The paralysis gripping Nepal's fragile peace process for nearly three months could be easing with Prime Minister Girija Prasad Koirala finally agreeing to abolish the kingdom's two-century-old institution of monarchy and declare Nepal a republic, according to the Maoists.
Koirala and his Nepali Congress party - so far the major opponents of the Maoist demand that King Gyanendra be sacked immediately through a parliamentary decree - have shown signs of relenting, with the prime minister partially agreeing to the proposal of a republic, the Janadisha daily, the Maoist mouthpiece, reported on Wednesday.
After several rounds of parleys, Koirala is now ready to amend the constitution that, though stripping the king of all powers and privileges, left the crown in a state of suspension, decreeing that an election would decide its fate.
Now, however, Koirala is ready to revise the constitution and abolish the crown before the election, as demanded by the Maoists.
The rebels had asked the parliament to effect the change, alleging that a free and fair election would not be possible as long as the king remained.
Although the majority of legislators supported their demand, the rebels were not able to push it through because they needed two-thirds majority, which eluded them because the Nepali Congress, the biggest party in the house, opposed them.
Koirala's capitulation comes with a condition, the Maoist daily said.
He is proposing that though Nepal would be declared a republic, the king should not be evicted from his palace immediately. The implementation would start only after the election.
This, incidentally, is also part of the peace formula suggested by former US president Jimmy Carter who visited Nepal last month to bring the warring sides together.
It would also get the support of the international community that has been urging the government to hold the election and let it decide the king's fate.
However, the daily also said that Maoist chief Prachanda is pushing for the immediate implementation of a republic.
While the deadlock on monarchy could be inching towards a consensus, the two parties still remain divided over a second Maoist demand.
The rebels also want a fully proportional electoral system, which is likely to improve their electoral chances.
While Koirala was opposing it at first, now he is ready to accept a 40 to 60 compromise in which 60 per cent of the seats would be elected as per the Maoist demand and the rest on the first past the post system, the report said.
Earlier, Prachanda had indicated that if the demand for a republic were to be conceded, his party would be flexible about the second.
Koirala's thaw was partly due to the growing pressure at home and abroad to reach an understanding with the Maoists and hold the twice-deferred election by April.
A new impetus came after his trusted Minister for Science, Technology and Environment Mohanta Thakur resigned on Tuesday along with three MPs from the Terai plains to form a regional party and push for autonomy in the restive plains.
Both the Nepali Congress and the Maoists are concerned at the move, realising their control in the plains is diminishing. Any further delay to hold the polls could spell disaster for them in the Terai, which is emerging as the new x-factor in Nepal's politics.