The NSW Upper House Committee in its review of the controversial sale found that the state government was effectively guaranteeing the electricity generators coal at $31 per tonne, well below the government supply contract rate, and the sale should be reversed.

''When you take in the account the [cost of developing the] Cobbora coal mine, another $1.2 billion, and the subsidised coal price … plus damages and so on, we estimate that probably the state – taxpayers – [is] only receiving between $600 and $700 million,'' committee chairman Fred Nile is reported as saying in the Sydney Morning Herald.

''We believe the loss to the state would be fully balanced up by any compensation payments. For example, the sale means we don't get the profit from the gentrader, which is probably $600 million a year. Multiply that by 10 years and you have $6 billion. So when you take into account the lost revenue, it is far better for the state to rescind the sale and to pay any damages.''

In a preliminary report, the NSW Auditor-General Peter Achterstraat said risks to the state include paying liquidated damages if availability targets were not met and shortfall payments if the Cobbora mine was unable to deliver agreed amounts of coal.

Nile suggested that the next state government after the March election should reverse the sale. But the Liberal-National Coalition – which is widely tipped to win the election in a landslide – said it needed to study the agreements before it made any decisions about the future of the state’s power privatisation program.