"A large portion of this goes to factories," the statement said. "Another portion is used by the fishing community. Some use kerosene as a substitute for diesel.
"Even when other areas are concerned, consumption of kerosene is very high in the coastal line. According to security forces, kerosene is used as a fuel even in manufacturing illicit liquor."
Sri Lanka's rulers have for years sold energy below cost, and kerosene in particular under a long-running energy deception policy and funded the cost with high taxes on other goods including basis foods or bank credit.
Kerosene and diesel are the most expensive refined fuels to import, and petrol is cheaper. But in Sri Lanka diesel is priced below petrol.
The wrong price signals then give incentives for people to increase consumption of such goods. At one time the gap between petrol and diesel was so large that people stopped buying petrol cars and bought diesel driven vans instead.
Some of the island's most profitable ceramic firms use kerosene to fire kilns.
Last month prices of diesel and petrol were raised steeply after bank credit taken to cover power and petroleum sector losses put pressure on a dollar peg.
The finance ministry said around 90 percent of the households now has access to electricity. Out of 4.5 million households only 300,000 households used kerosene.The finance ministry said estate areas such as Nuwara Eliya, Kandy and Baduall consumes less than 20 percent of the kerosene and even houses in estates have been given electricity.
But there were kerosene consuming households in the Colombo district. Colombo district has large numbers of poor, though the share of poor is small due a bigger overall population.