Federal Grid Company adopts Stock Options Policy

Federal Grid Company adopts Stock Options Policy

Moscow, 20 April 2011 - On 8 February 2011 the Board of Directors of JSC "FGC UES" ("Federal Grid" or the "Company") approved the Company's Policy on Stock Options.

The Stock Options Programme aims to reward Federal Grid senior managers and employees with the Company's stock for sustained growth in its market value, in line with international best practice. The Programme provides a strong means of motivating key executives of the Company to seek growth opportunities and efficiency savings with the view to achieving long-term growth in the Company's share price.

The Programme allows for the participation of the Chairman of the Management Board, as well as other corporate managers and the Company's employees in the Stock Options Programme.

According to the approved Programme, the exercise price for the Stock Options will be based on the weighted average price of the Federal Grid's stock on MICEX Stock Exchange for a 90 day period prior to the agreed grant date.

At present, the contract purchase price of the stock under the approved Stock Options Programme is above its current market value.

The total number of the Company's ordinary shares allocated to the Stock Options Programme should not exceed 2% of the total number of the Company's issued ordinary shares. The Company does not plan to acquire shares on the capital market in order to implement the Stock Options Programme.

During the initial allocation in 2011, the Company intends to allocate up to 13,727,165,278 ordinary shares. held by OOO Index Energetiki - FSK UES, a fully owned subsidiary of Federal Grid.

The Federal Grid's Stock Options Programme will continue for five years. The participants will be entitled to buy allocated stock three years after joining the Programme.

About Federal Grid Company

JSC "FGC UES" ("Federal Grid" or the "Company") is the operator and manager of Russia's unified electricity transmission grid system. With over 121,000 km of transmission lines and over 305 GVA of installed transformer capacity, it is the largest publicly traded electricity transmission company in the world.

Federal Grid's business is to provide transmission and connection services to the Russian wholesale electricity market. It maintains and develops the grid system and supervises grid facilities and infrastructure in 73 regions of Russia, in which it operates. Its customers are distribution grid companies, certain large commercial end customers and retail electricity supply companies. The Company operates in an exclusive, competition free environment, and is regulated by the Government of the Russian Federation.

The Company's revenue is mainly driven by the transmission tariff set by the Regulator, the FST. From 1 January 2010 a new RAB (Regulatory Asset Base) tariff framework, designed to stimulate investment and operating efficiency, was introduced. The RAB tariff will be reviewed every five years, with the initial five year period to expire at the end of 2014. The Company was incorporated in June 2002 as part of reorganization of Russia's electrical power industry. The Russian government is the largest shareholder with a 79.1% stake. Federal Grid's common shares are included on the RTS and MICEX stock exchanges under the ticker FEES. The company is included in the MSCI Emerging Markets and MSCI Russia indices.

Further information can be found at www.fsk-ees.ru/eng