Rotterdam city council has taken ‘unacceptable risks’ with the development of a project to supply heating to thousands of homes using excess warmth generated in the city’s port, according to an auditor’s report.

The debacle has cost the city hundreds of millions of euros and officials failed to properly inform councillors about the risks, the report said.

The Warmtebedrijf project was set up in 2006 with the aim of supplying 500,000 homes in the Rotterdam area with heat generated by industry based in the port.

But it was beset by problems from the beginning. Shell dropped out because of the cost of tapping into refinery heat sources and was replaced by waste processor AVR. But that contract also ran into trouble because of the high price the company was being charged for heat.

Now a project to pump heat to Leiden for 13,000 homes is two years behind schedule and may never be completed, the Volkskrant said.

So far the city has pumped over €73m into the scheme and is guarantor for a further €104m, but there is a real chance that money too will be gone, the auditor said.

Some insiders say the entire project could eventually go bust.

Amsterdam has also run into trouble with its massing waste processing company AEB which was also supposed to be used to heat homes in the capital.