"It occurred roughly at 12:00 p.m. (0730GMT) at a road
Government troops cordoned off the area shortly after the blast, keeping people from gathering at the scene for fears that there might be a second blast.
Several warning shots were also fired by the security forces.
Unofficial sources said that the Indian Consulate office may have been the target of the attack in the city that is the provincial capital of eastern Nangarhar province, 120 km east of Afghan capital of Kabul.
The nature of the blast might have been group attack or complex assault, involving several attackers, they said.
The Iranian and the Pakistani consulate buildings also located at the same district.
No group has claimed responsibility for the attack yet.