SP Investigation has said the blast was triggered by a build-up of pressure inside the tanker's storage area.
An eyewitness, Mian Ajmal Shah, said the blast took place while welding of the tanker was in progress.
Several shops have been destroyed in the explosion and the area's power supply has also been disrupted.
Police and rangers have cordoned off the area and rescue teams have shifted the injured to Civil Hospital Hyderabad. Most of the injured are in a stable condition.
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