Nepal says takes over ownership of king's palaces

KATHMANDU, Aug 23 (Reuters) Nepal's multi-party government said today it had taken the ownership of ancient palaces of unpopular King Gyanendra, including his official residence in the heart of Kathmandu, the country's capital.

But the monarch and his family will continue to stay in the sprawling Narayanhity palace in Kathmandu until an assembly due to be elected this year decides whether to retain the monarchy or turn the Himalayan nation into a republic, a minister said.

''Until now the Narayanhity was in the name of the king. Now it belongs to the government,'' Information and Communications Minister Krishna Bahadur Mahara told reporters after a cabinet meeting.

The government is also taking over the ownership of six other ancient palaces, including one in the historic Durbar Square in the capital, from the king, another minister told Reuters on condition of anonymity.

The government said the 60-year-old king would be allowed to keep the property he owned before being crowned.

There was no immediate comment from the monarch.

Some analysts said the move to take ownership of the palaces was a popular step against a widely disliked king, ahead of the November poll that would result in the formation of a constituent assembly, which would decide the political future of Nepal.

''The monarchy has become an election issue. This is proof that the campaigning for the elections has started,'' said Kunda Dixit, editor of the weekly Nepali Times.

''It will go down very well with the people.'' A panel headed by Home Minister Krishna Prasad Sitaula is collecting details of other assets including those of King Birendra and Queen Aishwarya, killed in a 2001 palace massacre.

Those deaths vaulted Gyanendra, then a businessman with interests ranging from tea to tobacco and casinos, to the throne.

Officials say the property of the slain royals will be used for a charity to be run by the government.

Traditionally, kings have been revered in the majority-Hindu Nepal as gods.

But the monarchy's popularity plunged in 2005 when Gyanendra fired the government and took absolute power, saying the move was vital to crush a deadly Maoist insurgency -- a conflict that killed more than 13,000 people.

But weeks of violent street protests, backed by the Maoists, last year forced him to hand back power to political parties.

The new government quickly stripped the king of his powers, including his control over the army.

The Maoists, who began their anti-monarchy revolt in 1996, are now in the government under a power-sharing deal with mainstream parties, and are pushing for abolition of monarchy.

REUTERS DKS BD2104