An exclusive Rs 15-crore (Rs 150 million) museum showcasing the Nizam's priceless jewellery, now under the RBI's custody in Mumbai, is likely to be set up beside the Gems and Jewellery Park at Hyderabad.
The museum is expected to come up once the Government of India approves the plans and design submitted by the state.
According to sources, the site at Banjara Hills where the Gems Park is now being constructed was favoured by the state government for housing the Nizam's jewels for various reasons besides security issues.
The other site considered for the construction of the museum was adjacent to the famous Salar Jung Museum located on the banks of the Musi river and is owned by an individual.
The central government had in principle agreed to shift the treasure to Andhra Pradesh after active lobbying by chief minister N Chandrababu Naidu for permanent display of the jewellery at Hyderabad.
The jewels once belonged to Mir Osman Ali Pasha, the last ruler of the erstwhile Niz-am state, is the property of the Government of India and will continue to be so even after the shifting of the jewels to Hyderabad.
An half-acre area at the Gems Park site owned by the State Trading Corporation has been earmarked for the proposed museum and the state tourism department has requested the state government to acquire another half-an-acre of land adjacent to the above site for the museum, sources said.
The AP government has appointed a British architect, John Bulluck, to provide designs for the construction of the museum.
Sources said that the state government has favoured the site after hearing about the sheetrock deposits under the proposed area which could provide added security to the Nizam's jewellry, the value of which was estimated to be about Rs 10,000 crore (Rs 100 billion).
The famous Jacob diamond, which is a part of the Nizam's treasure is alone valued around Rs 400-500 crore (Rs 4-5 billion), according to Salar Jung Museum officials.
The entire Nizam's collection belongs to the 18th and 19th centuries, they added.
According to the design and plan of the proposed museum prepared by John Bulluck, the facility would be constructed below ground level by scooping out the sheetrock so that the museum would be surrounded by the sheetrock which resists any kind of intrusion.
A moat was also proposed in the plan for providing extra security to the subterranean gallery, sources said.
It is learnt that the Gems Park promoters also wanted that the museum be constructed beside their facility as it would attract more people to visit the place.
An exclusive showroom to sell replicas of the Nizam's jewellry is also proposed at the museum premises.
Andhra Pradesh State Trading Corporation officials said they would bid for the execution of the museum project. The proposed cost of the project is estimated to be between Rs 12-15 crore (Rs 120-150 million).
The museum would be a tourism project.
"The central government has to approve the security features provided in the design apart from the complete plan. We are yet to receive nod," a senior APSTC official said.
After the integration of Hyderabad state with the Indian Union, the Nizam had constituted various trusts to which he allocated his vast fortune. Among them were the 'HEH The Nizam's Jewellry Trust' and 'HEH The Nizam's Supplementary Jewellery Trust'.
The government constituted several committees to consider the purchase of the jewels and their value was contested. The matter was finally resolved by the Supreme Court of India and the trustees received Rs 217.9 crore (Rs 2.179 billion) from the central government.