In 2053, there was a coalition government led by Prime Minister Sher Bahadur Deuba with the support of the RPP. The issue of whether or not to pass the Mahakali River Integrated Development Treaty (also known as the Mahakali Treaty) had caused a great stir within the main opposition party, UML.

The issue of the treaty had increased internal power struggles in the UML and created a new equation in the party. A joint meeting of both houses had to be held to pass the treaty. A two-thirds majority was needed. For that, the ruling Nepali Congress needed the support of the UML. Leaders including UML General Secretary Madhav Kumar Nepal, Jhalanath Khanal, and KP Sharma Oli were in favor of passing the treaty, while leaders including CP Mainali and Bamdev Gautam were creating a new equation in opposition to it.

On behalf of the government, the then Minister for Water Resources Pashupati Shumsher Rana had tabled the treaty in the House on Bhadra 26, 2053. There had been a general discussion on the treaty in the House. A plan was made to present the treaty for decision within a few days. But in the UML, extreme factionalism and a situation of party-opposition was created by linking past issues. The UML establishment party accused Bamdev of breaking the alliance between the Congress and the RPP and failing to pass the no-confidence motion. The CP, on the other hand, was accused of inciting the RPP while trying to topple the government.

A task force was formed under the coordination of KP Sharma Oli to study the Mahakali Treaty. As the coordinator of the task force, one faction of the party was criticizing Oli. Oli was also accused of having 'anti-national elements'. Oli, on the other hand, was resisting. UML General Secretary Nepal had said that they were determined to pass the treaty.

Speaking at a program of the Nepal Political Science Association (RALSANG) on Bhadra 21, 2053, General Secretary Nepal had said that UML was not a party that kept changing its tune. Citing the incident where Nepal Workers and Peasants Party (NMP) Chairman Narayanman Bijukchhe asked him not to pass the treaty, Nepal had replied that it would not give UML a chance to become a party of trouble.

Saying that he had promised to pass the treaty in Prime Minister Deuba's chamber, General Secretary Nepal had said that the people would not follow the party of trouble. He had argued that if the treaty was not passed, the people would consider UML a trouble. Stating that the reputation and credibility of a political party depend on its work, he had said that since the treaty had already been welcomed, if there were any problems, it should move forward with a place for improvement. He was of the opinion that there was no need to fundamentally improve the treaty. Nepal had said, ‘India’s behavior caused the problem.’ He had urged India to win Nepal’s trust by removing the army from Tinker. In the party’s central committee meeting, the central members had said that the treaty should be passed by incorporating the 10-point suggestions given by the Oli task force.

There was interest not only within the country but also outside. The then US Assistant Secretary of State, Mrs. Robin Raphael, who was visiting Nepal, had said that if the Mahakali Treaty was passed, it would be a key to attracting foreign investment.

At a press conference held in Kathmandu on Bhadra 21, 2053, Raphael had said that the United States would not take any decision on bilateral issues. During the visit, she met General Secretary Nepal, UML leaders Oli, Khanal, Mainali and Bharat Mohan Adhikari. She had talked to Prime Minister Deuba about bilateral economic development. At that time, there were allegations of child labor in ready-made garments being sent from Nepal to the US. Nepalis had expressed their problems to Rafael on this issue. Nepali businessmen had requested Rafael to increase the quota for the export of Nepali manufactured ready-made garments and carpets.