MOSCOW (AFP) – Militants burst into a hydroelectric plant in Russia's volatile Caucasus region Wednesday in a brazen dawn attack, killing two people and setting the facility ablaze with a string of blasts, officials said.

The unknown attackers set off the explosions at the station in the unrest-infested North Caucasus's Kabardino-Balkaria region by laying mines in the turbine room. The plant has been shut down as a result.

"A terror act took place at the Baksanskaya hydroelectric power plant," state-run power group RusHydro, which runs the plant, said in a statement.

White smoke billowed from the plant tucked into a forest and masked security officials were seen outside its premises, according to footage aired on national television.

The authorities are battling a Muslim insurgency in the Caucasus, where Moscow fought two bloody wars against Chechen separatists in the 90s and militants have long pledged to destroy key infrastructure sites.

FSB security service chief Alexander Bortnikov told President Dmitry Medvedev that steps had been taken to "increase the protection of strategic sites" after the attack, the Kremlin said.

Prime Minister Vladimir Putin had urgently convened officials for a meeting, his spokesman Dmitry Peskov said.

He was in constant contact with Igor Sechin, his deputy in charge of the energy sector, and told him to make sure the incident did not disrupt energy flow in the region, Peskov told AFP.

Regional police said a group of between three and five attackers burst onto the premises of the station located in the village of Atazhukino and killed two police guards and stole their weapons.

The assailants also injured two plant employees and one of them was now in a serious condition.

The visibly shaken director of the hydroelectric plant, Valery Shogenov, speaking on television, said the employees had been tied up with duct tape but managed to release themselves.

"The assailants mined the power plant's turbine room," police said, adding that two turbines were blown up, setting the engine room on fire. The blaze has since been put out.

A regional policeman, speaking to AFP, said "the assailants or their accomplices" briefly attacked a local police building in the town of Baksan, possibly to deflect attention from the upcoming attack.

Officials could not immediately say how many explosions shook the plant. A regional police spokesman told AFP there were two blasts, while Russia's NTV television, reporting from the scene, spoke of four explosions.

"There is no danger of a technological accident or catastrophe," regional official Gennady Vykhristyuk said in televised remarks.

Oleg Grekov, a regional official with the emergency situations ministry, said on Ekho of Moscow radio that the third turbine remained intact but the power plant has been halted.

Some said they feared the attack might be a precursor to more disastrous events. "I fear it might be a rehearsal of something more large-scale," senator Alexander Torshin said in comments on Echo of Moscow radio.

Built in the 1930s, the 25-megawatt power plant sits on the Baksan river, which flows into the Terek, the Caucasus' most famed river.

The accident is the latest blow to RusHydro. Last August 75 people died in an accident at the Sayano-Shushenskaya dam, a Siberian hydropower station that the state-run power group operates.

That catastrophe was claimed by an Islamist group which said it had detonated an anti-tank grenade in the plant's turbine hall. But this was denied by authorities who insisted technical faults were to blame.

Kabardino-Balkaria is part of the Caucasus but has until now seen less of the unrest that characterises the simmering guerilla conflict between Russian forces and Islamist rebels in Chechnya, Ingushetia and Dagestan.

In March, Russia was shaken to the core when two female suicide bombers, both from the North Caucasus region of Dagestan, killed 40 people in a pair of coordinated attacks on the Moscow metro.