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After the Dragonborn speaks to Uraccen, Grisvar offers them a shiv in return for a bottle of Skooma, which can be pickpocketed from or beaten out of several others in the mine. Alternatively, the Dragonborn can persuade Duach to give them his supply of Skooma. The shiv can be used to bribe Borkul the Beast into opening the door to Madanach's cell.
After speaking to Madanach, the Dragonborn is instructed to kill Grisvar as he has outlived his usefulness to Madanach.