Centennial is believed to be not prepared to accept the historic government supply benchmark price – about $60 per tonne – being offered by Delta in a contract for well in excess of 1 million tonne per annum of coal.

Just days after assuming full ownership of Centennial for $2.5 billion, Banpu is already signalling that it would prefer to supply the more lucrative steaming export market where prices are currently at $100/t.

Centennial provides 47% of coal to NSW power stations and picked up the coal assets of the previously government-owned Powercoal eight years ago.

The recent change in ownership of independent coal companies is ushering in a new pricing regime and an end of the discounted supply arrangements between NSW power generators and coal suppliers.

It comes at an awkward time for the NSW government, which is attempting to privatise its electricity assets for $8 billion by the next state election in March and needs to lock in coal supply agreements to create certainty of supply and price for prospective buyers.

It has already been forced to step in and develop the Cobbora mine near Mudgee after Whitehaven Coal did not agree on the price being offered by the government for the coal, believed to be $45/t.

In an increasingly politically charged atmosphere, NSW taxpayers could be saddled with a 17-year contract for the state to mine the $1.3 billion Cobbora project, which will effectively be subsidised to the tune of $1 billion below market prices.

The subsidy is based on the $35/t price for Cobbora coal being offered by the state to the electricity generators.

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.