S&P AFFIRMED RATINGS OF KAZAKHSTAN ELECTRICITY GRID OPERATING CO. (JSC) ON 'BB+'; OUTLOOK NEGATIVE

/Standard & Poor's, Moscow, November 24, 08/ - Standard & Poor's Ratings Services said today that it affirmed its 'BB+' long-term corporate credit rating on Kazakhstan Electricity Grid Operating Co. (JSC) (KEGOC), Kazakhstan's state- owned transmission grid operator. The outlook is negative. We apply a top-down rating approach to KEGOC, notching down two notches below the local currency rating on the (foreign currency BBB-/Negative/A-3, local currency BBB/Negative/A-3). This reflects KEGOC's strategically important status to the Kazakh government as a provider of core infrastructure services. We estimate KEGOC's stand-alone credit quality at 'B+'. "The stand-alone credit quality on KEGOC is constrained by the company's aggressive financial policy, large grid investment program and associated construction risk, high foreign currency and floating interest risk exposure, and Kazakhstan's relatively weak power sector characteristics," said Standard & Poor's credit analyst Sergei Gorin. Kazakhstan's relatively low wealth, limited customer diversification, and historically delayed payments impair KEGOC's market position. These risks are mitigated by state support to KEGOC in the form of guarantees on most of its debt, supportive tariffs, and potential extraordinary support. KEGOC also benefits from its monopoly position in a stable and low-operating- risk electricity transmission business. On Sept. 30, 2008, according to the company's management, available liquidity reserves of Kazakhstani tenge (KZT) 6.7 billion covered its KZT3.6 billion of debt maturing over the next 12 months. The outlook is negative because the outlook on the sovereign is negative. The outlook also reflects our expectation that KEGOC will remain closely integrated with the government as its 100% ultimate owner and will continue to benefit from various forms of state support, such as debt guarantees or equity increases. A change in the sovereign credit rating would not automatically result in a change in the rating on KEGOC; it would be subject to a separate review. "Were the government to deviate from its supportive policy or initiate a privatization process, KEGOC's credit risk would become more dependent on its weaker stand-alone credit profile, and this might put downward pressure on the ratings or the outlook," said Mr. Gorin. For more information: Sergei Gorin, Moscow, 7 (495) 783-41-32 Sergei_Gorin@standardandpoors.com Peter Kernan, London, 44 (207) 176-36-90; Peter_Kernan@standardandpoors.com [2008-11-24]