The European Union (EU) Thursday called on Bolivia to respect the ruling of the Hague-based Permanent Court of Arbitration (PCA) in favor of British power generator Rurelec PLC, said an official.

Timothy Torlot, head of the EU delegation in Bolivia, said the EU has shown the same respect for the South American country's privatization.

Bolivia has "the legitimate right to nationalize a company and as part of the international community we respect that," Torlot told a press conference in La Paz.

Torlot said he hoped the Bolivian government would respect the verdict though there is a little negotiation at the moment.

"I am very much encouraged that even President Evo Morales has said he will respect the verdict," he said.

According to the PCA, the Bolivian government should pay 41 million U.S. dollars in compensation and unpaid dividends after the court ruled the nationalization of the Guaracachi electricity company, in Bolivia's central region of Cochabamba, as "unlawful."

The court said the verdict was based on the bilateral investment treaty and the rules of the United Nations Commission on International Trade Law.

On May 1, 2010, then Bolivian President Evo Morales decreed the nationalization of three power companies including the Rurelec subsidiary, a move which boosted the country's state-controlled electricity generation to 80 percent.

However, the two sides failed to reach an agreement on a financial settlement and Rurelec filed a compensation claim of 142.2 million U.S. dollars to the PCA in March 2012.

Torlot said the global business community would be closely watching the country's reaction to the verdict. Endi