UPDATE 9-New Nigerian leader pledges electoral reform
* Jonathan must now appoint new vice president
* Thousands of mourners gather in Yar'Adua's home town
* Open race to succeed Yar'Adua in next polls
(Adds comment from ruling party, opposition)
By Randy Fabi and Felix Onuah
ABUJA, May 6 (Reuters) - Nigeria's new leader Goodluck Jonathan vowed on Thursday electoral reform and fighting graft would be top priorities as he steers the nation to its most fiercely contested polls since the end of military rule.
Jonathan was sworn in as head of state in Africa's most populous country following the death late on Wednesday of President Umaru Yar'Adua, who died peacefully aged 58 after a long battle with kidney and heart ailments.
"Our total commitment to good governance, electoral reform and the fight against corruption would be pursued with greater vigour," Jonathan said after taking the oath of office in front of ministers, state governors and ambassadors in Abuja.
Maintaining peace in the Niger Delta, the heartland of the OPEC member's 2 million barrels per day (bpd) oil industry, would also be a top priority, he said after being sworn in by Nigeria's Chief Justice Aloysius Katsina-Alu.
Jonathan had already been running affairs of state as acting president for several months and few expect any policy changes.
Yar'Adua had been absent from the political scene since November, when he left for treatment for a heart condition in Saudi Arabia. He returned to Nigeria in February but remained too sick to govern and never made another public appearance.
Jonathan assumed executive powers three months ago and has since appointed a new cabinet and his own team of advisers. He will now appoint a vice president and the pair will complete the unexpired presidential term until elections due by April 2011.
His choice of vice president could determine the outcome of those polls.
It is unclear if Jonathan, who is from the southern Niger Delta, will run for president because of an unwritten agreement in the ruling party that power rotates between north and south. The next four-year term is due to go to Yar'Adua's Muslim north.
"The paramount issue will be who the new vice president will be. It'll probably be a northerner (who) will be front runner for the presidency in 2011," said Kayode Akindele, a director at Lagos-based consultancy Greengate Strategic Partners.
The ruling People's Democratic Party (PDP) congratulated Jonathan and pledged its "unflinching loyalty and support".
The opposition Action Congress said the smooth succession showed Nigeria was on a "sound democratic footing".
On Thursday, the first of seven days of national mourning, Yar'Adua's body was flown to his home town of Katsina, where thousands of people lined the streets. U.S. President Barack Obama praised his "profound personal decency and integrity".
Yar'Adua, who pledged respect for the rule of law when he took office, was initially seen by many Nigerians as a breath of fresh air after eight years of former president Olusegun Obasanjo, an overbearing ex-military ruler with a penchant for disregarding court orders and legal detail.
He was Nigeria's first university-educated president in four decades and won 2007 polls which, though marred by ballot-stuffing, marked the first transfer of power from one civilian president to another since independence in 1960.
But the optimism quickly faded.
He earned the nickname "Baba Go-Slow" -- a reference to the local term for Nigeria's crippling traffic jams -- for what critics said was slow progress on everything from economic reforms to restoring the shambolic energy sector.
The later part of his tenure was overshadowed by prolonged absences for overseas medical care, the last of which brought Nigeria to the brink of constitutional crisis. But his biggest achievement was in the restive Niger Delta, the heartland of Africa's largest oil and gas industry.
Militant attacks rumbled on during the early part of his time in office, but his offer of amnesty last year led thousands of gunmen to lay down their weapons and has brought more than six months of relative peace in the region.
The main militant group, the Movement for the Emancipation of the Niger Delta (MEND), said it was saddened by his death.
"MEND considers the late president a genuine peacemaker whose initiatives, humility and respect began to bring confidence to the peace process," the group said in an email to Reuters. "His death may leave a vacuum that may not be filled."
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