* Union wants release of subsidy payments to avert strike
* Finance Minister investigating fuel marketers for fraud
LAGOS, Aug 22 (Reuters) - Nigeria's capital city suffered severe fuel shortages on Wednesday, as a union halted deliveries and threatened to cut supplies to the rest of the country by Friday unless the government resumed subsidy payments.
Fuel stations were closed throughout Abuja and black market traders buzzed around the city with jerry cans of petrol selling for 50 percent more than the official price of 95 naira (${esc.dollar}0.61) a litre.
Nigeria's finance ministry said on Friday it would not pay subsidies to fuel importers it was investigating for fraud, listing 21 local firms, including some major importers.
Nigeria's refined fuel workers' union NUPENG threatened on Wednesday to shut down the fuel distribution network in Africa's second biggest economy from Friday if the government did not release subsidy payments.
"The jobs of our 15,000 members can't be jeopardised because of these non-payments," NUPENG's chairman for Southwest Nigeria, which includes the commercial hub Lagos, told Reuters by phone.
"Our members working with these marketers have not been paid for up to three months, yet the government is investigating the subsidy claims of last year and not this year."
A parliamentary probe in April uncovered a ${esc.dollar}6.8 billion scam in the fuel subsidy administration from 2009 to 2011, one of the biggest corruption scandals in Nigeria's history.
It found that marketers were claiming subsidy for fuel they never delivered or that they sold to the country's neighbouring states. Finance Minister Ngozi Okonjo-Iweala has this year been holding back subsidy payments while importers prove they have actually brought in fuel, an effort to end the corruption.
In a worrying sign the strike might spread beyond fuel workers, the National Labour Congress (NLC), an umbrella union, told Reuters it supported the strike.
"It's really difficult for the marketers to pay the salaries of members ... The problem is the genuine people who import fuel are not being paid and this is not acceptable," NLC President Chris Uyot said. "We expect the government to make concessions."
The ruling People's Democratic Party said on Wednesday corrupt oil marketers and their political collaborators were the driving force behind the NUPENG strikes and called on Nigerians to support the government.
"Why is it that the union who was in the vanguard of calls for sanity in the subsidy regime is now standing against government's decision to ensure that transparency is taken to the letter?" a PDP statement said. "Is NUPENG running with the hare and chasing with the hound?"
In January, President Goodluck Jonathan tried to end the fuel subsidy, which economists say is wasteful and corrupt, but a week of NLC-led strikes and protests over petrol prices shut down the economy and forced him to partly reinstate it. (${esc.dollar}1 = 156.9500 naira) (Reporting by Chijioke Ohuocha and Tim Cocks; additional reporting by Joe Brock in Abuja; writing by Tim Cocks; editing by James Jukwey)
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