The major concern of power utilities is to maintain, in all situations, the supply of electrical power to all its customers without any failure. To meet this goal, load support and voltage compensation activities are done. Voltage compensation is generally required to decrease voltage fluctuation at the terminals of a transmission line. However, due to recent phenomenon such as increase in power demand, insufficient power generation and other economic and environmental factors, most power system utilities operate with their equipments very close to their thermal limits. With this situation, voltage instability and voltage collapse become likely to occur. One of the techniques to improve the grid performance is achieved by installing flexible AC transmission (FACTS) devices at optimal locations. In this thesis, optimal sizing and placement of UPFC for transmission line from Gilgel Gibe, Beles to Mekele is done using MatLab software to improve voltage profile of buses and to reduce transmission line over loading condition. Genetic algorithm is used to determine the optimal size of UPFC. The simulations are done for different load demand variations which include 25%, 50% and 100% variations from the existing demand. The simulation results demonstrated that, when the load demand is increased by 50%, there is a voltage profile problem at bus 13 which dropped to a value of 0.9455 pu and line 15 is overloaded to 117.3%. At 100% load growth also, there exited bus voltage profile problem in buses 13 and 12 which are 0.92343 & 0.9356 and five lines (2, 4, 9, 15 and 17) are overloaded to 153.441, 109.149, 117.125, 157.671, and 127.955%, respectively. After installing UPFC with a size of 100 MVAR between buses 13 and 12 when the load growth is at 50%, the voltage profiles of buses 13 is improved to 0.9938 pu and the line overloading of line 15 is reduced to 110.786%. Installation of UPFC between buses 13 and 12 with 150 MVAR rating for 100% growth also improved the voltage profiles to be between 0.95 and 1 pu. In addition percentage of loading of lines 2, 4, 9, 15 and 17 is dropped to 147.969, 107.658, 113.216, 153.436 and 124.527%, respectively.