Bolivia nationalises BP aviation unit

By Eduardo Garcia

LA PAZ (Reuters) - Bolivian leftist President Evo Morales told hundreds of supporters he nationalised the local unit of BP's aviation division on Friday, further tightening state control over the energy industry.

At a May Day rally, Morales said he signed a decree to take over Air BP, a division of British oil major BP (BP.L). The poor Andean nation had been in talks with the company over a possible takeover.

"I want to ask the Bolivian armed forces along with (Bolivian state energy company) YPFB to gain control of Air BP, the multinational that sells jet fuel. With this decree Air BP is now nationalized," Morales said in a speech outside the presidential palace in La Paz.

A BP spokesman in London said the company "had agreed a handover of our operations."

"We were surprised by today's takeover process. But we will continue to support the handover," the spokesman said.

Morales' government plans to compensate Air BP for the nationalisation of its Bolivian unit, which supplies jet fuel to 12 airports and airstrips, Bolivian Energy Minister Oscar Coca told reporters.

"The presidential decree calls for an assessment that has to be carried out in 120 days to determine the value," said Coca, adding that the supply of fuel to Bolivian and foreign airlines will not be disrupted.

"The company has been in contact with us and let us know it will proceed with this change... Air BP's shareholders are acting in a coherent manner," Coca said.