Nepal faces rising tensions over federalism

Significance

Prime Minister KP Oli took charge of government a year ago at the head of an alliance between his Communist Party of Nepal (Unified Marxist-Leninist) and the Communist Party of Nepal (Maoist Centre), before the parties merged in May to form the Nepal Communist Party (NCP). Oli’s government is the first to be elected under the country’s new republican, federal constitution, which devolves power to seven provincial and 753 local governments partly to address ethnic demands.

Impacts

• A corruption scandal involving aviation contracts may put Oli’s government under further pressure.
• The NCP will see increased intra-party tensions during negotiations over a new party chair, roughly in one year’s time.
• Kathmandu will explore stronger diplomatic ties with Washington.
• Nepal will expand its hydropower generation capacity.