Severe competition in the growing Rs 16,000 crore (Rs 160 billion) liquefied petroleum gas market is forcing state-owned oil companies to serenade customers with better service.

Hindustan Petroleum Corporation has, however, gone a step further by offering a discount of Rs 15 on a cylinder in case refills are not delivered within 24 hours.

The discount, besides other value-added services such as free burner servicing, providing electrical as well as plumbing services, will offered by HPCL's distributors and dealers.

Customers in Hyderabad, Delhi, Mumbai, Pune and Kolkata will be able to avail of this discount. Senior officials with HPCL say: "This is the first time a PSU is offering a discount for product not delivered within the prescribed time limit. This project is on pilot basis on our first anniversary of HP Gas. We intend to go in for a national rollout later."

HPCL, Indian Oil Corporation and Bharat Petroleum between them enjoy a 8 million tonne LPG market, while parallel marketers supply only 0.5 million tonne a year.

Even though government's policy in 1993 allowed parallel marketers to supply LPG they have not been able to grab market share owing to price differences.

LPG supplied by PSU as domestic cooking gas is subsidised and a major portion of demand for LPG in the country is for domestic cooking.

To grab the growing LPG demand, which is likely to grow at a compounded annual growth rate of 7.9 per cent in five years, oil PSUs have embarked on several initiatives.