By Gopal Sharma
KATHMANDU, Feb 7 (Reuters) - Nepal's Maoist party has for the first time laid down the condition on which its prime minister would resign, paving the way for an end to a political deadlock with opposition parties that has paralysed one of the world's poorest countries.
Baburam Bhattarai has agreed to step aside provided that opposition parties accept the chief justice of the Supreme Court as the head of a unity government to oversee national elections, delegates to a party conference said on Thursday.
A former rebel leader, Bhattarai has led a caretaker government since May last year, when parliament was dissolved after failing to reach a consensus on drafting a new constitution seen as key to Nepal's long-term stability.
Nepal is still recovering from a decade of civil war that killed more than 16,000 people before ending in 2006. Its politics remain fractious, and recent squabbles over Bhattarai's staying in power have sparked violent street protests.
The hope is that elections in May this year will end the deadlock and pave the way for a national assembly to draft a new constitution, after the 239-year-old monarchy was abolished and Nepal became a republic.
"Our party has proposed the chief justice of the Supreme Court to lead the new government to hold elections in May as a formula to end the deadlock," delegate Surya Rimal told Reuters from Hetauda, 80 km (50 miles) southeast of Kathmandu, where the Maoists are holding their first national congress in 21 years.
Opposition parties have demanded Bhattarai resign after he failed to hold elections he ordered for November last year, and the ongoing uncertainty of when elections will be held has fuelled unrest.
"I think it is a positive step because it is basically aimed at holding Constituent Assembly elections within a stipulated time," said Lok Raj Baral, a well-known commentator, about the Maoists' proposal. Opposition parties were not immediately available for comment.
The political stalemate has led many industries to close and frightened investors in the Himalayan nation, which relies on foreign aid and tourism to prop up its economy.
The Maoists won elections in 2008 after joining a peace process two years earlier and are leading a rickety coalition with regional parties based on the southern plains.
"We have no other option than this and this is the last one to solve the crisis," said the Maoist party spokesman, Agni Sapkota. (Editing by Matthias Williams)