Rurelec Regulatory News (RUR)

FOR IMMEDIATE RELEASE

4 May 2010

Rurelec PLC

("Rurelec" or the "Company")

Nationalisation of Controlling Stake in Guaracachi

Rurelec PLC (AIM:RUR), the power plant developer and owner-operator of power generation assets in Latin America, announces that in accordance with a Supreme Decree issued on 1st May by Bolivia's President Evo Morales , the 50.001 per cent. interest in Empresa Guaracachi S.A. ("Guaracachi") held by Rurelec subsidiary Guaracachi America, Inc ("GAI") has been nationalised and transferred to ENDE, the state power company. The Supreme Decree states that ENDE must pay fair value ("compensacion adecuada") for GAI's shares and gives ENDE 120 days to formulate its fair value proposals to GAI. The Directors of Rurelec believe that Rurelec's 'fair value' claim is no less than US$70 million (£46 million) and they intend to pursue their claim immediately and with all possible vigour.

Rurelec's investments in Bolivia are fully protected as a result of an investment treaty between Bolivia and the United Kingdom which came into force in 1990. The Agreement for the Promotion and Protection of Investments was signed in La Paz on 24th May 1988. This treaty protects all British companies and guarantees payment of market value in the event of compulsory state nationalisation of their investments in Bolivia. Rurelec is believed to be the third largest British investor in Bolivia after BP and BG, both of whom have arbitration cases pending under the treaty.

The action comes as part of a May Day programme which saw all three of the privatised power generations companies forcibly brought into state ownership by means of the Supreme Decree, together with one regional distribution company and the national electricity transmission company.

Since President Morales came to office in 2006, Rurelec has invested over US $110 million in new power capacity in Bolivia totalling 185 MW in five separate projects involving eleven new turbines or gas engines.

The book value of Guaracachi at 31st December 2009, according to Bolivian GAAP, is in the region of US$65 million (£42.5 million). Additionally GAI is due to receive US$5.5 million (£3.6 million) in dividends declared by Guaracachi.

Commenting on the nationalisation, Peter Earl, Managing Director, Rurelec PLC, said: "Our main focus now in Bolivia is to obtain 'fair value' for our assets as protected by the United Kingdom - Bolivia Treaty. However, Rurelec is not just about Bolivia. I would like to re-assure our investors that our other operations in Argentina are performing well and we are due to complete a refinancing issue of bonds in Argentina, as previously announced, now that we have obtained our key approvals from the Government of Argentina for premium electricity tariffs.

"Bolivia's surprise nationalisation move was taken in the face of assurances given to the British and French ambassadors in La Paz at the end of last week that the Morales Administration continued to want to maintain European private investment in the power sector. Sadly, this was not the case."

For further information, please contact: 

Company:

Peter Earl, Managing Director, Rurelec PLC Tel: +44 (0)20 7793 5610

Nominated Adviser:

Paul Shackleton /Tessa Smith, Daniel Stewart & Company PLC Tel: +44 (0)20 7776 6550

Brokers:

Daniel Briggs, Religare Capital Markets PLC Tel: +44 (0)20 7382 7776

Richard Swindells / Andrew Craig, Ambrian Partners Limited Tel: +44 (0)20 7634 4700

Financial PR:

Ana Ribeiro / Tim Blythe, Blythe Weigh Communications Ltd Tel: +44 (0)20 7138 3206