At least three people were killed and 222 were injured in the blast, with the cause of the explosion still being investigated.
The fire is reported to have spread through several apartment complexes in Kenya’s capital Nairobi .
A lorry carrying gas cylinders exploded in Embakasi district , “igniting a huge ball of fire”, an official said.
Housing, businesses and cars were damaged, with video showing a huge blaze raging close to blocks of flats. The area has been cordoned off and an investigation is under way into the cause of the explosion.
A child was among those who died, according Embakasi police chief Wesley Kimeto, who added that the death toll could rise.
Some 271 people were taken to hospital, according to the authorities, including at least 25 children.
Nairobi county Governor Sakaja Johnson said many of these people had been treated and sent home, but at least 39 have been sent to other facilities – some with critical injuries.
A further 27 people were treated on site for non-life-threatening injuries.
The government initially said the blast happened at a gas plant where workers were refilling gas cylinders, but the authorities later clarified that a truck had exploded in a parking yard.
According to government spokesperson Isaac Mwaura, a fireball from the blast “spread widely”. A flying gas cylinder hit a clothing and textiles warehouse, burning it down.
“The inferno further damaged several vehicles and commercial properties, including many small and medium sized businesses,” he said in a statement.
“Sadly, residential houses in the neighbourhood also caught fire, with a good number of residents still inside, as it was late at night.”
The fire has been contained and a search and rescue operation has been launched to find out if people are missing or have simply taken shelter elsewhere.
“There is still a search going on of whether there are bodies which have been burnt in various houses,” said Embakasi East MP Babu Owino.
The Energy and Petroleum Regulatory Authority (Epra) said in a statement that the gas plant was illegal and that it had rejected three applications for construction permits to build a storage and filling facility at the site.
Epra said the designs did not meet its safety standards and there was a high population around the proposed site. It is not clear how the facility was still able to operate.
Mr Mwaura, who visited the site, said the owners of the company involved must “compensate the victims” and take “full responsibility” for the explosion.
About 10 trucks were completely burned inside the compound where the explosion occurred.
One vehicle landed on top of a block of flats dozens of metres away, partially destroying the building’s front.
Witnesses told the BBC that the explosion sent objects including gas cylinders and a shipping container, flying into the air.
Jackline Karimi said she ran out of the house and lay flat on the tarmac. She suffered burns on her right hand and arm up to the shoulder and to her right leg.
“I saw a woman on fire, but we couldn’t help her. Everyone was running,” Ms Karimi said.
Another woman who was in a flat near the scene of the blast said she was trying to trace her friend. “She was pregnant and had a child in the house, which is now completely burned.”
At the Mama Lucy Kibaki Hospital, where many of the injured were initially treated, a man named Geoffrey-said he and his family were woken by a big explosion and thought their building was collapsing.”When I saw that the fire was too much, I used my body to shield my child and sustained burns on my back in the process,” said Geoffrey.”My family members got minor injuries but I got the most severe burns”.
Isaac Mwaura, the government spokesperson, said a command centre has been set up to help co-ordinate rescue operations and humanitarian assistance is being given to those affected.
He also said the government plans to provide two months’ rent for survivors whose houses were razed in the explosion.
“It is immoral to risk the lives of fellow Kenyans for profit,” he added.
“Sometimes we have weak enforcement institutions and of course the element of corruption, which has now led to the death of three of us Kenyans.”
