RUR.L Regulatory News (RUR)

 28 November 2011

Rurelec PLC

("Rurelec" or "the Company")

Update on Guaracachi Arbitration Process

Rurelec PLC (AIM:RUR), the electricity utility which owns and operates power generation capacity in Latin America is pleased to provide an update on its pending international arbitration against the Government of Bolivia pursuant to the UK/Bolivia and US/Bolivia bilateral investment treaties arising out of Bolivia's nationalisation and expropriation of Rurelec's controlling stake in Empresa Guaracachi SA ("Guaracachi") on 1 May 2010. As explained in our previous updates, we continue to pursue with all vigour the arbitration claims that we and our US subsidiary, Guaracachi America Inc., have against Bolivia with the aim of obtaining a just compensation for that investment.

The arbitral tribunal has been appointed. The members (and respective nationalities) are: Dr Manuel Conthe (Spain), nominated by us and Guaracachi America, Inc., Professor Raúl Vinuesa (Argentina), nominated by the Government of Bolivia and Dr Jose Miguel Júdice (Portugal) President, appointed by the Appointing Authority and former President of the International Court of Justice, Judge Gilbert Guillaume of France.

Following discussions between the parties and conference calls with the Tribunal, the arbitral procedure has now been established and includes the following key elements:

·; Transparency of the arbitration proceedings (main written pleadings and any final hearing will be accessible to the public);

·; The seat of the arbitration will be The Hague, Netherlands;

·; The arbitration will be administered by the internationally recognised Permanent Court of Arbitration in the Hague.

·; The English and Spanish languages will have equal status; and

·; The 2010 UNCITRAL Arbitration Rules will govern the arbitration.

International law requires the payment of compensation amounting to the full market value of the expropriated investment prior to any threat of expropriation. In this regard, Rurelec has commissioned an independent firm of internationally recognised experts to prepare a formal open market valuation of its holding in Guaracachi prior to such threat. This valuation will be presented to the arbitral tribunal, together with Rurelec's detailed statement of claim, supporting documents and witness statements, in March 2012. Commenting on the expansion Peter Earl, Chief Executive of Rurelec said:

"I am pleased with the progress which we are making towards a resolution of our compensation claims against the Plurinational Government of Bolivia. A year on from the expropriation of our Guaracachi shares, Rurelec is a very different company today with a strong balance sheet and cash flow from Argentina and we are well supported by our shareholders. We are now at an advanced stage of the arbitration process and look forward to a positive outcome in 2012."

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