New Delhi: The Union Cabinet on Wednesday approved setting up of an Indian Institute of Petroleum and Energy (IIPE) at Visakhapatnam in Andhra Pradesh at a cost of over Rs655 crore, fulfilling the commitment made to the state when Telangana was separated from it.

The Cabinet headed by Prime Minister Narendra Modi approved setting IIPE as ‘an Institute of National Importance’ through an Act of Parliament. “The Institute will have the governance structure as well as legal mandate to grant degrees in a manner similar to that enjoyed by IITs," an official statement said.

A separate Act will also impart the required status to the institute to become a ‘Centre of Excellence’ in petroleum and energy studies. The Cabinet also approved Rs655.46 crore as capital expenditure to set up IIPE and contribution of Rs200 crore towards its Endowment Fund.

This will be in addition to a contribution of Rs200 crore from oil companies towards the Endowment Fund. The Centre had promised a petroleum university as part of the package to Andhra Pradesh after Telangana was split from it.

Andhra Pradesh has allocated 200 acres of land, free of cost, for setting up of IIPE at Sabbavaram Mandal in Visakhapatnam district. A temporary campus of IIPE has been set up from academic session 2016-17 at the Andhra University campus with two undergraduate programmes in petroleum engineering and chemical engineering (with capacity of 50 students each).

IIT-Kharagpur has taken up the responsibility of mentoring the institute. “The objective is to meet the quantitative and qualitative gap in the supply of skilled manpower for the petroleum sector and to promote research activities needed for the growth of the sector.

“The academic and research activities of IIPE will derive strength from the institute’s proximity to sector-related activities such as KG-Basin, Visakhapatnam refinery and the planned petrochemical complex at Kakinada," the statement added.