The general, who seized power in the wake of an annulled presidential election two years ago, also said Chief Moshood Abiola, the presumed winner, was not to be freed from prison, where he has been held for more than a year. However, the sentences on 40 alleged coup plotters are to be commuted in deference to appeals from the international community.
In a television broadcast to mark the 35th anniversary of Nigeria's independence, General Abacha laid out his plans for the transition to democracy. His Provisional Ruling Council (PRC) would step down in 1998, he said, after parliamentary and presidential elections. Restrictions on party political activity are to be lifted this year.
The country is to be divided into six zones in the run-up to 1998. Six key offices, including President and Prime Minister, will thereafter be rotated among the zones over "an experimental period" of 30 years.
The treason charge facing Chief Abiola, who declared himself president in defiance of the military, has not been lifted. Referring to the June 1993 election, which Chief Abiola is regarded as having won, General Abacha said: "We cannot make progress by flogging dead issues or by pretending that matters which have long since been overtaken by events should be exhumed and given fresh breath".
Acknowledging "the concerns of world leaders ... who appealed to us to show clemency", he said those convicted of taking part in a coup plot earlier this year would have their sentences commuted. Fourteen alleged plotters are believed to have received the death penalty. The rest, including a former head of state, Olusegun Obasanjo, are understood to have been given life sentences.
"Abacha has defused the immediate crisis," a Western diplomat said yesterday. "The greatest pressure on him was to release the so-called coup plotters. People won't be very happy about Abiola, and they won't be pleased about the three-year transition period, but they won't be too surprised either."
In commuting the sentences General Abacha has indicated his desire to mend relations with the international community. Britain, the US and South Africa are among countries to have appealed for clemency for the political detainees and the resumption of constitutional government.
In addition to calls for sanctions, there has been pressure for the exclusion of Nigeria from the Commonwealth when heads of government meet in New Zealand next month.
"Abacha probably feels he's done what he had to do for Nigerians and has gone far enough in accommodating international opinion," said another diplomatic source. "The news about the coup plotters is encouraging, as is the fact that a specific date for the handover has been given. But the length of the transition period is longer than anyone would have liked."
The introduction of a rotational system of government may placate ethnic groups which believe they were disenfranchised by governments from the north.
The Hausa-Fulani of the Muslim north have dominated politics at the expense of the Yoruba in the south-west and the Ibo in the south-east, both largely Christian regions.
The continued detention of Chief Abiola, a Yoruba and a Muslim, will be particularly unpopular in the south, where he is a rallying-point for opponents of the regime. However, no unrest is expected from an opposition which has been dispirited by constant repression.
"When Abacha took power nearly two years ago he said he would only be there for a brief period," said Gani Fawehinmi, a lawyer who is the most outspoken opposition figure in Nigeria. "Again he's shown he's not a man to be trusted. His transition programme is a ruse to buy time. He has no intention of handing over power in three years."
Nigeria has been under rule by the military for more than 25 of the past 35 years. A succession of army men have reneged on promises to return the country to democracy. Only General Obasanjo stood down voluntarily.