Dahal, a former Maoist guerrilla leader in the mountainous nation sandwiched between China and India, formed a coalition cabinet dominated by the Nepali Congress party as well as other smaller groups last year.
But his Maoist Centre party, which is the third biggest group in the 275-member parliament, had criticised the Nepali Congress party for not giving a free hand to the prime minister and putting “hurdles” in removing some ministers with whom he was not satisfied.
Govinda Acharya, Dahal’s press secretary, said the former guerrilla chief was likely to name a new cabinet including nominees from two main opposition parties – Communist Party of Nepal (UML) and the Rastriya Swotantra Party (RSP).
“There were mainly policy differences that made it difficult for the prime minister to continue to work with the Nepali Congress. So he is bringing in the UML and RSP as new coalition partners,” Acharya told Reuters without elaborating.
UML leader Pradeep Gyawali said if Dahal “broke away” from the Nepali Congress his party would support the prime minister. RSP could not be immediately reached for comments. Party officials said Dahal, 69, wanted to remove some “non-performing” ministers including Finance Minister Prakash Sharan Mahat, who is from the Nepali Congress, saying he had not done enough to boost growth of the $40 billion economy.
Mahat has said the economic condition of the country was better now than last year.
Dahal’s Maoist Centre party and the Nepali Congress are also claiming the chair of the upper house of parliament the National Council, a parliamentary body key to making new laws.
The coalition with the Maoists had “almost collapsed”, Bishwa Prakash Sharma, a General Secretary of the Nepali Congress party said, adding that his party was meeting to discuss the new situation.
Dahal led a decade-long insurgency from 1996 which caused 17,000 deaths before he joined the mainstream under the 2006 peace deal overseen by the United Nations.
Nepal has had 13 governments since it abolished its 239-year-old monarchy in 2008 and became a republic.