Rena Co-operative Sugar Mill, controlled by a local political leader, allegedly discharged tonnes of molasses in the reservoir earlier this month.
Maharashtra Pollution Control Board has issued a notice to the mill, the district collector said when contacted.
"The villagers, along with the Art of Living organisation, built this cement nullah bund at a cost of Rs 6 lakh. It is the only source of drinking water for the village. After it was built last August, the water lasted us entire year," said advocate Jabbar Pathan, a resident.
Bhagwat Mane, deputy sarpanch, claimed that the authorities were reluctant to take action against the mill.
"We have no option but to depend on tankers for the drinking water now. In spite of writing a letter to the collector on August 8 and tehsildar on August 12, no action has been taken," Mane said.
Latur district collector Pandurang Pole said the MPCB had issued a notice to the mill.
"We have decided to provide the village with a special water supply scheme, and I will make sure that the mill bears the cost of it. Till then, we have arranged tankers," Pole said.
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