By Helen Popper
BUENOS AIRES (Reuters) - Argentina's lower house started debating the renationalization of the nation's largest energy company on Wednesday, a measure that is popular at home despite fierce criticism abroad.
President Cristina Fernandez angered Spain and other European trade partners last month when she unveiled her plan to expropriate a 51-percent controlling stake in YPF from Spanish oil major Repsol.
But her push to return YPF to state hands following its privatization in the 1990s has been cheered by Argentines who blame such free-market policies for causing a dire economic crisis a decade ago.
Senators passed the bill with overwhelming support last week with most opposition members voting in favor. A similar result is likely in the 257-seat lower house, which Fernandez also controls, letting her sign the bill into law later this week.
As lawmakers arrived for the session, Agustin Rossi, head of the ruling party bloc, said he expected 200 lawmakers to vote in favor. Final voting is expected late on Thursday.
"The fact that we've overcome the perverse political logic of ruling party versus opposition is a big stride for Argentine democracy," Rossi said, defending Fernandez's main justification for the takeover -- slack investment by Repsol in energy output.
Critics of Fernandez's increasingly combative and erratic policies say the government should have taken a gentler approach to YPF in order to safeguard foreign investment flows in future.
"We're in favor of putting 51 percent of YPF back in state hands, but why enter by the window when you can enter by the door?" said rightist lawmaker Francisco de Narvaez. "The constitution and the law say you must first pay a fair price and then expropriate."
Once the expropriation gets congressional approval, the focus will shift to how much the government will pay in compensation to Repsol, which denies charges of underinvestment.
Government officials have already indicated they will not pay the $9.3 billion the Spanish firm has asked for, but an Argentine valuation court will stipulate the sum. YPF accounts for about 20 percent of the Repsol group's net profit.
Madrid has vowed to curtail multimillion-dollar imports of biodiesel from Argentina in retaliation for the YPF takeover, while the European parliament has urged the European Commission, the EU's executive body, to consider reprisals.
Analysts have been warning of an energy crisis in Latin America's No. 3 economy for years, due to surging demand and stagnant production that critics blame on government policies such as price controls and export curbs.
The country registered an energy deficit for the first time in 17 years in 2011 as fuel imports doubled, eroding the trade surplus and pushing the issue to the top of Fernandez's agenda.
(Additional reporting by Hugh Bronstein; Editing by Marguerita Choy)