Serbia's President Aleksandar Vucic denied what he said were "baseless accusations" about his country's involvement.
"Police have carried out raids. There are arrests," Kurti told reporters from the scene near the northern town of Zubin Potok, where he repeated allegations that elements in Serbia were responsible for the attack.
He said that police had found evidence, and that all those involved would "face justice".
It was not clear if those arrested were directly involved in the blast.
This evening, another terrorist attack was carried out in the north of Kosova, marking the third explosion in the past three days. This latest attack targeted critical infrastructure, including water supply and electricity production. Our government will hold those responsible…— Albin Kurti (@albinkurti) November 30, 2024
A Reuters witness saw special police forces carrying out raids in northern Kosovo.
The explosion has increased tensions between Kosovo and Serbia.
Ethnic Albanian-majority Kosovo declared independence from Serbia in 2008 almost a decade after a guerrilla uprising against its rule but Serbia has not recognised Kosovo as an independent state.
Relations remain especially frayed in the north where the blast occurred, and where the Serb minority refuses to recognise Kosovo's statehood and still sees Belgrade as their capital.
The explosion occurred about 7pm on Friday.
The exact cause was not clear.
Kosovo's Security Council, which held emergency talks early on Saturday, said it had activated armed forces to prevent similar attacks.
Security was already heightened after two recent attacks where hand grenades were hurled at a police station and municipality building in northern Kosovo where ethnic Serbians live.
"The Security Council has approved additional measures to strengthen security around critical facilities and services such as bridges, transformer stations, antennas, lakes, canals," the council said in a statement on Saturday.
The NATO military alliance, which has maintained a peacekeeping force in Kosovo since 1999, condemned the attack in a statement on Saturday.
Its personnel have provided security to the canal and the surrounding area since the blast, it said.
A Reuters reporter visited the site on Saturday, where silt had poured through a hole in the canal's concrete wall.
Workers had installed a series of large tubes to bypass the leak.
Power supplies appeared to be largely intact but drinking water supply was disrupted to some areas.
Energy minister Artane Rizvanolli said Kosovo was co-ordinating with Albania's power company to provide more electricity.
She said water will be trucked to affected areas.
