Rurelec Regulatory News (RUR)

FOR IMMEDIATE RELEASE

12 November 2010

Rurelec PLC

("Rurelec" or the "Company")

Notice of Arbitration Claim of Compensation for Bolivian 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, together with its U.S. subsidiary Guaracachi America Inc ("GAI"), it is preparing to serve a Notice of Arbitration on the Government of Bolivia. The international arbitration claim relates to breaches of the bilateral treaties entered into by the U.S. and Bolivia ("the U.S. Treaty") and by the U.K. and Bolivia (the U.K. Treaty) concerning the promotion and protection of investments (together, "the Treaties"). Rurelec and GAI have instructed the law firm Freshfields Bruckhaus Deringer LLP, which has experience in resolving nationalisation claims against Bolivia, in relation to the proposed arbitration.

Compensation Claim

On 1 May 2010, the President of Bolivia issued a Supreme Decree ordering the nationalisation of the 50.001 per cent. interest in Guaracachi held by Rurelec's subsidiary GAI. The nationalisation of Guaracachi formed part of a May Day programme which saw all three of the privatised power generations companies forcibly brought into state ownership, together with one regional distribution company and the national electricity transmission company.

The Supreme Decree instructed ENDE (the integrated electricity utility owned by the Bolivian state) to pay the value of GAI's nationalised shares to be established through a valuation process to be completed within 120 days of the issuance of the Decree.

Subsequent statements by Bolivia's Minister for Economic Development, Sra Viviana Caro have sought to reassure investors in the four companies nationalised on May Day that Bolivia has the resources and the willingness to meet its compensation payment obligations. A facility of US $1 billion has been made available by the Bolivian Central Bank for the power sector including compensation to investors whose share stakes have been nationalised. On 6th May Standard & Poor's announced that it was upgrading Bolivia's foreign currency to B from B-. on the grounds of the country's strong economic performance and the fact that Bolivia then had US $8.5 billion of foreign exchange reserves on deposit. That figure of foreign reserves has improved further still and In October Fitch increased the country's rating to B+.

Under the terms of the Treaties, the Government of Bolivia must pay adequate, just and effective compensation for the nationalisation of protected investments, equivalent to the fair market value of the investments immediately prior to the nationalisation. Moreover, pursuant to the Treaties, Bolivia has consented to resolve investment disputes through international arbitration where said disputes are not resolved amicably following a three or six month negotiation period, pursuant to the U.S. and U.K. Treaties respectively.

Both Rurelec and GAI notified the Bolivian Government of an investment dispute arising under the Treaties on 13 May 2010. Despite Rurelec's and GAI's good faith attempts to resolve the dispute amicably, and notwithstanding the expiry of the 120 day deadline to establish compensation pursuant to the Supreme Decree, no offer of compensation has yet been put forward by the Government. The amicable negotiation period under the U.K. Treaty will elapse on 13 November 2010 (the amicable negotiation period under the U.S. Treaty has already elapsed), paving the way for the commencement of arbitral proceedings to recover the fair market value of the nationalised investment.

As a result of GAI's and Rurelec's investments, Guaracachi's generation capacity has more than doubled since its privatisation by the Government over a decade ago. Only in the past four years, Rurelec, through GAI, has sponsored over US$110 million of investment in new power capacity in Bolivia totalling 185 MW in five separate projects involving eleven new turbines or gas engines. Rurelec is believed to be the third largest British investor in Bolivia after BP and BG.

Commenting on the Notice of Arbitration, Peter Earl, Managing Director, Rurelec PLC, said: "Bolivia's Vice President, Alvaro Garcia Linera, is currently in the United Kingdom trying to attract British investment into Bolivia. The best signal he could have given would have been to accelerate a just and fair settlement of our claim for compensation for the shares in Guaracachi which were expropriated from us. To date, we have had no meaningful offer and so we are obliged to protect our shareholders' interests by issuing a formal claim against the Government of Bolivia.

The Bolivian Government has promised full compensation as stated in the Supreme Decree of 1st May. However all our efforts to reach an amicable settlement through visits to Bolivia at the request of the Government have failed to produce a settlement offer. We will therefore have to resort to arbitration proceedings pursuant to the Treaties if the Morales administration does not intend to keep its promises. The waiting period which had to elapse before Rurelec could start an arbitration expires tomorrow and our claim is ready to be issued.

I hope that for the sake of good relations between Britain and Bolivia, Vice President Garcia Linera will authorise his ministers to offer reasonable settlement terms. Otherwise the matter will be decided through international arbitration."

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 7444 0503

Financial PR:

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