* EU says action sends negative signal to international
* Spanish minister says Bolivia had guaranteed compensation
* Red Electrica shares fall 3.6 pct; Repsol down 2.87 pct
BRUSSELS/MADRID, May 2 The European Union and
Spain criticised the Bolivian government's nationalisation of a
local unit of Spain's Red Electrica Española, raising
questions about the security of investing in the South American
Bolivia's leftist President Evo Morales on Tuesday ordered
the army to take over the Cochabamba headquarters of power
transmission company Empresa Transportadora de Electricidad
The move follows Argentina's decision to expropriate Spanish
energy group Repsol's major stake in YPF.
"The European Commission is concerned by the Bolivian
government's decision," John Clancy, trade spokesman for the
Commission, the EU's executive, said on Wednesday.
"Actions like this one necessarily send a negative signal to
international investors over the business and investment climate
in Bolivia," Clancy said in a statement.
"We trust the Bolivian authorities will fully uphold their
investment agreements with Spain and ensure prompt and adequate
compensation for this expropriation."
Speaking in Brussels Economy Minister Luis de Guindos
criticised the move by Bolivia, but said the country had
guaranteed Spain compensation.
"The Spanish government does not like these sorts of
decisions as we believe it's fundamental to maintain legal
security when investing in countries like Bolivia," he said.
According to brokerage Banesto Bolsa, Red Electrica bought
the Bolivian subsidiary for 92 million euros ($122 million) in
2002, and had invested 60 million euros in the country's
The Bolivian government justified the nationalisation by
saying the company had failed to invest enough.
Shares in Red Electrica were down 3.6 percent at 31.7 euros
at 1126 GMT.
Banesto said the nationalisation would have limited impact
on the company's accounts. The brokerage said Repsol was the
Spanish company most exposed to Bolivia.
However, Bolivia assured Repsol chairman Antonio Brufau on
Tuesday that the company's investment in the country was safe
after the company's opening of a gas plant said to be worth
around 100 million euros.
Repsol shares were down 2.87 percent.
Spain has so far struggled to come up with a strong response
to Argentina's move against Repsol, although the European
Commission has said it is studying "all options".