Tuesday, May 16 2006 13:58 Hrs (IST) - World Time -

Kathmandu: Maoist leader Prachanda has asked Nepal's ruling seven-party alliance to form a negotiating team for initiating a dialogue with the rebels even as the government asked the guerrillas to stop acts like intimidation and extortion in order to create a conducive atmosphere for talks.

"The rebels would come forward for a dialogue as soon as the government forms a dialogue team to move ahead," Prachanda told a local radio station in Palpa district, The Kathmandu Post reported.

Expressing optimism about the success of the dialogue, he said, "We will come over ground, as the country heads towards finding solution to the crisis."

The seven-party ruling alliance is learnt to have delayed the formation of dialogue team due to some differences over the issue of cabinet expansion.

With most of the issues now settled, the government is likely to expand the seven member cabinet in a day or two, Nepali Congress sources said.

In the interview, the Maoist chief admitted that party cadres were extorting money to meet the expenses of their 10,000 plus 'Peoples Liberation Army'.

"Donation was necessary for food and treatment for thousands of our army". He said it was the duty of the government to allocate 50 percent of its budget to people in rural areas and to fulfill the basic needs of the PLA.

"Otherwise we remain compelled to collect taxes through our Government," he said. Meanwhile, Deputy Prime Minister K P Sharma Oli has asked the Maoists to stop acts like extortion, intimidation and recruitment of youths into the Maoist militia in order to create a conducive atmosphere for dialogue.