Kathmandu/IBNS: KP Sharma Oli is set to return as the Nepali Prime Minister after the Nepali Congress and Communist Party of Nepal (Unified Marxist-Leninist) have forged an alliance at midnight, media reports said.

The new alliance will lead the existing government, which was forced on March 4, to collapse.

A senior Nepali Congress leader, who was present in the meeting, told ANI as quoted by The Print, "Agreement has been signed between Nepali Congress leader Sher Bahadur Debua and UML Chairman KP Sharma Oli overnight to form a new government.

"As per which Oli will lead the government for next one and half years and Deuba the remaining time until the election which lies three years ahead."

"The party who will be leading the government will not get the Home Ministry has been agreed. Apart from the union government, the CPN-UML will be forming a government in Koshi, Lumbini and Karnali provinces while the Congress will lead the Bagmati, Gandaki and Far-Western provinces.

"The Madhesh-based parties will lead the government in Madhesh Province has been agreed in between the two leaders," he added.

As per the leader, the two parties have also reached a deal over the ministries.

As per the agreement, Congress president Sher Bahadur Deuba and UML chairman Oli will share term as the Prime Minister for 1.5-year each.

The two parties have excluded the incumbent government which is spearheaded by Pushpa Kamal Dahal aka Prachanda.

Before signing the agreement, leaders from the new formation had informed President Ram Chandra Paudel about the change in the constituents of the alliance.

However, the ruling party has briefed the cabinet that the alliance is intact hinting at no change in the dynamics of the coalition.

Quoting Prime Minister Dahal, Minister Rekha Sharma said as quoted by The Print, "The reports in the media are just rumours. We are still in dialogue with our coalition partners."

"The Prime Minister briefed us on the internal situation and dismissed external rumours," she added.

Sharma further quoted Dahal saying, "I have been in regular dialogue with UML Chairman Oli. We are in discussions on all matters,” Dahal stated in the Cabinet meeting, “The ongoing talks are just rumours. This coalition will last long."