The peddler, Collins Johnson Ochieng Seddah, was apprehended by the Police Commissioner's Task Force (West Zone Team) from S P Road and a hunt is launched to trace his accomplice, a Nigerian national named Christopher, a senior police officer said.
Collins was staying in India without valid visa.
According to police, Christopher supplied the contraband to Collins who in turn used to sell it to customers charging them Rs 5,000 per gram.
Investigation is being conducted to unearth the network of other local and foreign drug dealers of which Collins is allegedly a part.
Collins came to Hyderabad in 2003 and studied movie and TV direction before organising some documentaries for African TV channels, he said.
The Kenyan also worked as an event organiser for Hip-Up and African tribal and traditional dance parties in various star hotels in Hyderabad, police said.
The Central Excise and Customs Department had arrested Collins along with 11 others in 2010 for possessing "Ephedrine", a controlled narcotic substance, weighing 950 grams worth Rs 50 lakh and sent him to jail, where he was befriended by Christopher, they said.
