This thesis work presents assessment of power system harmonic problems on Kombolcha Textile Share Company which is located in Kombolcha town about 337kms from Addis Ababa towards north. The assessment identifies the dominant power system harmonic problems that disturb the power quality of the company. As such, the harmonic phenomena listed by IEEE standard 1159-1995 are assessed in this work. The necessary data has been collected from the secondary terminals of the service transformer of the company through direct measurement using 43B power quality analyzer. The collected data has been analyzed and the results are then compared with IEEE 519-1992 standards to identify the type and level of harmonic problems. The analysis of harmonic distortion has indicated that the worst harmonic distortion of 25.01% 5 �ℎ and 21.02% 7 �ℎ harmonic components have been existing in the power distribution system of the company. Again, the company has been operating with low power factor which is 0.789. Consequently, Single tuned shunt harmonic filters have been designed to reduce current harmonic problems and for up grading power factor. With the designed shunt harmonic filters the dominant harmonic components have been reduced to below 3.75% and the power factor up graded to 0.95. The cost analysis of the mitigation technique showed economic feasibility of the solution as it would take 9 months to return the total cost involved for the solution of the problems. The modeled systems with and without harmonic filters have been simulated using MAT LAB/SIMULINK to verify the improvement achieved in terms of harmonic problems. The result showed significant improvement. It has been concluded that harmonic distortion and power factor are saver compared to the standards. Key words: power quality, harmonics distortion, power factor, voltage distortion, mitigation system, shunt filter