Ethiopia and Djibouti built Ethiopia (Addis Ababa) to Djibouti (Djibouti city) electrified Railway. It is both passenger and freight line international railway transportation channel with cargo as core connecting the capital of Ethiopia with Djibouti. This railway loads are non linear loads, continuously increasing of non-linear load has serious impact on the power quality of power system. The deterioration of power quality has major influence on people's daily life and production, power quality is closely related to the safe and economical operation of power grid and has important influence on energy saving, consumption reduction and people's living environment. For technical reasons most railway power supplys are single-phase AC or DC. Three-phase public grid power is either converted into single-phase for feeding the railway or the railway power supply is grouped into separate sections fed individually from alternating phase-pairs of the public grid. The main concerns of electrified railway system due to non-linearity of traction load are system unbalance, reactive power, long or short term interruptions, presence of harmonics, etc. This thesis work presents the simulation of traction power supply system using PSSE-33.3 simulation software to evaluate and analyze the quality of power supply for Addis Ababa Djibouti railway traction substations during both steady state and fault conditions. Accordingly, the simulation result of the traction power supply system in normal and degraded operating conditions shows that in several traction substations due to traction loads; unbalance values are above the limit maximum value of 3.56% and also load flow calculation result for nominal voltage are above the limit maximum value of 1.09% and below the limit minimum value of 0.94% but after power conditioner introduction at Point of common coupling unbalance value reduced to 1.4 %, and nominal voltage value became in the range 0.97% to 1.01% which is recomeded value in both case as per relevant index and values specified by IEC and Ethiopian Electric power standareds. In addition to that the thesis approved short circuit current value of all traction substations are within the standareds of IEC that is 31.5kA.