Rurelec Regulatory News (RUR)

4 October 2012

Rurelec PLC

("Rurelec" or "the Company")

Arica Power Project Granted Full Environmental Approval

- Rurelec Shortlisted for 450 MW PPA in SING-

Rurelec PLC (AIM: RUR), the electricity utility focused on the development of power generation capacity and rural electrification projects in Latin America, announces that it has initiated the construction of a 40 MW power plant in Chile following the recent grant of full environmental approvals for the Termonor power project in Arica.

The Termonor plant will be situated at Parinacota which is close to the port city of Arica through which nearly all of Bolivia's Pacific Ocean merchandise passes in and out. Arica is also an important hub serving the mining industry of Northern Chile whose importance is expected to grow as new copper mining projects come into operation over the next decade.Rurelec, together with its Chilean partners Enerbosch and Invener, has selected a GE Frame 6B gas turbine which will initially run on liquid fuel until trans-shipped supplies of LNG become available in the near future. The initial Rurelec plan was to install a turbine with a nominal capacity of 38 MW. However the turbine being acquired will be refurbished and upgraded to 40 MW by the addition of water injection capability to reduce environmental emissions.

Eventually it is expected to increase the plant to a nominal capacity of 136 MW by the addition of a second gas turbine and conversion to combined cycle operation in a configuration identical to Rurelec's Energia del Sur plant in Patagonia, Argentina.Ground breaking at the plant is expected to occur in a formal ceremony to be held in Arica in the coming weeks.

The Termonor plant at Parinacota is intended to serve as Rurelec's entry into the important power generation market of northern Chile. The current net capacity of the in the Sistema interconectado del Norte Grande ("SING") transmission system, the electricity system which serves the mining region in the north of Chile, is around 4,000 MW but a minimum of 3,000 MW of new generation capacity will be needed in the next seven years to meet the projected demand of existing industrial power users, which are typically large copper mines.

In November 2010 cooperation agreement between the United Kingdom and Chile, was signed in London by Prime Minister, David Cameron, and Chilean President, Sebastian Pinera which stated that the two countries would co-operate on new Clean Tech power plants in the north of Chile.

As a result of this, and working closely with Independent Power Corporation PLC ("IPC"), a UK private power developer and power plant operator which, together with Invener, has been developing a number of Clean Tech thermal power plants in Chile Rurelec intends to sponsor at least 1,000 MW of new, high efficiency combined cycle capacity in the SING based on power purchase agreements with large power users in the region.

As part of this strategy, IPC and Rurelec have been jointly short listed by one substantial mining company for a 450 MW power purchase agreement currently being tendered for new Combined Cycle Gas Turbine "CCGT" capacity on the SING.

IPC and Rurelec are also in the preliminary phase of developing a second plant to underpin another mining company Power Purchase Agreement "PPA" for which they have been pre-qualified.

It is the intention of the Board of Rurelec to seek a secondary quotation on the Santiago Stock Exchange during the course of 2013 as the Termonor power plant approaches commercial operation.

Commenting on the Chilean expansion, Peter Earl, CEO of Rurelec said:

"We are delighted to have been granted full environmental approval for our power plant in Arica and to have been shortlisted for a 450 MW power purchase agreement in the SING. We have been committed to replacing generation capacity which we lost in 2010 when our Bolivian power company was nationalised. Now we expect to exceed it, something that we are well placed to achieve.

"Working with our partners in Chile, we are looking to meet Chile's demand for electricity in the northern SING region which serves some of the largest global mining companies in the world. This commitment is emphasised by our intention to obtain a secondary listing on the Santiago stock exchange in 2013."

For further information please contact: