On 17 October, at around 11.43 a.m., Sri Lanka lost electricity across the country. Within seconds, a fault in the power system became a national blackout. For some households it meant a few hours of inconvenience. For a small shop, a factory running a production line, or a filling station without backup power, the cost was much greater.
We often discuss electricity in terms of megawatts and tariffs. But for a consumer, the first question is simple: will the power be there when it is needed?
What caused the blackout?
The National System Operator (NSO) has said that a sudden loss of generation triggered the collapse of the grid on 17 October. Subsequent explanations indicated that output from one generator at Norochcholai fell sharply.
However, the exact sequence, including why the wider system could not contain the disturbance, is still under investigation. Norochcholai was then taken offline, removing about 810 MW of available capacity and forcing scheduled power cuts in the following days.
This distinction matters. The failure of one generator should not ordinarily switch off an entire country. And we should not rush to blame solar power, coal quality, or electricity reforms before the investigation is completed.
During the restoration, rooftop solar owners were asked to disconnect their systems. That highlights the difficulty of managing a grid with growing solar generation, particularly without sufficient real-time visibility and effective controls over thousands of small installations. It does not, by itself, prove that solar caused the blackout.
The economic cost is also worth remembering. Businesses will now think twice about relying entirely on the national grid. They will invest in generators, batteries, and fuel, increasing their costs. A large company may be able to absorb those expenses. A small enterprise may not. Investors also price reliability into their decisions. An unreliable electricity supply is effectively another tax on doing business, although that tax never appears in a government budget.
Some have questioned whether the unbundling of the Ceylon Electricity Board caused this failure. That is an important question, but it should not become a convenient political explanation.
The restructuring, completed in March, separated responsibilities among State-owned successor companies. It did not create the technical weaknesses of our grid overnight. Sri Lanka suffered nationwide blackouts long before the restructuring.
Nevertheless, the new entities must have clear responsibilities, strong coordination, and a single credible voice during emergencies. Separating institutions without establishing accountability would be a reform only on paper.
Privatisation concerns
At Advocata, we repeatedly supported the 2024 Electricity Act because separating generation, transmission, distribution, and system operation was an opportunity to make costs and responsibilities more transparent.
We also raised concerns about the 2025 amendments, particularly their emphasis on retaining State ownership of core companies. This was not about privatisation for its own sake. The Lanka Electricity Company (LECO) has shown that commercial management matters even under public ownership. Our concern was about access to capital, competitive pressure, and stronger protection for consumers.
The law does allow avenues for further restructuring and some private participation. But ownership and control of the main transmission network remain with the State. That makes the Government’s announcement, just days before the blackout, that four transmission lines would be opened to private investment particularly relevant.
The President referred to estimates of $ 4–5 billion for grid modernisation. Finding this money exclusively through the Treasury, at a time when Sri Lanka is trying to maintain fiscal discipline, would place an enormous burden on taxpayers.
Inviting private investment is therefore sensible. But it must be done through open, competitive tenders, with transparent contracts and clear responsibility for maintenance and performance. A badly negotiated private contract can be as costly to consumers as an inefficient State monopoly.
Battery storage, smarter controls, stronger transmission lines, and the ability to manage distributed solar should be developed together. Otherwise, adding more power plants or solar panels will not necessarily make the system more reliable.
We must also understand the limits of competition. It makes little sense to build several parallel electricity grids down the same street just to create choice. Transmission and local distribution networks need strong economic regulation. Competition is more practical in power generation, construction, procurement, and, over time, electricity supply services. Even where consumers cannot change their network provider, they should have enforceable service standards and a regulator willing to act.
Going beyond apologies
What concerned me most about the blackout was the way consumers were treated. The Energy Minister did express regret and the NSO issued updates.
Yet a nationwide failure deserved a clearer apology, regular explanations, and an account of what consumers could expect next. When a private company fails to deliver a service, customers can complain, demand compensation, or take their business elsewhere. Electricity consumers have little such leverage.
The response should go beyond an apology. The Public Utilities Commission of Sri Lanka should commission an independent investigation, publish its findings, and report on whether previous recommendations were implemented.
It should also examine a modest, automatic credit against the fixed charge on electricity bills when serious service standards are breached. Such a credit would not compensate a factory for lost production. It would, however, establish an important principle: a consumer should not be expected to pay in full for reliability that was not delivered.
There was another troubling observation. The Minister indicated that financial losses incurred by electricity sector companies could ultimately be reflected in tariffs, while consumer losses were difficult to calculate. Of course, those losses are difficult to measure. But it cannot be acceptable that the system knows how to recover its costs from consumers while having no comparable mechanism to recognise the costs imposed on them.
Public ownership does not guarantee reliable electricity. Private ownership does not guarantee it either. What matters is whether investment arrives on time, whether risks are managed, whether the regulator is independent, and whether the consumer has protection when things go wrong.
The real test of electricity reform is not how many companies we create or who holds their shares. It is whether the next equipment failure remains a manageable fault instead of becoming another national blackout.
(The writer is the Chief Executive Officer of Advocata Institute. He can be contacted via dhananath@advocata.org)
(The opinions expressed are the writer’s own views. They may not necessarily reflect the views of the Advocata Institute or anyone affiliated with the institute)