NEW DELHI: A Rs 4 per litre increase in petrol and diesel prices is in the offing if the state-owned fuel retailers are to return to pre-Karnataka poll hiatus margin levels, brokerage firms said. No sooner had Karnataka polled to elect a new state government, the state-owned Indian Oil Corp (IOC), Hindustan Petroleum Corp Ltd (HPCL) and Bharat Petroleum Corp Ltd (BPCL) on Monday ended a 19-day hiatus in revising petrol and diesel prices and reverted to the practices of changing rates on a daily basis.Since then petrol price has risen by 69 paisa a litre, including a 22 paisa hike effected today that took rate in Delhi to Rs 75.32, the highest in almost five years. Diesel prices have gone up by 86 paisa a litre, including 22 paisa increase today that took the rate to their highest ever of Rs 66.79 a litre in Delhi. “Our computation suggests that downstream oil marketing companies (OMCs) are required to increase retail prices of diesel by a steep Rs 3.5-4 a litre and gasoline (petrol) by Rs 4-4.55 per litre in the coming weeks to earn normative gross marketing margins of Rs 2.7 litre, ” Kotak Institutional Equities said in a report.The increase is based on assumption that global price of diesel and petrol and Rupee – US Dollar exchange rate remain stable hereon. “We note that the lack of price hikes over the past three weeks, before Karnataka elections amid a sharp increase in global crude/ product prices, has resulted in sharp moderation in gross marketing margins to around Rs 0.5-0.7 a liter,” it said.
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