Kathmandu (Agencies): Nepal's veteran communist leader Jhalanath Khanal was sworn in as the new Prime Minister on Sunday even as his party failed to ink a power sharing deal with its key ally Maoists, delaying the cabinet formation.

President Ram Baran Yadav administered the oath of office and secrecy at a grand function in the presence of top Nepalese leaders, including Vice President Parmananda Jha, caretaker Prime Minister Madhav Kumar Nepal, Maoist chairman Prachanda, Nepali Congress president Sushil Koirala and Parliament Speaker Subhas Chandra Nembang.

"I will remain committed and honest to the nation and its people to fulfill my duty," said 60-year-old Khanal.

Even as it ended a seven-month leadership vacuum in the country, the cabinet formation was postponed as the CPN-UML failed to finalise a power sharing deal with it main supporter UCPN-Maoist who are seeking their pound of flesh for having ensured Khanal's victory, sources said.

The much-awaited cabinet could not be formed today due to differences between the coalition partners over key portfolios. Now Khanal is likely to form a small cabinet on Monday.

The Maoist party, whose support was crucial in garnering a majority in the House vote on Thursday, are apparently demanding proportional representation in the cabinet.

The UCPN-Maoist has 238 seats and the CPN-UML has 108 seats in the Constituent Assembly, which acts as the country's interim Parliament.

The former rebels are pushing for key portfolios, including Home Ministry, which was rejected by Prime Minister Khanal, leading to the delay in cabinet formation, according to a senior leader of CPN-UML.

CPN-UML sources said the party has finalised the names of Bharat Mohan Adhikari, Bishnu Poudyal and Ganga Lal Tuladhar for key portfolios of Finance, Home and Education. However, the UCPN-Maoist are yet to finalise its cabinet members.

Two Terai based parties, Madhesi Peoples Rights Forum led by former Foreign Minister Upendra Yadav and Madhesi Peoples Rights Forum (Nepal) led by Mahendra Yadav are likely to join the government, sources said.
Nepali Congress, the second largest party with 114 members in the House, has decided to sit in the opposition.

There is growing anger in a section of the CPN-UML party and the Nepali Congress, which supported the Communist party-led government since 2009, over a secret deal with the
Maoists during the voting in the parliament, sources said.

Khanal's party, which is the third largest party in the parliament, got support from the main Opposition Maoist Party after Prachanda quit the race in a last minute decision.

Nepal's parliament voted under revised election rules designed to break a deadlock that had left the country without a government even after 16 rounds of elections.

The political deadlock over the last seven months has been hugely damaging for Nepal, which is still reeling from its decade of civil war that ended in 2006. At least 13,000 people were killed in Maoist led insurgency.