature protection” (Ecological Policies). This document provides the basis for the formation and implemen- tation of priority ecological goals and tasks, and serves as a control instrument in the effectiveness assessment of Ecologi- Grid Company 91

Every employee of the Company seeks to improve its eco- tion and maintenance of equipment, innovative and rationaliza- logical effectiveness through introduction of state-of-the-art tion activities aimed at resolving nature protection issues. resource-saving and ecologically safe technologies, moderniza- The Company’s Ecological Performance of the Year:

Result Deviation Measurement Ecological aspects unit 2011 2012 2012–2011

thousand cubic Water consumption 139,0 132,3 –6,7 meters

Water Disposal ton 137,3 124,0 –13,3

Total Emission of Pollutants into Atmospheric Air ton 30,3 30,2 –0,1

Emission of greenhouse gas ton 10,8 10,4 –0,3

Waste including: 28 376,1 41 583,0 13 206,9 • utilized waste ton 25 396,6 38 196,3 12 799,7 • recycled waste 399,7 837,0 437,3 • buried waste 2 579,8 2 549,7 –30,1

Payments for Negative Environmental Impact, including: 7 054,0 6 554,2 –499,8 • standard payments thousand rubles 6 230,5 6 554,2 323,7 • limit-exceeding payments 823,6 0,0 –823,6

Overall in 2012, the Company paid 7.1% less for negative Total Emission of Pollutants into Atmospheric Air, ton environmental impact than in 2011, which is primarily related to the lack of limit-exceeding payments. As a result of an inventory of contaminating objects the Company has registered 650 pollution sources in its branches. Seven of the 45 38,1 sources have gas purification devices that that are 89.3% (avg.) effective, which is an adequate performance for their technological capacity that 40 30,3 meets sanitary requirements and is within permissible emission limits. 30,2 35 Total emission of pollutants into atmospheric air was 30.193 tonne which is 0.098 tonne less than in 2011. 30 The decrease in emissions volume is linked to a decrease in the operation of metal- and woodworking machines as well as a decrease 25 in volume of paint jobs at branches of JSC “Grid Company” (“Сетевая компания”). 20 The Company quarterly controls carbon oxide, hydrocarbon and carbon black levels in the burnt gas of combustion engine 15 as part of its industrial control of pollutants emissions from moving sources. 10 The Company also controls its total emissions of greenhouse 5 gas into atmospheric air in compliance with the Federal Law

No.128-FZ dated 04.11.2004 “On the Ratification of The Kyoto 0 Protocol to the United Nations Framework Convention on 2010 2011 2012 Climate Change.” Amission of pollutants into the atmosphere HUMAN RESOURCE POLICIES 92 AND SOCIAL RESPONSIBILITY

Greenhouse gas is emitted due to fuel combustion of car The decrease in water consumption volume (6,66 thousand cubic engines and sulfur hexafluoride circuit breakers at the Company’s meters (4,8%) compared to 2011) is related to a decreased volume of branches. Most of the gas (92-95%) is emitted during fuel public water consumption (4,19 thousand cubic meters (5,2%)) and combustion. a decreased volume of water withdrawal from water-well holes (2,47 In 2012 10.44 tonne of greenhouse gas was emitted into thousand cubic meters (4,2%)). atmospheric air, which is 0.32 tonne less than in 2011. In 2012 the Company produced 41 583,04 tonne of waste The decrease in emissions of greenhouse gas in 2012 is as result of its production and economic activities. The number related to a decrease in fuel consumption, which in its turn can includes waste: be accounted for by a reduction in the Company’s car fleet. • re-used in own production – 837,03 tonne (2%); Emission of Greenhouse • passed over to specialized organizations for utilization Gas into Atmospheric Air, thousand tonne (recycling, detoxification, storage) – 38 196,27 tonne (90,3%); • passed over to specialized organizations for burying at solid domestic waste landfills – 2 549,74 tonne (6,1%).

Overall waste production has increased by 13 206,91 tonne 12 10,3 10,76 10,44 (46,5%) as compared to 2011 but is still within the permissible

10 limits.

8 Waste Production, tonne

6

4 83

50 000 5

41 2 40 000 0 76 3

2010 2011 2012 28 Emission of greenhouse gas 30 000 31 2

The Company’s water consumption totaled 132,34 thousand 15 cubic meters, including: 20 000

• 49,25 thousand cubic meters used for production needs 10 000 (37,2%); • 83,09 thousand cubic meters used for drinking needs (62,2%). 0 2010 2011 2012 Water Consumption from Different Sources, overall waste production thousand cubic meters

The increase in waste production is largely due to an increased waste production in the Company’s branches related to a large 131,64 139,00 132,34 volume of reconstruction works at the power grid facilities. 140 76,24 75,86 80,43 837,031 tonne or 2% of the overall waste production was

56,10 used in own production in 2012, which is 437.31 tonne (two 55,78 120 58,57 times) more than in 2011. The Company recycled in its own

100 production processes the following types of waste: transformer oil, concrete and reinforced concrete structures, construction

80 waste. The volume of waste passed over to specialized organizations 60 for recycling, detoxification, storage and burial at solid domestic waste landfills totalled 40 746,0 tonne or 98% of the overall 40 waste production. Compared to 2011, the Company passed over 12 799,7 20 tonne (50,4%) more waste to third-party organizations which is related to an overall increase in waste production at the Company. 0 The volume of waste buried at solid domestic waste landfills from artesian well from other enterprises Total totalled 2 549,74 tonne which is 30,04 tonne (1,2%) less than in 2010 2011 2012 2011. Grid Company 93

Waste Volume Passed Over for Recycling, Buried or The Company pays great attention to modern conditions of Reused in Own Production, % successful development and seeks to improve its production performance. It is also aware of the impact of its production activities on people’s health and environment and thus considers it a priority to minimize any possible negative consequences

100 93,9

90,9 through rational use of natural resources and nature protection

87,0 activities.

80 Along with traditional nature protection activities the Company implements local projects related to repair, reconstruction and equipment replacement, that help to reduce environmental

60 impact. The Company also strives to use modern technologies, equipment and materials. The Company’s expenses on nature protection activities 40 aimed at prevention of negative environmental impact reached in 2012 28,9 million rubles.

20 12,8 9,1 6,1

0 2010 2011 2012 recycled and used in own production passed over for being buried

Expenses on Nature Protection Activities:

Expenses Activity Losses averted, thousand rubles Environmental Impact, Tonne thousand, % rubles

Soil and land resources protection 18 387,0 63,4 18 183,3 44,68

Waste management 6 211,5 21,4 57 440,9 38 196,3

Rational use of water resources 3 901,4 13,5 451,36 97,2

Atmospheric Air Protection 468,6 1,6 3,45 2,57

Main nature protection activities performed in 2012: In 2012, the total amount of losses averted as a result of nature protection activities was 76,1 million rubles. • construction of areas for temporary storage of used Compliance of the Company’s nature protection activities petroleum products and waste; with nature protection legislation was assessed in the form of an • reconstruction of regional treatment facilities and the car ecological control based on the following criteria: wash (YeES) with circulating water supply (NKES); • equipping power lines with bird guards; • quality control of pollutants emitted into the atmosphere • reducing waste volume emitted to atmosphere from stationary and moving sources; by passing it over to specialized organizations for • atmospheric air quality control at the border of the sanitary utilization; project zone at industrial facilities; • reusing waste in own production (construction waste, • quality control of storm water and domestic sewage, control used supports, used transformer oil); of the effectiveness of local waste treatment plants; • supervision and industrial ecological control of pollutants • quality control of the water taken from underground sources emission and discharge into the atmosphere as well (water-well holes), check-up of water level dynamic in the as effectiveness of nature protection equipment. (gas holes; purification device, local waste treatment plants). • control of waste management activities; HUMAN RESOURCE POLICIES 94 AND SOCIAL RESPONSIBILITY

• control of land resources, their state and management; • keeping an annual statistical report for 2011 and presenting • recordkeeping. it to statistical authorities: forms 2-tp (air), 2-tp (waste), 2-tp (water handling facilities), 4-LS, 4-OS, 18-KS; Industrial ecological control is performed both from within the • posting on the external and internal websites of the Company using the Company’s internal resources as well as with Company details on ecological management system, the help of specialized organizations certified in compliance with industrial ecological control and results of the Company’s the legislation. nature protection activities; The industrial ecological control of 2012 showed that no limits • publication of materials on the functioning of the ecological were exceeded in terms of emission, disposal and waste production. management system and the Company’s nature protection The Company has developed, introduced and successfully activities in paper and electronic media. applying a system of ecological management that works well with the corporate management structure overall and that serves as an The ecological goals and tasks listed in the policies were effective means of environmental impact management. fulfilled: Ecological management system is a modern approach to balance environment protection goals and industrial activities and • pollutant emission into the atmospheric air reduced 0,3%; is part and parcel of the present-day management system of the • overall water consumption reduced 4,8%; Company. • waste disposal in the environment reduced 1,2%; Ecological management system of JSC “Grid Company” (“Сете- • volume of reused waste increased two times; вая компания”) is a socially significant structure that helps balance • volume of waste passed over for utilization to specialized permissible environmental impact and the Company’s social and organizations increased 50,4%. economic needs. The Company performed a number of activities to fulfill its In 2012 a team of auditors performed 30 internal audits obligation to make its technical, economic and ecological records in 232 departments of the branches and the Company’s accessible and transparent. To implement the “Policy of JSC “Grid management in order to assess the environmental management Company” (“Сетевая компания”) on Environment protection” the system and check whether it complies with the requirements Company took the following measures: of the ISO standard ISO 14001:2004. The audits were carried out in compliance with the “Schedule of Internal Audits of the • participation in the Republic’s annual contest “ECO-leader” Environmental Management System at the Company’s Branches” organized by Ministry of Ecology and Natural Resources and allowed to gather full and objective information on the of the Republic of Tatarstan. The Company won the “For functioning and effectiveness of the environmental management Effective Ecological Management” award among the system. Republic’s enterprises and organizations; Heads of departments then scheduled correction activities • participation in the 7th specialized exhibit “Ecotechnology aimed at eliminating discrepancies discovered by the audits and and equipment of the 21st century” supported by Ministry of preventing them in future. Ecology and Natural Resourced of the Republic of Tatarstan, The environmental management system covers all areas of Ministry of Industry and Trade of the Republic of Tatarstan the Company’s activities and affects each and every employee, and Kazan’s Mayor’s Office; which allows the Company to comply with the legislation • participation in the ranking of fundamental ecological- requirements, control and analyze nature protection activities, energetic effectiveness of Russia’s largest companies and as well as increase the effectiveness of environment impact enterprises; management. Grid Company 95

From December 17 to December 20 of 2012 the environmental As a result the audit group confirmed that the environmental management system was recertified according to the approved management system complies with the requirements of the audit plan to make sure that it complies with the ISO standard international standard ISO 14001:2004 and gave the Company an 14001:2004. international certificate IQNet (No. HR-0403 dated 28.12.2012) Assessment and the certification audit of the environmental and a Cro Cert certificate (No.403/1 dated 28.12.2012). management system were performed by independent auditors of a Certification of the environmental management system is certification group Cro Cert (Croatia), a member of the International voluntary which indicates that the Company consciously defined Network of Partner Certification Bodies IQNet (Switzerland). its obligations and responsibilities in terms of using natural During the audit the following major elements of the resources and seeks to improve its environmental effectiveness international standard were checked: management of and maintain the high level of environmental safety and production operations, internal audits, reporting and accounting; emergency reliability for the environment and people. preparedness, information exchange, corrective and preventive The Company aims to constantly improve its environmental measures, compliance with the requirements of nature protection management system to make its production activities more legislation, as well as monitoring, measuring and analysis on the effective ecologically and to ensure rational use of natural part of the managers. resources. Reliable sources

S cHEDULES

Reliable sources reliable facts

100 S cHEDULES

Book-keeping (financlal) statement of JSC “Grid Сompany” for 2012

Balance sheet for 31.12.2012 thousand rubles

ASSETS LINE CODE For 31.12.2012 For 31.12.2011 For 31.12.2010

I. FIXED ASSETS

Intangible assets 1 110 29 111 20 628 15 823

Results of research and development 1 120 22 158 27 863 20 960

Intangible development assets 1 130 0 0 0

Fixed development assets 1 140 0 0 0

Fixed assets 1 150 25 778 939 19 086 605 15 237 473

Income-bearing investments in tangible assets 1 160 0 0 0

Financial investment 1 170 297 418 357 097 847 330

Deferred tax assets 1 180 693 617 146 578 179 983

Other fixed assets 1 190 155 458 596 256 407 153

TOTAL for Section I: 1 100 26 976 701 20 235 027 16 708 722

II. WORKING ASSET

Physical inventory 1 210 344 463 147 221 99 435

Valued added tax on acquired assets 1 220 630 1 002 8 386

Accounts receivable 1 230 3 724 836 2 599 103 1 819 105

Financial investments (excluding cash equivalents) 1 240 3 198 000 2 440 440 1 548 715

Funds and cash equivalents 1 250 2 125 709 3 632 925 2 586 200

Other working assets 1 260 37 938 30 451 101 277

TOTAL for Section II: 1 200 9 431 576 8 851 142 6 163 118

BALANCE 1 600 36 408 277 29 086 169 22 871 840 Grid Company 101

thousand rubles

LIABILITY LINE CODE For 31.12.2012 For 31.12.2011 For 31.12.2010

III. CAPITAL AND RESERVES

Authorised capital (share capital, capital, partners’ 1 310 6 540 732 6 189 318 6 189 318 contributions)

Treasury stock 1 320 (0) (0) (0)

Revaluation of capital assets 1 340 0 0 0

Capital surplus (without revaluation) 1 350 808 684 485 383 485 383

Reserve fund 1 360 327 037 325 019 322 846

Undistributed profits (uncovered loss) 1 370 18 044 397 13 952 077 9 921 116

TOTAL for Section III: 1 300 25 720 850 20 951 797 16 918 663

IV. LONG-TERM OBLIGATIONS

Borrowed funds 1 410 0 0 0

Deferred tax liabilities 1 420 1 088 301 806 874 550 865

Estimated liabilities 1 430 0 0 0

Other liabilities 1 450 230 858 3 153 712 2 029 634

TOTAL for Section IV: 1 400 1 319 159 3 960 586 2 580 499

V. SHORT-TERM OBLIGATIONS

Borrowed funds 1 510 0 0 0

Accounts payable 1 520 8 996 537 3 750 869 2 626 726

Deferred income 1 530 0 0 65

Estimated liabilities 1 540 369 474 422 897 743 634

Other liabilities 1 550 2 257 20 2 253

TOTAL for Section V: 1 500 9 368 268 4 173 786 3 372 678

BALANCE 1 700 36 408 277 29 086 169 22 871 840 102 S cHEDULES

Income Statement for January-December 2012 thousand rubles

For January-December For January-December ITEM LINE CODE 2012 2011

Revenue 2 110 19 158 622 18 490 708

Cost of sales 2 120 (13 193 688) (12 257 379)

Gross profit (loss) 2 100 5 964 934 6 233 329

Business expenses 2 210 (0) (0)

Management expenses 2 220 (0) (0)

Sales profit (loss) 2 200 5 964 934 6 233 329

Participation capital 2 310 2 595 0

Interest receivable 2 320 330 846 237 237

Interest payable 2 330 (0) (0)

Other income 2 340 186 051 356 462

Other expenses 2 350 (1 146 264) (1 538 963)

Pretax profit (loss) 2 300 5 338 162 5 288 065

Current income tax 2 410 (1 510 011) (984 302)

including: permanent tax liabilities (assets) 2 421 173 426 201 012

Changes in deferred tax liabilities 2 430 (281 459) (255 200)

Changes in deferred tax assets 2 450 550 411 (19 123)

Other 2 460 (2 767) (19 455)

Net profit (loss) 2 400 4 094 337 4 009 985

Clarifications

For January-December For January-December ITEM CODE 2012 2011

FOR REFERENCE Surplus on revaluation of fixed assets not included in net 2 510 0 0 profit (loss) for the period

Surplus on other activities not included in net profit (loss) for the period 2 520 0 0

Aggregate financial result for the period 2 500 4 094 337 4 009 985

Basic earnings (losses) per share 2 900 0,00032 0,00032

Diluted earning (losses) per share 2 910

For full book-keeping account of the Company for 2012 in compliance with the requirement of Section 8.3 of Disclosure Statute for Issuers of Issued Securities approved by FFMS Act No.11-46/pz-n. dated 04.10.2011 go to page http://www.e-disclosure.ru/portal/ company.aspx?id=1830 or the Company’s official website http://www.gridcom-rt.ru (section “Shareholders and investors/Capital Stock”) Grid Company 103

Auditors’ report 104 S cHEDULES Grid Company 105 106 S cHEDULES

About the auditor The Company annually approves an auditor in compliance with the requirement of the Russian Federation legislation on Full company name: performing independent audits and approval of the annual accounting statement. The general meeting of shareholders of Limited liability company “FBK Volga Region”. 20.06.2012 appointed the winner of a competitive selection, LLC “FBK Volga Region” the auditor for the Company in 2012. Abbreviated company name: The selection of the auditing company for the compulsory audit of the financial account of the Company for 2012 was LLC “FBK Volga Region”. based on a bidding in the form of an open contest as envisaged by Federal law No. 94-FZ dated 21.07.2005 №94-ФЗ “On Legal address: placing orders for delivery of goods, execution of activities, providing services for state and municipal purposes”. 10 Yamasheva Str., Kazan, Republic of Tatarstan, 420080. The service payment for LLC “FBK Volga Region” was determined by the Company’s Board of Directors according Registration number in the register of auditors and audit to the results of the contest. The fee paid for the independent organizations of self-regulating non-profit organization audit of the book-keeping (financial) account of the Company “Institute of Professional Auditors”: for the period from January 1 to December 31, 2012 prepared in compliance with the Russian Federation legislation, amounted No.10202014708 dated 04.12.2009. to 345 760 (three hundred forty five thousand seven hundred sixty) rubles. Contact: The limited liability company “FBK Volga Region” has been a member of the International Association PKF since 1997. Mailing address: 10 Yamasheva Str., Kazan, Republic of LLC “FBK Volga Region” did not provide services unrelated Tatarstan, 420080 to auditing in 2012. Phone: (843) 564-53-74, 564-54-84. E-mail: [email protected].

Signlflcant aspects of policles on information disclosure in the book-keeping account

Basic approach to compilation of annual book-keeping time of use. The initial cost of IA is formed based on the actual account expenses related to their acquisition (production). The initial cost of IA received through a swap contract is The accounting reference period is from January 1 to calculated based on the cost of the delivered goods or goods that December 31. are to be delivered. If it is impossible to estimate, the initial cost The Company will continue its activities in foreseeable future of IA is calculated based on the price that the Society acquires and it has no intentions or necessity to liquidate or significantly similar assets for in comparable circumstances. In case IA items are reduce the scale of activities, that is why its obligations will be invested into the authorized capital the initial cost is estimated at the paid in accordance with the established procedure. amount of monetary value fixed by the founder. In case of obtaining Generally valuation of property purchased at a charge is IA items free of charge, by way of gift, the initial cost is calculated calculated by adding the actual expenses for the purchase; based on the market price at the date of entry into the books. property received free of charge – at market price at the Cost of IA items (except for IA with an indefinite useful life) capitalization date; property produced by the Society itself – by is redeemed by straight-line charging of depreciation that is adding the expenses for its production. accounted for at account 05 “Depreciation of IA.” Depreciation An item on the book-keeping account is considered significant is charged throughout the useful life of IA. The useful life of IA is if failure to disclose it may affect the economic decisions of defined as a period during which the Society expects to use the interested customers taken based on the account information IA with the purpose of profiting, and is annually reviewed. Ways provided by the Company. An amount of money is considered of changing depreciation evaluation are not envisaged. significant if its ratio to the overall sum of corresponding data for the fiscal year is not less than five per cent. Research and development activities (RDA) Assets and obligations are presented as short-term if the maturity (redemption) period is shorter than 12 months or Research and development expenses are understood by shorter than the operating cycle if it exceeds 12 months. All the the Society as all the actual expenses related to these activities. other assets and obligations are presented as long-term. Completed RDA are accounted by the book-keepers based on the work completion certificate. Expenses on RDA are then Intangible assets grouped in the book-keeping account based on the results of the completed activity. They are considered: Intangible assets (IA) are shown on the balance sheet at their initial cost less the depreciation amount accumulated during the • intangible assets if the asset meets IA criteria; Grid Company 107

• other expenses if they have a negative result, if they do (production) of rigging and workwear is accounted as envisaged not meet asset criteria or if further RDA are deemed for other inventory items. Cost of special rigging and workwear inadvisable; with a useful life exceeding 12 months is charged through a • expenses on RDA if they have a positive result. straight-line method. At the time of inventory release to production (sale) it is RDA expenses are written off in a straight-line method within evaluated by FIFO method. At release to production (sale), the the established period. The period over which RDA expenses cost of goods is deduced by average cost method. are to be written off is established by the Society independently Assets that cost less than 40000 rubles per unit with a based on the expected time of use of RDA results during which useful life exceeding 12 months are considered inventory items. the organization can profit, but not exceeding five years. Inventory items that have lost its value, partially or fully lost its initial quality or the market price of which has decreased, are Fixed assets accounted in the book-keeping at the end of the accounting period (quarter, year) less provision for devaluation of assets. The initial cost of purchased fixed assets is the amount of actual expenses on its acquisition, installation and production. Deferred expenses The initial cost of fixed assets received by contracts envisaging non-monetary fulfillment of obligations is the cost of delivered Expenses made during the current accounting period but values or values that are to be delivered by the Society. The related to future periods are accounted in the book-keeping cost of delivered values or values that are to be delivered is as deferred expenses. These expenses are deducted evenly established based on the price that similar items are acquired during the periods that they are related to. for in comparable circumstances. Deferred expenses are shown on the balance sheet as Fixed asset depreciation is charged through a straight- part of other current or non-current assets depending on their line method. Fixed assets with a consumer performance that maturity date. If the expenses are significant the Company lists remains unchanged with time are not liable to depreciation; them on the balance sheet on a separate line. these include real estate, environmental facilities and other similar items. Financial investments The useful life of an item is established by the Society according to Decree No.1 dated 01.01.2002 of the Russian Financial investments current market value of which is not Federation “On classification of fixed assets included into determined, are reflected in the book-keeping and accounting depreciation categories”. statements as of the accounting date at their historical cost. If Fixed assets are not reevaluated. the impairment test confirms a consistent significant impairment Real estate that no longer receives investments and that of financial investment, the Company forms a reserve for the is not registered as property in compliance with the existing impairment of financial investments at the difference value legislation are accounted for as fixed assets on a specialized between the reported and calculated value of such financial account 01/007 “Fixed assets without state registration of investments. property rights”. Depreciation is charged for such objects from Financial investments the market value of which can be the first day of the month after the month of accounting the estimated are reflected in the book-keeping account at the end object in the book-keeping record as fixed asset at the time of of the accounting year at the market value. At the retirement its operational readiness. of the asset accounted in the book-keeping as a financial Purchased real estate can be accounted as fixed assets only investment the market value of which cannot be estimated, its after the registration of property rights. Prior to the registration cost is estimated based on the initial cost of each book-keeping of property rights these real estate objects are accounted on unit of financial investments. account No. 08/001 “Purchase of separate objects”. The initial cost of sold real estate without registered property Cash rights is deducted from account 01/001 to account 01/010 “Fixed assets passed over to the buyer without registration of The line “Cash and cash equivalents” of the Society’s property rights”. Depreciation charged during the period from balance sheet includes deposits with a period not exceeding the date of acceptance and transfer certificate of the fixed asset three months. The interest accumulated for such deposits is and state registration is accounted as other expenses due to reflected on account 76 “Settlements with sundry debtors the fact that the asset is not used for its main purpose. and creditors” and is included in line “Accounts receivable” Fixed assets are shown on the balance sheet at their initial of the balance sheet. Cashflow is reflected on the cashflow cost except depreciation charges accumulated during the time statement with a section for cashflow from current investment of use. and financial operations. The cashflow statement concisely reflects indirect taxes (WAT) within составе payments from Inventory buyers and customers, payments to suppliers and contractors and payments (compensations) to the budget system of the Inventory is evaluated based on the transaction price Russian Federation. allowing for ordering costs. If the ordering costs related to certain inventory items can be separated from the overall Revenue recognition ordering costs, such ordering costs are accounted as related to specific inventory items. Otherwise ordering costs are Revenue and other income (receipts from the sale of products accounted as expenses of the current period. Acquisition (goods), receipts from execution of activities (providing services), 108 S cHEDULES

etc.), is recognized at the time of work completion, provision of Estimated liability for abortive trials a service, production of goods overall and is reflected in the balance sheet except WAT. Estimated liability for abortive trials for the accounting period (quarter, year) is calculated with regard to: Expenses recognition The stage of claim examination at the date of account compilation as well as the existing practices of examining similar claims, Expenses related to main activities (full actual factory costs), Estimated probability of adverse consequences for the Company are considered part of the expenses for the current accounting and estimated potential losses. (tax) period in full volume. General business and production The Company accepts its estimated liability at the claim value expenses are distributed between service types pro rata with for those claims that have a high or an extremely high probability of basic pay of factory personnel. adverse consequences for the Company.

Settlements with debtors and creditors Balance sheet error correction Settlements with debtors and creditors are accounted in terms of counterparties, obligations and related time periods. Mistakes made on the balance sheet and their consequences are Accounts receivable are presented as short-term on the subject to compulsory correction. A significant mistake for the balance sheet if its maturity period envisaged by the contract previous fiscal year found after approval of the account for that year does not exceed 12 months after the reference date. If the is corrected by: maturity period envisaged by the contract or an additional agreement exceeds 12 months after the reference date accounts • reflecting it in the corresponding sections of the account for receivable are presented as long-term. the current period. The offset account is the undistributed Bad debt provisions are made in the Society on an individual profit (uncovered loss) account; basis for each counterparty and contract. • recounting comparative figures of the balance sheet for accounting periods reflected on the Company’s balance Estimated liability for carry-over vacation sheet for the current accounting year except for cases when it is impossible to establish a connection of the The Company accepts estimated liability for carry-over mistake in question with a specific period or to determine vacation at the end of each accounting period (quarter, year). the cumulative impact of this mistake in respect to all the Estimated liability is evaluated for each of the Company’s previous accounting periods. employees individually. Estimated liability for carry-over vacation and the related premium amount are calculated with the following Accounting changes formulae: Consequences of accounting changes that affected or might significantly affect the financial state of the Society, the financial results of its activities and (or) cashflow are estimated in monetary Estimated liability Number of carry-over Average monthly pay terms. Consequences of accounting changes caused by changes for carry-over vacation days at the for 12 months in the Russian legislation and (or) regulatory acts on accounting are vacation accounting date / 29.4 reflected on the balance sheet as envisaged by the corresponding Russian legislation and (or) regulatory act on accounting. If the above mentioned documents do not establish a procedure for reflecting consequences of accounting changes, these Premium amount Estimated liability consequences are reflected on the balance sheet retrospectively, Premium amount rate for carry-over vacation except for cases when an estimate of these consequences cannot be reliably calculated in monetary terms for the period preceding the current.

Accounting changes for 2012 Estimated liability for performance bonus payments for the accounting period As of 2013 Federal law No. 402-FZ dated 06.12.2011 “On accounting” came into force and cancelled Federal law No. The Company accepts its estimated liability in respect to 129-FZ dated 21.11.1996. However, the new law does not expected expenses on performance bonus payments at the end envisage changes in the approach to calculation of financial of each accounting period (quarter, year). The estimated liability for data. Thus the book-keeping accounting policies for 2013 were performance bonus payments at the end of the accounting period merely edited and were not changed significantly in terms of (quarter, year) includes an amount that is to be paid during the essential content. period following the accounting one in compliance with the Order of Director General or (if the order is not ready at the accounting date) a sum estimated using the method of payment calculation and assessment of the financial data of the Company for the period, with regard to the statistical data on payments in the past few years. Grid Company 109

Data on compliance with corporate code of conduct

followed / Not No. Provision of the corporate code of conduct Commentary Followed 1 2 3 4 General meeting of shareholders

Article 11.6.1. of the Statute, article 14.1. of the Provision Notifying shareholders about a general meeting of shareholders not on the general meeting of shareholders of JSC “Grid 1 less than 30 days prior to its holding irrespective of the business to be followed Company” establish that shareholders should be notified transacted unless a longer period is stipulated by law about a general meeting of shareholders not less than 30 days prior to its holding

Article 13.1. of the Provision on the general meeting The ability of shareholders to meet the people authorized to participate of shareholders of JSC “Grid Company” envisages the in the general meeting of shareholders starting with the announcement right of persons included on the list of people, entitled to 2 day of a general meeting of shareholders and up to the ending of the followed participate in the general meeting of shareholders and actual general meeting of shareholders; and in case of an absentee having no less than 1% of the votes, to receive this list if meeting – up to the end of ballot paper acceptance they request to do so

The Company does not disclose information that is to be The ability of shareholders to make themselves familiar with the provided as part of preparation for the general meeting information (material) that is to be provided as part of preparation for of shareholders on the web-page. At the same time 3 partially followed the general meeting of shareholders through electronic messaging information that is to be provided as part of preparation systems including internet for the general meeting of shareholders can be sent to the Company’s shareholders via e-mail

The ability of a shareholder to bring an issue to the agenda of the general meeting of shareholders or request a general meeting of The Company’s Statute and internal documents do shareholders without providing an extract from the shareholder register not bind shareholders to provide an extract from the 4 if his or her share rights are registered in the shareholder register; in followed shareholder register while brining an issue to the agenda case his or her share rights are registered on the depository account, of the general meeting of shareholders or requesting a an extract from the depository account should suffice for exercising general meeting of shareholders these rights Article 4.1. of the Provision on the Board of Directors, article 2.5. of the Provision on Director General, article 1.6 of the Provision on Checkup Committee of JSC “Grid Stipulating in the statue or internal documents of a joint-stock Company” oblige members of the board of directors, company obligatory attendance of director general, members of the 5 followed Director General and members of the checkup committee board, members of the boards of directors, members of the checkup to attend general meeting of shareholders; article 17.4. of committee and the auditor of the jsc the Provision on general meeting of shareholders allows the Company’s auditor to attend general meetings of shareholders Obligatory attendance of candidates at the general meeting of Article 17.4. of the Provision on general meeting of shareholders dedicated to issues of electing members of the board shareholders establishes the ability to attend meetings 6 followed of directors, director general, members of the board, members of the for candidates for elections to management and control checkup committee as well as appointing the auditor of the jsc bodies of the Company A registration procedure for participants of the general meeting of shareholders is regulated by Section 23 The joint-stock company’s internal documents shall include a “Registration procedure for persons entitled to participate 7 registration procedure for the general shareholders’ meeting followed in the general meeting of shareholders” of the Provision participants on general meeting of shareholders of JSC “Grid Company” Board of Directors

According to article 12.1.2. of the Company’s Statute Provision in the statute of the joint-stock company for the board of the Board of Directors has the authority to establish 8 directors’ authority for annual approval of the financial and economic followed priority areas of the Company’s activities and approve the plan of the joint-stock company Company’s budget 110 S cHEDULES

The Company’s Board of Directors approved Risk Presence of a risk management system approved by the board of 9 Followed Management Policy of JSC “Grid Company” (protocol directors No.6/2012 dated 28.12.2012)

Availability in the statute of the joint-stock company of the right of the Subparagraph 16 of article 12.1.2. of the Statute 10 board of directors to suspend authorities of director general appointed n/A authorizes the Board of Directors to form an executive by the general meeting of shareholders body and prematurely terminate its powers

The statute of the joint-stock company authorizes the board of directors to set requirements to qualifications and remuneration of the 11 not Followed director general, executive board heads of the main structural units of the company The Board of Directors receives the approval of terms Stipulation in a joint stock company’s staute of the authority of the of contracts from Director General according to 12 board of directors to approve the terms and conditions of employment followed subparagraph 16 of article 12.1.2 of the Statute and contracts with director general and members of the executive board article.1.4 of the Provision on Director General of JSC “Grid Company” Stipulating in the statute or the internal documents o the jsc that the votes of director general and members of the board of directors are 13 not Followed not taken into account in settling contract terms with director general (management company, manager) or members of the board

The Board of Directors elected September 14, 2012 Presence of at least three independent directors meeting the 14 followed includes four directors that meet independence criteria requirement of the code of corporate conduct on the board of directors established in the Code of Corporate Conduct

Absence among the members of the board of directors of persons who were found guilty of crimes related to economic activities or crimes against the public order and interests of state service or local 15 followed government services or persons who were administratively punished for offences related to entrepreneurship, finance, tax and fees, or stock market Absence among the members of the board of directors of persons who 16 are also participants, director generals (managers), members of the followed managing bodies or a legal employee with a competing jsc Article 12.2.5 of the Statute, article 8.2 of the Provision Stipulating in the statute of the jsc that the board of directors should on the Board of Directors of JSC “Grid Company” 17 followed be elected by a cumulative vote establish that members of the Company’s board of directors should be elected by a cumulative vote Article 4.1. of the Statute on the Board of Directors of Stipulating in the internal documents of the jsc that the members of JSC “Grid Company” obliges members of the Board of the board of directors should be obliged to avoid actions that will or Directors to avoid actions that will or could potential lead 18 could potential lead to a conflict of their interests and the interests followed to a conflict of their interests and the interests of the JSC, of the jsc, and in case of such conflict – to reveal to the board of the and in case of such conflict – to reveal to the board of the directors information about it directors information about it

Article 4.1. of the Statute on the Board of Directors Stipulating in the internal documents of the jsc that the board of obliges members of the Board of Directors to inform directors should be obliged to inform the board of directors in writing the Board of Directors, Checkup Committee and the about their intention to make a transaction with the shares of the jsc Company’s auditor about their intention to make a 19 followed that they are shareholders of or its affiliated (dependent) societies as transaction with the shares of the JSC and (or) its well as reveal information about completed transactions with such affiliated (dependent) societies as well as reveal shares information about completed transactions with such shares

In the reporting year meetings of the board of directors were held no 20 not Followed less than twice per six weeks Meetings of the board of directors of the joint-stock company during 17 meetings of the Board of Directors were held in 2012, 21 the year which is the subject of the annual report of the joint-stock followed meetings were at intervals not exceeding six weeks company are carried out at least as often as once every six weeks Grid Company 111

Procedures of the Board of Directors’ meetings are regulated by Section VI “Calling and Holding a Meeting Regulating in the internal documents of the jsc procedures of the 22 followed of the Board of Directors, Procedure of Decision-Making” board of directors’ meetings of the Provision on the Board of Directors of JSC “Grid Company”

According to subparagraph 25 of article 12.1.2 of the Statute the Board of Directors is responsible for taking decisions on loan-related issues, third-person sureties to the amount from 5 to 50 percent of the balance sheet Stipulating in the internal documents of the jsc that the board of value of the Company’s assets established for the last day directors need to approve transactions of the jsc to the amount of 10 23 Partially Followed of the accounting period, transactions related to alienation or more percent of the society’s asset value, except for transactions or potential alienation of property, as well as transactions made as part of regular economic activities related to encumbering of real estate if such transactions can lead to its alienation to the amount from 5 to 50 per- cent of the balance sheet value of the Company’s assets established for the last day of the accounting period

According to article 3.1. of the Provision on the Board of Directors of JSC “Grid Company” a member of the Board of Directors is authorized to request and receive from the Stipulating in the internal documents of the jsc that members of the Company’s officials any information (documents and ma- board of directors are entitled to receive form the executive bodies terials) related to the Company necessary for performing and managers of jsc departments information required for executing 24 Partially Followed his or her functions, in addition article 3.2 obliges Director their functions, and that the executive bodies and managers of jsc General to provide any information about the Company’s departments should take responsibility in case they fail to provide such activities as well as his or her official duties at the request information of the Chairman of the Board of Directors. The Company’s internal documents do not envisage administrative measures for failure to provide information Existence of the board of directors’ strategic planning committee or assignment of the committee’s functions to another committee (other 25 Not Followed than the audit committee or human resources and remuneration com- mittee) Existence of a committee of the board of directors (auditing commit- The Audit Committee of the Board of Directors was elect- 26 tee) that suggests to the board of directors an auditor for the jsc and Followed ed at the meeting of the Board of Directors that took place interacts with it and the checkup committee of the jsc 14.09.2012 (protocol No.1/2012 dated 17.09.2012) Members of the Audit Committee of the Board of Direc- tors: • Alexander Nikolaevich Yurtaev (non-executive director); Only independent and non-executive directors may be members of the • Khazma Azalovich Bagmanov (non-executive director); 27 Followed audit committee • Marat Gabdulbarovich Nadyrshin (independent direc- tor); • Alexei Mikhailovich Pakhomov (independent director)

28 The audit committee should be managed by an independent director Not Followed

Article 6.1 of the Provision on the audit committee of the Board of Directors of JSC “Grid Company” entitles committee members to review records of committee and Stipulating in the internal documents of the jsc that all the members of Board of Directors’ meetings, receive copies thereof, the audit committee are entitled to access all documents and informa- request from members of the Board of Directors, the 29 Followed tion of the jsc under the condition of non-disclosure and confidentiality Company’s executive bodies and the Company’s depart- of information ments performing auditing and accounting functions information and documents related to issues within the committee’s competence established by the Provision on the Board of Directors 112 S cHEDULES

Creating a committee of the board of directors (human resources and Human resources and remuneration committee of the remuneration committee) responsible for establishing criteria of select- Board of Directors was elected at the Board of Directors’ 30 Followed ing candidates for the board of directors and developing a remunera- meeting held on 14.09.2012 (protocol No.1/2012 dated tion policy for the jsc 17.09.2012)

The human resources and remuneration committee should be man- The human resources and remuneration committee is led 31 Followed aged by an independent director by an independent director Alexei Mikhailovich Pakhomov

Members of the human resources and remuneration com- mittee of the Board of Directors: • Azat Kiyamovich Khamaev (non-executive director); Absence among the members of the human resources and remunera- 32 Followed • Alexander Petrovich Volodkevich (independent direc- tion committee of officials of the jsc tor); • Alexei Mikhailovich Pakhomov (independent director)

Creating a risk management committee of the board of directors or 33 assigning its functions to a different committee (other than the human Not Followed resources and remuneration committee)

Availability of a committee of the board of directors for settlement of corporate conflicts or assigning functions of such a committee to 34 Not Followed another committee (except for the audit committee and hr and remu- nerations committee)

Absence among the members of the committee for settlement of The Company does not have a Committee for Settlement 35 N/A corporate conflicts of the jsc officials of Corporate Conflicts

The arrangements for resolving corporate conflict committee shall be The Company does not have a Committee for Settlement 36 N/A governed by an independent director of Corporate Conflicts

Provision on the human resourced and remuneration committee was approved by the Board of Directors on 05.06.2007 (protocol No.10 dated 07.06.2007). Provisions on the audit committee was approved by the Provision in internal documents of the joint-stock company of the Board of Directors on 05.06.2007 (protocol No.10 dated 37 process of establishment and operation of the board of directors com- Followed 07.06.2007). mittees approved by board of directors Provision on Innovation committee was approved by the Board of Directors on 19.05.2011 (protocol No. 22 dated 20.05.2011)

The statute of the jsc should establish a procedure for deciding on a quorum of the board of directors that would guarantee compulsory 38 Not Followed participation of independent directors in the board of directors’ meet- ings

Executive Bodies

39 Presence of a collegiate executive (management) body in the jsc Not Followed Grid Company 113

According to subparagraph 25 of article 12.1.2 of the Statute the board of directors is responsible for taking decisions on loan-related issues, third-person sureties to the amount from 5 to 50 percent of the balance sheet value of the Company’s assets established for the last day Stipulating in the statute or internal documents of the jsc that the of the accounting period, transactions related to alienation management should approve transactions with real estate and obtain- 40 Partially Followed or potential alienation of property, as well as transactions ing credit if these transactions are not part of large-scale transactions related to encumbering of real estate if such transactions and they are not related to regular economic activities of the jsc can lead to its alienation to the amount from 5 to 50 percent of the balance sheet value of the Company’s assets established for the last day of the accounting period. The Company does not have a collegiate executive (management) body

Regulating in the internal documents of the jsc procedures of approv- 41 ing operations that are not part of the financial and economic plan of Not Followed the jsc

Absence among the members of the executive bodies of the jsc of 42 persons who are participants, director generals (managers), members Followed of the managing bodies or legal employees with a competing jsc

Absence among the members of the executive bodies of the jsc of persons who were found guilty of crimes related to economic activi- ties or crimes against the public order and interests of state service or local government services or persons who were administratively punished for offences related to entrepreneurship, finance, tax and 43 Followed fees, or stock market. If the functions of the single executive body are performed by an organization or a manager – that the director general and members of the board of the managing organization or manager should comply with requirements to director general and members of the board of the jsc

Stipulating in the internal documents of the jsc that the managing or- ganization (manager) should be forbidden to perform similar functions The functions of a single executive body were not handed 44 N/A in a competing society or have any other property relationship with the over to a managing company (manager) jsc other than providing services of a managing organization (manager)

According to article 2.8. of the Provision on Director Stipulating in the internal documents of the jsc that the members of General of JSC “Grid Company” Director General should the executive bodies should be obliged to avoid actions that will or avoid actions that will or could potential lead to a conflict 45 could potential lead to a conflict of their interests and the interests Followed of their interests and the interests of the JSC, and in case of the jsc, and in case of such conflict – to reveal to the board of the of such conflict – to reveal to the board of the directors directors information about it information about it

Availability in the statute or by-laws of the joint- stock company of The functions of a single executive body were not handed 46 N/A criteria of selection of a management company (managing director) over to a managing company (manager)

The single executive body (director general) of JSC “Grid The executive bodies of the jsc should present monthly reports on their Company” presents information about the key compo- 47 Partially Followed activities to the board of directors nents of the Company’s activities to the Chairman of the Board of Directors on a quarterly basis 114 S cHEDULES

Regulating responsibility for violations of non-disclosure of confidential 48 and privileged information in contracts signed by the jsc with director Followed general (managing body, manager) and members of the board

Society’s Secretary

Presence in the jsc of a special official (the society’s secretary) who is The Company’s corporate secretary was elected by the to ensure that the bodies and officials of the jsc follow procedures that 49 Followed Board of Directors on 23.11.2012 (protocol No. 5/2012 guarantee the realization of rights and legal interests of the society’s dated 23.11.2012) shareholders

Appointment (election) procedures of the Corporate Sec- Regulating in the statute or internal documents of the jsc the proce- retary and his or her duties are established in section 13 50 dure for appointing (electing) the society’s secretary and his or her Followed of the Statute of JSC “Grid Company” and the Provision duties on the Corporate Secretary

Qualities required from the Company’s corporate secretary Enumerating in the statute of the jsc a list of qualities that a candidate 51 Partially Followed are listed in article 3.4 of the Provision on the Corporate for the position of the society’s secretary should possess Secretary of JSC “Grid Company”

Significant Corporate Actions

An independent appraiser is recruited in cases envisaged Stipulating in the statute or internal documents of the jsc that a large- 52 Not Followed by the Federal Law “On joint-stock companies” and other scale transaction should be approved before its completion regulatory acts

Transactions defined as large-scale transactions by the An independent appraiser must be recruited to evaluate the market 53 Not Followed Federal Law “On joint-stock companies” were not made value of real estate that is part of a large-scale transaction by the Company in 2012

The statute of the jsc should forbid in cases of large-package acquisi- tion any actions aimed at defending the interests of the executive bod- ies (members thereof) and members of the board of directors of the jsc and any actions that could deteriorate the state of the shareholders 54 as compared to the current state (the statute should specifically forbid Not Followed issuing additional stock before the expected expiration date of the placed stock, issuing securities convertible to shares or securities that entitle the owner to purchase shares even if the board of directors is entitled to do so by the statute)

Stipulating in the statute of the jsc that an independent appraiser should be recruited for evaluation of the current market value of 55 Not Followed shares and potential changes in their market value as a result of take-over

The statute of the jsc should not free the buyer from the obligation to 56 suggest to shareholders selling the society’s equities (issuance securi- Followed ties convertible to equities) in case of a take-over Grid Company 115

The Company’s state and internal documents do not en- visage recruiting an independent appraiser for establish- Stipulating in a joint stock company’s statute or internal documents ing the shares conversion rate in case of reorganization. 57 that an independent assessor must be invited for determination of the Partially Followed An independent appraiser must be recruited, however, conversion value of shares after the reorganization according to paragraph 3 of article 75 of the FZ “On joint- stock companies”

Information Disclosure Provision on Information Policies of JSC “Grid Company” Regulating in the company’s internal documents rules and approaches 58 Followed was approved by the Board of Directors on 31.05.2012 to information disclosure (provision on information policies) (protocol No.13/2012 dated 01.06.2012)

According to article 3.1.2 of the Provision on Information The internal documents of the jsc should stipulate disclosure of Policies the Company discloses information about all regis- information about purposes of stock placement, people intending tered issues of securities and the most significant events in 59 to purchased the placed stock including a large package as well as Partially Followed the Company’s activities including the most important deci- information on whether the highest officials of the jsc will participate in sions taken by the management bodies of the Company, acquisition of the placed stock and places documents on all the registered decisions on issuing stock on the official web-page

Article 11.6.3 of the Statute and article 15 of the Provi- Internal documents must contain information, documents and sion on General Meeting of Shareholders of JSC “Grid 60 materials that should be provided to shareholders for taking decisions Followed Company” contain information, documents and materials brought to the agenda of the general meeting of shareholders that are to be provided to persons entitled to participate in the general meeting of shareholders

The Company discloses information in compliance with the Disclosure Statute for Issuers of Issued Securities approved by FFMS Act No.11-46/pz-n. dated 04.10.2011 on the The joint-stock company must have a web-page in the internet and web-page at http://www.e-disclosure.ru/portal/company. 61 Followed regularly disclose information about the jsc on this website aspx?id=1830. Information about the Company is regularly disclosed at the Company’s web-page: http://www.gridcom-rt.ru

Internal documents should stipulate disclosure of information on trans- Information on transactions categorized according to the actions of the jsc with persons that are the company’s highest officials Federal law “on joint-stock companies” as transactions according to its statute, as well as transactions with organizations the 62 Partially Followed with an involved self-interest is disclosed in the annual highest officials of which directly or indirectly own 20 or more percent report of the Company including its publication on the of the stock capital or transactions that could be significantly affected web-page by such persons

Stipulating in the internal documents disclosure of information on all 63 Followed transactions that may affect the market value of the jsc shares

Existence of a document approved by the board of directors on use of significant information about the activities of the jsc, its shares and The Provision on Information Policies of JSC “Grid Com- 64 other securities and transactions with them that is not available to the Followed pany” has a section dedicated to insider information public and the disclosure of which may significantly affect the market value of shares and other securities of the jsc 116 S cHEDULES

Control of Financial and Economic Activities

Existence of internal control procedures approved by the board of The Company has a Provision on Internal Control System 65 directors and regulating the financial and economic activities of the Followed of JSC “Grid Company” society

The Company has a control and revision manage- Existence of an ad hoc unit of the joint stock company that ensures ment that ensures compliance with internal control 66 compliance with the internal control procedures (control and audit Followed procedures. Control and revision management have an service) internal audit and a methodology departments

Stipulating in the internal documents of the jsc that the board of direc- 67 tors must establish the structure and the composition of the control Not Followed and revision management of the jsc

The control and revision service should not include persons who were found guilty of crimes related to economic activities or crimes against 68 the public order and interests of state service or local government Followed services or persons who were administratively punished for offences related to entrepreneurship, finance, tax and fees, or stock market

The control and revision service should not include persons who are involved in the executive bodies of the jsc as well as persons who are 69 Followed participants, director generals (managers), members of the managing boards or legal employees with a competing jsc

Stipulating in the internal documents of the jsc deadlines for provid- Article 9.5 of the Provision on Internal Control System of ing to the control and revision service documents and materials for the JSC “Grid Company” establishes a deadline for pro- 70 assessment of financial and economic activities as well as responsi- Partially Followed viding information for checkups by there are no measures bility of officials and employees of the jsc for failing to provide such envisaged for failure on the part of officials and employ- information before the given deadline ees to provide such information before the give deadline

Article 9.8 of the Provision on Internal Control System of JSC “Grid Company” obliges the internal audit department to regularly inform the audit committee of the Company’s The control and revision service should inform the audit committee board of directors about violations in financial, economic 71 about the discovered violations, and in case the jsc does not have an Followed and industrial activities discovered during checkups and audit committee it should inform the board of directors of jsc suggest measures for eliminating them including failure to comply or effectively comply with the internal documents approved in the Company and the results of elimination/ failed elimination of the discovered violations

Stipulating in the statute of the jsc that the control and revision and service should preliminarily assess the viability of operations not 72 Not Followed envisaged by the financial and economic plan of the jsc (non-standard operations)

Internal documents of the company must contain a procedure for non- 73 Not Followed standard operation approval by the board of directors Grid Company 117

Provision on Revision Committee of JSC “Grid Com- Existence of an internal document approved by the board of directors pany” was approved by the annual general meeting 74 and regulating procedures for checkups of financial and economic Followed of shareholders of 29.06.2007 (protocol No.14 dated activities of the jsc by a revision committee 13.07.2007)

The audit committee should assess the auditor’s conclusion before The Audit Committee of JSC “Grid Company” is sched- 75 presenting it to the shareholders at the general meeting of sharehold- Followed uled to examine results of financial (book-keeping) audit ers for 2012 in the second half of 2013

Dividends

Existence of an internal document approved by the board of directors Provision on Dividend Policy of JSC “Grid Company” 76 and used by the board of directors for taking recommendations on Followed was approved by the Board of Directors on 16.05.2011 dividend payments (provision on dividend policy) (Protocol No.21 dated 17.05.2011)

Regulating in the provision on dividend policy procedures for assessing Section 3 of the Provision on Dividend Policy of JSC “Grid the minimum share of net profit of the jsc channeled towards dividend Company” established the main principles of setting 77 payments and conditions under which dividends are not paid or paid Partially Followed dividend payment rates. partially for privileged shares the payment rates of which is established The Company has not placed any privileged shares in the statute

The Provision on Dividend Policy of JSC “Grid Company” The jsc should publish information on its dividend policy and the is published on the Company’s web-page at http://www. changes it undergoes in a periodical edition envisaged in the statute gridcom-rt.ru. 78 of the jsc and designed for publishing announcements of general Followed The Company’s Statute does not envisage a periodical meetings of shareholders as well as publishing such information on edition for publishing announcements of general meetings the web-page of the jsc of shareholders 118 S cHEDULES

List of transactions considered according to the federal law “On joint-stock companies” transactions with a self-interest and approved by the Company’s management bodies in 2012

Transaction amount, No. Type of transaction/subject matter Counterparties Interested Parties Approval WAT included (rubles) Supplier: D.Kh. Safiullin Protocol of the BD Subscription for “Tatarstan’s Power Engineering 1 164 793,20 LLC “Editorial staff of the magazine “Tatarstan’s I.Sh. Fardiev meeting No.7/2012 dated (“Energetika Tatarstana) Power Engineering” “Energetika Tatarstana”) A.R. Fakhrutdinov 17.02.2012 Supplier: D.Kh. Safiullin Protocol of the BD Subscription for “Tatarstan’s Power Engineering” 2 164 793,20 LLC “Editorial staff of the magazine “Tatarstan’s I.Sh. Fardiev meeting No.7/2012 dated (“Energetika Tatarstana”) Power Engineering” (“Energetika Tatarstana”) A.R. Fakhrutdinov 17.02.2012 Supplier: ID.Kh. Safiullin Protocol of the BD Subscription for “Tatarstan’s Power Engineering” 3 164 793,20 LLC “Editorial staff of the magazine “Tatarstan’s I.Sh. Fardiev meeting No.7/2012 dated (“Energetika Tatarstana”) Power Engineering” (“Energetika Tatarstana”) A.R. Fakhrutdinov 17.02.2012 Supplier: ID.Kh. Safiullin Protocol of the BD Subscription for “Tatarstan’s Power Engineering” 4 164 793,20 LLC “Editorial staff of the magazine “Tatarstan’s I.Sh. Fardiev meeting No.7/2012 dated (“Energetika Tatarstana”) Power Engineering” (“Energetika Tatarstana”) A.R. Fakhrutdinov 17.02.2012 Supplier: ID.Kh. Safiullin Protocol of the BD Subscription for “Tatarstan’s Power Engineering” 5 164 793,20 LLC “Editorial staff of the magazine “Tatarstan’s I.Sh. Fardiev meeting No.7/2012 dated (“Energetika Tatarstana”) Power Engineering” (“Energetika Tatarstana”) A.R. Fakhrutdinov 17.02.2012 Supplier: ID.Kh. Safiullin Protocol of the BD Subscription for “Tatarstan’s Power Engineering” 6 164 793,20 LLC “Editorial staff of the magazine “Tatarstan’s I.Sh. Fardiev meeting No.7/2012 dated (“Energetika Tatarstana”) Power Engineering” (“Energetika Tatarstana”) A.R. Fakhrutdinov 17.02.2012 Supplier: ID.Kh. Safiullin Protocol of the BD Subscription for “Tatarstan’s Power Engineering” 7 164 793,20 LLC “Editorial staff of the magazine “Tatarstan’s I.Sh. Fardiev meeting No.7/2012 dated (“Energetika Tatarstana”) Power Engineering” (“Energetika Tatarstana”) A.R. Fakhrutdinov 17.02.2012 Supplier: ID.Kh. Safiullin Protocol of the BD Subscription for “Tatarstan’s Power Engineering” 8 164 793,20 LLC “Editorial staff of the magazine “Tatarstan’s I.Sh. Fardiev meeting No.7/2012 dated (“Energetika Tatarstana”) Power Engineering” (“Energetika Tatarstana”) A.R. Fakhrutdinov 17.02.2012 Supplier: ID.Kh. Safiullin Protocol of the BD Subscription for “Tatarstan’s Power Engineering” 9 164 793,20 LLC “Editorial staff of the magazine “Tatarstan’s I.Sh. Fardiev meeting No.7/2012 dated (“Energetika Tatarstana”) Power Engineering” (“Energetika Tatarstana”) A.R. Fakhrutdinov 17.02.2012 Supplier: Protocol of the BD Subscription for “Tatarstan’s Power Engineering” D.Kh. Safiullin 10 182 540,16 LLC “Editorial staff of the magazine “Tatarstan’s meeting No.7/2012 dated (“Energetika Tatarstana”) I.Sh. Fardiev A.R. Fakhrutdinov Power Engineering” (“Energetika Tatarstana”) 17.02.2012 Protocol of the BD Product supply agreement (VipNET Coordinator Supplier: 11 137 529,00 A.M. Pakhomov meeting No.7/2012 dated HW1000) JSC “ICL-КПО ВС” 17.02.2012 Protocol of the BD Product supply agreement (VipNET Coordinator Supplier: 12 137 529,00 A.M. Pakhomov meeting No.7/2012 dated HW1000) JSC “ICL-КПО ВС” 17.02.2012 Protocol of the BD Product supply agreement (VipNET Coordinator Supplier: 13 137 529,00 A.M. Pakhomov meeting No.7/2012 dated HW1000) JSC “ICL-КПО ВС” 17.02.2012 Protocol of the BD Product supply agreement (VipNET Coordinator Supplier: 14 137 529,00 A.M. Pakhomov meeting No.7/2012 dated HW1000) JSC “ICL-КПО ВС” 17.02.2012 Protocol of the BD Product supply agreement (VipNET Coordinator Supplier: 15 137 529,00 A.M. Pakhomov meeting No.7/2012 dated HW1000) JSC “ICL-КПО ВС” 17.02.2012 Protocol of the BD Product supply agreement (VipNET Coordinator Supplier: 16 137 529,00 A.M. Pakhomov meeting No.7/2012 dated HW1000) JSC “ICL-КПО ВС” 17.02.2012 Protocol of the BD Product supply agreement (VipNET Coordinator Supplier: 17 137 529,00 A.M. Pakhomov meeting No.7/2012 dated HW1000) JSC “ICL-КПО ВС” 17.02.2012 Protocol of the BD Product supply agreement (VipNET Coordinator Supplier: 18 137 529,00 A.M. Pakhomov meeting No.7/2012 dated HW1000) JSC “ICL-КПО ВС” 17.02.2012

Protocol of the BD Product supply agreement (VipNET Coordinator Supplier: 19 137 529,00 A.M. Pakhomov meeting No.7/2012 dated HW1000) JSC “ICL-КПО ВС” 17.02.2012 Grid Company 119

Protocol of the BD Product supply agreement (VipNET Coordinator Supplier: 20 275 058,00 A.M. Pakhomov meeting No.7/2012 dated HW1000) JSC “ICL-КПО ВС” 17.02.2012 Software supply contract: • Red Hat Enterprise Virtualization for Servers Protocol of the BD Seller: 21 (1 Socket), Standard 1 Year; 453 782,60 A.M. Pakhomov meeting No.7/2012 dated JSC “ICL-КПО ВС” • Red Hat Enterprise Linux Servers, Standard 17.02.2012 (1–2 Sockets) Unlimited guests Software supply contract: • Red Hat Enterprise Virtualization for Servers Protocol of the BD Seller: 22 (1 Socket), Standard 1 Year; 199 573,11 A.M. Pakhomov meeting No.7/2012 dated JSC “ICL-КПО ВС” • Red Hat Enterprise Linux Servers, Standard 17.02.2012 (1–2 Sockets) Up to 4 guests Software supply contract: • Red Hat Enterprise Virtualization for Servers Protocol of the BD Seller: 23 (1 Socket), Standard 1 Year; 199 573,11 A.M. Pakhomov meeting No.7/2012 dated JSC “ICL-КПО ВС” • Red Hat Enterprise Linux Servers, Standard 17.02.2012 (1–2 Sockets) Up to 4 guests Software supply contract: • Red Hat Enterprise Virtualization for Servers Protocol of the BD Seller: 24 (1 Socket), Standard 1 Year; 199 573,11 A.M. Pakhomov meeting No.7/2012 dated JSC “ICL-КПО ВС” • Red Hat Enterprise Linux Servers, Standard 17.02.2012 (1–2 Sockets) Up to 4 guests Software supply contract: • Red Hat Enterprise Virtualization for Servers Protocol of the BD Seller: 25 (1 Socket), Standard 1 Year; 199 573,11 A.M. Pakhomov meeting No.7/2012 dated JSC “ICL-КПО ВС” • Red Hat Enterprise Linux Servers, Standard 17.02.2012 (1–2 Sockets) Up to 4 guests Software supply contract: • Red Hat Enterprise Virtualization for Servers Protocol of the BD Seller: 26 (1 Socket), Standard 1 Year; 199 573,11 A.M. Pakhomov meeting No.7/2012 dated JSC “ICL-КПО ВС” • Red Hat Enterprise Linux Servers, Standard 17.02.2012 (1–2 Sockets) Up to 4 guests Software supply contract: • Red Hat Enterprise Virtualization for Servers Seller: Protocol of the BD 27 (1 Socket), Standard 1 Year; 199 573,11 JSC “ICL-КПО ВС” A.M. Pakhomov meeting No.7/2012 dated • Red Hat Enterprise Linux Servers, Standard 17.02.2012 (1–2 Sockets) Up to 4 guests Software supply contract: • Red Hat Enterprise Virtualization for Servers Protocol of the BD Seller: 28 (1 Socket), Standard 1 Year; 199 573,11 A.M. Pakhomov meeting No.7/2012 dated JSC “ICL-КПО ВС” • Red Hat Enterprise Linux Servers, Standard 17.02.2012 (1–2 Sockets) Up to 4 guests Software supply contract: • Red Hat Enterprise Virtualization for Servers Protocol of the BD Seller: 29 (1 Socket), Standard 1 Year; 199 573,11 A.M. Pakhomov meeting No.7/2012 dated JSC “ICL-КПО ВС” • Red Hat Enterprise Linux Servers, Standard 17.02.2012 (1–2 Sockets) Up to 4 guests Software supply contract: • Red Hat Enterprise Virtualization for Servers Protocol of the BD Seller: 30 (1 Socket), Standard 1 Year; 199 573,11 A.M. Pakhomov meeting No.7/2012 dated JSC “ICL-КПО ВС” • Red Hat Enterprise Linux Servers, Standard 17.02.2012 (1–2 Sockets) Up to 4 guests Protocol of the BD 25 600,00 Licensee: 31 Sub-licensing contract for PC software use rights A.M. Pakhomov meeting No.7/2012 dated WAT free JSC “ICL-КПО ВС” 17.02.2012 Protocol of the BD 901 802,00 Licensee: 32 Sub-licensing contract for PC software use rights A.M. Pakhomov meeting No.7/2012 dated WAT free JSC “ICL-КПО ВС” 17.02.2012 Protocol of the BD 695 550,00 Licensee: 33 Sub-licensing contract for PC software use rights A.M. Pakhomov meeting No.7/2012 dated WAT free JSC “ICL-КПО ВС” 17.02.2012 Protocol of the BD 915 600,00 Licensee: 34 Sub-licensing contract for PC software use rights A.M. Pakhomov meeting No.7/2012 dated WAT free JSC “ICL-КПО ВС” 17.02.2012 Protocol of the BD 842 250,00 Licensee: 35 Sub-licensing contract for PC software use rights A.M. Pakhomov meeting No.7/2012 dated WAT free JSC “ICL-КПО ВС” 17.02.2012 120 S cHEDULES

Protocol of the BD 915 600,00 Licensee: 36 Sub-licensing contract for PC software use rights A.M. Pakhomov meeting No.7/2012 dated WAT free JSC “ICL-КПО ВС” 17.02.2012 Protocol of the BD 695 550,00 Licensee: 37 Sub-licensing contract for PC software use rights A.M. Pakhomov meeting No.7/2012 dated WAT free JSC “ICL-КПО ВС” 17.02.2012 Protocol of the BD 768 900,00 Licensee: 38 Sub-licensing contract for PC software use rights A.M. Pakhomov meeting No.7/2012 dated WAT free JSC “ICL-КПО ВС” 17.02.2012 Protocol of the BD 622 200,00 Licensee: 39 Sub-licensing contract for PC software use rights A.M. Pakhomov meeting No.7/2012 dated WAT free JSC “ICL-КПО ВС” 17.02.2012 Protocol of the BD 709 050,00 Licensee: 40 Sub-licensing contract for PC software use rights A.M. Pakhomov meeting No.7/2012 dated WAT free JSC “ICL-КПО ВС” 17.02.2012 Protocol of the BD 562 350,00 Licensee: 41 Sub-licensing contract for PC software use rights A.M. Pakhomov meeting No.7/2012 dated WAT free JSC “ICL-КПО ВС” 17.02.2012

Operation and implementation agreement for Protocol of the BD Executive: 42 an automated system for claims and dispute 198 200,00 A.M. Pakhomov meeting No.7/2012 dated JSC “ICL-КПО ВС” resolution 17.02.2012

Additional agreement dated 01.04.2008 about extension of non-residential lease with a total area Protocol of the BD 85 104,91 Tenant: 43 of 83,18 square meters in the building of Atninsky D.Kh. Safiullin meeting No.7/2012 dated for 11 months JSC “Tatenergosbyt” REN located at 83 Sovetskaya Str., Bolshaya 17.02.2012 Atnya, Antya Region, Republic of Tatarstan Executive: Protocol of the BD Additional agreement about a value increase of a 325 436,00 44 Autonomous Non-Commercial Organization D.Kh. Safiullin meeting No.7/2012 dated contract for educational services WAT free “Energetik” 17.02.2012 Executive: Protocol of the BD Additional agreement about a value increase of a 90 885,00 45 Autonomous Non-Commercial Organization D.Kh. Safiullin meeting No.7/2012 dated contract for educational services WAT free “Energetik” 17.02.2012 Executive: Protocol of the BD Additional agreement about a value increase of a 90 000,00 46 Autonomous Non-Commercial Organization D.Kh. Safiullin meeting No.7/2012 dated contract for educational services WAT free “Energetik” 17.02.2012 Executive: Protocol of the BD Additional agreement about a value increase of a 110 000,00 47 Autonomous Non-Commercial Organization D.Kh. Safiullin meeting No.7/2012 dated contract for educational services WAT free “Energetik” 17.02.2012 Executive: Protocol of the BD Additional agreement about a value increase of a 200 000,00 48 Autonomous Non-Commercial Organization D.Kh. Safiullin meeting No.7/2012 dated contract for educational services WAT free “Energetik” 17.02.2012 Addition agreement about establishing the Executive: Protocol of the BD 1 466 096,00 49 terminal value of a contract for educational Autonomous Non-Commercial Organization D.Kh. Safiullin meeting No.7/2012 dated WAT free services “Energetik” 17.02.2012

Contract for educational services of one employee Executive: Protocol of the BD at a training course “Analysis of damage rate and 6 903,00 50 Autonomous Non-Commercial Organization D.Kh. Safiullin meeting No.7/2012 dated diagnostics of potential transformers 35-220 kV WAT free “Energetik” 17.02.2012 using the expert diagnostics system “Albatross”

Executive: Protocol of the BD Contract for educational services of employee 3 840 678,00 51 Autonomous Non-Commercial Organization D.Kh. Safiullin meeting No.7/2012 dated training WAT free “Energetik” 17.02.2012

Executive: Protocol of the BD Contract for educational services of employee 1 695 194,00 52 Autonomous Non-Commercial Organization D.Kh. Safiullin meeting No.7/2012 dated training WAT free “Energetik” 17.02.2012

Executive: Protocol of the BD Contract for educational services of employee 914 410,00 53 Autonomous Non-Commercial Organization D.Kh. Safiullin meeting No.7/2012 dated training WAT free “Energetik” 17.02.2012 Monetary funds loan agreement for the period up Borrower: Protocol of the BD 54 to December 31, 2013 with an annual interest 3 000 000,00 Autonomous Non-Commercial Organization D.Kh. Safiullin meeting No.7/2012 dated pay of 0,1% “Energetik” 17.02.2012 Party: I.Sh. Fardiev Protocol of the BD Additional agreement about contract extension for 55 369 825,28 JSC “Generation Company” (branch “Kazan A.R. Fakhrutdinov meeting No.7/2012 dated equipment placement CHP-1”) R.M. Khaziev 17.02.2012 Grid Company 121

Seller: I.Sh. Fardiev Protocol of the BD 5 938 920,00 56 Contract of sale of sanatorium packages for 2012 JSC “Generation Company” (branch Sanatorium A.R. Fakhrutdinov meeting No.7/2012 dated WAT free “Balkysh”) R.M. Khaziev 17.02.2012 Seller: I.Sh. Fardiev Protocol of the BD 5 938 920,00 57 Contract of sale of sanatorium packages for 2012 JSC “Generation Company” (branch Sanatorium A.R. Fakhrutdinov meeting No.7/2012 dated WAT free “Balkysh”) R.M. Khaziev 17.02.2012 Seller: I.Sh. Fardiev Protocol of the BD 5 132 920,00 58 Contract of sale of sanatorium packages for 2012 JSC “Generation Company” (branch Sanatorium A.R. Fakhrutdinov meeting No.7/2012 dated WAT free “Balkysh”) R.M. Khaziev 17.02.2012 Seller: I.Sh. Fardiev Protocol of the BD 5 938 920,00 59 Contract of sale of sanatorium packages for 2012 JSC “Generation Company” (branch Sanatorium A.R. Fakhrutdinov meeting No.7/2012 dated WAT free “Balkysh”) R.M. Khaziev 17.02.2012 Seller: I.Sh. Fardiev Protocol of the BD 6 744 920,00 60 Contract of sale of sanatorium packages for 2012 JSC “Generation Company” (branch Sanatorium A.R. Fakhrutdinov meeting No.7/2012 dated WAT free “Balkysh”) R.M. Khaziev 17.02.2012 Seller: I.Sh. Fardiev Protocol of the BD 4 326 920,00 61 Contract of sale of sanatorium packages for 2012 JSC “Generation Company” (branch Sanatorium A.R. Fakhrutdinov meeting No.7/2012 dated WAT free “Balkysh”) R.M. Khaziev 17.02.2012 Seller: I.Sh. Fardiev Protocol of the BD 5 938 920,00 62 Contract of sale of sanatorium packages for 2012 JSC “Generation Company” (branch Sanatorium A.R. Fakhrutdinov meeting No.7/2012 dated WAT free “Balkysh”) R.M. Khaziev 17.02.2012 Seller: I.Sh. Fardiev Protocol of the BD 5 938 920,00 63 Contract of sale of sanatorium packages for 2012 JSC “Generation Company” (branch Sanatorium A.R. Fakhrutdinov meeting No.7/2012 dated WAT free “Balkysh”) R.M. Khaziev 17.02.2012 Seller: I.Sh. Fardiev Protocol of the BD 5 938 920,00 64 Contract of sale of sanatorium packages for 2012 JSC “Generation Company” (branch Sanatorium A.R. Fakhrutdinov meeting No.7/2012 dated WAT free “Balkysh”) R.M. Khaziev 17.02.2012 Seller: I.Sh. Fardiev Protocol of the BD 1 908 920,00 65 Contract of sale of sanatorium packages for 2012 JSC “Generation Company” (branch Sanatorium A.R. Fakhrutdinov meeting No.7/2012 dated WAT free “Balkysh”) R.M. Khaziev 17.02.2012 Shareholder with more than 20% of voting shares of Additional contract about the number and Executive: Protocol of the BD both societies – Republic of 66 schedule of infomercial broadcasts on the radio 25 200,00 JSC “Television and Radio Broadcasting meeting No.7/2012 dated Tatarstan represented by the “Yana Gasyr” Company “Novy Vek” 17.02.2012 Ministry of Land and Property Relations Contract for acceptance services of power Protocol of the BD Customer: 67 accounting meters (three-phase direct- 11 040,00 A.N. Evseev meeting No.7/2012 dated JSC “ Heating Systems” connection accounting meters) 17.02.2012

Bank: Protocol of the BD according to 68 Contract for services using plastic bank cards JSC “AKIBANK” I.Sh. Fardiev meeting No.7/2012 dated service charges 17.02.2012

Contract for maintenance services of automated Protocol of the BD commercial data power measuring system within Executive: D.Kh. Safiullin 69 828 029,24 meeting No.7/2012 dated measurement and information system-computer LLC “TatAISEnergo” A.R. Fakhrutdinov 17.02.2012 information complex

Contract for maintenance services of automated Protocol of the BD commercial data power measuring system within Executive: D.Kh. Safiullin 70 856 838,44 meeting No.7/2012 dated measurement and information system-computer LLC “TatAISEnergo” A.R. Fakhrutdinov 17.02.2012 information complex

Contract for maintenance services of automated Protocol of the BD commercial data power measuring system within Executive: D.Kh. Safiullin 71 1 951 892,24 meeting No.7/2012 dated measurement and information system-computer LLC “TatAISEnergo” A.R. Fakhrutdinov 17.02.2012 information complex

Contract for maintenance services of automated Protocol of the BD commercial data power measuring system within Executive: D.Kh. Safiullin 72 901 384,76 meeting No.7/2012 dated measurement and information system-computer LLC “TatAISEnergo” A.R. Fakhrutdinov 17.02.2012 information complex

Contract for maintenance services of automated Protocol of the BD commercial data power measuring system within Executive: D.Kh. Safiullin 73 1 911 498,48 meeting No.7/2012 dated measurement and information system-computer LLC “TatAISEnergo” A.R. Fakhrutdinov 17.02.2012 information complex 122 S cHEDULES

Contract for maintenance services of automated Protocol of the BD commercial data power measuring system within Executive: D.Kh. Safiullin 74 1 133 267,00 meeting No.7/2012 dated measurement and information system-computer LLC “TatAISEnergo” A.R. Fakhrutdinov 17.02.2012 information complex Contract for maintenance services of automated Protocol of the BD commercial data power measuring system within Executive: D.Kh. Safiullin 75 1 111 027,60 meeting No.7/2012 dated measurement and information system-computer LLC “TatAISEnergo” A.R. Fakhrutdinov 17.02.2012 information complex Contract for maintenance services of automated Protocol of the BD commercial data power measuring system within Executive: D.Kh. Safiullin 76 729 543,80 meeting No.7/2012 dated measurement and information system-computer LLC “TatAISEnergo” A.R. Fakhrutdinov 17.02.2012 information complex Contract for maintenance services of automated Protocol of the BD commercial data power measuring system within Executive: D.Kh. Safiullin 77 819 115,44 meeting No.7/2012 dated measurement and information system-computer LLC “TatAISEnergo” A.R. Fakhrutdinov 17.02.2012 information complex Protocol of the BD Contract for maintenance services of automated Executive: D.Kh. Safiullin 78 3 403 033,88 meeting No.7/2012 dated system of electric power technical record-keeping LLC “TatAISEnergo” A.R. Fakhrutdinov 17.02.2012 Protocol of the BD Contract for maintenance services of automated Executive: D.Kh. Safiullin 79 3 862 757,84 meeting No.7/2012 dated system of electric power technical record-keeping LLC “TatAISEnergo” A.R. Fakhrutdinov 17.02.2012 Protocol of the BD Contract for maintenance services of automated Executive: D.Kh. Safiullin 80 4 621 099,84 meeting No.7/2012 dated system of electric power technical record-keeping LLC “TatAISEnergo” A.R. Fakhrutdinov 17.02.2012 Protocol of the BD Contract for maintenance services of automated Executive: D.Kh. Safiullin 81 2 496 510,44 meeting No.7/2012 dated system of electric power technical record-keeping LLC “TatAISEnergo” A.R. Fakhrutdinov 17.02.2012 Protocol of the BD Contract for maintenance services of automated Executive: D.Kh. Safiullin 82 217 066,32 meeting No.7/2012 dated system of electric power technical record-keeping LLC “TatAISEnergo” A.R. Fakhrutdinov 17.02.2012 Protocol of the BD Contract for maintenance services of automated Executive: D.Kh. Safiullin 83 3 654 518,52 meeting No.7/2012 dated system of electric power technical record-keeping LLC “TatAISEnergo” A.R. Fakhrutdinov 17.02.2012 Protocol of the BD Contract for maintenance services of automated Executive: D.Kh. Safiullin 84 608 328,64 meeting No.7/2012 dated system of electric power technical record-keeping LLC “TatAISEnergo” A.R. Fakhrutdinov 17.02.2012 Additional agreement about preventive recovery Protocol of the BD Executive: D.Kh. Safiullin 85 services for automated commercial data power 121 434,39 meeting No.7/2012 dated LLC “TatAISEnergo” A.R. Fakhrutdinov measuring system controllers 17.02.2012

Additional agreement about preventive recovery Protocol of the BD Executive: D.Kh. Safiullin 86 services for automated commercial data power 121 434,39 meeting No.7/2012 dated LLC “TatAISEnergo” A.R. Fakhrutdinov measuring system controllers 17.02.2012

Additional agreement about preventive recovery Protocol of the BD Executive: D.Kh. Safiullin 87 services for automated commercial data power 40 478,13 meeting No.7/2012 dated LLC “TatAISEnergo” A.R. Fakhrutdinov measuring system controllers 17.02.2012

Additional agreement about preventive recovery Protocol of the BD Executive: D.Kh. Safiullin 88 services for automated commercial data power 80 956,26 meeting No.7/2012 dated LLC “TatAISEnergo” A.R. Fakhrutdinov measuring system controllers 17.02.2012

Additional agreement about preventive recovery services for automated system of electric power Protocol of the BD Executive: D.Kh. Safiullin 89 technical record-keeping equipment, contract for 69 534,18 meeting No.7/2012 dated LLC “TatAISEnergo” A.R. Fakhrutdinov maintenance services of automated system of 17.02.2012 electric power technical record-keeping Additional agreement about preventive recovery Protocol of the BD Executive: D.Kh. Safiullin 90 services for automated system of electric power 194 295,02 meeting No.7/2012 dated LLC “TatAISEnergo” A.R. Fakhrutdinov technical record-keeping controllers 17.02.2012

Additional agreement about preventive recovery Protocol of the BD Executive: D.Kh. Safiullin 91 services for automated system of electric power 390 200,31 meeting No.7/2012 dated LLC “TatAISEnergo” A.R. Fakhrutdinov technical record-keeping controllers 17.02.2012 Additional agreement about an increase in Protocol of the BD volume and service charges for the contract for Executive: D.Kh. Safiullin 92 56 669,38 meeting No.7/2012 dated maintenance services of automated system of LLC “TatAISEnergo” A.R. Fakhrutdinov 17.02.2012 electric power technical record-keeping Grid Company 123

Additional agreement about an increase in volume and service charges for the contract Protocol of the BD for maintenance services of automated Executive: D.Kh. Safiullin 93 40 478,13 meeting No.7/2012 dated commercial data power measuring system within LLC “TatAISEnergo” A.R. Fakhrutdinov 17.02.2012 measurement and information system-computer information complex Termination agreement of the contract for Protocol of the BD Executive: D.Kh. Safiullin 94 software maintenance of automation system of — meeting No.7/2012 dated LLC “TatAISEnergo” A.R. Fakhrutdinov records and documents management “Delo” 17.02.2012 Contract for design and survey services related to major construction work “Modernization Protocol of the BD of data collection equipment by constructing Executive: D.Kh. Safiullin 95 821 580,70 meeting No.7/2012 dated data collection and processing center with an LLC “TatAISEnergo” A.R. Fakhrutdinov 17.02.2012 automated commercial data power measuring system” Additional agreement about changes in equipment list of the automated commercial data power measuring system subject to maintenance Protocol of the BD Executive: D.Kh. Safiullin 96 and establishment of the overall service charges 1 519 499,35 meeting No.7/2012 dated LLC “TatAISEnergo” A.R. Fakhrutdinov for the contract for maintenance services for the 17.02.2012 automated commercial data power measuring system Additional agreement about changes in equipment list of the automated system of electric power technical record-keeping system subject Protocol of the BD Executive: D.Kh. Safiullin 97 to maintenance and establishment of the overall 5 081 616,09 meeting No.7/2012 dated LLC “TatAISEnergo” A.R. Fakhrutdinov service charges for the contract for maintenance 17.02.2012 services for the automated system of electric power technical record-keeping system Contract for construction, installation, hook-up and start-up works “Modernization of data collection Protocol of the BD Contractor: D.Kh. Safiullin 98 equipment by constructing data collection and 6 103 986,38 meeting No.7/2012 dated LLC “TatAISEnergo” A.R. Fakhrutdinov processing center with an automated commercial 17.02.2012 data power measuring system” Protocol of the BD Executive: D.Kh. Safiullin 99 Product supply agreement (for equipment) 777 625,96 meeting No.7/2012 dated LLC “TatAISEnergo” A.R. Fakhrutdinov 17.02.2012 Shareholder with more than 20% of voting shares of Contract for acceptance services of power Protocol of the BD Customer: both societies – Republic of 100 accounting meters (three-phase direct- 1 104,00 meeting No.7/2012 dated JSC “Muslyumovo Engineering Network” Tatarstan represented by the connection accounting meters) 17.02.2012 Ministry of Land and Property Relations

Non-residential lease contract with an area of Protocol of the BD 244 133,34 Renter: 101 38,0 square meters at the second floor of the D.Kh. Safiullin meeting No.8/2012 dated for 11 months JSC “Tatenergosbyt” (Chistopol branch) building located at 13a Gagarina Str., Nurlat 22.02.2012

Executive: Protocol of the BD Contract for consultation services (seminars) for 102 44 674,80 Autonomous Non-Commercial Organization D.Kh. Safiullin meeting No.8/2012 dated employees “Energetik” 22.02.2012 Executive: Protocol of the BD Contract for consultation services (seminars) for 103 24 426,00 Autonomous Non-Commercial Organization D.Kh. Safiullin meeting No.8/2012 dated employees “Energetik” 22.02.2012 Executive: Protocol of the BD Contract for psychophysiological examination 104 172 776,78 Autonomous Non-Commercial Organization D.Kh. Safiullin meeting No.8/2012 dated services, training sessions “Energetik” 22.02.2012 Executive: Protocol of the BD Contract for educational services of employee 1 317 799,00 105 Autonomous Non-Commercial Organization D.Kh. Safiullin meeting No.8/2012 dated training, including get-away training sessions WAT free “Energetik” 22.02.2012 Executive: Protocol of the BD Contract for educational services of employee 1 469 340,00 106 Autonomous Non-Commercial Organization D.Kh. Safiullin meeting No.8/2012 dated training, including get-away training sessions WAT free “Energetik” 22.02.2012 Executive: Protocol of the BD Contract for educational services of employee 2 525 726,00 107 Autonomous Non-Commercial Organization D.Kh. Safiullin meeting No.8/2012 dated training, including get-away training sessions WAT free “Energetik” 22.02.2012 Executive: Protocol of the BD Contract for educational services of employee 1 008 524,00 108 Autonomous Non-Commercial Organization D.Kh. Safiullin meeting No.8/2012 dated training, including get-away training sessions WAT free “Energetik” 22.02.2012 124 S cHEDULES

Executive: Protocol of the BD Contract for educational services of employee 945 260,00 109 Autonomous Non-Commercial Organization D.Kh. Safiullin meeting No.8/2012 dated training, including get-away training sessions WAT free “Energetik” 22.02.2012 Shareholder with more than 20% of voting shares of Protocol of the BD Contracts for acceptance of power accounting Customer: both societies – Republic of 110 379,00 meeting No.8/2012 dated meters JSC “Almetyevsk-Vodokanal” Tatarstan represented by the 22.02.2012 Ministry of Land and Property Relations Contractor: I.Sh. Fardiev Protocol of the BD Contract for maintenance services of power 111 181 571,58 JSC “Generation Company (Nizhnekamsk HPP A.R. Fakhrutdinov meeting No.8/2012 dated equipment of SS 35/6 kV T121 branch) R.M. Khaziev 22.02.2012 Shareholder with more than Enterprise: 20% of voting shares of Contract for services of removal and storage of Protocol of the BD 102 092,89 JSC “Buinsk Multi-activity Manufacturing both societies – Republic of 112 solid municipal waste at a landfill: 315,53 cubic meeting No.8/2012 dated WAT free Enterprise of Housing and Utilities Infrastructure” Tatarstan represented by the meters per year 22.02.2012 (Engineering Network)” Ministry of Land and Property Relations Additional agreement for extension of non- residential lease contract located at the first 57 657,51 Protocol of the BD floor of the laboratory (inv. No.246, N) at the Tenant: 113 for 9 months D.Kh. Safiullin meeting No.13/2012 territory of AGRES located at 5a Shevchenko Str., JSC “Tatenergosbyt” (“Almetyevsk branch”) dated 01.06.2012 Almetyevsk, Republic of Tatarstan, 423450: room 9, total area of 97,3 square meters. Termination agreement for non-residential contract lease with a total area of 39,61 square Protocol of the BD Party: 114 meters in the Office and Amenity building of - D.Kh. Safiullin meeting No.13/2012 JSC “Tatenergosbyt” (Privolzhsk branch) Prigorodny REN located at 15 Severnaya Str., dated 01.06.2012 Stolbishche, Republic of Tatarstan Additional agreement about change of non- residential lease contract period (garage) with an 129 641,49 Protocol of the BD Renter: 115 area of 46,5 square meters at the administrative for 11 months D.Kh. Safiullin meeting No.13/2012 JSC “Tatenergosbyt” (Privolzhsk branch) building located at 22 Sibirsky Trakt Str., Arsk, dated 01.06.2012 Republic of Tatarstan Additional agreement about extension of non- 1 976,26 Protocol of the BD residential lease contract with an area of 1 square Tenant: 116 for 11 months I.Sh. Fardiev meeting No.13/2012 meter located at 109 Tukay Str., Kazan (in the JSC “AKIBANK” dated 01.06.2012 administrative building of Kazan Electric Network)

One-year extension of contract for services Party: Protocol of the BD related to production and maintenance of public according to the CJSC “Certification Authority” D.Kh. Safiullin 117 meeting No.13/2012 digital signature key certificates, according to the price list Registration center: A.R. Fakhrutdinov dated 01.06.2012 contract terms LLC “TatAISEnergo”

One-year extension of contract for services Party: Protocol of the BD related to production and maintenance of public according to the CJSC “Certification Authority” D.Kh. Safiullin 118 meeting No.13/2012 digital signature key certificates, according to the price list Registration center: A.R. Fakhrutdinov dated 01.06.2012 contract terms LLC “TatAISEnergo” One-year extension of contract for services Party: Protocol of the BD related to production and maintenance of public according to the CJSC “Certification Authority” D.Kh. Safiullin 119 meeting No.13/2012 digital signature key certificates, according to the price list Registration center: A.R. Fakhrutdinov dated 01.06.2012 contract terms LLC “TatAISEnergo” One-year extension of contract for services Party: Protocol of the BD related to production and maintenance of public according to the CJSC “Certification Authority” D.Kh. Safiullin 120 meeting No.13/2012 digital signature key certificates, according to the price list Registration center: A.R. Fakhrutdinov dated 01.06.2012 contract terms LLC “TatAISEnergo” One-year extension of contract for services Party: Protocol of the BD related to production and maintenance of public according to the CJSC “Certification Authority” D.Kh. Safiullin 121 meeting No.13/2012 digital signature key certificates, according to the price list Registration center: A.R. Fakhrutdinov dated 01.06.2012 contract terms LLC “TatAISEnergo” One-year extension of contract for services Party: Protocol of the BD related to production and maintenance of public according to the CJSC “Certification Authority” D.Kh. Safiullin 122 meeting No.13/2012 digital signature key certificates, according to the price list Registration center: A.R. Fakhrutdinov dated 01.06.2012 contract terms LLC “TatAISEnergo” One-year extension of contract for services Party: Protocol of the BD related to production and maintenance of public according to the CJSC “Certification Authority” D.Kh. Safiullin 123 meeting No.13/2012 digital signature key certificates, according to the price list Registration center: A.R. Fakhrutdinov dated 01.06.2012 contract terms LLC “TatAISEnergo” Grid Company 125

One-year extension of contract for services Party: Protocol of the BD related to production and maintenance of public according to the CJSC “Certification Authority” D.Kh. Safiullin 124 meeting No.13/2012 digital signature key certificates, according to the price list Registration center: A.R. Fakhrutdinov dated 01.06.2012 contract terms LLC “TatAISEnergo” One-year extension of contract for services Party: Protocol of the BD related to production and maintenance of public according to the CJSC “Certification Authority” D.Kh. Safiullin 125 meeting No.13/2012 digital signature key certificates, according to the price list Registration center: A.R. Fakhrutdinov dated 01.06.2012 contract terms LLC “TatAISEnergo” Party: Contract for services related to production and Protocol of the BD CJSC “Certification Authority” D.Kh. Safiullin 126 maintenance of public digital signature key 17 400,00 meeting No.13/2012 Registration center: A.R. Fakhrutdinov certificates dated 01.06.2012 LLC “TatAISEnergo” One-year extension of contract for services related Protocol of the BD according to the Executive: D.Kh. Safiullin 127 to information and communication technologies meeting No.13/2012 price list LLC “TatAISEnergo” A.R. Fakhrutdinov according to the contract terms dated 01.06.2012 One-year extension of contract for services related Protocol of the BD according to the Executive: D.Kh. Safiullin 128 to information and communication technologies meeting No.13/2012 price list LLC “TatAISEnergo” A.R. Fakhrutdinov according to the contract terms dated 01.06.2012 One-year extension of contract for services related Protocol of the BD according to the Executive: D.Kh. Safiullin 129 to information and communication technologies meeting No.13/2012 price list LLC “TatAISEnergo” A.R. Fakhrutdinov according to the contract terms dated 01.06.2012 One-year extension of contract for services related Protocol of the BD according to the Executive: D.Kh. Safiullin 130 to information and communication technologies meeting No.13/2012 price list LLC “TatAISEnergo” A.R. Fakhrutdinov according to the contract terms dated 01.06.2012 One-year extension of contract for services related Protocol of the BD according to the Executive: D.Kh. Safiullin 131 to information and communication technologies meeting No.13/2012 price list LLC “TatAISEnergo” A.R. Fakhrutdinov according to the contract terms dated 01.06.2012 One-year extension of contract for services related Protocol of the BD according to the Executive: D.Kh. Safiullin 132 to information and communication technologies meeting No.13/2012 price list LLC “TatAISEnergo” A.R. Fakhrutdinov according to the contract terms dated 01.06.2012 One-year extension of contract for services related Executive: Protocol of the BD according to the D.Kh. Safiullin 133 to information and communication technologies LLC “TatAISEnergo” meeting No.13/2012 price list A.R. Fakhrutdinov according to the contract terms dated 01.06.2012 One-year extension of contract for services related Protocol of the BD according to the Executive: D.Kh. Safiullin 134 to information and communication technologies meeting No.13/2012 price list LLC “TatAISEnergo” A.R. Fakhrutdinov according to the contract terms dated 01.06.2012 One-year extension of contract for services related Protocol of the BD according to the Executive: D.Kh. Safiullin 135 to information and communication technologies meeting No.13/2012 price list LLC “TatAISEnergo” A.R. Fakhrutdinov according to the contract terms dated 01.06.2012 Protocol of the BD Two-month extension of contract for Internet according to the Provider: D.Kh. Safiullin 136 meeting No.13/2012 access services price list LLC “TatAISEnergo” A.R. Fakhrutdinov dated 01.06.2012 Protocol of the BD Two-month extension of contract for Internet according to the Provider: D.Kh. Safiullin 137 meeting No.13/2012 access services price list LLC “TatAISEnergo” A.R. Fakhrutdinov dated 01.06.2012

Protocol of the Two-month extension of contract for Internet according to the Provider: D.Kh. Safiullin 138 BD meeting No.13/2012 access services price list LLC “TatAISEnergo” A.R. Fakhrutdinov dated 01.06.2012

Protocol of the BD Two-month extension of contract for Internet according to the Provider: D.Kh. Safiullin 139 meeting No.13/2012 access services price list LLC “TatAISEnergo” A.R. Fakhrutdinov dated 01.06.2012 Protocol of the BD Two-month extension of contract for Internet according to the Provider: D.Kh. Safiullin 140 meeting No.13/2012 access services price list LLC “TatAISEnergo” A.R. Fakhrutdinov dated 01.06.2012 Protocol of the BD Two-month extension of contract for Internet according to the Provider: D.Kh. Safiullin 141 meeting No.13/2012 access services price list LLC “TatAISEnergo” A.R. Fakhrutdinov dated 01.06.2012 Protocol of the BD Two-month extension of contract for Internet according to the Provider: D.Kh. Safiullin 142 meeting No.13/2012 access services price list LLC “TatAISEnergo” A.R. Fakhrutdinov dated 01.06.2012 Protocol of the BD Two-month extension of contract for Internet according to the Provider: D.Kh. Safiullin 143 meeting No.13/2012 access services price list LLC “TatAISEnergo” A.R. Fakhrutdinov dated 01.06.2012 Protocol of the BD Two-month extension of contract for Internet according to the Provider: D.Kh. Safiullin 144 meeting No.13/2012 access services price list LLC “TatAISEnergo” A.R. Fakhrutdinov dated 01.06.2012 126 S cHEDULES

Additional agreement about a one-year extension Protocol of the BD according to the Executive: D.Kh. Safiullin 145 of contract for information and communication meeting No.13/2012 contract price list LLC “TatAISEnergo” A.R. Fakhrutdinov technology services for 2012 dated 01.06.2012

according to the Protocol of the BD Additional agreement about a one-year extension Executive: D.Kh. Safiullin 146 meeting No.13/2012 of contract for Internet access services for 2012 contract price LLC “TatAISEnergo” A.R. Fakhrutdinov list dated 01.06.2012 Protocol of the BD Additional agreement about the list of services according to the Executive: D.Kh. Safiullin 147 meeting No.13/2012 (description of provided services) to the contract contract price list LLC “TatAISEnergo” A.R. Fakhrutdinov dated 01.06.2012 Additional agreement about establishing a price Protocol of the BD 193 721,58 Executive: D.Kh. Safiullin 148 for providing a quarter of the communication line meeting No.13/2012 for 2 months LLC “TatAISEnergo” A.R. Fakhrutdinov capacity located on the overhead lines dated 01.06.2012 Additional agreement about establishing a price Protocol of the BD 1 008 104,85 Executive: D.Kh. Safiullin 149 for providing a quarter of the communication line meeting No.13/2012 for 9 months LLC “TatAISEnergo” A.R. Fakhrutdinov capacity located on the overhead lines dated 01.06.2012 Additional agreement about a change in rates for Protocol of the BD 193 721,58 Customer: D.Kh. Safiullin 150 providing anchorage points for communication meeting No.13/2012 for 2 months LLC “TatAISEnergo” A.R. Fakhrutdinov line placement dated 01.06.2012 Additional agreement about a change in rates for Protocol of the BD 1 008 104,94 Customer: D.Kh. Safiullin 151 providing anchorage points for communication meeting No.13/2012 for 9 months LLC “TatAISEnergo” A.R. Fakhrutdinov line placement dated 01.06.2012 Protocol of the BD Additional agreement about extension of contract 178 545,36 Customer: D.Kh. Safiullin 152 meeting No.13/2012 for data transmission for a year LLC “TatAISEnergo” A.R. Fakhrutdinov dated 01.06.2012 Lease contract for a section of a land parcel with cadastral No.16:34:131202:2 with an Protocol of the BD meeting area of 18,0 square meters on the territory of 33 000,00 Tenant: D.Kh. Safiullin 153 No.13/2012 d SS “Kutlu-Bukash” located in Kutlu-Buktash, for 11 months LLC “TatAISEnergo” A.R. Fakhrutdinov ated 01.06.2012 Rybno-Slobodsky Municipal District, Republic of Tatarstan

Supply contract of PC software samples (rights for Agent: Protocol of the BD PC Software CryptoPro CSP version 3.6 Update D.Kh. Safiullin 154 2 250,00 LLC “TatAISEnergo” meeting No.13/2012 license for data encryption tool CryptoPro CSP up A.R. Fakhrutdinov Supplier: CJSC “SoftLine Trade” dated 01.06.2012 to version 3.6 on one PC MS Windows)

Additional agreement on editing the scope of agreement on subsystem maintenance and changes in contract rates for development and Protocol of the BD Executive: 155 introduction services for the internal information 2 991 300,00 A.M. Pakhomov meeting No.13/2012 JSC “ICL-КПО ВС” portal of JSC “Grid Company” on the basis of dated 01.06.2012 Microsoft SharePoint 2010 and Microsoft Lync 2010 Additional agreement about changes in the Shareholder with more than price list on services of TV station “TNV” and 20% of voting shares of Executive: Protocol of the BD general prices for the contract on preparing both societies – Republic of 156 478 676,00 JSC “Television and Radio Broadcasting meeting No.13/2012 video materials and providing air time on the TV Tatarstan represented by the Company “Novy Vek” dated 01.06.2012 station “Tatarstan Novy Vek” with the purpose of Ministry of Land and Property broadcasting infovideos Relations. Shareholder with more than Additional agreement about changes in the 20% of voting shares of editorial calendar of infomercials on the radio Executive: Protocol of the BD both societies – Republic of 157 “Yana Gasyr” to the contract on producing 131 927,00 JSC “Television and Radio Broadcasting meeting No.13/2012 Tatarstan represented by the infomercials and providing air time on the radio Company “Novy Vek” dated 01.06.2012 Ministry of Land and Property “Tatarstan Novy Vek” with advertising purposes Relations. Contract for providing consultation services (seminar): “Improving effectiveness of internal Executive: Protocol of the BD 158 auditing system for compliance of environmental 9 440,00 Autonomous Non-Commercial Organization D.Kh. Safiullin meeting No.13/2012 management system with the requirements of “Energetik” dated 01.06.2012 ISO 14001” Executive: Protocol of the BD Contract for psychophysiological examinations of 159 111 274,00 Autonomous Non-Commercial Organization D.Kh. Safiullin meeting No.13/2012 employees by the laboratory, training sessions “Energetik” dated 01.06.2012 Contract for educational services of employee training at specialist training course “Managers Executive: Protocol of the BD 168 480,00 160 and experts of power stations, networks and Autonomous Non-Commercial Organization D.Kh. Safiullin meeting No.13/2012 WAT free servicing power engineering companies” (topic: “Energetik” dated 01.06.2012 Technological connection) Grid Company 127

34 495,00 for training Additional agreement about training and boarding Protocol of the BD WAT free; Executive: D.Kh. Safiullin 161 costs for two students for 2012 as part of meeting No.13/2012 2 555,00 “Kazan Power Engineering College” Sh. Fardiev personnel preparation dated 01.06.2012 for boarding WAT included Additional agreement about extension of lease contract of sections of the land parcel with a cadastral number 16:48:070203:37 with an area of 767 square meters including the following sections: under support of No.1 OHL 500 kV Renter: I.Sh. Fardiev Protocol of the BD 10 875,29 162 Zainsk-Bugulma (Zainsk state district power JSC “Generation Company” (Zainsk state district A.R. Fakhrutdinov meeting No.13/2012 for 11 months plant-Bugulma) with an area of 378 square power plant) R.M. Khaziev dated 01.06.2012 meters, under support of No.1 OHL 500 kV Zainsk-Kuybyshev (Zainsk state district power plant-Kuybyshev) with an area of 389 square meters Additional agreement for extension of the contract for equipment placement: - PTS-630-10/0,4kV – on the land parcel located at 11 Tetsevskaya Str., Kazan: (cad. No. 16:50:21 Party: I.Sh. Fardiev Protocol of the BD 291 967,17 163 04 01:0090), with an area of 7,5 square meters JSC “Generation Company” (branch “Kazan A.R. Fakhrutdinov meeting No.13/2012 for 11 months near the food court building; - BPTS-630 kV on CHP-2”) R.M. Khaziev dated 01.06.2012 the land parcel located at 11 Tetsevskaya Str., Kazan, (cad. No. 16:50:21 04 01:0090), with an area of 7,5 square meters near the main office Protocol of the BD Contract for maintenance services (OHL-6 kV Customer: 164 111 886,00 A.K. Khamaev meeting No.13/2012 feeder 101-20) JSC V.D. Shashin “Tatneft” dated 01.06.2012 Protocol of the BD Contract for services of acceptance of power Customer: 165 408,00 A.K. Khamaev meeting No.13/2012 accounting meters JSC V.D. Shashin “Tatneft” dated 01.06.2012 • installation of a fenced-off area at OHL 6-10 kV at the price for 1 km of and overhead and cable lines – 19 112,00; • installation of a fenced-off area at CL 6-10 kV A.K. Khamaev, shareholder at the price for 1 with more than 20% of voting Executive: Protocol of the BD Contract for installation services of fenced-off km of a cable line shares of both societies 166 JSC “Land Relations Development Center of the meeting No.13/2012 areas for overhead and cable power lines within Yelabuga– – Republic of Tatarstan Republic of Tatarstan” dated 01.06.2012 45 532,00; represented by the Ministry of • preparation Land and Property Relations. of information on major construction work or other line facilities located in the fenced-off area at the price for 1 km of the power line– 4 048,00. Executive: Protocol of the BD Additional agreement about a value increase of 470 000,00 167 Autonomous Non-Commercial Organization D.Kh. Safiullin meeting No.3/2012 dated a contract for educational services of employees WAT free “Energetik” 01.08.2012 Contract for consultation services (seminar) on Executive: Protocol of the BD the subject: “Nature protection activities and 168 5 097,60 Autonomous Non-Commercial Organization D.Kh. Safiullin meeting No.3/2012 dated effectiveness of environmental management “Energetik” 01.08.2012 system” Shareholder with more than Five-year lease contract for a land parcel with 20% of voting shares of Tenant: Protocol of the BD cad. number 16:50:100411:112 with an area 3 660,94 both societies – Republic of 169 JSC “Television and Radio Broadcasting meeting No.3/2012 dated 663 square meters located at 8B Solovetskikh for 1 month Tatarstan represented by the Company “Novy Vek” 01.08.2012 Yung Str., Kazan, Republic of Tatarstan Ministry of Land and Property Relations 128 S cHEDULES

Shareholder with more than 20% of voting shares of Executive: Protocol of the BD Contract for providing air time at the TV station both societies – Republic of 170 59 000,00 JSC “Television and Radio Broadcasting meeting No.3/2012 dated “Tatarstan Novy Vek” with advertising purposes Tatarstan represented by the Company “Novy Vek” 01.08.2012 Ministry of Land and Property Relations Supply contract of PC software samples (rights for Agent: Protocol of the BD PC Software CryptoPro CSP version 3.6 Update 2 250,00 LLC “TatAISEnergo” 171 A.R. Fakhrutdinov meeting No.3/2012 dated license for data encryption tool CryptoPro CSP up WAT free Supplier: 01.08.2012 to version 3.6 on one PC MS Windows) CJSC “SoftLine Trade” Supply contract of PC software samples (rights for Agent: Protocol of the BD PC Software CryptoPro CSP version 3.6 Update 2 250,00 LLC “TatAISEnergo” 172 A.R. Fakhrutdinov meeting No.3/2012 dated license for data encryption tool CryptoPro CSP up WAT free Supplier: 01.08.2012 to version 3.6 on one PC MS Windows) CJSC “SoftLine Trade” Supply contract of PC software samples (rights for Agent: Protocol of the BD PC Software CryptoPro CSP version 3.6 Update 3 000,00 LLC “TatAISEnergo” 173 A.R. Fakhrutdinov meeting No.3/2012 dated license for data encryption tool CryptoPro CSP up WAT free Supplier: 01.08.2012 to version 3.6 on one PC MS Windows) CJSC “SoftLine Trade” Supply contract of PC software samples (rights for Agent: Protocol of the BD PC Software CryptoPro CSP version 3.6 Update 2 250,00 LLC “TatAISEnergo” 174 A.R. Fakhrutdinov meeting No.3/2012 dated license for data encryption tool CryptoPro CSP up WAT free Supplier: 01.08.2012 to version 3.6 on one PC MS Windows) CJSC “SoftLine Trade” Supply contract of PC software samples (rights for Agent: Protocol of the BD PC Software CryptoPro CSP version 3.6 Update 2 250,00 LLC “TatAISEnergo” 175 A.R. Fakhrutdinov meeting No.3/2012 dated license for data encryption tool CryptoPro CSP up WAT free Supplier: 01.08.2012 to version 3.6 on one PC MS Windows) CJSC “SoftLine Trade” Supply contract of PC software samples (rights for Agent: Protocol of the BD PC Software CryptoPro CSP version 3.6 Update 2 250,00 LLC “TatAISEnergo” 176 A.R. Fakhrutdinov meeting No.3/2012 dated license for data encryption tool CryptoPro CSP up WAT free Supplier: 01.08.2012 to version 3.6 on one PC MS Windows) CJSC “SoftLine Trade” Supply contract of PC software samples (rights for Agent: Protocol of the BD PC Software CryptoPro CSP version 3.6 Update 2 250,00 LLC “TatAISEnergo” 177 A.R. Fakhrutdinov meeting No.3/2012 dated license for data encryption tool CryptoPro CSP up WAT free Supplier: 01.08.2012 to version 3.6 on one PC MS Windows) CJSC “SoftLine Trade” Supply contract of PC software samples (rights for Agent: Protocol of the BD PC Software CryptoPro CSP version 3.6 Update 2 250,00 LLC “TatAISEnergo” 178 A.R. Fakhrutdinov meeting No.3/2012 dated license for data encryption tool CryptoPro CSP up WAT free Supplier: 01.08.2012 to version 3.6 on one PC MS Windows) CJSC “SoftLine Trade” Supply contract of PC software samples (rights for Agent: Protocol of the BD PC Software CryptoPro CSP version 3.6 Update 2 250,00 LLC “TatAISEnergo” 179 A.R. Fakhrutdinov meeting No.3/2012 dated license for data encryption tool CryptoPro CSP up WAT free Supplier: 01.08.2012 to version 3.6 on one PC MS Windows) CJSC “SoftLine Trade” Additional agreement about extension of the list Protocol of the BD of equipment subject to storage and extension of Executive: 180 3 540,00 A.R. Fakhrutdinov meeting No.3/2012 dated the storage period for the contract for responsible LLC “TatAISEnergo” 01.08.2012 storage services Shareholder with more than Contract for technical checkup services of 20% of voting shares of both Protocol of the BD a vehicle (including its parts and specialty 38 400,00 Executive: 181 societies – Republic of Tatarstan meeting No.3/2012 dated equipment) with the purpose of ensuring that it WAT free JSC “Tattekhcontrol” represented by the Ministry of 01.08.2012 meets vehicle safety requirements Land and Property Relations Shareholder with more than Contract for technical checkup services of 20% of voting shares of Protocol of the BD a vehicle (including its parts and specialty 50 700,00 Executive: both societies – Republic of 182 meeting No.3/2012 dated equipment) with the purpose of ensuring that it WAT free JSC “Tattekhcontrol” Tatarstan represented by the 01.08.2012 meets vehicle safety requirements Ministry of Land and Property Relations Shareholder with more than Contract for technical checkup services of 20% of voting shares of Executive: Protocol of the BD a vehicle (including its parts and specialty 12 920,00 both societies – Republic of 183 JSC “Tattekhcontrol” meeting No.3/2012 dated equipment) with the purpose of ensuring that it WAT free Tatarstan represented by the 01.08.2012 meets vehicle safety requirements Ministry of Land and Property Relations Shareholder with more than Contract for technical checkup services of 20% of voting shares of Protocol of the BD a vehicle (including its parts and specialty 77 230,00 Executive: both societies – Republic of 184 meeting No.3/2012 dated equipment) with the purpose of ensuring that it WAT free JSC “Tattekhcontrol” Tatarstan represented by the 01.08.2012 meets vehicle safety requirements Ministry of Land and Property Relations Grid Company 129

Shareholder with more than Contract for technical checkup services of 20% of voting shares of Protocol of the BD a vehicle (including its parts and specialty 38 070,00 Executive: both societies – Republic of 185 meeting No.3/2012 dated equipment) with the purpose of ensuring that it WAT free JSC “Tattekhcontrol” Tatarstan represented by the 01.08.2012 meets vehicle safety requirements Ministry of Land and Property Relations Protocol of the BD Contract for acceptance services of power Customer: 186 15 946,00 A.N. Evseev meeting No.3/2012 dated accounting meters JSC “Almetyevsk Heating Systems” 01.08.2012 Shareholder with more than Additional agreement for providing newspaper 20% of voting shares of Executive: Protocol of the BD space on the pages of the “Mayak” newspaper both societies – Republic of 187 4 500,00 JSC “Tatmedia” (branch “Mayak Newspaper meeting No.3/2012 dated for publishing industrial information, additional Tatarstan represented by the editorial office) 01.08.2012 application to contract for services Ministry of Land and Property Relations Shareholder with more than Additional agreement for providing newspaper 20% of voting shares of Executive: Protocol of the BD space on the pages of the “Znamya Truda” both societies – Republic of 188 8 260,00 JSC “Tatmedia” (branch “Znamya Truda meeting No.3/2012 dated newspaper for publishing industrial information, Tatarstan represented by the Newspaper editorial office”) 01.08.2012 additional application to contract for services Ministry of Land and Property Relations Shareholder with more than Additional agreement for providing newspaper 20% of voting shares of Executive: Protocol of the BD space on the pages of the “Znamya Truda” both societies – Republic of 189 8 010,00 JSC “Tatmedia” (branch “Znamya Truda meeting No.3/2012 dated newspaper for publishing industrial information, Tatarstan represented by the Newspaper editorial office”) 01.08.2012 additional application to contract for services Ministry of Land and Property Relations Shareholder with more than Additional agreement for providing newspaper 20% of voting shares of space on the pages of the “Selskie Ogni” Executive: Protocol of the BD both societies – Republic of 190 newspaper (in Russian) and “Avul utlary” (in Tatar) 4 252,50 JSC “Tatmedia” (branch “Muslyumovo editorial meeting No.3/2012 dated Tatarstan represented by the for publishing industrial information, additional office”) 01.08.2012 Ministry of Land and Property application to contract for services Relations Shareholder with more than Additional agreement for providing newspaper 20% of voting shares of Executive: Protocol of the BD space on the pages of the “Sarman” newspaper both societies – Republic of 191 4 290,00 JSC “Tatmedia” (branch “Sarmanovsk editorial meeting No.3/2012 dated for publishing industrial information, additional Tatarstan represented by the office”) 01.08.2012 application to contract for services Ministry of Land and Property Relations Shareholder with more than 20% of voting shares of Publisher: Protocol of the BD Contract for providing advertising space in the both societies – Republic of 192 10 608,00 JSC “Tatmedia” (branch “Chistopol Izvestiya meeting No.3/2012 dated newspaper “Chistopol Izvestiya” Tatarstan represented by the Newspaper editorial office”) 01.08.2012 Ministry of Land and Property Relations Shareholder with more than 20% of voting shares of Executive: Protocol of the BD Contract for providing information space in the both societies – Republic of 193 14 352,00 JSC “Tatmedia” (branch “Chistopol Izvestiya meeting No.3/2012 dated newspaper “Chistopol Izvestiya” Tatarstan represented by the Newspaper editorial office”) 01.08.2012 Ministry of Land and Property Relations Shareholder with more than 20% of voting shares of Contract for providing information space in the Executive: Protocol of the BD both societies – Republic of 194 newspaper “Alkeev Vesti” for publishing an 10 650,00 JSC “Tatmedia” (branch “Alkeev Vesti meeting No.3/2012 dated Tatarstan represented by the infomercial article Newspaper editorial office”) 01.08.2012 Ministry of Land and Property Relations Shareholder with more than 20% of voting shares of Contract for producing, imposing, placing and Executive: Protocol of the BD both societies – Republic of 195 distributing commercials, infomercials and social 23 600,00 JSC “Tatmedia” (branch “Tugan Yak Newspaper meeting No.3/2012 dated Tatarstan represented by the advertisements in printed media editorial office”) 01.08.2012 Ministry of Land and Property Relations Shareholder with more than 20% of voting shares of Contract for producing, imposing, placing and Executive: Protocol of the BD both societies – Republic of 196 distributing commercials, infomercials and social 23 600,00 JSC “Tatmedia” (branch “Kaybych Tannary meeting No.3/2012 dated Tatarstan represented by the advertisements in printed media Newspaper editorial office”) 01.08.2012 Ministry of Land and Property Relations 130 S cHEDULES

Additional agreement about extension of lease Protocol of the BD contract of a land parcel with an area of 118 5 980,70 Renter: I.Sh. Khalikov 197 meeting No.3/2012 dated square meters located at Gagarina Str., Kazan. for 11 months JSC “Kazan Heat Network Company” M.G. Nadyrshin 01.08.2012 Cad. number: 16:50:100302:29 Contract for services of the psychophysiological Executive: Protocol of the BD 198 laboratory related to psychocorrection and 40 639,20 Autonomous Non-Commercial Organization D.Kh. Safiullin meeting No.1/2012 dated preventive treatment for employees “Energetik” 17.09.2012 Contract for consultation services (seminar) on subjects: “New legislation and regulatory acts for Executive: Protocol of the BD nature protection activities of an enterprise, use 199 5 097,60 Autonomous Non-Commercial Organization D.Kh. Safiullin meeting No.1/2012 dated of natural resourced and environmental safety”, “Energetik” 17.09.2012 “Analysis of implementation of environmental policy by the branches in 2011” Contract for educational services of employee training at training sessions “Pre-certificate training on occupation safety”, “Pre-certificate training on Industrial Power Safety for operation Executive: Protocol of the BD 18 000,00 200 of power networks and lines”, “Pre-certificate Autonomous Non-Commercial Organization D.Kh. Safiullin meeting No.1/2012 dated WAT free training on occupational safety while operating “Energetik” 17.09.2012 equipment under pressure”, “Pre-certificate training on occupational safety for facilities under lifting construction” Contract for educational services of employee training at training sessions “Pre-certificate training on occupation safety”, “Pre-certificate training on occupational safety while operating Executive: Protocol of the BD 26 734,00 201 equipment under pressure”, “Pre-certificate Autonomous Non-Commercial Organization D.Kh. Safiullin meeting No.1/2012 dated WAT free training on occupational safety for facilities under “Energetik” 17.09.2012 lifting construction”, “Pre-certificate training on Industrial Power Safety for operation of power networks and lines” Contract for educational services of employee training at training sessions “Pre-certificate Executive: Protocol of the BD 12 334,00 202 training on Industrial Power Safety for operation of Autonomous Non-Commercial Organization D.Kh. Safiullin meeting No.1/2012 dated WAT free heating networks and lines”, “Being in charge of “Energetik” 17.09.2012 power facilities of different property types Contract for educational services of employee training at training session “Practicing Executive: Protocol of the BD 264 000,00 203 scheduling and carrying out internal audits of the Autonomous Non-Commercial Organization D.Kh. Safiullin meeting No.1/2012 dated WAT free environmental management system according to “Energetik” 17.09.2012 ISO standards” Contract for educational services for one employee at a training session “Managers and Executive: Protocol of the BD 6 480,00 204 experts on power stations, lines and servicing Autonomous Non-Commercial Organization D.Kh. Safiullin meeting No.1/2012 dated WAT free facilities of power engineering” (subject: “Energetik” 17.09.2012 Technological connection) Shareholder with more than Additional agreement about change of contract 20% of voting shares of Executive: Protocol of the BD value for providing newspaper space on the both societies – Republic of 205 8 260,00 JSC “Tatmedia” (branch “Znamya Truda meeting No.1/2012 dated pages of the newspaper “Znamya Truda” for Tatarstan represented by the Newspaper editorial office”) 17.09.2012 publishing industrial information Ministry of Land and Property Relations Shareholder with more than Additional agreement about change of contract 20% of voting shares of Executive: Protocol of the BD value for providing newspaper space on the both societies – Republic of 206 12 750,00 JSC “Tatmedia” (branch “Znamya Truda meeting No.1/2012 dated pages of the newspaper “Znamya Truda” for Tatarstan represented by the Newspaper editorial office”) 17.09.2012 publishing industrial information Ministry of Land and Property Relations Shareholder with more than Additional agreement about change of contract 20% of voting shares of Executive: Protocol of the BD value for providing newspaper space on the both societies – Republic of 207 17 860,00 JSC “Tatmedia” (branch “Mayak Newspaper meeting No.1/2012 dated pages of the newspaper “Mayak” for publishing Tatarstan represented by the editorial office”) 17.09.2012 industrial information Ministry of Land and Property Relations Shareholder with more than Additional agreement about change of contract 20% of voting shares of value for providing newspaper space on the pages Executive: Protocol of the BD both societies – Republic of 208 of the newspaper “Selskie Ogni” (in Russian) and 9 855,00 JSC “Tatmedia” (branch “Muslyumovo editorial meeting No.1/2012 dated Tatarstan represented by the “Avul utlary” (in Tatar) for publishing industrial office”) 17.09.2012 Ministry of Land and Property information Relations Grid Company 131

Shareholder with more than Additional agreement about change of contract 20% of voting shares of Executive: Protocol of the BD value for providing newspaper space on the both societies – Republic of 209 9 165,00 JSC “Tatmedia” (branch “Sarman editorial meeting No.1/2012 dated pages of the newspaper “Sarman” for publishing Tatarstan represented by the office”) 17.09.2012 industrial information Ministry of Land and Property Relations Shareholder with more than 20% of voting shares of Executive: Protocol of the BD Contract for publishing two announcements in the both societies – Republic of 210 1 720,00 JSC “Tatmedia” (“Chistopol Izvestiya Newspaper meeting No.1/2012 dated newspaper “Chistopol Izvestiya” Tatarstan represented by the editorial office”) 17.09.2012 Ministry of Land and Property Relations Additional agreement about establishing and individual rate for the bank services for cash payments for employee pay and social payments, 0,9% Protocol of the BD Bank: 211 travel expenses, petroleum, oil and lubricants, of the withdrawal I.Sh. Fardiev meeting No.1/2012 dated JSC “AKIBANK” (Almetyevsk branch) farm produce purchases and other economic amount 17.09.2012 needs as well as other payments from the bank account

Additional agreement about establishing a service 0,3% Protocol of the BD fee for wage enrollment and other payments to Bank: 212 of each fund I.Sh. Fardiev meeting No.1/2012 dated the employees’ bank cards to the contract on JSC “AKIBANK” (Almetyevsk branch) transfer 17.09.2012 services with the use of bank plastic cards

Additional agreement about establishing a service 0,3% Protocol of the BD fee for wage enrollment and other payments to Bank: 213 of each fund I.Sh. Fardiev meeting No.1/2012 dated the employees’ bank cards to the contract on JSC “AKIBANK” (Nizhnekamsk branch) transfer 17.09.2012 services with the use of bank plastic cards

Additional agreement about establishing a service Protocol of the BD fee for wage enrollment, travel expenses, economic 0,3% Bank: 214 I.Sh. Fardiev meeting No.1/2012 dated and representational expenses to the employees’ of the deposit JSC “AKIBANK” (Kazan branch) 17.09.2012 accounts to the contract for services

Additional agreement about establishing a service Protocol of the BD fee for wage enrollment, travel expenses, economic 0,3% Bank: 215 I.Sh. Fardiev meeting No.1/2012 dated and representational expenses to the employees’ of the deposit JSC “AKIBANK” (Kazan branch) 17.09.2012 accounts to the contract for services

Contract for services with the use of bank plastic 0,3% Protocol of the BD cards for receipt of wages and other payments Bank: 216 of each fund I.Sh. Fardiev meeting No.1/2012 dated related to professional activities and a service JSC “AKIBANK” transfer 17.09.2012 package according to the bank rates

Contract for services with the use of bank plastic 0,3% Protocol of the BD cards for receipt of wages and other payments Bank: 217 of each fund I.Sh. Fardiev meeting No.1/2012 dated related to professional activities and a service JSC “AKIBANK” (Kazan branch) transfer 17.09.2012 package according to the bank rates

Deposit contract with a period of 173 days at Protocol of the BD Bank: 218 8.5% annual interest rate with a monthly interest 500 000 000,00 I.Sh. Fardiev meeting No.1/2012 dated JSC “AKIBANK” (Kazan branch) payment 17.09.2012 Additional agreement about extension of a lease contract for a land parcel (cad. number Renter: Protocol of the BD 7 319,18 I.Sh. Khalikov 219 16:50:160102:0018) with an area of 30 square JSC “Generation Company” (branch “Kazan meeting No.1/2012 dated for 11 months F.Kh. Tukhtarov meters located at Bratyev Kasimovykh Str., Kazan CHP-1”) 17.09.2012 (boiler-room “Gorki-2”) Sublease contract for a land parcel (cad. number Tenant: Protocol of the BD 16:52:01 03 01:0055) with an area of 456,25 11 136,18 I.Sh. Khalikov 220 JSC “Generation Company” (branch meeting No.1/2012 dated square meters, located at 5 Shlyuzovaya Str., for 10 months F.Kh. Tukhtarov “Nizhnekamsk HPP”) 17.09.2012 Naberezhnye Chelny, Republic of Tatarstan Additional agreement about educational prices Protocol of the BD 51 742,50 Executive: D.Kh. Safiullin 221 for three students for 2012 to the contract for meeting No.1/2012 dated WAT free “Kazan Power Engineering College” A.R. Fakhrutdinov personnel preparation 17.09.2012 Shareholder with more than Contract for technical checkup services of 20% of voting shares of Protocol of the BD a vehicle (including its parts and specialty 6 220,00 Executive: both societies – Republic of 222 meeting No.2/2012 dated equipment) with the purpose of ensuring that it WAT free JSC “Tattekhcontrol” Tatarstan represented by the 08.10.2012 meets vehicle safety requirements Ministry of Land and Property Relations 132 S cHEDULES

Shareholder with more than Additional agreement about change of contract 20% of voting shares of value for providing newspaper space on the pages Executive: Protocol of the BD both societies – Republic of 223 of the newspaper “Selskie Ogni” (in Russian) and 8 260,00 JSC “Tatmedia” (branch “Muslyumovo editorial meeting No.2/2012 dated Tatarstan represented by the “Avul utlary” (in Tatar) for publishing industrial office”) 08.10.2012 Ministry of Land and Property information Relations Shareholder with more than 20% of voting shares of Publisher: Protocol of the BD Contract for providing advertising space in the both societies – Republic of 224 8 850,00 JSC “Tatmedia” (branch “Chistopol Izvestiya meeting No.2/2012 dated newspaper “Chistopol Izvestiya” Tatarstan represented by the Newspaper editorial office”) 08.10.2012 Ministry of Land and Property Relations Additional agreement about extension of non- residential lease contract for an area of 137 square meters in the buildings of Kama-Ustye Protocol of the BD REN and Drozhzhanovsky REN located in the 717 179,54 Tenant: A.P. Volodkevich 225 meeting No.2/2012 dated Republic of Tatarstan, in Kama-Ustye district, for 11 months JSC “Tatenergosbyt” (Buinsk branch) I.Sh. Khalikov 08.10.2012 urban type settlement Kuybyshevsk Zaton, Tukaya Str., and Novoe Drozhzhanoyer Town in Drozhzhanovo District Additional agreement about extension of lease contract for a land parcel with cad. number 16:20:130121:0020 with an area of 250 square Protocol of the BD 1 783,54 Tenant: A.P. Volodkevich 226 meters under a real estate object – administrative meeting No.2/2012 dated for 11 months JSC “Tatenergosbyt” (Buinsk branch) I.Sh. Khalikov building, inv. No.19-5-327, cad. number of the 08.10.2012 object 16:20:130121:0020:0004, located at Zelenodolsk District, Nurlaty Town • installation of a fenced-off area at the price for 1 km of overhead and cable lines – 15 482,27; • installation of a fenced-off area at the price for 1 A.K. Khamaev, km of an under- Shareholder with more than ground cable line Executive: 20% of voting shares of Protocol of the BD Contract for installation services of fenced-off –11 426,59; 227 JSC “Land Relations Development Center of the both societies – Republic of meeting No.2/2012 dated areas for overhead and cable power lines 6-10 kV • preparation of Republic of Tatarstan” Tatarstan represented by the 08.10.2012 information on Ministry of Land and Property major construc- Relations. tion work or other line facilities located in the fenced-off area at the price for 1 km of the power line– 234,82: for five intersections at 1 km of cable Protocol of the BD Bank contract for opening of a bank account and according to the Bank: 228 I.Sh. Fardiev meeting No.2/2012 dated banking services bank rates JSC “AKIBANK” (Kazan branch) 08.10.2012 Contract for placing equipment (ATM) in a non- Protocol of the BD 3 361,27 Party-2: 229 residential space with an area of 1,0 square I.Sh. Fardiev meeting No.2/2012 dated for 11 months JSC “AKIBANK” (Kazan branch) meters located at 23 Magistralnaya Str., Kazan 08.10.2012 Transaction on depositing at JSC “AKIBANK” 500 000 000 (five hundred million) rubles of temporarily surplus funds for a period up to September Protocol of the 18, 2013 with an annual interest rate of 9% in Bank: Extraordinary General 230 addition to the previous deposit contract with JSC 500 000 000,00 I.Sh. Fardiev JSC “AKIBANK” Shareholders Meeting “AKIBANK” approved by the Board of Directors for No.28 dated 14.11.2012 placing 500 000 000 (five hundred million) rubles for 173 days with an annual interest rate of 8,5% and a monthly interest payment Additional agreement about extension of the non- residential lease contract for an area of 83,18 Protocol of the BD 87 724,78 Tenant: I.Sh. Khalikov 231 square meters in the building of Atninsk REN No.5/2012 dated for 11 months JSC “Tatenergosbyt” (Privolzhsk branch) A.P. Volodkevich located at 83 Sovetskaya Str., Atninsky District, 26.11.2012 Bolshaya Atnya Grid Company 133

Shareholder with more than 20% of voting shares of Protocol of the BD Contract for producing and placing infomercials in Executive: JSC “Tatmedia” (branch “Editorial both societies – Republic of 232 63 700,00 No.5/2012 dated the magazine “Tatarstan” staff of the magazine “Tatarstan”) Tatarstan represented by the 26.11.2012 Ministry of Land and Property Relations Shareholder with more than 20% of voting shares of Contract for providing air time on the TV station Executive: Protocol of the BD both societies – Republic of 233 “Tatarstan Novy Vek” (TNV) for broadcasting of an 91 168,00 JSC “Television and Radio Broadcasting No.5/2012 dated Tatarstan represented by the infomercial Company “Novy Vek” 26.11.2012 Ministry of Land and Property Relations Shareholder with more than 20% of voting shares of Protocol of the BD Donatory: both societies – Republic of 234 Donation contract 7 819 803,80 No.5/2012 dated Government of the Republic of Tatarstan Tatarstan represented by the 26.11.2012 Ministry of Land and Property Relations Contract of property sale: wall split air conditioner Lessar: LS/LU-H07KB2; air conditioner Samsung: Protocol of the BD AQ 18UANSER; office dividers NAYADA- Seller: A.P. Volodkevich 235 305 484,00 No.6/2012 dated STANDART; office dividers NAYADA-OPTIMA+; JSC “Tatenergosbyt” I.Sh. Khalikov 28.12.2012 vertical blinds - 14,55 square meters; vertical blinds with installation - 18,1 square meters

Argument settlement for conflict resolution Protocol of the BD between parties on a claim for cost recovery, Plaintiff: A.P. Volodkevich 236 142 219 982,82 No.6/2012 dated commercial services agreement for power JSC “Tatenergosbyt” I.Sh. Khalikov 28.12.2012 transmission from 01.01.2012 to 31.07.2012

Shareholder with more than Additional agreement about change of contract 20% of voting shares of Executive: Protocol of the BD value for providing newspaper space on the both societies – Republic of 237 8 260,00 JSC “Tatmedia” (branch “Znamya Truda No.6/2012 dated pages of the newspaper “Elmet Tannary” for Tatarstan represented by the Newspaper editorial office”) 28.12.2012 publishing industrial information Ministry of Land and Property Relations Shareholder with more than Additional agreement about change of contract 20% of voting shares of Executive: Protocol of the BD value for providing newspaper space on the both societies – Republic of 238 8 260,00 JSC “Tatmedia” (branch “Sarman editorial No.6/2012 dated pages of the newspaper “Sarman” for publishing Tatarstan represented by the office”) 28.12.2012 industrial information Ministry of Land and Property Relations Shareholder with more than 20% of voting shares of Contract for producing, imposing, placing and Executive: Protocol of the BD both societies – Republic of 239 distributing commercials, infomercials and social 23 600,00 JSC “Tatmedia” (branch “Volzhskie Zori No.6/2012 dated Tatarstan represented by the advertisements in printed media Newspaper editorial office”) 28.12.2012 Ministry of Land and Property Relations Shareholder with more than 20% of voting shares of Contract for producing, imposing, placing and Executive: Protocol of the BD both societies – Republic of 240 distributing commercials, infomercials and social 23 600,00 JSC “Tatmedia” (branch “Bayrak, Znamya, Yalav No.6/2012 dated Tatarstan represented by the advertisements in printed media Newspaper editorial office”) 28.12.2012 Ministry of Land and Property Relations . Shareholder with more than Additional agreement about placement of an 20% of voting shares of Executive: Protocol of the BD advertisement related to the intention of handing both societies – Republic of 241 860,00 JSC “Tatmedia” (branch “Novaya Zhizn No.6/2012 dated over land parcels and changes in providing of Tatarstan represented by the Newspaper editorial office”) 28.12.2012 services listed on the contract for services Ministry of Land and Property Relations Shareholder with more than 20% of voting shares of Contract for providing publishing services for Executive: Protocol of the BD both societies – Republic of 242 publishing information and analysis materials in 59 000,00 JSC “Tatmedia” (branch “Magrifet Newspaper No.6/2012 dated Tatarstan represented by the the newspaper “Magrifet” editorial office”) 28.12.2012 Ministry of Land and Property Relations

Protocol of the BD Sub-licensing contract for PC software use 27 500,00 Licensee: 243 A.M. Pakhomov No.6/2012 dated rights(PL/SQL Developer 5 User License) WAT free JSC “ICL-КПО ВС” 28.12.2012 134 S cHEDULES

Sub-licensing contract for handing over of licensed software (Spider Project Desktop Plus, Protocol of the BD 225 540,00 Licensee: 244 Spider Project Desktop), non-exclusive right for its A.M. Pakhomov No.6/2012 dated WAT free “JSC ICL-КПО ВС” use and maintenance for a one-year period after 28.12.2012 the transaction

Protocol of the BD Contract of software sale for SAP Crystal Reports Seller: 245 99 700,00 A.M. Pakhomov No.6/2012 dated 2011 INTL WIN NUL Shrink (Version 14) JSC “ICL-КПО ВС” 28.12.2012

Software purchase contract, one-year subscription: Red Hat Enterprise Linux Server, Standard (1-2 Sockets) Up to 4 guests; Red Hat Protocol of the BD Enterprise Linux Server, Standard (1-2 Sockets) Seller: 246 2 371 026,40 A.M. Pakhomov No.6/2012 dated Unlimited guests; Red Hat Enterprise Virtualization JSC “ICL-КПО ВС” 28.12.2012 for Servers (1 Socket), Standard 1 Year, Red Hat Enterprise Linux Server, Standard (1-2 sockets) (Up to 1 guest) with Smart Management 1 Year

Property and non-residential lease contract No.50,51 Kh.A. Bagmanov Protocol of the BD 398 637,14 Renter: 247 with an area of 30,4 square meters, located at 1 A.P. Volodkevich No.6/2012 dated for 11 months JSC “Generation Company” Salimzhyanova Str., Kazan I.Sh. Khalikov 28.12.2012

• Balance from 300 000 000 to 1 000 000 000 except payments from loan accounts; • 5% annual interest Additional agreement about establishing of an rate; Protocol of the BD individual rate for monthly interest payments for a • Balance Bank: 248 I.Sh. Fardiev No.6/2012 dated permanent balance of funds at the bank account less than JSC “AKIBANK” (Kazan branch) 28.12.2012 linked to the bank account contract 300 000 000 and more than 1 000 000 000, except for payments from loan accounts; • 2% annual interest rate Grid Company 135 420094, Kazan, Bondarenko Str., 3, tel. +7 (843) 291-85-59, fax +7 (843) 291-85-69, е-mail: [email protected], www.gridcom-rt.ru

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