Felix Onuah and Joe Brock Abuja

Nigerian President Goodluck Jonathan announced a cut in petrol prices to 97 naira (R4.74) a litre yesterday, a gesture that prompted unions to suspend mass protests to allow further talks with the government.

But the main labour unions said strikes that paralysed the country last week would resume pending further talks, and residents of Nigeria’s largest city Lagos reported seeing soldiers in the streets in an apparent security move.

“They are searching vehicles. It looks like they want to maintain law and order,” one resident said.

Oil output by Nigeria, Africa’s biggest crude exporter, has not been affected by the labour unrest, which began after a fuel subsidy was scrapped on January 1, more than doubling the pump price of petrol to 150 naira a litre from 65 naira.

Jonathan met union leaders on Sunday in search of a compromise to end the strikes but he said later that the talks had “yielded no tangible result” and he would pursue a policy of removing subsidies seen as breeding waste and corruption.

Jonathan said: “The government will continue to pursue full deregulation of the downstream petroleum sector. However, given the hardships being suffered by Nigerians, and after due consideration and consultations… the government has approved the reduction of the pump price of petrol.”

Chika Onuegbu, a senior official at Nigeria’s umbrella Trade Union Congress and its main oil union Pengassan, said further talks with the government were due to be held yesterday and he hoped for progress that would allow a suspension of the strikes.

Pengassan had previously said it would cut oil production if there was a complete breakdown of negotiations between labour and the government.

Global oil prices were boosted by fears of reduced supplies from Nigeria late last week. Traders and analysts say a serious production outage would push prices higher.

Several people were killed in clashes between strikers and police last week.

Economists said the subsidy should be dropped because it was wasteful and open to corruption. Protesters have countered that argument by asking the government to work harder to tackle graft and waste before rescinding public benefits.

On Sunday Jonathan gave approval for an investigation. Oil Minister Diezani Alison-Madueke said she had written to the Economic and Financial Crimes Commission inviting the regulator to examine the subsidy procedure. State oil company NNPC and fuel regulators have come under fire for a lack of transparency from independent reports, including one by KPMG. Alison-Madueke pledged to review the reports.

Nigeria produces more than 2 million barrels of crude oil a day but decades of graft and mismanagement have forced it to import almost all its needs for refined fuel.

Alison-Madueke said she would meet legislators in the next week to seek progress towards passing a wide-ranging Petroleum Industry Bill that had been stuck in parliament for years, costing Nigeria billions of dollars in lost investment.

Nigeria holds the world’s seventh-largest gas reserves but infrastructure only provides enough power to support a medium-sized European city, meaning most people live without electricity.