This paper presents a method for optimal allocation of active and/or passive VAR compensation. The method is implemented using Static Var Compensator (SVC) and shunt capacitors to improve the overall performance of a radial primary distribution network. The impact of optimal allocation of shunt compensators on primary distribution networks performance with different load levels (20% increased or 20% decreased) is also studied. Modified IEEE 33-bus primary distribution network is used to verify the effectiveness of the proposed methodology with different load levels. Implementation of the suggested methodology is carried out by Power World Simulator (PWS). PWS is a software package that has strong analytical and visualization functions suitable for extensive power flow study of an electric power system.