Openness towards cooperation and business community

Constructive dialogue with business community - pledge of strategic targets achievement

Purchasing activity

PJSC "TGC-2" -large industrial company possessing thousands of counterparts: starting with fuel suppliers and ending with contract organizations on repair work performance and research work rendering. Thereby the company understands the dependence of its work results on the quality of built interaction with the business partners, and also contribution that it brings by business development support in regions of Company's functioning.

While co-operating with business-community the Company is oriented on business reputation formation of a reliable and constructive partner opened to a dialogue on mutually advantageous basis and aimed at the development of long-term, stable relations with partners. Key principles of the Company are:

• Respect and the account of partners' interests;
• Parties' equality;
• Openness and transparency and as a consequence - trust in relations;
• Mutual interest of parties in the partnership;
• Voluntariness and reality of the obligations taken by partners;
• Parties responsibility for performance of the obligations taken;
• Documentary intentions and obligations strengthening of the parties.

The central purchasing body of PJSC "TGC-2" is the PJSC "TGC-2" Central Tender Committee. Its first cast was confirmed on December, 30th, 2005 by the Report Э 10, the second - on December, 27th, 2006, Report Э 30.

The basic document which forms company plans in the field of purchasing activity is the annual complex program of the goods, works and services scheduled purchases for the Company needs realization.

According to Enactment "of scheduled purchases realization :" next competitive purchases methods are provided:

• Competition;
• Inquiry of supply;
• Inquiry of the prices;
• Competitive negotiations;
• Purchase at a unique source;
• Purchase by participation in the procedures organized by production sellers

PJSC "TGC-2" spent 1 618 837 470 rubles total on scheduled purchases in 2006, that made up 40 % of Company's total costs amount.

All tender participants - suppliers and contractors - pass the empowerment and solvency examination on the basis of competitive selection. Their business reputation is estimated. In case the infringement facts, concerning the generally accepted norms of business cooperation, and moreover the current legislation norms, including human rights are elicited the participant bars out of the tender. The company respects the business partners' rights, but it also aims to protect its commercial interests. With this view within the limits of the corruption counteraction program realization 1 119 contracts partners (65 % of the total number of partners) were checked. 21 field target examinations in territorial Head departments of PJSC "TGC-2" and PJSC "AGC" were organized by the economic security service.

The company strictly adheres to the declared principles of fair partnership in the enterprise activity. For the accounting period it didn't undergo prosecutions from the supervising bodies.

According to the results of PJSC "TGC-2" Annual Complex Scheduled Purchases Program by the end of 2006 more than 65 % of purchases were made through the open competitions, open quotation query, and open supply query. In the Annual Complex Scheduled Purchases Program of 2007 the share of the scheduled purchases is increased up to 75 % total.

Quantity of purchases made, 2006.

In the view of economic safety maintenance and the corruption prevention in the organization, the Company responsibly approaches to the employment question of people from amongst applicants for available vacancies. The economic safety service operating in the Company accurately traces the possibility occurrence corruption element in the Company, not only concerning re-hired workers, but also concerning employees who already work in PJSC "TGC-2".

In order to implement the Company's economic safety measures economic safety service employees are annually trained techniques of revealing and counteraction of possible corruption displays among the Company's business partners and employees.

The openness, transparency, partnership, the mutual interests account and the organization of the purchase tender on the competitive basis within the limits of Annual Complex Scheduled Purchases Program resulted in absence corruption cases in a business environment and in the company itself during the accounting period.

Key principle of relations with investment community - to justify expectations of investors

PJSC "TGC-2" and investment community

PJSC "TGC-2" understands that realization of the scheduled plans in the development and capitalization growth field is almost impossible without attraction of large-scale investments. The company prefers active position in interaction with shareholders and investors, and maximally aims to develop trust relations and the maximum interest at the absolute observance of all legislatively fixed corporate procedures.

In order to increase investors' interest the Company actively worked on the actions liquidity in 2006.

From the moment of shares introduction in October, 2006 on Russian MICEX and RTS leading share platforms the investors' interest had arisen within first two months. Prices of the TGC-2 shares had almost doubled during the period from October till December of 2006. The greatest interest in the shares was shown by private investors, and this was reflected in higher shares dynamics growth on the MICEX.

TGC-2 solves actual problems during its work:

• Conditions creation for steady of growth PJSC' shares market cost;
• Protection of the rights and legitimate interests of shareholders and investors regarding maintenance of their access to the PJSC work information, taking into account its completeness, urgency and reliability principles;
• Methodological and informational supply of the the PJSC in policy and PJSC Strategy formation on the share market.

Increase of Company's market capitalization - pledge of investors' interest to the Company.

In order to increase market capitalization of PJSC "TGC-2" following events are supposed to be held:

• Inclusion of PJSC "TGC-2" shares in PJSC "RTS" quotation list;
• Creation and realization of individual depositary receipts programs;
• Preparation for machinerying out of additional issue (IPO / closed placing);
• Increase of informational transparency of PJSC work;
• Processing of a corporate web-site;
• Organization of round table conferences, and meetings with financial analysts;
• Dispatch of newsletters to interested parties.

In May, 2007 TGC-2 Board of directors had confirmed the investment program of the company for 2007-2010. It became some kind of a reference point of the far-reaching investment projects realization in regions of the company's activity - from Arkhangelsk to Yaroslavl.

Main objective of the investment program is the efficiency increase of existing gas limits usage and the maximum co-generation development (the combined electric power and heat development), as the most economic and demanded mode of energy production which provide the maximum competitiveness on the wholesale electric power market.

The first stage of TGC-2 investment program is designed to endure 4 years. However the company already has a detailed plan of its investment program realization events up to 2015. And if the volume of first stage financing, taking into account last adjustments, will reach 38,8 billion of rubles by 2011, the planned volume of the second one is about 110 billion of rubles.

The attracted funds will become the basic sources of program financing by 2011: long-term credits, leasing, bonds, and also capital from additional shares issue realization.

More detailed report on mutual relations with shareholders and investors can be found in "Invest-community" section.

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