Econometric modeling and forecasting of natural gas demand for power sector in Bangladesh

Natural gas is the principal indigenous resource for power generation in Bangladesh. Use of other conventional fossil fuels like petroleum and coal are quite insignificant with respect to the use of natural gas. The gas reserve of Bangladesh is depleting fast because of this heavy dependence on gas. Therefore, it is essential to have a realistic assessment of the gas demand pattern in the near future. In this paper the impacts of economic variables like gas price, per capita Gross Domestic Product (GDP) on gas demand were investigated by employing advanced econometric modeling technique. This research uses time series data for modeling the gas demand in Power sector and forecasting the demand up to 2025. Various statistical tests were employed to choose the correct functional form. Results show no significant impact of price on gas demand. Moreover, the forecast obtained from the analysis shows that the gas demand will increase rapidly in future. This research thus concludes that gas demand cannot possibly be controlled by price management and also emphasizes on strengthening the supply side to meet the growing gas demand in the near future.