ABUJA (AFP) -- President Olusegun Obasanjo marked Nigeria's National Day on Wednesday with an impassioned defense of his reform program, as organized labor threatened to strike over fuel price rises.

In a radio address on the 43rd anniversary of Nigeria's independence from colonial rule, the recently re-elected leader called for a "rebirth in optimism" in Africa's most populous nation.

The former military dictator in April won a second term as a civilian president, and has promised to turn around a stagnant economy with a bold series of public sector reforms led by a new generation of ministers.

But the first step down this road -- an attempt to deregulate fuel prices -- has already hit public opposition, and union leaders have warned that they will call the year's second general strike if it is not reversed.

"Fellow Nigerians, our reform program will entail sacrifice in one form or the other, but I can assure you that this sacrifice will have manifold returns," Obasanjo said in his annual National Day speech.

"In the process of rebuilding our nation, much of the last four years has been spent on digging for a solid foundation. Now we are all set for action on setting the foundation," he said. "We have identified new voices, islands of integrity, and we have identified opportunities for growth and development," he insisted. "Fellow Nigerians, please join me in dedicating this National Day to the birth of optimism."

Obasanjo was speaking as huge fuel queues continued to snarl up traffic in Nigeria's teeming cities, and union leaders promised a repeat of June's general strike, which derailed the last attempt to reform fuel distribution.

Then, Obasanjo had attempted to raise the price of a liter of subsidized petrol or diesel from 28 naira to 45 (35 U.S. cents), but was forced to scale back the increase by a strike which paralyzed business life.

On Tuesday this week, the fuel pricing agency announced that it had now simply scrapped the price cap and invited private filling station operators to set their own prices according to the rules of market forces.

Almost immediately petrol jumped from 34 naira per liter to 39.95 on the crowded streets of Lagos, Africa's gridlocked largest city.

Union leaders said a renewed strike was inevitable.

"We have decided to go on strike to resist the deregulation policy," said John Odah, general secretary of the Nigeria Labor Congress, the umbrella union body which led June's protests.

"The national executive council will meet on October 6 to work out the modalities for the action and to decide on when it will start," he added.

The strike of June and July brought business life in Nigerian cities to a halt and triggered protests in which at least a dozen people died, most of them strikers cut down by police bullets.

Nigeria is Africa's biggest producer of crude oil, but refines little of it itself and relies on expensive imports to fuel its cars and trucks.

The public has shown little trust in Obasanjo's promise that the subsidy money will now go to improving basic services, and labor leaders accuse government of making consumers pay while the elite reaps profits.

"We told them to improve local refining of the products by making the four refineries work. Government seems to lack the political will ... because of their cronies that are feeding fat on the system," Odah stormed.

Obasanjo's speech did not address the fuel issue d1irectly, but appealed for Nigeria's long-suffering citizens to bear with him.

"We need all hands on deck, for the sake of our nation ... This year I see a new Nigeria -- a Nigeria to give satisfaction to all of us," he said.