The subsidy is based on the $35 per tonne price for Cobbora coal being offered by the state to the electricity generators which NSW Treasurer Eric Roozendaal is hoping to privatise for $8 billion before next March’s election.

Likely buyers for the assets, including AGL Energy and Origin Energy, are effectively being offered long-term supply from the mine at a 40% discount on long-term domestic prices of $60/t.

Opposition industry spokesperson Duncan Gay said the state government was looking to sign the deal within the coming weeks, locking taxpayers into the subsidy for up to 17 years.

“We would be locked in to this contract come March and there would be absolutely nothing we could do about it," Gay told AAP.

“Even if we won power at the election, there's nothing we could do about it. The contract would be signed.

“The biggest problem is for the taxpayers of this state.”

The NSW Greens have asked that the state government stop the power sell-off and start again on a renewable energy plan.

“[NSW Treasurer] Eric Roozendaal's privatisation is turning into a fire sale, with households set to be slugged by rising electricity prices and greater taxes and charges to cover the subsidy,” Greens MP John Kaye said in a statement.

Industry sources are also questioning the state’s ability to operate a mine efficiently and the economic sense of owning one operation that will have to run at a cost basis.

The move by Roozendaal is being seen as a last-ditch effort to ensure the cost of coal for the state’s electricity assets. The state government last mined coal in NSW through its Powercoal entity in 2002, before selling its assets to Centennial Coal.