The Sri Lankan government has unveiled a transformative National Electricity Policy, opening it for public feedback until January 9, 2026. The policy outlines sweeping reforms in pricing, regulation, and renewable energy expansion while emphasizing financial sustainability and cost-reflective tariffs in the nation’s electricity sector.

Issued under the amended Sri Lanka Electricity Act by the Ministry of Energy, the policy signals a decisive shift from administratively controlled pricing. Electricity pricing will now consider long-term system costs, supply security, and regulatory oversight, moving away from arbitrary adjustments that have historically burdened taxpayers.

Key features include the formal unbundling of the Ceylon Electricity Board (CEB) into separate entities for generation, transmission, distribution, and system operations. The National System Operator will play a central role in security-constrained dispatch and long-term planning to minimize generation costs while ensuring grid stability.

Cost-reflective tariffs are at the heart of the reform. Future electricity rates are expected to reflect the full cost of generation, transmission, and distribution, with subsidies restricted to vulnerable consumers via transparent, targeted mechanisms. Limited lifeline support will continue, but the era of hidden cross-subsidization is drawing to a close.

The policy prioritizes renewable energy, including solar, wind, hydro, biomass, and waste-to-energy projects. However, integration will follow system limits, grid stability rules, and competitive procurement processes, signaling a departure from ad hoc project approvals. Digitalization is another central pillar, with smart metering, automated meter reading, and centralized data platforms aimed at loss reduction and demand-side management.

The policy also introduces a National Tariff Policy, tightening regulatory oversight of costs and enforcing efficiency benchmarks. Regulatory scrutiny, rather than arbitrary tariff hikes, will address inefficiencies. Phased implementation begins in 2026, encompassing competitive generation procurement, feed-in tariff reviews, and full operationalization of system operator functions.

The reform aligns with Sri Lanka’s International Monetary Fund Extended Fund Facility (EFF) program. IMF Mission Chief Evan Papageorgiou emphasized that cost-recovery pricing and CEB unbundling are critical structural benchmarks. “Cost-reflective pricing supports fiscal stability, ensures utilities operate commercially, and lays the foundation for long-term economic benefits,” he said.

Despite the policy framework, tariffs remain a contentious issue. The Public Utilities Commission of Sri Lanka (PUCSL) rejected a proposed 6.8% hike for late 2025, citing improved hydropower generation. Consumer groups have even called for reductions in early 2026, signaling potential adjustments but not confirming the widely discussed 11% increase.

As Sri Lanka embarks on this energy sector transformation, careful regulatory implementation and public scrutiny will be essential to balance affordability, sustainability, and financial viability in the nation’s electricity supply.

As Sri Lanka struggles to rebuild rural communities battered by Cyclone Ditwah and years of economic stress, India’s decision to double funding for housing projects in the Northern and Southern Provinces signals more than humanitarian concern. It highlights New Delhi’s broader regional strategy of combining disaster response with long-term people-centric development to maintain influence in its immediate neighbourhood.

In late December 2025, diplomatic exchanges formalised India’s revised financial commitment to three housing initiatives—Gram Shakthi Northern, Gram Shakthi Southern I, and Gram Shakthi Southern II. Under the revised terms, financial assistance per house was doubled to Rs. 1 million, benefiting over 1,550 low-income families. The adjustment followed Sri Lanka’s request, citing cost escalations caused by the COVID-19 pandemic, supply disruptions, and the country’s 2022 economic crisis, which left many beneficiaries unable to complete construction.

The projects operate under an owner-driven model, allowing families to build their own homes rather than depend on contractors. This approach, while slower, has been praised for promoting community ownership and reducing corruption. However, inflation and currency depreciation had eroded the original Rs. 500,000 allocation, threatening to stall progress until India stepped in.

Housing has become a cornerstone of India’s development diplomacy in Sri Lanka. Nearly 50,000 homes have already been completed under flagship Indian-funded housing programmes in the Northern, Eastern, and plantation regions, with another 10,000 currently under construction. Additional initiatives include island-wide model villages, pilgrim transit housing near the Madhu Shrine, and post-disaster reconstruction support.

Analysts note that India’s focus on the North and South carries strategic significance. These regions not only suffered severe cyclone damage but also represent areas where economic vulnerability could translate into political instability. By responding swiftly “as a friend in need,” India reinforces its image as a reliable first responder while countering growing competition from other regional actors.

The assistance also aligns with India’s wider $450 million reconstruction and recovery package announced after Cyclone Ditwah. Rather than one-off relief, the emphasis is on durable infrastructure that supports livelihoods, social stability, and goodwill at the grassroots level.

As Sri Lanka’s recovery remains fragile, India’s housing support demonstrates how humanitarian aid and geopolitical strategy increasingly overlap. The effectiveness of these projects in restoring dignity and stability to rural communities will shape public perception and regional alignmentsin the years ahead.

As Sri Lanka enters 2026 with cautious economic optimism, Colombo Port City stands at a critical juncture, transitioning from a long-term infrastructure ambition into an operational financial and commercial zone with measurable economic implications. More than a decade after construction began, the 269-hectare development is no longer defined by land reclamation and policy promises, but by its ability to generate investment flows, employment, and export-driven growth.

Developed by CHEC Port City Colombo (Pvt) Ltd., the project has endured a turbulent operating environment since its inception in 2014. Political transitions, the 2019 Easter Sunday attacks, the COVID-19 pandemic, and the 2022 sovereign debt crisis each tested investor confidence. Despite these disruptions, Port City progressed steadily, culminating in the completion of land reclamation in 2019 and the passage of the Colombo Port City Economic Commission Act in 2021.

That legislation established Sri Lanka’s first Special Economic Zone with an independent regulatory framework, offering tax incentives, simplified approvals, and foreign exchange flexibility. As of early 2026, 146 enterprises have registered within the zone, largely focused on financial services, IT, logistics, and professional services aimed at international markets. While many remain in early operational stages, officials argue this represents a shift toward modern service exports rather than traditional goods-based growth.

A key operational milestone was reached in October 2025 with the commissioning of water, electricity, and sewerage connections to Colombo’s main city grid. This step enabled large-scale commercial activity and vertical construction to proceed without reliance on interim infrastructure an issue previously flagged by analysts as a bottleneck to investor confidence.

Retail and lifestyle developments have also moved from concept to reality. The Mall at Port City Colombo, opened in September 2024, introduced South Asia’s first downtown duty-free retail model, drawing regional attention and contributing to tourism-linked consumption. Meanwhile, the Business Centre, positioned as an IT and business park, began tenant handovers in mid-2025, signaling the start of recurring commercial occupancy.

Private capital participation has further strengthened Port City’s outlook. The USD 120 million Luxury Marina Development by Browns Investment PLC broke ground in January 2025, adding a maritime leisure component expected to attract high-net-worth visitors and regional yacht traffic.Economists caution, however, that Port City’s long-term success will depend on integration with the wider economy. Job creation, skills transfer, and linkages with domestic firms will determine whether the project becomes an isolated enclave or a genuine growth engine. As 2026 unfolds, Port City’s performance will increasingly be judged not by infrastructure delivered, but by economic value created

A loan scheme has been launched for small and medium-scale paddy mill owners and cooperative societies to facilitate the purchase of paddy harvest for the 2025/26 Maha season, effective from yesterday (01).

The Development Finance Department of the Ministry of Finance said the scheme aims to ensure a fair price for paddy farmers by providing financial support for the purchase of the Maha season harvest.

The scheme targets small and medium-scale paddy mill owners and cooperative societies with a maximum daily paddy threshing capacity of 25 metric tons. Applicants must possess a valid business registration certificate issued by a relevant government institution, along with a licence from the Paddy Marketing Board.

Under the loan facility, eligible applicants can obtain loans of up to Rs. 50 million at an annual interest rate of 7 per cent. The loan must be repaid within 180 days.

Government banks including the Bank of Ceylon, People’s Bank and the Regional Development Bank, as well as selected major private banks, will participate in the scheme.

The total loan amount expected to be disbursed for the Maha season under this programme is approximately Rs. 10,000 million. The Ministry said paddy will be purchased at a minimum price announced by the Department of Agriculture to ensure farmers receive a fair return for their harvest.

Justice and National Integration Minister Harshana Nanayakkara said yesterday that investigations into complaints of enforced disappearances will commence early this year, stressing that rebuilding the country requires trust, fairness, the rule of law and national unity.

Speaking at a ceremony held at the Ministry to mark the commencement of work for the New Year, the Minister highlighted the importance of restoring social trust through national integration. He noted that equitable language access, equal service delivery, respectful law enforcement and inclusive policymaking are essential elements in this process.

“Cyclone Ditwah has reminded us that fostering social trust through national integration and unity, rather than division, is essential for saving lives,” he said.

The Minister added that when citizens feel acknowledged in their own language, treated fairly by the law and protected regardless of their identity, it is a clear sign that national integration is taking place.

He further said steps will be taken to ensure that, within the coming month, the public will be able to access all forms required for government-related work in all three official languages.

Reflecting on the recent disaster, Nanayakkara said Cyclone Ditwah had tested the country’s systems, institutions and citizens, while also highlighting the resilience of the Sri Lankan people. He emphasised that the phrase “Rebuilding Sri Lanka” should not be dismissed as mere propaganda, but recognised as a social responsibility.

“Rebuilding Sri Lanka begins with trust, justice, law and unity. As we move towards 2026, the government has set a clear objective to rebuild the country in a gradual, inclusive and sustainable manner. The first priority is the reconstruction of systems,” he said.

The Minister also underscored the need to reform the justice system, stating that a foundation must be established to transform it from one that instils fear among the people to one that earns their trust.

Highlighting the spirit of global and regional cooperation, the Sri Lanka Navy today acknowledged the invaluable assistance provided by foreign warships that arrived in the country to participate in the International Fleet Review (IFR) 2025 and extended crucial Humanitarian Assistance and Disaster Relief (HADR) operations during the recent adverse weather disaster.

The IFR 2025 was held off the Galle Face seas as part of the Sri Lanka Navy’s 75th anniversary celebrations, according to a Navy statement. Representing the Government of Sri Lanka, Prime Minister Dr. Harini Amarasuriya graced the event and received the traditional naval salute onboard SLNS Gajabahu as participating foreign warships paid their honours.

Eight foreign naval vessels arrived in Sri Lanka by November 27 to take part in the IFR under the theme “Sailing Strong – Together.” The participating warships were Bangladesh Navy’s BNS Prottoy, Indian Navy’s aircraft carrier INS Vikrantand INS Udaygiri, Iran Navy’s IRIS Naghdi, Maldivian Coast Guard’s CGS Huravee, Royal Malaysian Navy’s KD Terengganu, Pakistan Navy’s PNS Saif, and Russian Navy’s Gremyashchy.

Due to the disaster situation caused by severe weather conditions across the island, the foreign warships were promptly redirected to support humanitarian relief operations. In particular, helicopters deployed from the Indian Navy’s INS Vikrant and the Pakistan Navy’s PNS Saif played a commendable role in search-and-rescue missions for affected communities.

The Navy said the participation of these warships in the IFR not only honoured maritime traditions and Sri Lanka’s naval heritage but also reinforced collective cooperation and partnerships needed to address non-traditional maritime threats and climate change-induced natural disasters in the region.

The Prime Minister also expressed her gratitude to diplomatic representatives present at the event for their support in disaster relief efforts. Officials in attendance represented the High Commissions and Embassies of Bangladesh, India, Iran, Maldives, Malaysia, Pakistan and Russia in Sri Lanka.

Under a nationwide initiative to introduce innovative digital solutions, the Ministry of Transport, Highways, and Urban Development today (01) launched a new programme for Sri Lanka Transport Board (SLTB) buses, enabling passengers to pay fares using electronic cards.

Implemented with the guidance of the Ministry of Digital Economy, the initiative aims to strengthen public transport services while enhancing transparency and accountability between passengers and conductors.

The project was inaugurated at the Makumbura Multimodal Centre (MMC) under the patronage of SLTB Chairman Sajeewa Kanakaratne. The card-based payment system allows passengers to pay only the exact stipulated fare and will not impose any additional charges on commuters.

Officials said the government plans to further refine and improve the system by assessing strengths and weaknesses identified during the initial phase of implementation.

The pilot project commenced today on selected routes, including Makumbura–Galle and Makumbura–Embilipitiya.

The launch event was attended by the Advisor to the Ministry of Digital Economy, Sumudu Rathnayake, officials from People’s Bank, and several other distinguished invitees.

Showery condition is expected to enhance in Eastern, Northern and Uva provinces during the coming days, due to the development of a low-level atmospheric disturbance to the East of Sri Lanka.

Showers will occur at times in Eastern, Central, North-central and Uva provinces and in Hambantota district. Fairly heavy falls above 75 mm are likely at some places in Central and Uva provinces and in Batticaloa and Ampara districts.

Several spells of showers will occur in Northern province.

Showers or thundershowers may occur at several places elsewhere after 2.00 p.m. Fairly heavy falls above 50 mm are likely at some places in these areas.

A few showers may occur in coastal areas of North-western and Western provinces and in Galle and Matara districts.

Misty conditions can be expected at some places in Sabaragamuwa and Central provinces and in Galle and Matara districts during the early hours of the morning.

The general public is kindly requested to take adequate precautions to minimize damages caused by temporary localized strong winds and lightning during thundershowers.