Result of EGM

Rurelec PLC
05 January 2006


5 January 2006

Rurelec PLC ('Rurelec' or the 'Company')

EGM Approval of the Acquisition of a controlling stake in Empresa Electrica
Guaracachi SA

Placing of 46,938,775 Ordinary Shares at 42 pence per share and Re-Admission to
trading on AIM

Rurelec announces that, at an Extraordinary General Meeting of the Company held
today, its shareholders have approved the acquisition of a controlling stake in
Empresa Electrica Guaracachi SA ('Guaracachi' or 'EGSA'), Bolivia's largest
power generation company. The acquisition is to be funded by a placing of
46,938,775 Ordinary Shares in Rurelec at a price of 42 pence per share. The new
shares are expected to be admitted to the AIM Market of the London Stock
Exchange on 6 January 2006, upon which the acquisition will complete.

Rurelec's wholly owned subsidiary, Birdsong Overseas Limited, is expected to
acquire Bolivia Integrated from Southern Integrated for a total consideration of
up to US$ 35 million. Bolivia Integrated indirectly owns a controlling stake of
50.00125 per cent, of Guaracachi.

Guaracachi was formed in 1995 as part of the privatisation of the Bolivian
electricity industry. Following an international public tender, a 50 per cent.
stake in Guaracachi was transferred to a subsidiary of GPU Inc, the US utility,
in return for a cash investment of US$ 47 million into Guaracachi. The Bolivian
state's shares in Guaracachi were in turn transferred to two Bolivian pension
funds with a small number of shares allocated to employees of the state power
company, ENDE. In 1999, GPU was permitted to take Board control of Guaracachi
and increase its stake to 50.00125 per cent. of the Company.

On 29 June, 2005 the share capital of Guaracachi was listed on the Bolivian
stock exchange.

Guaracachi has three existing power plants with a total installed capacity of
360 MW. They are located in Santa Cruz (292 MW), Sucre (39 MW) and Potosi (27
MW). The latter plant's Olympus gas turbine is believed to be the highest
operational gas turbine of any power plant in the world.

Guaracachi currently has two new power plant additions under construction for
commissioning in 2006. These two plant additions in Sucre and Santa Cruz will
add 79 MW of new nominal installed capacity, an increase of 22 per cent.
compared with the current installed capacity.

Longer term, in 2007 and beyond, Guaracachi expects to add 80 MW of combined
cycle capacity in Santa Cruz following the recent approval by the United Nations
Clean Development Methodology Committee of the CCGT conversion methodology for
calculating carbon emission reductions, Bolivia's first UN approved carbon
credits.

Guaracachi also expects to finalise a 120 MW Yacuiba export project for the sale
and export of electricity to Argentina. Preliminary power purchase and fuel
supply agreements for this project have already been reached respectively with
CEMSA, the subsidiary of Endesa of Spain, and Chaco, the Bolivian subsidiary of
BP, and a preliminary finance agreement has also been agreed with a group of
domestic financial institutions for a privately placed bond issue in support of
the export project. The governments of Bolivia and Argentina announced this
initiative in August 2005.

Both the CCGT conversion project and the Yacuiba export project are expected to
be commissioned during 2007 and to make full year contributions from 2008
onwards.

The consideration of US$ 35 million comprises a cash payment of US$ 30 million
on completion and a loan note of US$ 5 million repayable upon the receipt of
certain dividends or no later than 31 December 2010.

The Company will raise approximately £18,529,285, before expenses, through the
issue of 46,938,775 Placing Shares, to institutional and other investors, at a
price of 42 pence per Placing Share to finance the Acquisition. The Placing
Shares represent approximately 68.7 per cent. of the Enlarged Share Capital. At
today's share price of 50 pence, the Company will, on Admission, have a market
capitalisation of £34.14 million.

Owing to its size and the interests of certain Directors, the transaction
constitutes both a 'reverse takeover' and a Related Party Transaction for the
purpose of the AIM Rules and was conditional on shareholder approval. A circular
comprising an Admission Document under the AIM rules was sent to Shareholders on
13 December 2005

Enquiries:

Peter Earl                      020 7793 7676
Rurelec PLC

Paul Shackleton                 020 7776 6550
Daniel Stewart & Co. plc

Christian Dennis                020 7588 5171
Hichens Harrison & Co. plc

Daniel Stewart & Co. plc, which is regulated by the Financial Services
Authority, is acting as nominated adviser to the Company. It will not be
responsible to any person other than the Company for providing the protections
afforded to its customers or for advising any other person on the contents of
any part this announcement. The responsibilities of Daniel Stewart & Co. plc as
the Company's nominated adviser under the AIM Rules are owed solely to the
London Stock Exchange and are not owed to the Company or any Director or
Shareholder or to any other person, in respect of any decision to acquire
Ordinary Shares in reliance on any part of this announcement or otherwise.
Daniel Stewart & Co. plc is not making any representation or warranty, express
or implied, as to the contents of this announcement.

Hichens, Harrison & Co. plc, which is regulated by the Financial Services
Authority, is acting as broker to the Company. It will not be responsible to any
person other than the Company for providing the protections afforded to its
customers or for advising any other person on the contents of any part of this
announcement. The responsibilities of Hichens, Harrison & Co. plc as the
Company's broker under the AIM Rules are owed solely to the London Stock
Exchange and are not owed to the Company or any Director or Shareholder or to
any other person, in respect of any decision to acquire Ordinary Shares in
reliance on any part of this announcement or otherwise. Hichens, Harrison & Co.
plc is not making any representation or warranty, express or implied, as to the
contents of this announcement.

Introduction
The Board of Rurelec announced today that Rurelec shareholders have approved,
through the Company's wholly owned subsidiary Birdsong Overseas Limited, the
purchase for cash and loan notes of the entire issued share capital of Bolivia
Integrated from Southern Integrated. Bolivia Integrated indirectly owns 50.00125
per cent. of EGSA which operates three generating plants supplying electricity
in Bolivia. The Acquisition is to be financed in part by a placing of up to
46,938,775 Ordinary Shares with institutional investors, Peter Earl and
Technology Finance Limited, the latter two of whom both have an indirect
interest in Southern Integrated. Owing to its size and the interests of certain
Directors, the transaction constitutes both a 'reverse takeover' and a Related
Party Transaction for the purpose of the AIM Rules and was conditional on
shareholder approval. This was obtained at an Extraordinary General Meeting of
the Company held today.

A circular, which comprised an Admission Document, setting out the background to
and reasons for the Acquisition and Placing and containing a recommendation to
vote in favour of the Resolutions by the Independent Directors was earlier sent
to shareholders.

Background information on Rurelec
Rurelec was initially established specifically to develop rural electrification
projects and isolated generation projects in Latin America and was admitted to
trading on AIM on 18 August 2004.

Acquisition of ESA
Following flotation, Rurelec embarked on a programme of acquisitions of power
plant equipment, the first of which was through the purchase of ESA from
Guaracachi in October 2004. The consideration for the transaction was US$
550,000 in cash.

ESA is the owner of two 3 MW Worthington dual fuel generation units. These are
small machines which are suitable for rural generation.

Acquisition of 9 Jenbachers
In January 2005 Rurelec announced that it had acquired for cash nine Jenbacher
engines, each with a gross generation capacity of 2 MW, for a total of £1
million. Simultaneously, the Company sold six of these engines for the sum of £1
million. The remaining three Jenbachers are to be installed in Yacuiba, Southern
Bolivia, where gas supplies are available and shortages of power exist.

Acquisition of Patagonia Energy
In July 2005 Rurelec announced that it had acquired 50 per cent. of the issued
share capital of Patagonia Energy for an initial consideration of US$ 4.5
million in cash and further payments of US$ 1.5 million, with the dates of
payment determined by the future profit of EDS. Patagonia Energy is 50 per cent.
owned by Basic Energy Limited, a company organised and existing under the laws
of the Bahamas. Patagonia Energy wholly owns directly (and indirectly through
Electrica) EDS, which owns and operates a generating plant supplying electricity
in the isolated electricity system of Southern Patagonia, Argentina.

The generating plant comprises two General Electric MS6001B gas turbines in open
cycle, with a generating capacity of 77MW.

The acquisition of Patagonia Energy was a reverse takeover which was approved by
Shareholders on 29 July 2005 and is described in an Admission Document issued by
the Company dated 6 July 2005.

Background information on Bolivia Integrated and the Acquisition

The Acquisition
Rurelec is to indirectly acquire Bolivia Integrated which, through a holding
company, owns 50.00125 per cent. of the issued share capital of EGSA, an
electricity generating company. The consideration is for an amount up to US$ 35
million. On completion of the Acquisition US$ 30 million is being satisfied in
cash. In addition the Loan Note in the amount of US$5,000,000 shall be issued to
Southern Integrated and shall be redeemed in any number of payments as follows:

• between 30 April 2006 and 30 December 2007, in an amount equal to the
aggregate amount of dividends paid after Admission by Guaracachi and distributed
up to Birdsong Overseas Limited (net of costs and taxes) ('Received Dividends')
subject to a maximum aggregate amount of US$ 3,000,000; the first payment being
due within 10 business days after 30 April 2006 and subsequent payments becoming
due within 10 business days after receipt of further Received Dividends.

• from 31 December 2007, in an amount equal to the aggregate amount of Received
Dividends (less any amounts already paid under the Loan Note) subject to an
overall aggregate maximum principal amount payable under the Loan Note of US$
5,000,000; such amounts becoming due within 10 business days after receipt of
further Received Dividends.

• to the extent not previously redeemed the Loan Note shall be redeemed in full
by Birdsong Overseas Limited on 31 December 2010. Interest at LIBOR plus 5 per
cent. per annum shall accrue on the Loan Note to the extent of any outstanding
unredeemed capital, which shall be payable after all principal amounts have been
paid.

The Acquisition Agreement includes warranties and a tax indemnity given by IPC
and Southern Integrated, the scope of which is fairly standard for transactions
similar in nature to the Acquisition. The time limit for non-tax warranty claims
is 2 years from Admission and the time limit for tax warranty claims and claims
under the tax indemnity is 7 years from Admission. No warranty or tax indemnity
claim may be made under the Acquisition Agreement unless the aggregate amount of
such claims exceeds US$ 250,000.

IPC and Southern Integrated are jointly and severally liable under the
warranties and the tax indemnity in an amount up to US$ 35 million, the maximum
consideration payable. However, the ability to recover against IPC and Southern
Integrated may be limited if IPC or Southern Integrated distributes or otherwise
pays out to its shareholders or third parties the consideration monies. This is
because Southern Integrated has no significant net assets and IPC had, as at 31
December 2004 prior to the acquisition of Southern Integrated, net assets of
approximately £183,000. Moreover, there can be no guarantee that IPC's net asset
value will not further reduce prior to the making of a warranty claim or claim
under the tax indemnity.

To partially redress this situation, warranty claims and claims under the tax
indemnity (and certain other claims under the Acquisition Agreement) may be set
off against amounts unpaid under the Loan Note. US$ 5 million of the Loan Note
will remain unpaid prior to 30 April 2006 and a minimum of US$ 2 million of the
Loan Note will remain unpaid prior to 31 December 2007. These amounts represent
the principal security that Rurelec has in relation to warranty and tax
indemnity claims under the Acquisition Agreement. The Independent Directors
note, therefore, that the effective amount of cover in relation to the
warranties and tax indemnity may be limited.

Summaries of the Acquisition Agreement and the terms of the Loan Note are set
out in the Admission Document.

The vendor, Southern Integrated, is wholly owned by IPC. IPC is an independent
power developer with international experience in building, owning and operating
approximately 4,000 MW of power generation plants. IPC wishes to sell Bolivia
Integrated in order to concentrate on new projects outside Latin America and on
developing its power plant operations and maintenance activities.

Peter Earl is the controlling shareholder in IPC and is the chairman of EGSA.
Peter Earl and Elizabeth Shaw are directors of IPC and Michael Eyre is managing
director of IPC's wholly owned subsidiary IPOL. James West is also a
non-executive director of IPC.

EGSA is a Bolivian company that was set up in July 1995 as part of the
privatisation of the Bolivian electricity industry. Following an international
public tender, 50 per cent. of the share capital of Guaracachi was transferred
to GAI, a subsidiary of the US utility GPU Inc., for a cash investment of US$ 47
million into EGSA. The Bolivian state's shares in Guaracachi were in turn
transferred to two Bolivian pension funds with a small number of shares
allocated to employees of the state power company, ENDE. In 1999 GAI was
permitted to increase its shareholding to 50.00125 per cent. of Guaracachi and
to assume Board control of the Company. On 29 June 2005, the share capital of
Guaracachi was listed on the Bolivian stock exchange.

EGSA is a capitalised company which requires it to take decisions such as profit
distribution of more than 30 per cent. of the annual profits by a vote of 75 per
cent. of the shares represented at an extraordinary general meeting of the
shareholders. As such GAI will need the support of one of the pension funds in
order to declare a dividend of more than 30 per cent. of the profits in any one
year.

EGSA
EGSA's generating plants are connected to the NIS. It currently has three
plants, located near Santa Cruz, Sucre and Potosi, with a total nominal
installed capacity of 360 MW. These are:

• Guaracachi plant
- 292 MW of installed capacity on two General Electric 6FA high technology gas
turbines and six Frame 5 gas turbines
• Aranjuez plant
- 39 MW of installed capacity on one Frame 5 gas turbine and 5 dual fuel natural
gas and diesel generating units
• Karachipampa plant
- 27 MW of installed capacity on one Rolls Royce Olympus gas turbine

EGSA sells its entire output at the spot price to distribution companies and in
addition to the electrical energy generated, it receives payments for having
capacity available.

Gas is supplied to the Guaracachi and Aranjuez plants under a contract with
Chaco expiring on 31 July 2007 and to the Karachipampa plant under a contract
with Andina expiring on 30 September 2007.

Management and the supervision of technical maintenance are undertaken by IPOL
under a five year Management Agreement expiring on 12 December 2008 payable in
US dollars. Such technical and management services include:
• the selection and assistance in negotiation for technology and services to
Guaracachi;
• ongoing monitoring, maintaining and upgrading of EGSA's generating assets; and
• advice and assistance in financing, risk management, optimisation of assets,
procurement and improvement in operating and management services.

Further details of the Management Agreement are set out in the Admission
Document.

The table below summarises the trading record of Guaracachi for the three years
to 31 December 2004 and the six months to 30 June 2005 and is restated according
to International Financial Reporting Standards.

                          Year ended    Year ended    Year ended    Year ended
        ----------------    ----------    ----------    ----------    ----------
                           31-Dec-02     31-Dec-03     31-Dec-04     30-Jun-05
        ----------------    ----------    ----------    ----------    ----------
                             US$'000       US$'000       US$'000       US$'000
        ----------------    ----------    ----------    ----------    ----------
Revenue                       27,354        27,688        25,632        14,594
----------------            ----------    ----------    ----------    ----------
Profit/(Loss)Before Tax        4,131        (1,754)        2,842         5,277
----------------            ----------    ----------    ----------    ----------
Net Assets                    89,648        86,407        87,246        87,240
----------------            ----------    ----------    ----------    ----------

Assets owned on Admission
On Admission Rurelec will own:
•    ESA, which in turn owns two Worthington dual fuel generating units, with 6 MW
aggregate capacity;
    three Jenbachers with 6 MW aggregate capacity;
•    a 50 per cent. indirect interest in Central Termica Patagonia, a 77 MW
gas-fired power plant in Patagonia; and
•    a 50.00125 per cent. indirect interest in Guaracachi, which owns 3 generating
plants in Bolivia with 360 MW (nominal) aggregate capacity described above.


Investment Strategy
The Directors' strategy is to continue to acquire, or invest in, companies with
established electricity generating operations or generating assets suitable for
redeployment in the regional power markets of the Southern Cone of Latin America
as well as in the isolated generation sector in Latin America. The investment
strategy of the Company, while originally focused on rural electrification
projects, has been extended to suitable opportunities to acquire or invest in
generating assets operating on interconnected systems within those Latin
American countries which have implemented structural reform programmes.
Furthermore, the Directors have identified opportunities to manage the
implementation phase of rural electrification projects as well as investing in
the generation assets that are required to satisfy the increased demand
associated with that expansion.

Any generating capacity deployed by the Company will, wherever possible, be
supported by Power Purchase Agreements expected to incorporate payments for both
capacity and energy production or by transparent wholesale markets for power
with independent regulation and credit-worthy counter-parties.

The Directors are keen to promote sustainable projects based on locally-produced
fuel supplies and will, where practicable, promote the use of renewable sources
for electricity generation. They are also eager to give priority to the
development of combined cycle gas turbine (CCGT) capacity based on the
conversion of existing plants to achieve greater fuel efficiency operation
capturing waste heat for the generation of additional electricity with no
additional fuel cost. Such conversion projects may be eligible for United
Nations approved carbon emission reduction certificates issued under the Kyoto
Protocol.

Current trading and prospects
EGSA exceeded its budget for the first three quarters of 2005. While the last
quarter does not usually produce the highest revenues and net income (since this
is a rainy period in Bolivia when hydro generators receive dispatch priority),
the Directors expect Guaracachi to continue to be ahead of budget for the full
year.

EGSA currently has two new power plant additions under construction for
commissioning in 2006. These two plant additions in Sucre and Santa Cruz will
add 79 MW of new nominal installed capacity, an increase of 22 per cent.
compared with the current installed capacity of 360 MW. Accordingly, the
Directors expect Guaracachi to benefit from increased capacity payments once
these projects complete. Demand growth in the NIS is expected by CNDC to rise by
more than 8 per cent. in 2006. Prospects for 2006 therefore appear to be good.

Longer term, in 2007 and beyond, Guaracachi expects to add 80 MW of combined
cycle capacity in Santa Cruz following the recent approval by the United Nations
Clean Development Methodology Committee of the CCGT conversion methodology for
calculating carbon emission reductions. Guaracachi also expects to finalise a
120 MW Yacuiba export project for the sale and export of electricity to
Argentina. Preliminary power purchase and fuel supply agreements for this
project have already been reached respectively with CEMSA, the subsidiary of
Endesa of Spain, and Chaco the Bolivian subsidiary of BP, and a preliminary
finance agreement has also been agreed with a group of domestic financial
institutions for a privately placed bond issue in support of the export project.
The governments of Bolivia and Argentina announced this initiative in August
2005.

Both the CCGT conversion project and the Yacuiba export project are expected to
be commissioned during 2007 and to make full year contributions from 2008
onwards. Communities in Riberalta and Guayamerin on the Amazon Basin have
requested Rurelec's local power subsidiary, ESA, to install new capacity in
these isolated areas. Negotiations have begun for new power purchase agreements
in each city. The Company is also considering new isolated generation and rural
electrification projects in Northern Argentina.

At the same time the Company intends to continue to take advantage of suitable
opportunities to trade in portfolios of power generation equipment where the
management's knowledge of the second hand equipment market can help source good
value motors and turbines for Rurelec projects while at the same time produce a
trading profit from the onward sale of surplus machines.

The Directors are confident that the demand in Latin America which has led to
Rurelec's strong start as a generation company will be matched by a steady flow
of new power projects.

The Directors intend to change the accounting year to 31 December with effect
from 31 December 2005.

Relationship with IPC and Related Party Transaction
Peter Earl is the controlling shareholder in IPC and is the chairman of EGSA.
Peter Earl and Elizabeth Shaw are directors of IPC and Michael Eyre is managing
director of IPC's wholly owned subsidiary IPOL. James West is also a
non-executive director of IPC. IPOL provides operations and supervision of
technical maintenance services to Guaracachi under the long term Management
Agreement (described in the Admission Document). Peter Earl has committed to
procure that he and Technology Finance Limited, both of whom have an indirect
interest in Southern Integrated, subscribe for 13,605,442 Ordinary Shares (the
'Subscription Shares') at the Placing Price and that such subscription shall
occur not less than 5 business days after Admission (the 'Subscription').

The Acquisition is classified as a related party transaction under Rule 13 of
the AIM Rules. Accordingly, only the Independent Directors have made the
recommendation to Shareholders in the Admission Document.

Under the Acquisition Agreement IPC has agreed not to compete in relation to the
operation of power plants in Bolivia and Argentina for the period of three years
from completion of the Acquisition. IPC has also given a separate confirmation
to Rurelec that IPC will only have the right to develop or invest in power
generation projects in Latin America if Rurelec has declined the opportunity.

Details of the Placing
The Company has raised an aggregate of approximately £19,714,000, before
expenses, through the issue of an aggregate of 46,938,775 Placing Shares, to
institutional investors and to Peter Earl and Technology Finance Limited
pursuant to the Subscription, all at a price of 42 pence per Ordinary Share. The
net proceeds are being used to part finance the cash consideration for the
Acquisition (including redemption of part of the Loan Note).

The Placing Shares (including the Subscription Shares) represents approximately
68.74 per cent. of the Enlarged Share Capital. At the Placing Price, the
Company's market capitalisation on Admission will be £28,681,285.50.

Following Admission, and assuming the completion of the Subscription by Peter
Earl and Technology Finance Limited referred to above, the Directors (and
companies connected and/or associated with them) will hold, in aggregate,
approximately 16.04 per cent. of the Enlarged Share Capital.

The Placing Shares will rank pari passu in all respects with the Existing
Ordinary Shares. Dealings in the Placing Shares (other than the Subscription
Shares to be subscribed by Peter Earl and Technology Finance Limited, dealings
in which are expected to commence not later than 6 business days later) are
expected to commence on 6 January 2006. It is anticipated that CREST accounts
will be credited on the day of Admission and that certificates will be
despatched by first class post by 16 January 2006.

Directors
Biographical details of the Directors are as follows:

James West, Chairman and Non-Executive Director, aged 58. Following a successful
career as Managing Director of Globe Investment Trust plc, Jimmy West became the
Chief Executive of Lazard Asset Management and a Managing Director of Lazard
Brothers & Co. Ltd, where he held full responsibility for the bank's investment
operations. He is now Chairman of Gartmore Fledgling Trust plc and Jupiter
Second Enhanced Income Trust plc and is a non-executive Director of a number of
diverse companies including Candover Investments plc, British Assets Trust plc
and Global Natural Energy plc.

Peter Earl, Managing Director, aged 50, began his career at the Boston
Consulting Group advising state owned companies. He has advised ministries of
finance and central banks in Abu Dhabi, Albania, Kuwait and Saudi Arabia. He is
the author of the standard European textbook on cross-border takeovers published
by Euromoney. Formerly Chief Executive of Tranwood plc and The Carter
Organization Inc., in New York, he acted on secondment to the World Bank and the
United Nations Development Programme, advising on privatisations in Latin
America and Eastern Europe, where he has served as Deputy Chairman for the
United Nations Economic Commission for Europe infrastructure finance group. He
was a director of Fieldstone Private Capital Group Limited ('Fieldstone') in
London. In the mid-1990's, he advised on USD 6 billion of cross-border power
sector acquisitions and bids, involving 5,000 MW of installed capacity and more
than 2 million distribution customers. In 1995, he founded IPC which has owned,
developed and operated 4,000 MW of power projects around the world including in
Kazakhstan, USA, Argentina and Bolivia. He is an Oxford University graduate and
was a Kennedy Scholar at Harvard University.

John Michael Eyre, Director of Engineering, aged 51, is both a Chartered and
European Engineer and has extensive experience in project management and
development in the power sector. As a Central Electricity Generating Board
engineer, he spent part of his early career on secondment to Eskom of South
Africa with responsibility for maintenance of a portfolio of 26 power plants. He
subsequently became Head of Engineering Quality with National Power plc, where
he developed and implemented policy for risk management of their UK assets as
well as leading the technical due diligence for significant international
acquisitions such as Hub, a 1,200 MW oil-fired plant in Pakistan, and Marmara, a
500 MW combined cycle power plant in Turkey. Recently, he led business
development at Lloyds' Register power division (subsequently Ingenco) and
advised developers on renewable energy projects. At IPC, he is responsible for
operations and maintenance activities and supervising technical due diligence
for proposed acquisitions and greenfield development in Latin America and
Central Asia.

Elizabeth Shaw, Director of Finance, aged 45, has been involved in the
electricity sector since 1994. Between 1994 and 2000, as a director of
Fieldstone, she advised on a number of mergers, acquisitions and disposals in
the electricity industry, both in the UK and in developing markets. In Bolivia,
she advised on the spin-off of the Electropaz distribution business of Compania
Boliviana de Energia Electrica S.A. to Iberdrola S.A. of Spain and on the sale
by ENDE of its electricity distribution interests in Cochabamba. Prior to
joining Fieldstone, Elizabeth was extensively involved in the financing of
small-to-medium sized companies in the UK, including raising equity for both
listed and unlisted companies. Currently she is responsible for business
development and finance at IPC. She is a graduate of Exeter University.

Francis Mattos, Non-Executive Director, aged 72, has over 40 years' broad-based
power sector engineering and management experience, initially as a senior
manager with the Central Electricity Generating Board. In 1984 he was seconded
to British Electricity International (BEI), where he was responsible for
overseas business and project development. On privatisation of the U.K.
electricity sector, BEI became National Power International with a focus on
international utility acquisitions and power plant construction projects. These
projects included the acquisition in 1993 of the Pego power station in Portugal,
then the largest, privatised, power project in Europe where he was a director.
Recently he was an adviser to Sithe Energies, Inc. and is a registered
consultant to the World Bank and other funding agencies. He has written and
presented papers on power system economics and control, tariffs, substation
switching, planning and operations reliability standards. He is both a Chartered
Engineer and a Chartered Manager. On 19 July 2004 the Company passed a
resolution at an extraordinary general meeting to approve his appointment as a
Director notwithstanding that he has attained the age of 70, in accordance with
section 293(5) of the Act.

Sir Robin Christopher KBE CMG, Non-Executive Director, aged 61, retired from the
Foreign and Commonwealth Office in 2004. Since 1994, Sir Robin has been British
ambassador to Ethiopia, Indonesia and Argentina. Sir Robin first lived in Latin
America forty years ago. He knows Bolivia well. He is a trustee for The Brooke
Hospital, Prospect Burma and St. Matthew's Children Fund (Ethiopia), all of
which are charitable trusts. He is also an Hon. Fellow of the Institute for the
Study of the Americas (ISA) at London University. He is a graduate from Oxford
University.

Lock-ins and orderly market arrangements
Following Admission and the Subscription by Peter Earl and Technology Finance
Limited, the Directors (and companies connected and/or associated with them) and
certain senior management will be interested, in aggregate, in 10,952,721
Ordinary Shares representing approximately 16.04 per cent. of the Enlarged Share
Capital. Under the terms of the Lock-in Agreement each of the Directors and
their connected persons including IPC, save in certain limited circumstances,
will not dispose of any interest in any Ordinary Shares held by them for a
period of twelve months from Admission other than with prior written consent of
both the Broker and Nominated Adviser and for a further twelve months, only
having consulted the Broker and Nominated Adviser, or the Company's then broker
and nominated adviser, so as to ensure the maintenance of an orderly market in
the Ordinary Shares.

Under the terms of the Orderly Market Agreement, Technology Finance Limited will
not dispose of any interest in any Ordinary Shares held by them for a period of
12 months, without consulting the Broker and Nominated Adviser, or the Company's
then broker and nominated adviser, so as to ensure the maintenance of an orderly
market in the Ordinary Shares.

Share option scheme
The Directors believe that the Company's success is highly dependent on the
quality of its employees. To assist in the recruitment, retention and motivation
of employees, an important part of the future remuneration strategy will be the
ability to award equity incentives and in particular share options to employees.
The Directors intend to adopt a share option scheme pursuant to which options
may be granted to Directors and employees of the Group, at a subscription price
equal to the greater of the nominal value per Ordinary Share and the market
value of an Ordinary Share at the time of grant, over an aggregate maximum of 10
per cent. of the Company's issued share capital from time to time.

Dividend policy
On 5 November 2005 the Company announced its preliminary results for the year to
30 June 2005 in which the Directors have recommended a dividend of 0.5 pence per
share which was approved by Shareholders at the AGM of the Company held on 12
December 2005. The Directors intend to continue to pay dividends in the future
when it is prudent to do so, having regard to the availability of the Company's
distributable profits and the retention of funds required to finance future
growth. In the medium term the Directors intend that dividend income will be a
significant source of shareholder value.

Enquiries:

Peter Earl                   020 7793 7676
Rurelec PLC

Paul Shackleton              020 7374 6789
Daniel Stewart & Co PLC

Christian Dennis             020 7588 5171
Hichens Harrison & Co. plc

DEFINITIONS
The following definitions apply throughout this announcement, unless the context
requires otherwise:

'Acquisition'
the acquisition of Bolivia Integrated pursuant to the Acquisition Agreement

'Acquisition Agreement'
the conditional agreement between inter alia Southern Integrated and Birdsong
Overseas Limited for the acquisition by Birdsong Overseas Limited from Southern
Integrated of the entire issued share capital of Bolivia Integrated.

'Act' or 'Companies Act'
the Companies Act 1985, as amended

'Admission'
the re-Admission of the Existing Ordinary Shares and Investor Warrants to
trading on AIM and the Admission of the Placing Shares to trading on AIM
becoming effective in accordance with the AIM Rules

'AIM'
the market known as 'AIM' operated by the London Stock Exchange

'AIM Rules'
the rules for AIM companies in force at the date of this announcement issued by
the London Stock Exchange

'Andina'
Empresa Petrolera Andina, a company registered in Bolivia

'Articles'
the articles of association of the Company

'Basic Acquisition Agreement'
the agreement between Basic Energy Limited and Rurelec for the acquisition by
Rurelec from Basic Energy Limited of fifty per cent. of the issued share capital
of Patagonia Energy.

'Birdsong Overseas Limited'
a wholly owned subsidiary of the Company, registered in the British Virgin
Islands under registration number 688032 whose registered office is at Nerine
Chambers, 5 Columbus Centre, Road Town, Tortola, British Virgin Islands

'Board'
the board of directors of the Company, including a duly constituted committee of
such directors

'Bolivia Integrated'
Bolivia Integrated Energy Limited, a company registered in the British Virgin
Islands under registration number 510247, whose registered office is at Nerine
Chambers, 5 Columbus Centre, Road Town, Tortola, British Virgin Islands

'Broker' or 'Hichens Harrison'
Hichens, Harrison & Co. plc

'Broker Warrants' 75,000 warrants issued to Hichens Harrison on 18 August 2004
to subscribe for 75,000 Ordinary Shares at a price of 40 pence per Share

'Capime'
Capime Ingenieria S.A. a company registered in Argentina whose principal office
is at Talcahuano 736-7mo, Piso, Buenos Aires, Argentina

'Chaco'
Empresa Petrolera Chaco S.A., a company registered in Bolivia

'Combined Code'
the 'Combined Code on Corporate Governance' published in July 2003 by the
Financial Reporting Council

'CREST'
the computerised settlement system (as defined in the CREST Regulations)
operated by CRESTCo which facilitates the transfer of title to shares in
uncertificated form (as defined in the CREST Regulations)

'CRESTCo'
CRESTCo Limited

'CREST Regulations'
the Uncertificated Securities Regulations 2001 (SI 2001/3755)
'Daniel Stewart'
Daniel Stewart & Co plc, the Company's nominated adviser

'Directors'
the directors of the Company

'Enlarged Share Capital'
the Ordinary Shares in issue immediately following Admission and completion of
the Placing (excluding any Ordinary Shares that may be issued pursuant to the
exercise of any Warrants prior to Admission)

'ESA'
Energia para Sistemas Aislados ENERGAIS S.A., a company registered in Bolivia
under registration number 107752 whose principal office is at Calle Los Pitones
No. 2038, Avda. Beni entre Segundo y Tercer Anillo, Santa Cruz, Bolivia

'EDS'
Energia del Sur S.A., a corporation duly incorporated and existing under the
laws of the Republic of Argentina, domiciled at Alicia Moreau de Justo 2050, 3rd
floor, office 307, City of Buenos Aires, Republic of Argentina

'EGM' or 'Extraordinary General Meeting'
the extraordinary general meeting of the Company convened for 10.00 a.m. on 5
January 2006, notice of which is set out at the end of the Admission Document

'Electrica' Electrica del Sur, S.A., a corporation duly incorporated and
existing under the laws of the Republic of Argentina, domiciled at Alicia Moreau
de Justo 2050, 3rd floor, office 307, City of Buenos Aires, Republic of
Argentina

'Enlarged Group'
the Company together with its subsidiaries following completion of the
Acquisition

'Executive Directors'
Peter Earl, Michael Eyre and Elizabeth Shaw

'Existing Ordinary Shares'
the 21,350,000 Ordinary Shares in the capital of the Company in issue at the
date of this announcement

'FSMA'
the Financial Services and Markets Act 2000

'GAI' or 'Guaracachi America Inc.'
Guaracachi America Inc., a company registered in the state of Delaware under
registration number 2524312 whose principal office is at 32 Loockerman Square,
Suite L-100, City of Dover, County of Kent, State of Delaware

'Grant Thornton'
Grant Thornton UK LLP of Grant Thornton House, Melton Street, Euston Square,
London NW1 2EP

'Group'
the Company and its subsidiary undertakings as at the date of this announcement

'Guaracachi' or 'EGSA' Empresa Electrica Guaracachi, S.A., a company registered
in Bolivia under registration number 08-035910-03 whose principal office is at
Av. Brasil, Esquina 3 Anillo, Santa Cruz, Bolivia

'Independent Directors'
Francis Mattos and Sir Robin Christopher KBE CMG, neither of whom are deemed to
be a Related Party

'Investor Warrants'
1,000,000 warrants issued by the Company, on 18 August 2004 to subscribe for
1,000,000 Ordinary Shares

'IPC'
Independent Power Corporation PLC a company registered in England under
registration number 3097552, whose principal office is at 5th Floor, Prince
Consort House, 27-29 Albert Embankment, London SE1 7TJ

'IPOL'
Independent Power Operations Limited, a company registered in England under
registration number 4288901, whose registered office is at 5th Floor, Prince
Consort House, 27-29 Albert Embankment, London SE1 7TJ

'Loan Note'
the loan note issued pursuant to the note instrument constituting unsecured loan
notes up to USD 5 million redeemable not later than 31 December 2010

'Lock-In Agreements'
the conditional agreements governing the disposal of Ordinary Shares by the
Directors and others.

'London Stock Exchange'
London Stock Exchange plc

'Management Agreement'
the long term management agreement 13 December 2003 between IPOL and EGSA

'Non-Executive Directors'
James West, Francis Mattos and Sir Robin Christopher

'Official List'
the Official List of the UKLA

'Orderly Market Agreement'
the conditional agreement governing the disposal of Ordinary Shares by
Technology Finance Limited.

'Ordinary Shares'
ordinary shares of 2 pence each in the capital of the Company

'Patagonia Energy'
Patagonia Energy Limited a company registered in the British Virgin Islands
under registration number 620522, whose registered office is at the offices of
Walker (BVI) Limited, Walker Chambers, P.O. Box 92, Road Town, Tortola, British
Virgin Islands

'Patagonia Group'
Patagonia Energy and its subsidiary undertakings as at the date of this
announcement

'Patagonia Shareholders' Agreement'
the agreement between Basic, Rurelec and Patagonia Energy relating to certain
rights and obligations in respect of the shares in the capital of Patagonia
Energy,

'Placees'
the subscribers of Placing Shares pursuant to the Placing

'Placing'
the conditional placing by Hichens Harrison on behalf of the Company of the
Placing Shares pursuant to the Placing Agreement and including for these
purposes the subscription by Peter Earl and Technology Finance Limited of
Placing Shares

'Placing Agreement'
the conditional placing agreement dated 13 December 2005 between the Company,
the Directors, Daniel Stewart and Hichens Harrison

'Placing Price'
42 pence per Placing Share

'Placing Shares'
the 46,938,775 new Ordinary Shares which are the subject of the Placing

'Prospectus Rules'
the Prospectus Rules of the UKLA

'Related Party'
a party who is so defined in the AIM Rules

'Related Party Transaction'
a transaction as defined in rule 13 of the AIM Rules

'Resolutions'
the resolutions set out in the Notice of the EGM

'Rurelec' or the 'Company'
Rurelec PLC

'Services Agreement'
the shared services agreement dated 23 July 2004 between the Company and IPC

'Shareholders'
holders of Ordinary Shares

'Southern Integrated'
Southern Integrated Energy Limited a company registered in the British Virgin
Islands under registration number 491283, whose registered office is at Nerine
Chambers, 5 Columbus Centre, Road Town, Tortola, British Virgin Islands

'UKLA'
the Financial Services Authority, acting through the United Kingdom Listing
Authority, in its capacity as the competent authority for the purposes of Part
VI of FSMA

'USA' or 'United States'
the United States of America, its territories and possessions, any State of the
United States of America and the District of Columbia

'Warrants'
the Broker Warrants and the Investor Warrants




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