(RUR) Rurelec

5 January, 2012

Rurelec PLC

("Rurelec" or "the Company")

Expansion into Chile with 38 MW Project in Arica

Rurelec PLC (AIM:RUR), the electricity utility which owns and operates power generation capacity in Latin America, announces its expansion into Chile.  Rurelec has today acquired a 50 per cent interest in Termonor SA, a Chilean project company which has developed a fully consented 38 MW diesel fired power plant in Arica, the port city which lies close to the northern Chilean borders with Peru and Bolivia Commercial operation is expected before the end of 2012.

Under the terms of the agreement, Rurelec is paying US$162,500 split equally between Invener, a local development company, and Enerbosch, the Chilean construction group, for a 50 per cent interest in Termonor. A further US $362,500 will be paid when the Arica project reaches certain milestones linked to financial completion and commercial operation taking the total consideration to US $525,000. Rurelec will also reimburse IPC's development costs of US$250,000 when the Arica plant enters commercial service, which is expected to be in the last quarter of 2012.  The total equity requirement for the project is a further US$4 million over the construction period.  This will be subscribed in the amount of US$2 million by Rurelec and US$2 million jointly by Invener and Enerbosch.  Project construction debt is to be provided by suppliers and a privately placed project bond issue.

Rurelec's strategy to expand into Chile and Peru, where both countries are experiencing high demand growth for power, was made possible by the substantial increase in the share capital of Rurelec completed in April 2011, which eliminated the Company's external borrowings. 

Commenting on the Chilean expansion (which follows an announcement concerning Peruvian expansion on 12 December 2011), Peter Earl, Chief Executive of Rurelec said:

"I am delighted to announce our expansion into Chile, a country we have hoped to enter since 2007.

12^th December 2011

Rurelec PLC

("Rurelec" or "the Company")

Hydropower Expansion into Peru

Rurelec PLC (AIM:RUR), the electricity utility which owns and operates power generation capacity in Latin America, announces a new project in Peru.

Foreign investment is actively encouraged in Peru, as the country is experiencing high demand growth for power. 

Rurelec has agreed, as anchor investor alongside Peruvian and other international partners, to acquire a 50 per cent interest in Cascade Hydro Limited ("Cascade"), a newly formed hydroelectric power development company focused on run-of-river projects.

Rurelec has secured an option over a 32 MW pipeline of prospective developments, which it proposes to inject into Cascade on completion of successful final due diligence.  The initial package includes Canchayllo, a 4 MW project located in the Junín Province to the east of Lima, which was awarded a power purchase agreement (PPA) in the latest round of renewable energy tenders in Peru.

With a planned construction period of about18 months post financing, the US$8m project is expected to enter commercial operations in 2013.  The Board has approved initial funding of US$600k to cover operating expenses and development costs which should bring the Canchayllo project to financial close as well as substantially fund the  development of the other run of river hydro projects now under option in Peru

The hydroelectric power generation business is highly capital intensive and requires a flexible investment structure with ready access to development capital.  However, once constructed, the strong cash flow and low operating cost of typical run-of-river hydros make them potentially suitable for refinancing by local bond issues.  The local management of Cascade have a close working relationship with  Peruvian banks and insurance companies, which currently have an appetite to provide long term finance for contracted Peruvian hydros.  In addition, Rurelec's own established banking links and proven project management capabilities in the region can assist Cascade in its programme of construction and finance of new mini hydros.

Commenting on the expansion, Peter Earl, Chief Executive of Rurelec said:

"I am delighted to announce our expansion into Peru, which has been a long term strategy for the Company.

"Our investment in Cascade is the first small step in the process of replacing Rurelec's 538 MW of installed capacity at Guaracachi which was lost as a result of the Bolivian Government's nationalisation of the electricity generation sector on 1^st May 2010.  After three years of retrenchment, we are finally moving ahead again in Latin America with excellent new partners and with only limited exposure for Rurelec's hard won cash resources."

-     Ends -

For further information please contact: