The quality of voltage and current delivered by the power utilities has become a major concern of the modern industries. The common power quality problems are voltage sag, voltage imbalance, transients, interruptions and harmonics. The two major power quality disturbances are voltage sag and harmonic distortion. In this paper, a Quality Power Provider (QPP) based on voltage source inverter is modeled by simulation to compensate the power quality disturbances such as voltage sag and voltage harmonics in the distorted and unbalanced supply condition. The phase locked loop (PLL) is an important control unit of the QPP control scheme. To obtain accurate phase information and frequency of the input supply, the dqPLL method has been proposed. The proposed structure uses the coordinate transformation of 3-phase voltages form a-b-c to d-q and generate two voltage variables direct-axis (Vd) and quadrature-axis (Vq) as dc variables which are easy to apply in filtering techniques. The d-q PLL technique maintains the output signal by tracking the phase of the supply voltage and by controlling the phase shift Vq to zero. Hence in system steady state, the absolute value of Vd equals the supply voltage. The QPP has been modeled and simulation is done using PSCAD software. The control scheme is able to mitigate voltage sag and voltage harmonics, fast and efficiently with low total harmonics distortion (THD). With the improvised scheme, QPP is able to achieve an improved performance, thus increasing the power rating and minimum energy injection. In addition a zero-sequence component remover has been included to minimize the THD level. The proposed QPP has enhanced the quality of power supply at the sensitive load end.