Efforts to bring stability in Nepal are suffering setbacks, Karin Landgren, the special representative of the UN secretary-general for Nepal, said here.
"The peace process has stagnated in Nepal to a certain degree," she said at a press briefing on Friday.
In the face of negative developments, the Security Council has passed a resolution that extends the stay of the peacekeeping mission in Nepal (UNMIN) for another six months to facilitate the government and other parties to work out a durable peace plan.
The key challenges that remain are drafting of a new constitution and integration of the thousands of Maoist army personnel into the main army. The government has announced the start of this rehabilitation programme.
"Critical political decisions need to be taken soon on the modalities and the number of Maoist army personnel to be integrated into the security forces," said Landgren.
The UN representative also reported the rise of 107 armed groups in the southern region of Terai. "On the situation in the Terai it is clear that the law and order situation is precarious," she said.
Nepal has endured political instability since it ended nearly three centuries of monarchal rule in 2008 -- making it the world's youngest republic. In the last few months, confusion over the constitutionally mandated roles of the government and the army has impeded the reconciliation process.
In May, Pushpa Kamal Dahal Prachanda from the Unified Communist Party of Nepal-Maoist (UCPN-M), which was leading the coalition government, stepped down as prime minister following a decision by President Ram Baran Yadav of the Nepali Congress to reinstate the Chief of Army Staff whom Prachanda had fired.
A leaked video showed Prachanda telling Maoist army commanders that some allocated money would be "used for revolt" caused further unrest. The present government formed by the Communist Party of Nepal-Unified Marxist-Leninist (UML) and 21 other political parties does not include the Maoists.
"Trust and confidence are at a very low ebb," said Landgren, calling for the Maoists to show their "commitment to multi-party democracy".
"The focus in recent months on competitive politics has drawn attention away from the business of key peace process issues," she added.
The UN is also discouraging the Indian government from reinstating its military aid to Nepal, which may disrupt the frail peace between the government and the Maoists.
International observers are encouraging the nation's leaders to form a "political consultative mechanism" that consistently negotiates the outstanding issues. It is hoped that a government of national unity can be formed, which will fortify the peace efforts.
The UN official also drew attention to the culture of impunity that had gripped the nation -- no prosecutions had taken place for the human rights violations committed during the decade-long civil war. In the midst of ongoing political turmoil, Nepal's economy has also become a cause for concern. Remittances, a major proportion of the country's income, have sharply declined.