Unable to create instance on an external network

Issue

• Whenever we launch an instance on the external network, the instance is getting into error state with:

ERROR: RescheduledException: Build of instance <uuid> was re-scheduled: It is not allowed to create an interface on external network <uuid>

• Error seen in nova-compute.log:

2017-07-25 02:07:09.596 9035 ERROR nova.compute.manager [-] Instance failed network setup after 1 attempt(s)
2017-07-25 02:07:09.596 9035 TRACE nova.compute.manager Traceback (most recent call last):
2017-07-25 02:07:09.596 9035 TRACE nova.compute.manager   File "/usr/lib/python2.7/site-packages/nova/compute/manager.py", line 1688, in _allocate_network_async
2017-07-25 02:07:09.596 9035 TRACE nova.compute.manager     dhcp_options=dhcp_options)
2017-07-25 02:07:09.596 9035 TRACE nova.compute.manager   File "/usr/lib/python2.7/site-packages/nova/network/neutronv2/api.py", line 336, in allocate_for_instance
2017-07-25 02:07:09.596 9035 TRACE nova.compute.manager     self._check_external_network_attach(context, nets)
2017-07-25 02:07:09.596 9035 TRACE nova.compute.manager   File "/usr/lib/python2.7/site-packages/nova/network/neutronv2/api.py", line 247, in _check_external_network_attach
2017-07-25 02:07:09.596 9035 TRACE nova.compute.manager     network_uuid=net['id'])
2017-07-25 02:07:09.596 9035 TRACE nova.compute.manager ExternalNetworkAttachForbidden: It is not allowed to create an interface on external network <uuid>
2017-07-25 02:07:09.596 9035 TRACE nova.compute.manager