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General view of Iqaluit, Nunavut, Canada, on Oct 8, 2019. (Photo: REUTERS/Stephane Mahe) - 

The capital of Canada's Arctic territory has ordered its 7,000 residents not to drink the city's water due to suspected fuel contamination.

Iqaluit, the capital of Canada's northernmost territory Nunavut, which borders Greenland, declared a state of emergency on Tuesday night, telling residents to stop using city water for drinking and cooking.

Residents reported fuel odours in the water over the weekend, but the source was not clear. The water would not be safe even after boiling, the city said.

Investigators found potential hydrocarbon contamination at a water treatment plant. Analysis of samples sent out of the territory were due back in five business days.

Some people in Iqaluit normally receive piped water and others get truck delivery. During the water emergency, the city is sending treated water by truck, but that water should still be boiled for at least one minute, the city said. Other residents could get water in jugs at a pickup point in Iqaluit.

Although Canada has 20 per cent of the world's fresh water within its borders, 45 indigenous communities across the country currently have boil-water advisories. Nunavut's population is 86 per cent indigenous.

Canada's indigenous people experience the country's highest rates of poverty, with 25 per cent estimated to be living in poverty, according to the Canadian Poverty Institute.

Water is a contentious issue for Liberal Prime Minister Justin Trudeau, who was first elected in 2015 with a promise to end all boil-water advisories within five years.

Groceries - including bottled water - are extremely expensive in Canada's North, due in part to high shipping costs.

Iqaluit has had two different boil-water advisories since August due to repairs to water infrastructure//CNA