Bolivian President Evo Morales went to some length to indicate that his order to the military to take over the Red Electrica de Espana's local operations wasn't to be compared with Argentine appropriation of YPF Repsol's energy assets in that country.
He was taking over the company, Morales said, but will compensate it adequately.
Both the United States and European Union said they were concerned the nationalization would damage investment climate in Bolivia, while Brazilian industry analysts said Argentine and Bolivian actions against foreign companies risked discouraging investors away from Latin America.
Latin America's investor community and business analysts had no immediate comment on Morales' order, which came shortly before the president inaugurated a Repsol gas processing plant that was originally intended to supply Argentina.
Whether that arrangement still holds, amid a bitter diplomatic row between Argentina and Spain over the YPF Repsol seizure in Argentina, remains unclear.
Morales accused Red Electrica de Espana of not investing enough profits into developing its Bolivian company TDE, echoing Argentine statements before the YPF Repsol takeover.
The seizure of Red Electrica de Espana leaves open the question of how the company will be run once nationalized. Spanish government sources said Bolivian government officials have been in talks with Madrid and promised fair compensation for assets and investments.
The seizure comes at a sensitive time for Spanish Prime Minister Mariano Rajoy, who is facing record unemployment and an economy teetering on the brink, on the verge of appealing for an EU bailout.
Morales used a May Day rally at the Government Palace in La Paz to announce the takeover "as a fair homage to the workers and the Bolivian people in their fight for the recovery of their natural resources."
The company runs a large part of the Bolivian power grid.
A few hours later Morales presided over the inauguration of the gas processing plant in southern Bolivia with Repsol President Antonio Brufau by his side. Current plans call for increased gas exports to Argentina. How that sits with the current diplomatic standoff between Argentina and Spain remains unclear.
Morales nationalized petroleum companies in 2006 then gave them new back exploration and production rights under new agreements.
This time, Bolivia has upset both the Obama administration and European Union.
"We are concerned for the Bolivian government decision to nationalize TDE, which comes shortly after the Argentine announcement," U.S. State Department spokesman Mark Toner said in Washington.
EU spokesman John Clancy said in Brussels the European Union "is worried about the decision of the Bolivian government to nationalize TDE and is closely following the situation."
Spanish Economy Minister Luis de Guindos said Bolivia had guaranteed Spain compensation. But, he said, "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."