"We counted about 17 bodies at 2.30 p.m. but the evacuation is ongoing. We also counted five injured people and carried them to the hospital," Xinhua quoted Lawan Tanko, commissioner of police in the state, as saying.
Borno state has been a flashpoint of attacks perpetrated by Boko Haram.
The police chief said he had instructed his men to visit hospitals in the state capital to get comprehensive details of the casualties of the blast.
Tanko said the police had also fortified security in all public places to prevent any incident in the state capital.
Borno state has been a flashpoint of attacks perpetrated by Boko Haram since 2009, when the sect launched its insurgency targeting churches, security facilities, schools and villages.