Ugandan security agencies said earlier on Monday they were on high alert for a possible attack after their intelligence reports indicated al-Qaeda-linked groups could be planning to hit Uganda during the festive season.
Police said one of those dead was likely to have been one of a group of men who intended to load the bag, apparently containing an explosive device, onto the bus.
The second victim died in hospital where 26 people wounded by the blast were being treated, police said, but could not confirm local media reports that the death toll had risen to three, or that some suspects were shot dead by police officers.
The blast comes weeks after unidentified men killed three Kenyan policeman in two separate grenade and gun attacks in Nairobi on December 3.
Police said they were likely terrorist attacks and asked for help from the U.S. Federal Bureau of Investigation to track down the perpetrators.
Police said another of the suspects behind Monday’s blast at the bus station in downtown Nairobi was arrested nearby with two suitcases, which police had taken away for checks.
“We have anti-terrorist police investigating this crime, and we are not ruling out anything,” police spokesman Eric Kiraithe told Reuters.
“It was not a very large explosion, but there were many injured because it was an area where there were many travellers,” Kiraithe said.
Kiraithe said six men approached the bus, with some of the them carrying the bag, and a tussle ensued after they resisted attempts to have their luggage searched.
At this point, the men ran from the bus, and one of them dropped the bag which then exploded.
One of the windows on the bright red Kampala Coach bus was shattered by the explosion. There were blood stains on the road and bags strewn around the scene.
Kampala suffered twin suicide bombings on July 11 as football fans watched the finals of the world cup tournament on television. A total of 79 people were killed in that attack, for which a Somali rebel group al-Shabaab claimed responsibility.
Uganda police said they were on high alert after earlier warnings of a possible threat in their country.
“We already had prior information that al Qaeda allied groups such as ADF (Allied Democratic Forces) and al Shabaab were planning to launch attacks during this festive season, and we shared this intelligence with out counterparts in neighbouring countries,” Uganda police spokesman Vincente Ssekate told Reuters.
“Our security and intelligence systems are tracking these plans, and we’ve also told the public to be on high alert.”
The ADF is a rebel group trying to set up an Islamic state in Uganda.
Twice hit by al Qaeda-linked attacks, Kenya has long cast a wary eye at its lawless neighbour Somalia, where al Shabaab militants have been waging a three-year insurgency against the Western-backed Somali government and want to impose a harsh version of sharia (Islamic law). Reuters