Bolivia’s president Evo Morales has seized control of the Spanish company Transportadora de Electricidad (TDE) which runs around three-quarters of Bolivia’s grid.

Morales nationalized the company after ordering troops to take over its offices and hang the Bolivian flag outside its door.

He told a May Day ceremony that the takeover had been carried out because of a lack of investment in Bolivia by TDE.

“In honour of all Bolivian people who have struggled to recuperate our natural resources and basic services, we are nationalising Transportadora de Electricidad (TDE),” he said.

The move has been slammed by both the European Union and the Spanish government.

John Clancy, trade spokesman for the European Commission, said today: “The European Commission is concerned by the Bolivian government’s decision. Actions like this one necessarily send a negative signal to international investors over the business and investment climate in Bolivia.”

He added: “We trust the Bolivian authorities will fully uphold their investment agreements with Spain and ensure prompt and adequate compensation for this expropriation.”

Transportadora de Electricidad is owned by Red Eléctrica Corporaciión, which has run most of Bolivia’s electricity distribution since the grid was privatised 15 years ago. In Spain, Red Eléctrica Corporaciión is the sole grid operator and is 20 per cent owned by the government.

Morales has said that the Spanish company will be compensated for the takeover.

In 2010, Morales took control of most of Bolivia’s power generation companies, including UK-headquartered Ruralec, which is still seeking compensation via a court case in The Hague.

Yesterday’s action follows Argentina’s decision last month to nationlise oil firm YPF, in which Spanish company Respol had a controlling stake.