This Paper presents a new approach for the optimal sizing and siting of substations and network routing problem. The solution approach proposed is a nolinear programming approach. The problem has been formulated as a Quadratic Mixed Integer programming (QMIP) problem in terms of the fixed costs of the substations and lines and the present worth of the energy loss costs of the line segments. The solution to this QMIP problem is obtained in two stages. In the first stage the quadratic programming problem is solved following the procedure developed by Wolfe using simplex method and treating all the variables as continuous variables. In the second stage, a procedure has been suggested to integerize the values of the integer variables. The proposed method is validated using a numerical example.