Issue of Debt

Federal Grid Company completed a RUR 10 billion bond placement

Moscow, 5 July 2011 - Federal Grid Company of the Unified Energy System ("Federal Grid Company" or the "Company") (ticker symbol: MICEX, RTS, LSE: FEES) announces that it has successfully completed a ten-year domestic Ruble-denominated bond placement for the value of RUR 10 billion.

As at the closure of the order book the debt issue was oversubscribed by over 2.5 times. Over 40 large Russian and international investors subscribed to the placement. Banks and private investors made up 67% of the total placement value, while fund managers made up 12% and investment companies contributed 21% of the total value.

The coupon rate for the issue was 8.50%, which was 40 basis points below the initial coupon guidance.

Renaissance Capital, Gazprombank, VTB Capital and Sberbank of Russia were Joint Lead-Managers of the bond issue.

Andrey Kazachenkov, Deputy Chairman of the Management Board, commented:

"We are very pleased with the results of this bond placement. We view its success as a vote of confidence by Russian and international investors in Federal Grid, its investment profile and growth strategy. We are proud to be the first Russian company to successfully place a ten-year domestic bond issue after the financial crisis. The long-term financial planning model based on the RAB regulation helps to facilitate fundraising at favorable rates".

About Federal Grid Company

Federal Grid Company is the operator and manager of Russia's unified electricity transmission grid system with over 121,000 km of transmission lines and over 311 thousand MVA 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 regional distribution companies, retail electricity supply and large industrial enterprises 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 Federal Tariff Service. From 1 January 2010 a new RAB (Regulatory Asset Base) tariff framework, designed to stimulate investmentand operating efficiency, was introduced.

The Company was incorporated in 2002 as part of reorganization of Russia's electrical power industry. The Russian Government is the largest shareholder with a 79.48% stake.

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

Neither the content of the issuer's website nor the content of any other website accessible from hyperlinkson the issuer's website is incorporated into, or forms part of, this announcement.