New Delhi: The Union government has decided to transfer the ownership of the iconic Air India building in Mumbai to the Maharashtra state government for Rs.1,601 crore, besides waiver of old dues payable to the state amounting to about Rs.300 crore, an official aware of the matter said on Thursday.

“The Centre has approved the transfer of Air India building in Mumbai to the Government of Maharashtra (GoM) at a consideration of Rs.1,601 crore”, Department of Investment and Public Asset Management (Dipam) secretary Tuhin Kanta Pandey said.

The state government also agreed to waive dues of Rs.298.42 crore, which would have been otherwise payable by AI Assets Holding Ltd (AIAHL) to GoM for this transaction, he added.

AIAHL is the special purpose vehicle (SPV), which was incorporated on January 22, 2018, to own and manage residual non-core assets, including paintings and artefacts, of state-run Air India, which was subsequently sold to the Tata group.

The government, after five years of struggle to privatise debt-ladden, accepted Tata Sons’ bid for its flagship carrier for Rs.18,000 crore in October 2021. The ownership of the airline was transferred on January 27, 2022.

The SPV, which is 100% owned by the central government, was formed to warehouse accumulated working capital loan not backed by any asset along with four subsidiaries – Air India Air Transport Services Ltd (AIATSL), Airline Allied Services Ltd (AASL), Air India Engineering Services Ltd (AIESL) and Hotel Corporation of India Ltd (HCI). The non-core assets, including the land and the building, were valued at Rs.14,718 crore.

The new owner is expected to use the building to house its offices. According to a report filed by HT on November 8, 2022, the building was eyed by many entities, including the Jawaharlal Nehru Port Authority (JNPA) and the Life Insurance Corporation (LIC) of India. The 23-storey building has 46,470 square meters of space, which was constructed in 1974 on land owned by the Maharashtra government.

In 2019, the Maharashtra government bid Rs.1,400 crore for the building, while JNPA bid Rs.1,375 crore and LIC Rs.1,200 crore. After chief minister Eknath Shinde-led government assumed office in June 2022, the state government revised the bid to Rs.1,600 crore against the company’s ask of Rs.2,000 crore, the report said. It was built by John Burgee of New York’s architectural firm – Johnson/Burgee.