YEREVAN, June 11 (Reuters) – Armenia and Russia failed to agree terms on a loan to finance the upgrade of a nuclear plant in the South Caucasus country, Prime Minister Nikol Pashinyan said on Thursday.

The Metzamor plant, about 25 km (16 miles) outside Yerevan, provides 40% of Armenia’s electricity and is supervised by the Armenian government.

Its renovation started in 2015, when Russia’s Rosatom and the plant signed a $300 million loan agreement covering extended operation and the provision of materials. The deal included a $30 million grant from the Russian partner.

The Armenian side used nearly $200 million and asked Rosatom to disburse the remaining $107 million, but the Russian company attached new conditions, which Yerevan rejected.

“We will draw funds from our internal resources, which will certainly have better conditions,” Pashinyan told a government meeting.

He said the government would raise around 63 billion Armenian drams (around $130 million) by issuing government bonds on the domestic market.

An Armenian government document obtained by Reuters, showed Rosatom suggested that 80% of the newly-disbursed loan should be used to buy equipment and services in Russia.

In addition, Rosatom suggested Armenia pay $19.5 million for the plant’s management and wanted a fee of 1% of the portion of the loan that had not yet been used. (Reporting by Nvard Hovhannisyan; writing by Margarita Antidze; editing by Barbara Lewis)