* Gov't, Spanish power firm to coooperate on compensation
* Leftist president nationalized REE's local unit
BUENOS AIRES May 7 (Reuters) - Bolivia's government will work with Red Electrica Espanola to decide how much the Spanish power company should get in compensation for the nationalization of its local unit, officials said on Monday.
President Evo Morales, who has steadily tightened state control over the economy, ordered the army to take over the Cochabamba headquarters of power transmission company Empresa Transportadora de Electricidad (TDE) last week.
The leftist leader's decision to put the operation back in state hands, which followed Argentina's move to expropriate Spanish energy group Repsol's majority stake in YPF , deepened European concerns about the investment climate in South America.
However, after talks in La Paz, Energy Minister Juan Jose Sosa and REE chief executive Jose Folgado said they would work together to hire an independent company to put a value on TDE for the purposes of compensation.
"With regards the matter of compensation ... over the nationalization of TDE, we're going to work together in a process based on objectivity and transparency," Folgado was quoted as saying in a government statement.
Sosa, who echoed Folgado's comments, said last week that TDE would be valued by a government-hired company within six months.
Red Electrica indirectly holds 99.9 percent of TDE, which reported net profits of 12.5 million euros ($16.4 million) last year, less than 3 percent of Red Electrica's 2011 net profits.
Spain's government initially criticized Bolivia's move to seize control of TDE on the grounds the company had failed to invest enough in the country, but later said it was legitimate because the government of the Andean nation had guaranteed compensation. ($1 = 0.7603 euros) (Reporting By Carlos Quiroga; Writing by Helen Popper; Editing by Richard Pullin)