In most industrial plants, power quality is a major issue which hinders productivity and efficiency of the plants due to the use of semiconductor based loads and non-linear loads. As a result, to address the power quality problems in these industries, specialized power devices such as the Unified Power Quality Conditioner (UPQC), can be installed at the customer's location to resolve practically all power quality issues. UPQC consist of a series of active power filters (APF) which mitigate voltage quality issues and shunt active power filters which are used to reduce current quality issues, like harmonics and reactive power burdens. This paper, therefore presents an investigation and assessment of the power quality problems associated with Bahir Dar Textile Share Company. This was achieved by examining the voltage and current harmonic levels of various types of loads using PI and fuzzy logic controllers by measuring the level of total harmonic distortion (THD) with and without the insertion of the UPQC. The novelty of this paper is the implementation of the controller based customized UPQC for power factor and reactive power compensation. It was observed that by designing the system without and with UPQC, the results of the FFT analysis show that the fuzzy logic controller (FLC) reduced the harmonics level of the load voltage and current by 1.10% and 2.14% respectively. Generally, harmonics was alleviated by 90%, reactive power was reduced by 20%, and power factor was improved by 33%. Hence, the proposed UPQC is capable of holding the voltage and current harmonics levels within the acceptable limit, which satisfies the standards imposed by IEEE 519-1995.