Sarath Amunugama said representations were expected to be made to the Organisation of the Petroleum Exporting Countries (Opec) at its meeting in Vienna in late July for a loan, grant or subsidy to manage the cost in the short term.

The government has also said it would consider revising the subsidy rates, possibly moving to the previous government's policy of monthly revisions in keeping with changes in global oil prices.

"This has become a critical issue and CPC (Ceylon Petroleum Corp) is unable to pay overdrafts taken and is running into problems with the banks," Amunugama said at a seminar.

A report from Lanka Orix Securities carried in local media said the country's oil bill would rise by at least $117 million in 2004 to $550 million, due to the subsidy with world oil prices rocketing in the last few weeks.

The report said the current cost of the subsidy was around 800 million rupees ($7.867 million) a month, compared with about 600 million rupees previously.