In this modern age of technological development demand of the electrical energy is increasing where generation and transmission capacity is not increasing at same rate. This gives constraints on the power system. The erection of a new transmission line is not an easy task especially in the developing countries like India. So a power system engineer must try to use existing transmission lines up to their stability limits. Operating the lines near or above thermal stability limits makes system vulnerable to faults moreover it also increases the losses in the system. One way to increase the transmission capacity of the system without operating it to its thermal stability limit is to provide reactive power compensation at various locations. Reactive power compensation improves the voltage profile of the system, increase the power transfer in the lines and reduce losses. STATCOM is one such device that is used for reactive power compensation. It provides reactive power compensation thereby improving the voltage profile of the system.In this thesis reactive power compensation is attempted using STATCOM. To study its affect Load flow study is performed on IEEE 5 bus, IEEE 14 bus and IEEE 30 bus with and without STATCOM incorporated and the results are then compared to show the effect of STATCOM on the system. NEWTON RAPHSON method is used for the load flow study of the system.