A study commissioned by the NSW opposition has found that the state’s taxpayers will lose $400 million a year for the term of the 15-year contract stitched up as part of the government’s controversial electricity privatisation program.

Under the arrangement, the state has guaranteed a price of $31 per tonne to the electricity generators from Cobbora, at a time when analysts are predicting that the world’s leading buyer of thermal coal, Japan, will increasingly switch out of nuclear energy to coal and drive the price beyond $US130/t.

The analysis commissioned by the Coalition considers the low quality of the Cobbora coal and the estimated $120 million cost of building rail links to connect the mine to the existing rail infrastructure.

Taking the lower quality and high development costs into account, the bank analysis conservatively estimates the net price that Cobbora coal could receive on the open market is $58/t.

The $27/t difference represents a potential ''loss'' to taxpayers of $400 million a year, totalling $6 billion over the life of the supply contracts, based on Cobbora supplying 12.2 million tonnes per annum of coal to local power generators.

The original estimate for the cost to taxpayers of the subsidy was $1 billion.

The $1.5 billion mine establishment price tag is expected to be paid from the $5.3 billion received by selling the state-owned electricity retailers, along with the output from two power stations near Lithgow and one on the central coast, Eraring.

A controversial NSW upper house parliamentary inquiry has called for an independent review of the need for the Cobbora mine, including an examination of the subsidy involved in selling the coal below the market price.