News & Publications - Press Releases

13 May 2010

Rurelec PLC (AIM:RUR), the power plant developer and owner-operator of power generation assets in Latin America, announces Rurelec has today served a formal notice of a breach of the Bilateral Investment Treaty between the UK and Bolivia ("the Treaty") on President Evo Morales thereby triggering the six month negotiating period prior to international arbitration. Rurelec has instructed Freshfields Bruckhaus Deringer LLP, who have experience in resolving nationalisation claims against Bolivia, to advise them in relation to negotiations and in an eventual arbitration.

Compensation Claim

The Decree ordered expropriation of the 50.001 per cent. interest in Guaracachi held by Rurelec subsidiary Guaracachi America, Inc ("GAI").  The Supreme Decree stated that ENDE (the integrated electricity utility owned by the Bolivian state) had to pay fair value ("compensacion adecuada") for GAI's shares. Bolivia's proposals regarding compensation amount should be made within 120 days of the issue of the Decree.

Read more: Instigation of Arbitration Process in connection with Compensation Claim for Bolivian Nationalisation of Controlling Stake in Guaracachi

4th May 2010

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 1^st 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 24^th 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 31^st 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.

Read more: Nationalisation of Controlling Stake in Guaracachi

Rurelec PLC announces that is has now posted a downloadble PDF copy of the Bolivian Government's Supreme Decree (no 0493) on its website.  The Supreme Decree was signed in Cochabamba on 1^st May 2010.  Rurelec has also posted a downloadble PDF copy of the 1988 United Kingdom - Bolivia Agreement for the Promotion and Protection of Investments on its website so that investors may see the extent to which Rurelec's investment in Bolivia is protected by international treaty.  That treaty was signed in La Paz on 24^th May 1988.

Download pdf of Nationalisation Supreme Decree 493

Dowload pdf of UK-Bolivia 1988 Treaty

1st May 2010

Rurelec plc (AIM:RUR) ("Rurelec" or "the Company"), the power plant developer and owner-operator of power generation assets in Latin America, announces that it has today been informed that the Bolivian Government has taken steps to nationalise by force Rurelec's controlling stake in Empresa Electrica Guaracachi SA ("Guaracachi").  The move 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 a Supreme Decree signed by President Evo Morales, together with one regional distribution company and the national electricity transmission company.

This surprise 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.  Furthermore, during the same week, the Morales Administration stated publicly that it expected to reach negotiated agreement for a public-private partnership with the electricity generators.  Such an approach would permit even greater investment in new power plants by Rurelec and its subsidiaries.

Read more: Nationalisation of Controlling Stake in Guaracachi

19 April 2010

Rurelec (AIM:RUR) is pleased to announce a number of important developments in Argentina and Bolivia which are material to its overall plan to return to the development path interrupted by the 2008 debt crisis.

In Bolivia, Rurelec's 50.01 per cent subsidiary, Empresa Guaracachi, S.A. ("Guaracachi"), has received the approval from the United Nations UNFCCC for the registration of carbon emission reductions (CERs) from the 96 MW combined cycle expansion project.  The project has achieved mechanical completion and is now in the commissioning phase.  The UN has agreed to register 335,000 CERs a year for the project subject to receiving certain corrections.  These corrections have now been submitted.  As announced three weeks ago, Guaracachi has entered into contracts with the Andean Development Corporation (CAF) and the KfW development arm of the German government to sell these CERs for the life of the Kyoto Treaty generating up approximately US$5m per annum of additional income depending on the number of CERs actually generated and the prevailing exchange rate when funds are received. 

Read more: Important Developments