Nepal makes headway in path to choose new PM

KATHMANDU (Reuters) - Social democrat Sushil Koirala was named as candidate for the Himalayan nation's prime minister by the Nepali Congress party on Sunday, clearing a major hurdle for the formation of a new government two months after an election. The party emerged as the biggest political group in the November election for a constituent assembly which also works as the parliament. But a new government has not been formed yet amid a row within the party over who should be the new leader. Koirala, who is also the party head, defeated three time former Prime Minister Sher Bahadur Deuba in a vote by party legislators. Nepal, sandwiched between India and China, has been running under an interim constitution since the 2008 abolition of the centuries-old monarchy and the prolonged political deadlock has crippled the economy, forcing thousands to seek work abroad. Koirala must be elected by a majority in the parliament, which holds its first meeting on Sunday and is yet to fix a date for the election of the premier. "Our priority is to form a government of national consensus, including all major political parties in the parliament. This is necessary to draft the constitution within one year," said Dilendra Prasad Badu, a senior Nepali Congress leader. Koirala will need the support of the UML, a moderate communist party, to win as his party controls only 194 votes in the 601-seat parliament. Party officials said the leader is trying to persuade Maoist former rebels also to join a national unity government for stability in the impoverished mountainous nation that has seen five government changes since a 2008 election. But the former rebels fear that the Nepali Congress and the UML, the second largest group, could unite against it to water down their vision of a federal and secular republic. (Reporting by Gopal Sharma; Writing by Alistair Scrutton; Editing by Ron Popeski)