I don't expect its a big deal you will be just exercising your right to change your mind. Just call them up and tell them that after assessing your circumstances you have concluded that the internship will interfere with your studies etc and therefore you won't be able to report.
No need to worry about making enemies it's not personal and besides, at times making enemies is inevitable, just make sure that in whatever situation your best.

Kwani there are people for went for the interview? The only requirement missing there was that the intern had to pay for the privilege of the internship.

Just be honest with them, tell them you have decided to accept internship with another company and thank them for the opportunity. Infact it is a plus for you since companies are attracted to interns that attract offers from other companies because it is an indication that someone else also believe in you.

I advice you against telling them that it would interfere with your studies because good students do not opt out of internships, you'll look stupid if you say that, infact most of the good students get more than two offers for internships and companies understand that, so just tell them you have decided to accept another internship.

Not a laughing matter. There are organisations that charge interns for the opportunity to work there.

A fellow got an industrial attachment with the Oil Refinery a few years ago.

They offered him 15k pm but said that he had to meet the cost of additional insurance premium needed because of engaging an untrained employee... the cost of the premium came to 50 for the three months. So effectively, he paid them sh1,666 every month!