Nepal's Khadga Prasad Sharma Oli was sworn in as prime minister on Monday after his Communist Party forged a coalition government with the centre-left Nepali Congress, shifting power in the country's often-volatile parliament.

Oli, 72, chief of the second-largest party in the parliament, the Communist Party of Nepal - Unified Marxist Leninist (CPN-UML), returns as prime minister for the fourth time.

In the Himalayan republic of about 30 million people, overshadowed by giant neighbours India and China, Oli previously trod a fine balance between the rivals, cordial to both but reaching out to Beijing to decrease Nepal's dependency on New Delhi.

"I, KP Sharma Oli, in the name of the country and people, pledge that I will be loyal to the constitution... and fulfil my duty as the prime minister," Oli said, as President Ram Chandra Poudel administered the oath of office.

First elected as prime minister in 2015, he was reelected in 2018 with a rare majority government, and then reappointed briefly in 2021.

His predecessor and former coalition government ally, Pushpa Kamal Dahal, lost a vote of confidence on Friday, barely 18 months after taking office.

Dahal, a former Maoist guerrilla commander better known by his nom de guerre Prachanda ("The Fierce One"), was forced to step down after Oli's party withdrew its support. 

Oli instead forged a deal with Sher Bahadur Deuba of the Nepali Congress.

He has promised to yield the post to the former five-time prime minister Deuba, 78, later in the parliamentary term.

Nepal's next general elections are due in 2027.

'Old leaders'

The country became a federal republic in 2008 after a decade-long civil war and a peace deal that saw the Maoists brought into government and the abolishment of the monarchy. 

Since then, a revolving door of aging prime ministers and a culture of horse-trading have fuelled public perceptions that the government is out of touch with Nepal's pressing problems.

But political journalist Binu Subedi said that while Oli was an old face in parliament, he faces fresh challenges.

"As new parties challenge old leaders, we have to see how this coalition performs", Subedi said.

"Will they be more democratic and work well for the people?" she added.

"Or think that they can do anything, because they have the strength of numbers?"

Oli's political career stretches nearly six decades. 

The veteran politician, who has had two kidney transplants, was born in 1952 in Nepal's Tehrathum district, close to the eastern border with India.

Drawn into underground communist politics as a teenager, he was arrested in 1973 aged 21 for campaigning to overthrow the monarchy. 

He was jailed for 14 years, four of which he said were in solitary confinement, a period when he studied and wrote poetry, penning his verses on cigarette boxes when he could not access paper.

After his release in 1987, he joined the CPN-UML and rose through the party ranks, winning elections to parliament.