President Muhammadu Buhari has approved a gasoline pump price cut to 125 naira ($0.4085) a litre from 145 naira during a cabinet meeting on Wednesday.
The moves will allow citizens to benefit from the deep slide in international crude markets, but at the risk of adding to the country’s budget worries. Fuel prices are contentious in Nigeria, where riots can break out at rumours of increases. Prices had been kept artificially low at 145 naira ($0.48) per litre.
Africa’s biggest economy has been battered by the global effects of coronavirus.
Roughly 90% of the Nigerian government’s foreign exchange earnings come from sales of oil, prices of which have taken a beating amid lower Chinese demand and a price war between Saudi Arabia and Russia.
Timipre Sylva, minister of state for petroleum, later issued a statement saying Nigerians should benefit from falling fuel costs, which were “a direct effect of the crash in global crude oil prices”.
“This action is being taken to cushion the economic impact of COVID-19 on our people,” he said.
Also on Wednesday, Nigeria introduced a “modulation mechanism” that will allow a reduction in petrol costs if there is a decline in crude prices, a presidency aide said.
“Nigeria has now introduced a modulation mechanism – if crude oil prices go down we will see a reduction in petrol prices. If prices go up we will see an increase,” Bashir Ahmed said in a tweet. He attributed his remarks to Sylva.