Mohan Baidya's newly-formed party could revive ties with Maoist insurgents in India and play to the grievances of ex-combatants back home.
Nepal's constitutional crisis has led to worries about renewed instability in the Himalayan nation. Those concerns were amplified further during June when a dissident faction broke away from the country's leading political force, the Unified Communist Party of Nepal (Maoist).
"The split in the largest party means more instability in the country," Ram Kumar Dahal, professor of Political Science at Tribhuvan University, told Khabar South Asia. "More worrying is the fact that the new party has declared to fight for a people's republic. Over time it will threaten democratic parties and institutions."
After a three-day gathering, former Maoist vice chairperson Mohan "Kiran" Baidya and other leaders of the radical faction announced they were breaking away to form a new grouping, called the Communist Party of Nepal (Maoist).
CP Gajurel, a senior leader of the breakaway party, told Khabar that aspirations for sweeping reforms have not been met. "We will first launch [a] peaceful movement," he said. "We will resort to revolt only if our peaceful movement is suppressed and we are denied other options to achieve that reform."
Although the breakaway faction represented only a minority of the Maoist party as a whole, it could gain more clout due to citizen disenchantment over the stalled political process, analysts say.
Many commentators, however, are cautioning against alarmism, saying the risk should not be exaggerated. Vijay Kant Karna, another political scientist from Tribhuvan University, suggests the dissidents are not in a position to cause major turmoil.
"The new party has a leadership crisis and cannot lead a revolt or another war since its leader Mohan Baidya does not have that character," he told Khabar.
Journalist Ganga BC, who covers Maoist issues for the daily Kantipur, Nepal's largest newspaper, takes a similar view.
"They cannot launch a new revolt because they do not have mass support as of now. They have only slogans and do not have organisational strength to launch a revolt," he said.
Nevertheless, there are concerns in Nepal that the radicals' message will resonate among former Maoist combatants, some of whom are unhappy with the process of being reintegrated. Around 3,129 ex-combatants living in cantonments are in the process of being integrated into the Nepal Army, while others are returning to civilian life.
Although the former guerrillas are being provided with cheques ranging from Rn 544,350 ($6,357) to Rn 876,423 ($10,235), some say they face hurdles in building their new lives.
"These combatants might put pressure on the leadership [of the new Maoist party] to launch a revolt," Ganga, the journalist, said.
Political analyst Shyam Shrestha agrees that the newly-formed party could have a disruptive influence.
"They will not support any attempt to forward the peace process as they have been opposing integration of Maoist combatants into the national army from the very beginning, arguing the integration is not going to be dignified," Shrestha said.
Of broader regional concern is the possibility that the new party will foster ties with Maoist insurgents in India, who have been waging an armed campaign across large sections of the country's northeast.
"The Indian Maoists and the Revolutionary Internationalist Movement have long pressed Nepali Maoists not to join the peace process," Dahal said. "The split will encourage them not to renounce violence and choose peace."
Sahana Ghish in Kolkata contributed to this article.