The announcement sparked spontaneous protests across the country.
The new pump price is $0.4 per litre of petro down from the current $0.43 per litre starting Jan 1, 2016.
Announcing the decision on December 25, the Minister of State for Petroleum, Emmanuel Kachikwu said the government could no longer afford to subsidise.
The west African country spends more than $2 billion on petrol subsidy, mostly petrol and kerosene.
The subsidy was recently found to be largely a source of corruption.
Earlier, President Muhammadu Buhari reduced the price of petrol from $0.48 to the present $0.43.
Petrol is central to Nigeria’s economy.