Three people have been killed and five others injured after a bomb exploded in front of the headquarters of Nepal's monopoly oil importer.

Nepal Oil Corporation has been criticised for increasing prices of petrol, diesel and cooking gas, but had not previously been the target of violence.

No group has claimed responsibility for the blast in Kathmandu, the capital's first major attack in four years, said police officer Devendra Subedi.

The Babarmahal area of the city is home to a number of government offices and is generally guarded by both police and soldiers and crowded with government workers and visitors.

It is also near the fortified Singhadurbar complex housing the prime minister's office and key ministries.

Two people died at the scene of the blast and one succumbed to injuries in hospital, said Mr Subedi.

The explosion damaged motorcycles and the front gate of the corporation.

Nepal Oil Corporation has the monopoly to import and distribute oil products in Nepal. There have been regular fuel shortages over the past few months. People have been forced to wait for hours for rationed petrol and diesel for vehicles or to buy cooking gas in the black market.

There was no immediate comment from the government. Home Minister Bijay Gachchedar visited the explosion site but did not comment to journalists.