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Risks associated with the political and economic situation in the country (countries) and the region where the Issuer is registered as a taxpayer and/or carries out its core activities provided that the Issuer's core business in that country (region) yielded 10% or more of revenues for the latest completed reporting period preceding the Securities Prospectus approval date.

Country risks

The effects of the global financial crisis, financial problems and increased awareness of the risks of investing in emerging market economies reduce the amount of foreign investment in Russia and adversely affect the Russian economy. Besides, taking into account large amounts of natural gas and oil produced in Russia for exports, the Russian economy is especially exposed to changes in the world prices of natural gas and oil. That is why the declining world oil prices adversely affect the development of the Russian economy. These developments may limit the Issuer's access to capital and adversely affect the purchasing power of the Issuer's consumers.

The Issuer is taking all efforts to reduce the effect of these factors on its activities by optimizing the use of credit leveraging amid the crisis.

Regional risks

1. The Issuer is registered as a taxpayer in the Krasnoyarsk Territory, which was formed on 7 December 1934. The Krasnoyarsk Territory covers an area of 2,339,700 square kilometres or 13.7% of the territory of the Russian Federation.

The Krasnoyarsk Territory holds the 2nd place in the Russian Federation in terms of area after the Republic of Sakha (Yakutia) and the 13th place in term of population.

Electric power engineering is one of the leading sectors in the Krasnoyarsk Territory. In terms of installed capacity and output, the electric power sector accounts for about 10% of the total output of products (works, services) in the key industry sectors in the region.

2. The constituent entities of the Russian Federation accounting for more than 10% of the Issuer's revenues in the latest completed reporting period preceding the securities prospectus approval date are the Samara Region, the Volgograd Region, the Republic of Khakassia.

The Samara and Volgograd Regions are some of the most developed industrial regions in Russia with developed infrastructure. Therefore, the Issuer's activities in these regions are not exposed to risks related to stoppage in transportation due to remoteness and/or rough terrain. Apart from that, the Volga area is traditionally highly attractive in terms of investment for domestic and foreign investors.

The Republic of Khakassia is located in the southwestern part of East Siberia on the left bank of the Yenisei River. The republic extends 460 km from north to south and 200 km from west to east (in its broadest part). The republic borders on the Krasnoyarsk Territory in the north, east and south-east, the Kemerovo Region in the west, the Republic of Tyva in the south

and the Republic of Altai in the south-west. The Republic of Khakassia covers an area of 61,900 square kilometres and has a population of 583,200 people.

Industry is a key sector of the economy in the Republic of Khakassia, accounting for about 37.5% of the gross regional product and a considerable part of tax payments to the republic's budget (40.3%).

The basis of the region's industry is formed by non-ferrous metallurgy, electric power generation and the fuel industry, which account for over 77% of regional industrial output. The power sector contributes 19% to industrial production in the region. The power system of the Republic of Khakassia comprises the Sayano-Shushenskaya HPP, the Mainskaya HPP and three electric power plants with an aggregate capacity of 7,016 MW. Of this capacity, the Sayano-Shushenskaya HPP and the Mainskaya HPP, which are owned by the Issuer, account for 6,721 MW (96%). Therefore, the Issuer holds the dominant position in electric power generation in the Republic of Khakassia, providing for the reliable operation and development of industry and other branches of the economy in the region.

The following risks arise in connection with the accident in and shutdown of the Sayano-Shushenskaya HPP in the Republic of Khakassia:

– reduction in tax payments to the regional consolidated budget; – social tension occurrence in the region;

– likely non-fulfillment of obligations under contracts for electric power supply to customers; – likely loss of jobs in the region.

The Issuer’s planned actions in case of its business being adversely affected by changing situations in the country (countries) or region (regions).

For the purpose of minimizing risks related to the accident in the Sayano-Shushenskaya HPP, the Issuer makes the following provisions: - the work related to the power station restoration performed by the Sayano-Shushenskaya HPP personnel is in progress;

- efforts are taken to introduce amendments and supplement to the laws of the Russian Federation and corporate standards related to technical regulation as applied to safety and reliability of electric power facilities;

- a program of social support «Sayan, we stand together!» is implemented, within its framework donations are collected by Sozidaniye charitable foundation to provide help to the families of those who died or suffered as a result of the accident in Sayano- Shushenskaya HPP;

- the Issuer has fulfilled all the obligations pertaining to lump-sum payments intended for the families of those who died as a result of the accident in Sayano-Shushenskaya HP. Such payments amount to nearly 110,000,000 rubles and include 38,170 rubles payable to each affected family for funerals arrangements, material aid to such families in the amount of two average monthly earnings of the dead person and material assistance to the amount of 1,000,000 rubles;

- personal scholarships, non-government pensions and material aid to dependants are provided; lump-sum payments to those who were injured during the accident range from 50,000 to 150.000 rubles; bank loans of the families where someone died as a result of the accident are redeemed; members of such families are provided with jobs with the HPP and other power companies. % apartments have already been allocated and another 14 apartments are now selected in coordination with such families members; - in order to monitor health condition and give recommendations on preventive care, an extraordinary medical examination is

arranged for employees of Neporozhny Sayano-Shushenskaya HPP Branch and OJSC «Sayano-Shushensky Hydroenergoremont. A program for rehabilitation and recreation of the persons who do not meet the criteria of such aid provision applied by the Social insurance foundation’

- a system of rendering psychological assistance to individuals has been established. Professional psychologists train local specialists and teachers in particular techniques of aid provision to casualties and children. 43 teachers and 29 psychologists have already been trained. By now, such aid has been provided to over 513 adults and 103 children. Changes in the situation in the country and regions of the Issuer's operations, the nature and frequency of such changes and associated risks are hardly predictable, as well as their influence on the Issuer's future activities. Most of these risks can hardly be controlled by the Issuer due to their global scope. In the event that the situation in Russia or regions is destabilized, threatening to adversely affect the Issuer's operations, the Issuer will take anti-crisis measures to maximally reduce negative impacts on its activities.

Risks related to possible military conflicts occurrence, announcement of the state of emergency or strikes in the country and region where the Issuer was registered as a taxpayer and/or runs its core business:

In case of any military conflicts occurrence, the Issuer is exposed to the risks related to dangers threatening the employees’ health and breakdown of its key assets.

Political situation in the region of the Issuer’s registration and most regions where the Issuer runs its business is quiet, possibility of military conflicts occurrence, announcement of the state of emergency or strikes in these regions is minimal, except for the southern regions of the Russian Federation.

Due to eventual aggravation of the conflict between Georgia and Ossetia, the described risk may occur in the Republic of North Ossetia- Alania, where the Issuer runs its business. In case of such risk occurrence, the Issuer will make any provisions to minimize the consequences of such risk occurrence that will include:

– evacuation of the personnel and construction machines and equipment located in close proximity; – enhancing security of the Issuer’s facility for the purpose of preventing dangerous situations arising. .

Risks associated with the geographical position of the country and the region, in which the Issuer is registered as a taxpayer and/or carries out its core business, including the increased danger of natural calamities, possible stoppage in transportation due to remoteness and/or rough terrain, etc.

The regions of the Issuer's activities are characterized by the developed transport infrastructure and are not exposed to risks associated with stoppage in transportation.

The following can be referred to risks associated with the geographical position of regions: the danger of sustaining losses (for example, as a result of the suspension of fixed assets) due to seismic activity, avalanches, mudslides, and also other unfavourable weather conditions (hurricanes, strong snowfalls, frosts, etc.).