S&P Assigned to KEGOC JSC Governance Score 'CGS-5'

/Standard & Poor's, Moscow, January 23, 09/ - Standard & Poor's Governance Services today assigned its corporate governance score (CGS) on Kazakhstan Electricity Grid Operating Company KEGOC JSC (KEGOC), the national transmission grid operator of Kazakhstan, to 'CGS-5'. "Management, the board, and the shareholder support the development of corporate governance at KEGOC, which is an important strength. Nevertheless, the legacy of hierarchical control mechanisms has not been fully overcome," said Standard & Poor's governance analyst Elena Pastoukhova. The overall CGS on KEGOC is the result of four component scores of 1 (low) to 10 (high): - Ownership structure and external influences 5 - Shareholder rights and stakeholder relations 4+ - Transparency, disclosure, and audit 5+ - Board structure and effectiveness 5 The strengths of corporate governance practices at KEGOC include: - Samruk, the state-owned holding company that was KEGOC's sole shareholder before its merger with the Kazyna fund in October 2008, has demonstrated its commitment to implement best international practices of corporate governance in the company. - There are precedents of the shareholder and the Kazakhstani government supporting the development of KEGOC, also through capital injections. - Transparency is relatively high. The company has been preparing IFRS financials since 2004. The content of the Website is comprehensive. - KEGOC has been consistently developing its internal audit function in recent years. The internal audit department (IAD) actively interacts with the Audit committee. The scope of the IAD's audits follows the international practice. - There is a strong skill mix on the board and two directors are independent. The committee structure is solid. The board and committees hold regular meetings where open discussion is encouraged. Standard & Poor's analysis has, on the other hand, identified several weaknesses in the company's governance system, including: - The direct authority of the shareholder is broader then in well-governed companies. - The merger of Samruk, the company's shareholder, and Kazyna adds uncertainty over the policies with respect to its subsidiaries and KEGOC in particular. - The independent directors are in the minority on the board and therefore have limited ability to balance the shareholder. - The company charter reflects the current situation of being wholly owned by Samruk-Kazyna and does not provide framework for the rights of other potential shareholders. Shareholder meetings are not conducted. - KEGOC does not disclose notes to IFRS statement on its Website. There are drawbacks in on-going disclosure. - The history of existence of nomination and remuneration committees is too short. The opinions expressed are the independent opinions of S&P's Governance Services, a department of Equity Research Services, and do not reflect the opinions of other areas of Standard & Poor's. Standard & Poor's corporate governance scores, GAMMA scores and other analytic services are performed as entirely separate activities in order to preserve the independence and objectivity of each analytic process. Information on corporate governance scores and GAMMA scores, including the related report "CGS: KEGOC JSC", published on January 23, 2009 is available at www.governance.standardandpoors.com. Alternatively, call one of the following Standard & Poor's numbers: Moscow (7) 495-783-4000/40. Contact: Elena Pastoukhova, Moscow (7) 495-783-40-94 elena_pastoukhova@standardandpoors.com Oleg Shvyrkov, Moscow (7) 495-783-40-45 oleg_shvyrkov@standardandpoors.com Additional Contact Governance@standardandpoors.com [2009-01-26