Kathmandu: A bomb exploded on Monday at the office of a hydroelectricity project being developed with Indian assistance in eastern Nepal, an official said, weeks before its inauguration by Prime Minister Narendra Modi.

The compound wall of the 900 MW Arun III Hydroelectric Power Plant's office in Tumlingtar area, nearly 500 km from Kathmandu, was damaged in the explosion, said Siva Raj Joshi, Chief District Officer of the Sankhuwasabha district.

An unidentified group was behind the explosion targeting Arun III office situated at Tumlingtar, according to Chief District Officer Shivaraj Joshi.

Joshi informed that the explosion caused minor damaged to the office. However, no one was injured in the incident. Joshi has informed that further investigation into the incident is underway and extensive search is on for the perpetrators.

Following the incident, security has been stepped up in the area.

The blast comes at a time when preparations were going on for laying foundation stone of the project by Modi during his official visit to Nepal on May 11. The project is slated to come into operation by 2020.

A Project Development Agreement (PDA) for Arun III was signed with India's state-owned Satluj Jal Vidyut Nigam (SJVN) on November 25, 2014 in the presence of the then Prime Minister Sushil Koirala and visiting Prime Minister Modi.

Meanwhile, the Indian embassy here has discussed the matter with the Nepal Foreign Affairs Ministry here, an official at the embassy said.

The Foreign Minister of Nepal said they had asked the Ministry of Home Affairs to investigate the matter.

This is the second blast in a month in Indian properties in Nepal.

On April 17, a pressure cooker bomb went off near the Indian Embassy field office in Biratnagar damaging the walls of the premises.

Nepal is currently facing shortage of power and the production of hydropower from the project will mainly serve its domestic demands.

The project is expected to bring in USD 1.5 billion foreign direct investment into Nepal and create jobs for thousands of people.