Nigerian trade unions threatened on Wednesday to call a national strike and shut down large parts of the country's oil industry from next week, if the government failed to restore a scrapped fuel subsidy.

The government said it would not budge on the subsidy, which was removed on Sunday as part of sweeping economic reforms, setting the scene for a showdown with unions and protesters angered by a sharp rise in fuel prices.

All offices, oil production centres, air and sea ports, fuel stations, markets, banks, among others will be shut down, the National Labour Congress and Trades Union Congress said in a joint statement.

If the government did not change its mind, the trade unions said they would order that indefinite general strikes, mass rallies and street protests be held across the country with the first on Monday, 9th January.

The elimination of the popular fuel subsidy caused the price of petrol to double overnight and has already sparked protests.

Most Nigerians see the subsidy as the only direct benefit they get from their country's vast oil deposits.

Nigeria's fuel regulator announced the end of the subsidy on Sunday as part of efforts to cut government spending and instil fiscal discipline. They reforms are a flagship policy of President Goodluck Jonathan and his economic team.

Mr President is deeply touched by the pains people are going through as a result of the removal of fuel subsidy. He said I should let Nigerians know that it's a painful decision that has to be taken to save the country from total collapse, Information Minister Labaran Maku said at a press conference.

To go back will cripple the economy. That is why we are calling on our citizens to bear with us, he added.

Thousands of protesters took over the main square of the northern city of Kano on Wednesday, chanting slogans against the move and calling for the government to resign.

We will not leave here. We are ready to bear our cross, protester Ibrahim Adamu told Reuters in central Kano. Jonathan should understand it is the people's mandate he is toying with. We won't move an inch from here unless the subsidy removal is reversed.

BOLDEST MOVE YET

On Tuesday, protesters shut petrol stations, formed human barriers along motorways and hijacked buses in Nigeria's biggest city Lagos in anger at the doubling of fuel prices. One demonstrator was reported shot dead in the country's west.

Economists say the subsidy encouraged corruption and waste and handed over billions of dollars of government cash to a cartel of wealthy fuel importers.

Nigeria is Africa's biggest oil producer but has to import most of its refined petroleum at great cost to the Treasury.

Nigeria's government has made its boldest move yet by abolishing the fuel subsidy, Renaissance Capital said in a note on Wednesday. The subsidy is widely believed to have benefited the wealtier (who own cars), encouraged corruption, discouraged investment in refineries and encouraged smuggling abroad.

Removing it pushed pump prices to 150 naira ($0.92) per litre from 65 naira.

Look at my fuel tank, said taxi driver David John, pointing at a half-full fuel dial in his green Toyota Camry. That was 3,500 naira. Last week that was enough to fill the whole tank.

The government estimates it will save 1 trillion naira ($6.21 billion) this year with the elimination of the subsidy.

The International Monetary Fund, which periodically criticises Nigeria for its wasteful use of public money, has backed the move.

(Additional reporting by Mike Oboh in Kano and Felix Onuah and Tim Cocks in Abuja; Writing by Tim Cocks; Editing by Andrew Heavens)