South Yorkshire councils must pay back between £13 million and £14 million to the European Union due to the failed Digital Region project.
The scheme, which aimed to bring super-fast connectivity to the area, was cancelled earlier this year despite costing £160 million.
Now, due to EU rules, the local authorities involved must pay back half of the £27 million grant they received from Brussels.
A spokesperson for the councils told local newspaper The Star: "In line with European Union regulations, between £13 million and £14 million of European Regional Development Fund funding will be repaid."
According to the newspaper, the project cost £90 million to set up and a further £70 million to shut down. It will officially be closed on August 14th.
John O'Connell, director of the Taxpayers' Alliance, added: "This entire project has been a shambles from start to finish."
Earlier this month, The Star reported Sheffield city centre could be left without super-fast broadband for a year as a result of the Digital Region failure. Jonathan Thornhill, director of local internet service provider ASK4, told the publication that other companies overlooked the area due to the fact it had already been served by the project.
He claimed it could take three years for super-fast connectivity to arrive in the city centre and in that time people who had been going online via the Digital Region will have to move to an inferior ADSL connection.
Only 3,000 people ever subscribed to the project, which led to its eventual downfall. It has been reported the scheme was making monthly losses of £1 million.
The problem of unreliable broadband is one that affects the Yorkshire region as a whole and rural areas in particular. Earlier this year, the Federation of Small Businesses regional chairman for North Yorkshire Simon Williams discussed the issue with the Yorkshire Post.
"Rural businesses face challenges not encountered by their urban counterparts. They struggle against the odds of poor communications, unreliable broadband services and patchy, un-integrated transport services," he stated.