Regulatory & Policy News
View all(114)⚡ Parliamentary Committee Urges Energy Sector Co-ordination After Island-Wide Blackout
• Grid Failure Trigger: The total system collapse on 17 Oct at 11:43 AM was caused by a severe imbalance—Norochcholai coal plant Unit 1 suddenly dropped from 187 MW to 5 MW, while 1,700 MW of rooftop solar was active on the grid (out of 529 MW coal total supply). • Interlocking Issues: Sectoral Oversight Committee (SOC) directed the PUCSL, National System Operator (NSO), and utilities to end siloed operations. Uncontrolled injections from rooftop solar complicate restoration as owners failed to manually disconnect systems when requested. • Demand Shift: PUCSL data indicates peak electricity demand has shifted from night to day due to expanding commercial activity, impacting national tariff structures and grid capacity planning. • Historical Context: Marks Sri Lanka's second major failure in under 2 years (following the 9 Feb 2025 outage caused by low system inertia from high solar energy contribution). A final technical evaluation report has been requested.
📊 Sri Lanka Prison Population Drops 12% Amid Justice Reforms
• Overall Figures: Total inmate population fell by 12% (5,068 inmates) from 41,993 on July 1 to 36,925 by September 30, following targeted government measures to reduce overcrowding. • Government Analyst Sector: Bureaucratic delays identified as a major driver of overcrowding. Workforce expansion led to 1,506 reports issued in August and September. Proposed amendments will mandate a strict 2-month deadline for issuing examination reports. • Legal & Administrative Reform: Proposed legislation allows prompt destruction of seized narcotics after photograph/video documentation and Magistrate approval, eliminating the need to retain full evidence packages until trials conclude while safeguarding fair trial rights.
Sri Lanka Security Reform: PTA Repeal Concerns ⚖️
Sri Lanka’s government, led by President Anura Kumara Dissanayake, has tabled the Protection of the State from Terrorism Bill (PS-TB) to replace the 1979 Prevention of Terrorism Act (PTA). However, analysis from Amnesty International and civil society indicates the bill re-packages executive powers rather than preventing state abuse. • Key Concerns & Legal Flaws: • Arbitrary Detention: Permits administrative detention up to 1 year without charges, plus up to another year in pre-trial detention (2 years cumulative). • Elastic Definitions: Broad scope fails to explicitly safeguard peaceful protests, trade union actions, or civic advocacy. • Lower Thresholds: Penalizes acts causing a "likelihood of substantial economic loss," raising risks for industrial action and mass strikes. • Expanded Powers: Grants search, arrest, and seizure authority to the armed forces and coast guard. Executive-appointed review panels lack independent judicial oversight. • Economic & National Impact: • Investment & Governance: Executive overreach risks undermining corporate governance, ESG compliance, and long-term commitment from international investors. • Trade Preferences: Failure to meet international human rights standards threatens Sri Lanka’s access to vital export benefits, such as the European Union’s GSP+ scheme. • Jurisdictional Risk: Heightens risks for foreign nationals, researchers, and tourists during political climate shifts.
Sri Lanka Prepares Rubber Sector for EU Deforestation Rules 📈
Sri Lanka’s rubber industry is taking proactive steps to align with the European Union Deforestation Regulation (EUDR) to maintain access to key European markets, safeguard local livelihoods, and protect national export competitiveness. • Key Initiative: A technical workshop was held in Colombo—organized by the EU-funded Green Recovery Facility (GRF) and implemented by Expertise France—to address EUDR requirements, supply chain coordination, and traceability for local exporters. • Sector Breakdown: The regulation impacts natural rubber and derivative products, including tyres, rubber hoses, and conveyor belts. • Strategic Focus: European Commission and European Forest Institute (EFI) experts outlined compliance obligations, implementation steps, and findings from a 2025 assessment on Sri Lanka's industry readiness. • Institutional Collaboration: Key public and private stakeholders—including the Ministry of Plantation and Community Infrastructure, Rubber Development Department, Planters’ Association of Ceylon, and Colombo Rubber Traders’ Association—engaged directly with EU representatives to build practical systems for compliance. _Note: Specific export volume figures and % changes were not provided in the report._
📈 CoPF Pushes New Procurement Act Amid Slow Capital Spending
• Overall Utilization: Sri Lanka has utilized only ~Rs. 385 Bn out of its allocated Rs. 1,380 Bn capital expenditure this year, reflecting severe under-utilization of public investment funds needed for economic growth. • Key Operational Bottlenecks: Discussions in the Committee on Public Finance (CoPF) highlighted procurement delays, registration hurdles, legal framework deficiencies, and operational friction in digital systems—particularly affecting critical purchases for pharmaceuticals and essential goods. • Proposed Reforms: Proposals include raising financial limits for committees, establishing long-term framework agreements for repetitive purchases, creating sector-specific guidelines, and expanding the Procurement Management Information System (PROMIS) across all provincial councils and departments by 2027 (currently tracking 394 units across 19 Ministries). • National & Economic Impact: President Anura Kumara Dissanayake noted that over-regulated, anti-corruption rules have created restrictive bottlenecks. Economists warn that persistent shortfalls in deploying funds toward critical infrastructure (transport, power, digital systems) signal poor capital absorption to international partners and risk weakening long-term GDP growth.
📉 FCEJ Condemns Proposed Laws & Regressive Economic Policies
The Feminist Collective for Economic Justice (FCEJ) has issued a statement criticizing the NPP Government’s latest legislative agenda and economic trajectory, warning of rising authoritarianism to enforce anti-people economic reforms. • Policy & Economic Concerns FCEJ highlighted that continued austerity, subsidy removals, low social spending, and foreign loan conditionalities are worsening household precarity. Export-led growth, mineral mining, and green transition initiatives in sectors like energy, agriculture, and plantation development are driven by corporate interests without adequate labor and environmental protections. • Impact on Vulnerable Groups Working households face depressed wages, high living costs, rising debt, and climate-induced shocks, forcing many into informal labor or foreign employment. • Proposed Oppressive Legislation The collective flagged key October 2026 legislative bills that risk over-criminalizing dissent and expanding police powers: • Protection of the State from Terrorism Bill (PSTA): Broadens terrorism definitions to cover protests and curtails judicial oversight. • Organised Crime Bill: Re-introduces police confession clauses. • NGO Bill: Imposes mandatory registration, crowdfunding restrictions, and penalties up to LKR 1 Mn. • Financial Acts (2026 Updates): Enhances surveillance via terrorism financing and money laundering amendments. • Call to Action FCEJ urges the Government to shift away from prioritizing elite macroeconomic stability at the expense of working people, particularly women, and to reverse oppressive legislative trends.
📈 HRCSL Recommends Withdrawal of Prevention of Organised Crime Bill
• Regulatory & Governance Update: The Human Rights Commission of Sri Lanka (HRCSL) has urged the Minister of Justice to withdraw and revise the proposed Prevention of Organised Crime Bill (Gazetted Oct 6, 2026), citing severe incompatibilities with constitutional rights and international human rights treaties. • Core Human Rights & Legal Concerns: - Admissibility of Police Confessions: Provisions mirror Section 16 of the PTA, allowing confessions made to ASP-rank officers as evidence, which the Commission warns creates incentives for custodial torture. - Extensive Executive Detention Powers: Permits detention orders via the Ministry of Public Security for "serious crimes." The broad definition includes non-violent offenses such as intellectual property infringements, customs violations, and wildlife/flora import breaches. - Broad Group Membership Test: Membership factors encompass style of dress, tattoos, hand signs, or mere association with known members, creating an unreasonably wide legal net. - Judicial Oversight Constraints: Violates Article 13(2) of the Constitution by stripping Magistrates of discretionary authority regarding bail, discharge, or remand. • Impact: While acknowledging the necessity for organized crime legislation, HRCSL emphasizes that any legal framework must retain meaningful judicial authority to prevent excessive executive overreach and protect human rights.
⚠️ BASL Warns New Crime Bill Places Severe Legal Burden on Corporate Directors
The Bar Association of Sri Lanka (BASL) has raised strong concerns over the proposed Prevention of Organised Crimes Bill (OCB) and the Protection of the State from Terrorism Bill (PSTA), warning of heavy liabilities for corporate leadership and expanded executive powers. • Corporate & Board Liability Under the OCB, company directors must prove on a balance of probabilities that an corporate offence occurred without their knowledge or that due diligence was exercised. The law classifies copyright, trademark infringement, excise, and forest violations as "serious crimes" when linked to group actions. • Judicial Overreach & Detention Powers The BASL warned that the Bill bypasses judicial oversight, allowing detention for up to 1 year on a Ministry Secretary's order with bail restricted to the High Court. It also removes standard protections regarding police confessions, eroding the presumption of innocence. • Terrorism Bill Discrepancies The gazetted PSTA significantly deviates from the draft approved by the review committee, without prior notice to members. The BASL has filed a Special Determination Application in the Supreme Court and called for the immediate withdrawal of both Bills.
📈 IRD and Excise Department Sign MoU to Combat Tax Evasion and Illicit Financial Flows
• Key Agreement: Sri Lanka’s Inland Revenue Department (IRD) and Excise Department (ED) signed a Memorandum of Understanding (MoU) to establish real-time intelligence sharing and joint parallel financial investigations aimed at preventing tax evasion and money laundering. • Regulatory Context: Effective August 4, 2026, offenses under the Excise Ordinance and direct tax evasion were classified as "Unlawful Activities" related to money laundering under the Prevention of Money Laundering (Amendment) Act. This aligns with Sri Lanka's third mutual evaluation on anti-money laundering and counter-terrorist financing. • Impact on Revenue Collection: • Resolves historical institutional silos, incompatible record-keeping, and automated data gaps that allowed non-compliant businesses to underreport turnover to the IRD while underreporting production volumes to the ED. • Aims to optimize state resources, expand tax compliance audits, curb black-market trade in excisable goods, and improve the state's tax-to-GDP ratio to hit national revenue collection targets.
Infrastructure Vulnerability Threatens Economic Resilience 📈
• Critical Lifelines at Risk: A major grid failure in October 2026 exposed severe interdependencies across key national assets, causing temporary shutdowns at vital water treatment facilities (Ambatale and Biyagama) and impacting telecom networks. • Energy & Power Capacity: The shutdown of the ~900 MW Norochcholai coal-fired power station temporarily removed ~810 MW from the grid, highlighting the urgent need for dependable reserve capacity, grid black-start capabilities, and fast-track expansion of renewable energy with battery storage. • Digital & Connectivity Assets: Over 99% of international data relies on undersea cables (e.g., SEA-ME-WE 4, 5, and upcoming 6). Building domestic cloud redundancy, localized ICT/BPM infrastructure, satellite fallbacks, and multi-route connections is critical to avoid single-point disruptions to banking, trade, and public services. • Strategic Action Plan: Recommends a national audit of critical dependencies within 12 months, mandatory backup power for essential utilities within 24 months, and long-term 5-10 year development of exportable capabilities in cybersecurity, fintech, and AI applications.
⚖️ Supreme Court Hears Challenges Against Proposed Anti-Terror Bill
The Supreme Court of Sri Lanka has commenced hearing petitions challenging the constitutionality of the Protection of the State from Terrorism Bill. • Bench & Hearing Details: A three-judge bench led by Chief Justice Preethi Padman Surasena, alongside Justices Achala Wengappuli and Sampath Abeykoon, is presiding over the matter. • Constitutional Concerns: Around 25 petitions have been filed alleging that disputed clauses in the proposed law violate fundamental rights guaranteed by the Constitution. • Relief Sought: Petitioners have urged the Court to rule that the Bill requires a two-thirds majority in Parliament and national referendum approval for enactment.
🏛️ 13-Member Parliamentary Committee Appointed to Oversee Anti-Corruption Drive
• Governance & Institutional Framework: Parliament has established a 13-member committee to oversee and lead the execution of tasks under the National Anti-Corruption Action Plan 2025–2029. • Leadership & Composition: The committee is chaired by Deputy Chairperson of Committees Hemali Weerasekara and includes cross-party representation with 12 additional Members of Parliament. • Legislative Approval: The decision was finalized during the Committee on Parliamentary Business meeting on 25 September 2026, as announced by Speaker Jagath Wickramaratne. • Economic Context: Strengthening governance, institutional transparency, and anti-corruption measures remains critical for boosting investor confidence and national economic stability.