Download - Second Report of Commonwealth Games Village
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COMMONWEALTH GAMES VILLAGE
2/11/2011
Second Report of
Second Report of HLC
Vigyan Bhawan Annexe, New Delhi
HIGH LEVEL COMMITTEE
2011
Commonwealth Games
Village Second Report of HLC
V I G Y A N B H A W A N A N N E X E , N E W D E L H I
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Contents Chapter Particulars Page No.
Acronyms 2
Executive Summary 3
1 Introduction 9
2 Location of Games Village 14
3 Planning and Bidding 21
4 Project Development Agreement and Execution 31
5 Bailout Package and Release of Funds 41
6 Completion and Handover 69
7 Main Findings 75
8 Recommendations 81
Appendix 1: List of Documents Reviewed 82
Appendix 2: List of persons interviewed 85
Annexures
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Acronyms AGL Above Ground Level
ACIL M/s Ahluwalia Contracts (India) Ltd.
BSES Bombay Sub-urban Electric Supply
CGV Commonwealth Games Village
CGF Commonwealth Games Federation
CFO Chief Financial Officer.
CPWD Central Public Works Department
COS Committee of Secretaries
CW&PRS Central Water and Power Research Station
DDA Delhi Development Authority
DJB Delhi Jal Board
DPCC Delhi Pollution Control Committee
DUAC Delhi Urban Art Commission
Emaar MGF M/s Emaar MGF Construction Private Limited
FM Finance Member
FAR Floor Area Ratio
GoM Group of Ministers
GoI Government of India
HLC High Level Committee
HIG High Income group
ITDC Indian Tourism Development Corporation
LIG Lower Income Group
LG Lieutenant Governor of Delhi
MCD Municipal Corporation of Delhi
MIG Middle Income Group
MoYAS Ministry of Youth Affairs and Sports
MoUD Ministry of Urban Development
MoEF Ministry of Environment and Forests
NDMC New Delhi Municipal Council
NEERI National Environmental Engineering Research Institute
NOC No Objection Certificate
OC Organizing Committee
PIL Public Interest Litigation
PPP Public Private Partnership
PDA Project Development Agreement
PD Project Developer
PWD Public Works Department
RFP Request For Proposal
RFQ Request For Qualification
SBI State Bank of India
SC Supreme Court of India
YJA Yamuna Jiye Abhiyaan
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Executive Summary
Nodal Agency for Games Village 1. Delhi Development Authority (DDA) is the nodal agency for urban planning and its implementation
in Delhi. It has been the primary organization for undertaking urban development projects in Delhi
since 1957.
2. DDA was assigned the responsibility for development of the Games Village, arguably the most
important infrastructure necessary for holding the Commonwealth Games, 2010. It was designed
to accommodate about 8000 athletes and Team officials during the Games.
3. The Games Villages residential zone was developed by M/s Emaar MGF Construction Private
Limited (Emaar MGF). The residential zone consisted of 34 residential towers and 1168 apartments.
The unit mix of the total apartments constructed was as under:
Particulars 2 Bedroom 3 bedroom 4 Bedroom 5 Bedroom Total
Number of
apartments
31 765 209 163 1168*
*Source Data submitted by Emaar MGF to DDA (March-April 2009)
Loss of Precious Time 4. While the Games were awarded to India on 13th November, 2003, by when the site for Games
Village had also been frozen, the decision on the mode of development of the Games village was
finally taken and agreed to by all stakeholders only by January 2006. This delay of over two years in
finalizing the development strategy proved costly to DDA in so far as it prevented DDA from
considering an alternative in the situation which emerged in 2008-09.
Development Costs associated with Site 5. The site selected for the development of the Games Village suffered from several shortcomings,
which got highlighted with the passage of time. Due to this particular location, the site necessitated
an expenditure of about 633.06 crore on construction of an elevated road over Barapullah Nullah
(linking CGV to JLN Sports complex), Flyover on NH 24 near the Games Village (to provide
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uninterrupted ingress and egress into and from CGV) and noise barriers along NH24 and adjacent
railway track. The details of the cost are in Chapter 2 of the Report.
Project Execution in Public Private Partnership mode 6. According to DDA documents, the decision to adopt the PPP mode for developing the
Commonwealth Games Village was taken keeping in view constraints of scale, time, quality,
specifications and the need for 4000 rooms during the Games period. Based on their
recommendation, Government approval for implementation of the project on a Public Private
Partnership mode (PPP) was granted. However, the PPP mode of execution, little understood by
DDA, was distorted to such an extent by the Project Developer and DDA that it virtually ceased to
be a PPP project. Instead it became a project implemented by DDA and constructed by the
Developer through a sub-contractor.
Deviations from Model Concession Agreement in PDA
7. DDA did not include certain key provisions of the Model Concession Agreement, in particular, those
relating to (a) establishing an escrow account and, (b) audit in the Project Development Agreement
(PDA) signed with the selected Project Developer. This significantly diluted the ability of DDA to
monitor the implementation of the CGV project and make a proper assessment of the fund
requirement of the Project Developer in 2009.
Failure to meet Contractual Obligations 8. Emaar MGF sought concessions / relaxations not contained in the PDA. These included, inter- alia,
extension on milestones and financial assistance. Emaar MGF contrived an emergency situation;
DDA chose neither to enforce contractual rights nor to resist Emaar MGF demands.
9. DDA spent substantial amount on items which were to be taken up by Emaar MGF and has to
recover the amount from the Project Developer. The total amount due from Emaar MGF on
account of quality issues and non-performance aggregates to 96.33 crore. However, this amount
is under dispute. Details are in Chapter 6 of the Report.
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Fallout of emergency situation
10. According to the Project Development Agreement signed on 14th September, 2007, DDA and
Emaar MGF were to share the residential apartments in the ratio of 1:2. This was effectively
changed to 1:0.63 with the decision to bail out the Project Developer through purchase of 333
apartments from Emaar MGFs share of the apartments. It should be noted that the Project
Developer had asked for 321 crore as loan at normal rate of interest or purchase of 250
apartments. It was DDAs decision to purchase 333 apartments.
11. The Bailout package was premeditated, suggestive of the outcome preceding the process. DDA
formed a Valuation Committee which, in turn, appointed two Independent Consultants to
determine fund requirement of Emaar MGF and the value of apartments (in March 2009) for
arriving at the number of additional apartments to be purchased by DDA. A Negotiation
Committee, which was set up with the approval of LG, was unable to reach a mutually acceptable
sale price with Emaar MGF. Emaar MGF, then addressed a letter to LG dated 22.04.2009 stating
their readiness to accept a rate of 11,000 per sft which was endorsed with alacrity on 24.04.2009
at a meeting chaired by LG, attended by Secretary and Joint Secretary, Ministry of Urban
Development, Vice Chairman, DDA and Finance Member and Engineer Member, DDA. The locus
standii of this Group to take such an important decision is not known. It is surprising that such a
decision was not taken by the competent Authority: DDA. Such a major decision with large financial
implications, not being taken by the competent authority, renders it suspect. It was referred to the
Authority only in June 2009 after the Bailout Agreement had been signed in May, 2009.
12. The Technical consultants, based on the project specifications, estimated the cost price of the
project at 934.49 crore (excluding the land cost). This estimation was later ignored. In the process
of finalizing a sale price, which was also agreeable to Emaar MGF, the sale price recommended by
the Financial Consultants was revised several times to finally accommodate 10% cost of capital and
15% Developers margin. It may be noted that as per industry norms, cost of capital is borne by the
Developer. In the calculations, the sub-contract price of 1168.21 crore was accepted at face value
even though no signed contract was shown to the Financial consultant.
13. A copy of the sub contract between Emaar MGF and M/s Ahluwalia Contracts (India) Ltd., which
was apparently not earlier available to the DDA, was obtained and referred to a Consultant of the
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HLC. Based on this document, the TDS returns filed by Emaar MGF and the Project Report
submitted to SBI by the PD, the Consultant has calculated that the total estimated Project Cost was
1368.42 crore and the per sft. Cost, inclusive of Developers margin, should not have been more
than 7829 per sft.
14. Expert analysis of the cash flow statements of Emaar MGF Constructions Pvt. Ltd., Emaar MGF Land
Ltd. and the Group for the years 2007-08, 2008-09 and 2009-10 reveal that the Project Developer
did not really require the fund infusion from DDA for completion of the project and it was just a
ruse for selling off a huge chunk of its share of unsold flats to a bulk buyer at a price that was
acceptable to them and at a time when the real estate market was sluggish!
Undue Favours to Project Developer 15. Some of the undue favours that were bestowed on the Project Developer by DDA are as under:
(a) Purchase of apartments
DDA purchased the apartments from Emaar MGF at the rate of 11,000 per sft, which was way
higher than the rate of 7829 per sft. arrived at by the Consultant of HLC based on assessed
cost of the Project or the market price of 9068 per sft arrived at by HLC. The sale price paid
by DDA was also much higher than what had been recommended by the experts of DDA and
the highest price initially recommended by the Valuation Committee, which was 9,720 per sft.
Whether based on the assessed cost of the Project or the market price determined by HLC,
the purchase of 333 apartments by DDA @ 11,000 per sft. caused undue financial gain for
the Project Developer of an amount ranging between 134 crore to 220 crore.
(b) Recovery from Customers
The Valuation Committee based on the advice of the experts recommended to the Negotiation
Committee that the funding by DDA to the Developer under the Bailout package should be net
of the funds received by Emaar MGF from the sale of apartments. While this advice was noted,
the Negotiation Committee failed to include any definitive clause in the Bailout package to
ensure that cognizance of this stream of funds was taken while deciding the installment
amount to be released by DDA to the PD.
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(c ) Unauthorized payments
The Bailout Agreement specified the expenditure which could be met through the funds
received from the bailout package aggregating to 766.89 crore. Emaar MGF made payments
to other Group companies, incurred marketing expenditure etc. (as indicated in their utilization
certificate) which was not authorized and hence has been termed unauthorized expenditure
by the Financial Consultant. As per the utilization certificate for the period ending 3rd March
2010, such payments aggregated to 64 crore. Further, excess funds aggregating to 192.71
crore from the Bailout package with Emaar MGF as on 31st March, 2010 were parked by the
Developer in a short term investment fund.
16. The summary of the financial favours/ loss to DDA by a series of decisions taken to support Emaar
MGF are set out in the following Table:
S.NO. Particulars Claim ( Crore) Reference
I Non levy of Liquidated Damages on the Emaar MGF as per the Agreement terms DDA waived the damages
81.45 Chapter 4
II Bailout Package
A Purchase of apartments at a very high rate of 11,000 per sft
134.00 220.00 Chapter 5
B Recovery from customers and sale of new apartments not reduced from the fund requirement for the project (as recommended by the Financial consultants to the Valuation Committee)
686.34 Chapter 5
C Unauthorized payments contrary to the Agreement 64.00 Chapter 5
D Investments (as on 31st March, 2010) 192.71 Chapter 5
Poor Monitoring 17. Although DDA had an oversight and monitoring responsibility, it failed to detect contract violations
/ other problems. Records reveal that on several occasions the Monitoring Committee discussed
the significant delays and other related issues but the same were documented in a very
perfunctory manner.
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Box: 1 Games Village Saga
DDA was the chosen agency for development of the Games Village for CWG, 2010. The Village was over-
designed to accommodate 8000 athletes and officials while provision for 6000 would have been
adequate. This was mentioned in the Report of the Evaluation Commission set up by CGF in October 2003
itself.
Over two years were frittered away in deciding the development strategy. Ultimately, it was decided to
adopt the Public Private Partnership model for development of Games Village in January 2006 and the
Project Development Agreement could be signed only in September, 2007.
Trouble began to brew by early 2008 and in February, 2009, the Project Developer (Emaar MGF) formally
sought financial assistance from DDA/Government. Bailout package was given to the Developer on his
terms and conditions as by then DDA had concluded that it had no other viable option left if the Games
Village was to be ready in time. So, as with other CWG projects, in the national interest DDA decided to
forego terms and conditions of a valid legal document the Project Development Agreement and
sacrifice its own interests.
DDAs decision to purchase 333 apartments from Emaar MGFs share in 2009 only helped the Project
Developer to offload his share of unsold flats in bulk at a price that was acceptable to him and was way
above the prevailing market price. Funds made available by DDA in 2009-10 enabled the Project
Developer to divert funds to various applications other than the CGV Project such as repayment of interest
bearing loans, investment of surplus funds into mutual funds and transferring funds to other Group
companies.
Finally the Games Village was ready but at a huge cost. Key principles of PPP model were ignored and the
only principle that remained was that risk and loss would be borne by DDA while profit would be of
Emaar MGF.
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Chapter 1: Introduction Bidding for the Games
1.1 In May 2003 Government of India gave its nod to the Indian Olympic Association (IOA) to bid for
the Commonwealth Games 2010 (CWG) at an estimated expenditure of 296 crore towards sports
infrastructure and conduct of games, with expenditure on security and Games Village to be incurred by
the Government and Delhi Development Authority (DDA)
1.2 India was awarded the rights to host the Commonwealth Games (CWG) for 2010 by the
Commonwealth Games Federation in November 2003.
1.3 Indian Olympic Association/ Organizing Committee together with the Government of National
Capital Territory of Delhi and Government of India entered into the Host City Contract with the
Commonwealth Games Federation on 13th November, 2003 for holding of XIX Commonwealth Games
in Delhi during 03-14 October 2010.
1.4 The major responsibilities regarding the successful delivery of the XIX Commonwealth Games
were of the OC, GNCTD and GOI. The major responsibilities of the stakeholders were as follows:
Key Activities Stakeholders
Sports Infrastructure Ministry of Youth Affairs & Sports; Govt. Of Delhi; Delhi
Development Authority (DDA) and New Delhi Municipal
Council (NDMC)
City Infrastructure City Government; Municipal Council of Delhi (MCD) and
NDMC
Games Village Delhi Development Authority (DDA)
Conduct and Delivery of Games Organizing Committee (OC)
Host Broadcasting and Media Press
Centre
Prasar Bharati and Ministry of Information &
Broadcasting
Tourism and Accommodation for
Tourists
Ministry of Tourism
Security Ministry of Home Affairs
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Role of DDA
1.5 DDA was created in 1957 under the provisions of the Delhi Development Act, 1957 to promote
and secure the planned development of Delhi. The charter lists the following objectives as incidental
and ancillary to the working and functioning of DDA:
To formulate a Master Plan for covering the present and future growth of Delhi and to
promote and secure the development of Delhi according to the plan covering all possible
activities.
To acquire, hold, manage and dispose of land and other property.
To carry out building, engineering, mining and other operations.
To provide services and amenities incidental to the above
1.6 DDA was given the following mandate with respect to the XIX Commonwealth Games:
Development of the Games Village for the accommodation of the participants during the
Games;
Development of the Yamuna Sports Complex;
Development (including up-gradation) of the Siri Fort Sports Complex;
Development of Vasant Kunj flats to accommodate tourists during the Games; and
Development of 33 hotels to accommodate the projected tourists during the Games.
Organizational Structure
1.7 The present organization structure of DDA is illustrated in the following chart:
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1.8 To ensure timely completion of the CWG projects, various divisions were created by DDA under
the supervision of Director (Sports) and entrusted with the responsibility of construction of the same.
Under this format, 13 divisions were formed.
a. Division 1 - 9 : Responsible for civil work at various projects
b. Division 10 - 13: Responsible for electrical work at various projects
Governance Structure for CWG projects - DDA
1.9 Various committees were constituted by DDA to monitor the progress and provide constant
quality assurance with regards to the CWG project. Four major committees were constituted for this
purpose, namely:
Monitoring Committee (CGV)
The Monitoring Committee was formed under the chairmanship of an Independent engineer,
(who was unanimously elected by the two parties to the Agreement) and had Chief Engineer,
SEZ, DDA and a representative of the Project Developer for the Games Village project, as
members. The committee was mandated to meet every month to review the progress of work
at the Commonwealth Games Village
Chairman, DDA (LG of
Delhi)
Vice Chairman
FinanceMember
Engineer Member
Principal Commissioner
Principal Commissioner
Principal Commissioner cum Secretary
Chief Officers, Engineers ,
Commissioners, & Directors
Chief Legal Advisor
Principal Commissioner
(CWG)
Commissioner Planning
Chief Vigilance Officer
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Stadia Committee
The mandate prescribed for the Stadia Committee was to conduct regular meetings to address
all issues relating to the development of the Games Village site. Weekly meetings were to be
held to assess the progress of the project and resolve all project related issues relating to
flyover, residential facility, temporary overlays, practice venues etc.
Weekly Site Coordination Committee
This committee was formed on 27th May 2009 by the Principal Commissioner (CWG) to facilitate
internal co-ordination amongst the contractors, consultants and the DDA engineers and
resolution of issues of mutual interest.
High Powered Committee (HPC)
The Vice Chairman, DDA constituted a HPC to monitor the progress regarding preparation for
the Commonwealth Games. The committee was empowered to monitor and ensure early
solutions of all issues relating to the Commonwealth Games. Following were the committee
members:
Finance Member, DDA - Chairman
Engineer Member, DDA
Pr. Commissioner (CWG), DDA
Director Sports (Member Secretary), DDA
Representative of Delhi Govt. (GNCTD)
Representative of Organizing Committee, Commonwealth Games 2010
Copies of orders constituting the above mentioned Committees are at Relevant Document 1.
Scope of Report
1.10 This Report reflects the findings and conclusions of the High Level Committee (HLC) on various
aspects relating to the development of the Commonwealth Games Village for providing
accommodation to the participating athletes and Team officials.
1.11 The HLC through its team of officers / experts examined the performance of the DDA against
the Terms of Reference of the Committee, with special focus on:
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Planning and execution of development of Games Village execution and delivery with
reference to time, cost and quality
The effectiveness of the organizational structure and governance, in particular, within DDA
Weakness in management, alleged irregularities, wasteful expenditure and wrongdoing in
performance of the tasks assigned to DDA
Criteria
1.12 The HLC evaluated the management and performance of the key functions carried out by DDA
in the background of reasonable timelines for initiating and completing the projects in accordance with
established standards, generally accepted best practices and conformity to good governance.
Methodology
1.13 The key procedures carried out for the purpose of review were:
a. Identification and examination of relevant file notes of DDA, Ministry of Urban
Development, extracts of the Notes for Cabinet, records of the meetings of GoM, and
correspondence on the subject matter. The list of documents reviewed is at Appendix 1.
b. Interview with officers and functionaries responsible for planning, execution and
monitoring of the CGV project. The list is placed at Appendix 2.
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Chapter 2: Location of the Commonwealth Games Village
2.1 The Games Village is located in Pocket III of Sub-Zone 6 of the River Yamuna, developed on an
area of 59.28 hectare between river Yamuna and the flood protection bund on the eastern side.
2.2 The HLC has been informed by DDA that the location of the Games Village was identified by the
Planning Department of DDA in consultation with the then LG, Shri Vijai Kapoor, in the year 2003.
However, there is no documentary evidence to suggest the type of inputs that were taken into account
before it was concluded that the present location of the Games Village is the best available site.
2.3 On 14th May, 2003, the LG in his letter addressed to the Chairman, Commonwealth Games
Federation (CGF) mentioned that we have set aside land for building a brand new Games Village. A
copy of the letter is at Annexure 1.
2.4 Further, in his letter dated 22nd August 2003 to the Secretary, Department of Youth Affairs and
Sports, Government of India (GOI), the LG stated that the site was showcased to the Evaluation
Commission of the Commonwealth Games Federation (CGF) that had visited New Delhi in August 2003
to evaluate the citys bid for Commonwealth Games 2010. There is a mention in the said letter that the
site was liked immensely keeping in view its salubrious environs, its location vis-a-vis the competition
sites and its location on the transportation map which will include metro line from NOIDA to the
centre of the city by the year 2010. A copy of the letter is at Relevant Document 2.
Box: 2 Excerpts from the Report of the CGF Evaluation Commission (October 2003)
The DDA (Government) is constructing the Village on a pleasant and high quality site. No
detailed architectural planning has been undertaken to date. A design competition will be
conducted. 40 hectares of land has been reserved in the heart of Delhi.
The proposed Village site adjoins the National Highway-24 and will be connected with the
Mass Rapid Transit System (MRTS) and Electric Magnetic Unit (EMU) Trains.
The estimated cost of construction of the Commonwealth Games Village will be Rs.185.8 crore
(USD 38.8 million).
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2.5 Subsequently, on 11th September 2003, Union Cabinet approved the site of the Games Village
at the current location based on the proposal of LG.
2.6 The HLC, based on the records made available to it, finds that the Union Cabinet was not
provided with all the information regarding the pros and cons of the location of the Games Village. The
Cabinet approval, therefore, seems to be based solely on the assertions made by the LG. Moreover,
the Group of Ministers (GoM) merely acknowledged the decision of the Cabinet and asked DDA to
make available strategy options for development of the Games Village in its 4th meeting held on 17th
March, 2005.
2.7 Once the site had the seal of approval of various authorities, what followed was a series of
steps undertaken by DDA to regularize the decision.
Change in Land Use
2.8 The first step towards regularization of the site for development of the Games Village was in
the form of change of land use of the earmarked area. Vide notification dated 2nd March, 20061, the
land use of area measuring 42.5 hectares (105.0 acres) was sought to be changed from agricultural
and water body to public and semi-public facilities. Further, vide notification dated 18th August,
20062 (a modification of the earlier notification), the land use of an area of 16.5 hectares was changed
to Residential for 11 hectares and 5.5 hectares to Commercial/ Hotel.
2.9 Initially, DDA had proposed that hotels would also come up at the same site. However, this was
opposed by Chairman, OC on the ground that it would be discriminatory to put up some athletes and
Team officials in hotels and others in Games Village. On 19.11.2006 GoM agreed, in principle with the
model where the residential accommodation for the athletes may be developed on a PPP model in the
form of a residential complex with additional hotel accommodation being provided in close proximity
to the Games Village which would assist OC officials in making arrangements for technical officials.
1 See Relevant Document 3 2 See Relevant Document 4
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2.10 Through February-August 2007, a NGO named Yamuna Jiye Abhiyaan (YJA) in its
communication to several GOI ministries including MoUD, MoEF, and MYA&S had raised many
pertinent issues relating to the location of the Games Village. YJA sought an appointment with these
agencies, including the GoM, to discuss their submission of the issues highlighted; however, they were
only given an audience by GoM during the 12th meeting held on 12th November 2007. By this time the
GoM had taken all major decisions relating to the development of the Games Village at the site
selected and the PDA had also been signed by DDA and Emaar MGF. Thereafter, any appeal to change
the location of the Games Village could be brushed aside stating that the current time frame to
develop the Games Village did not permit any deliberation on the matter.
Alternative Sites
2.11 Perusal of the presentation made by YJA to the GoM, indicates that it had suggested certain
alternative sites, which included
(a) Safdarjung airport
(b) Jasola Sports complex and
(c) Dwarka - Sector 20.
While the HLC has not examined the suitability of such sites vis a vis the current site, it may be stated
that the Government and DDA ought to have examined various options before zeroing in on the
location of the Games Village. It may be pertinent to note that the Asian Games Village in 1982 was
located within two kms. of the Jawahar Lal Nehru Stadium and hence faced minimal transportation
problems. HLC has been informed that during the run up to the CWG 2010, there were suggestions for
an alternative location close to Jawahar Lal Nehru Sports complex which, unfortunately, was never
considered.
Environmental Clearance
2.12 At the first instance, MoEF granted conditional clearances vide its letter dated 14th December,
20063. MoEF insisted that a study needs to be conducted to assess the impact of Akshardham bund on
3 See Relevant Document 5
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the area of flood plain in the upstream reaches of river Yamuna. Accordingly Central Water Power
Research Station (CW&PRS) was entrusted with the study. CW&PRS submitted its report to MoEF in
March 20074. The report indicated that the bund would cause insignificant flood problem upstream as
well as in the region of the bund. Accordingly, MoEF amended its environmental clearance of 14th
December 2006 and issued an amended letter on 29th March 20075.
2.13 In January 2008, DDA made a reference to National Environmental Engineering Research
Institute (NEERI) seeking their opinion on whether the proposed site for Games Village was part of the
Yamuna Flood Plain and whether having complied with the MoEF conditions for environmental
clearance, there would be any further threat of environmental degradation / loss of ground water
recharge and /or if there are any additional abatement / measures required to be undertaken. The
opinion indicated that the project posed insignificant risk6.
2.14 Environmental clearances /reports, in particular NEERI Report, ought to be viewed in context of
what happened during August September, 2010. It rained as it should; unfortunately for these
agencies, more heavily than usual. Yamuna water including seepage compromised the site to a point
where its use was in question unless the monsoon abated. Vestiges remain; the jury is still out on
remedial measures, costs, responsibility et al.
2.15 While the process of compliance with environmental issues may appear transparent at first
glance, the HLC noted that DDA did not inform the following agencies / statutory authorities, which
have regulatory role vis--vis the river Yamuna. These include:
Yamuna Standing Committee (YSC) of Central Water Commission No approval
accorded by the concerned authority with respect to the development of the Games
Village as this project was never referred to it.7
4 See Relevant Document 29 5 See Relevant Document 6 6 See Relevant Document 7 7 It may be noted that since October 2003, 19 projects had been cleared by the Yamuna Standing Committee including construction of elevated road over Barapullah Nallah but the Games Village Project was never referred to YSC of Central Water Commission for their approval. See Relevant Document 8.
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Central Ground Water Authority (CGWA)
Yamuna Removal of Encroachments Monitoring Committee
Public Interest Litigation 2.16 Thereafter, a plethora of objections were raised and a Public Interest Litigation (PIL) was also
filed. The issues addressed in the PIL were finally dismissed by the Supreme Court judgment dated 30th
July 20098. The judgment was largely based on expert opinion. However, this case took considerable
time of the various government authorities including MoEF, Ministry of Youth Affairs and Sports,
Ministry of Urban Development and Poverty Alleviation, Government of Delhi and DDA as all had to file
separate counter affidavits dealing with all the subjects including the apprehensions about the alleged
damage to the ecology of the Yamuna riverbed, floodplain and other environmental hazards.
Avoidable Development Cost
2.17 As brought out in the preceding paragraphs, the process of regularization of the current site
for development of the Games Village took considerable time and Government also had to bear
possibly avoidable development cost of about 633.06 crore towards removing/mitigating inter alia
transportation bottlenecks and noise pollution, which was highlighted by Mr. Mark Fennel, President,
CGF. Details of such expenditure are as under:
Particulars Expenditure
( in crore)
Comments
Additional Land requirement 21.34 DDA/ Ministry of Urban Development negotiated with the Government of Uttar Pradesh the purchase
of land measuring 31.542 acres
Bund Road 13.39 Widening and strengthening of the bund road between NH-24, Railway line near Akshardham
temple
Construction of flyover on the
intersection of NH-24 and
bund road near the Games
Village
90.77 The proposal for construction of the flyover was rejected by DUAC vide their letter dated 29
th
October, 2007 stating that keeping in view the short
duration of the games with the volume of traffic and
also with the Noida mode interchange which was
8 See Relevant Document 9
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approved and likely to be commissioned by 2010, the
traffic during the games could be managed with
suitable traffic management interventions. A copy of the Letter from DUAC is at Relevant Document 10.
Noise Barrier 4.84 The CGF COCOM raised issue related to noise management at the selected site on account of
railway line running close to the proposed village and
the construction of flyover at the proposed
intersection. OC had raised this issue in the 8th GOM meeting and recommended change of Games Village
location. LG indicated that the change of site would
not be possible. However, it was agreed that the
issue of noise pollution would be taken care of. In order to mitigate the issue of noise, noise barriers
were constructed on the side of the flyover and
temporary noise barrier was constructed along the
railway line.
A copy of the relevant minutes of the GoM meeting is
at Relevant Document 11.
Elevated road over Barapulla
Nullah
440.00 As per the Chief Minister, Delhis submission to the GOM, the said flyover did not have any legacy value
after it ceased to achieve its objective of connectivity
of the Games Village to the Jawaharlal Nehru
Stadium. However, the same was constructed as the
decision for locating the Games Village was cited as
an irreversible decision on account of limited time
available before the commencement of the Games.
A Copy of the letter from the Chief Minister is at
Relevant Document 12.
Extra Piles driven
(proportionate cost)
62.72 This expenditure relates to the extra piling work done by the project developer (M/s Emaar MGF
Construction Pvt. Ltd.) due to soil conditions of the
selected site. As against an approximate figure of
2850 piles, approximately 14060 piles were driven for
the structure of the residential complex.
A copy of the letter from Emaar MGF giving the piles
actually driven as against the estimates is at Relevant
Document 13.
TOTAL 633.06
2.17 Based on the review of the documents and discussions with the DDA officials, the HLC is of the
view that various options regarding suitable site for Games Village were not adequately examined and
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documented, which indicates lack of informed decision making process. The site recommended by the
then LG was accepted by OC, CGF, Cabinet and GoM at its face value. In fact, several steps had to be
taken later to regularize the site for the purpose of development of the Games Village.
2.18 The site, inter alia, had a number of constraints with respect to zoning, land ownership,
Akshardham temple interface and transportation / access issues apart from the fact that it was located
close to the Yamuna river. The flooding of the basements of the newly constructed residential towers
in August September 2010, following heavy rainfall in Delhi served to highlight the potential danger
that could be posed by Natures fury to buildings constructed in this fragile and vulnerable location.
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Chapter 3: Planning and Bidding Planning
3.1 It is evident from records that the site for the Games Village had been identified in May 2003
itself and had been favourably commented upon by the Evaluation Commission of the CGF in its Report
forwarded to all Commonwealth Games Associations in October 2003 ahead of the crucial vote for
selection of Host City for CWG 2010 in November 2003. However, there is nothing on record to suggest
that DDA undertook any activity relating to the development of Games Village at the identified site
during the entire year 2004.
Box: 3 Conclusions of Evaluation Commission regarding Games Village
Based on the information provided by Delhi and independent expert analysis the Evaluation
Commission has concluded the following in relation to the Village Plans.
i. More detailed planning is required. However, the undertakings of Delhi provide sufficient
comfort at this stage that a suitable Village will be developed.
ii. When constructing a new site to act as a Village the planning for Games Operations Overlay is
a major undertaking and is a significant financial commitment. The Village will require a large
amount of physical space to support the operations of offices, logistical, and athlete service
areas. The supply and fitout of these spaces will be additional to the cost of constructing the
actual housing stock. The Commission, while provided comfort by the role of the DDA,
stressed the need for Delhi to ensure that there is sufficient clarity as between the DDA and
the future Organising Committee (and now the Bid Committee) to ensure that the Games
times Operations Overlay is adequately financed.
iii. Having an extra capacity of upto 2,500 bed spaces does not adversely affect the operation of
the Village providing it does not cause excessive operational expenditure. It may be possible
to use some of the surplus spaces for supporting CGA offices and other Village operational
functions.
iv. Some services (dining facility/capacity) may be over-scoped however this can be adjusted
during more detailed planning.
v. The configuration of bedrooms will be critical to determining if these housing requirements
can be met in an operationally sound manner and needs to be contemplated in the planning
process.
vi. The proximity of the Village to the airport, city and the venues is excellent and will allow all
athletes to live in one Village.
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Delay in finalizing Development Strategy 3.2 GOM in its 4th meeting held on 17th March, 2005 instructed DDA to make available two or three
strategy options to develop the Games Village for the consideration of the GOM. Accordingly, DDA on
19th April, 2005 submitted the concept paper which provided for the accommodation for 7000 athletes
and officials in the residential zone which could be utilized post Games as hotels, hostels / apartments.
A copy of the concept paper is set out as Relevant Document 14.
3.3 It has been stated that DDA held detailed deliberations with almost all major real estate
developers, NHAI, Ministry of Urban Development and Planning Commission before they finalized the
PPP structure of the project. According to DDA officials, the decision to adopt the PPP mode for
developing the Commonwealth Games Village was taken keeping in view constraints of scale, time,
quality, specifications and availability of 4000 rooms during the Games period. DDA was of the view
that it was not possible to develop the residential facility through other options such as auction of land
or self development.
3.4 Subsequently, GOM in its 6th meeting held on 8th September, 2005 directed DDA to prepare
three options for the Games Village including the option relating to its possible use as Games Village
for Asian Games 2014, in consultation with Organizing Committee (OC). Vice Chairman, DDA made a
presentation to the GOM in its 7th meeting held on 27th September, 2005 wherein it was proposed that
the facilities would be developed under the Public-Private-Partnership framework to ensure
commercial viability. Further, the OC was asked to complete the consultation process with regard to
the Games Village and venues by 15th October 2005, after discussion with the stakeholders and submit
their views to the Ministry for placing them before the GOM for consideration.
3.5 GOM finally decided in the 9th meeting held on 4th January, 2006 that the Games Village would
be developed on the Public Private Partnership (PPP) model. A copy of the GoM decision is at
Annexure 2.
3.6 Thereafter, DDA engaged M/s. Pricewaterhouse Coopers Pvt. Ltd. (PwC) on 16th June 2006 to
provide expert advice and consultation services with respect to the development of the Games Village
under the PPP model. The report was submitted by the consultants in August 2006.
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3.7 Thus, it is clear that there was unacceptable delay in formulating a strategy to develop the
Games Village and almost three years were lost even after the site had been finalized in the year 2003
itself.
3.8 This delay in planning for the Games Village did not leave any room for addressing
contingencies in an effective manner. As the subsequent events revealed, grave consequence of poor
planning was witnessed in more areas than one. Some instances are -
Even when there was extremely poor response to the RFP from reputed developers who
felt that the time period for project completion was too tight, DDA could not explore
alternatives;
DDA had to be content with selection of a project developer even when there was only
a single successful bidder who had no past record of actual completion of any
residential project in India.
DDA had to succumb to the demands of the Project Developer for funding the project.
3.9 Based on the planned timeline, the total time available for the project development from the
date of signing of the Agreement was 30 months (September 2007 March 2010).
Box: 4 Why PPP?
The reasons for taking the decision to develop Commonwealth Games Village in Public Private Partnership
mode by DDA are unclear.
DDA was and is the premier agency undertaking Housing schemes in Delhi and reportedly has a 2/3rd market
share. Its specialization lies in design, development and construction of housing projects for all sections of
society. It had developed the Asian Games Village for accommodating athletes and officials during 1982 Asian
Games.
DDA reportedly had huge cash reserves. Thus, it had the expertise and the funds to develop the
Commonwealth Games Village. It had zeroed in on the site and had also been identified as the Nodal Agency
for developing the Games Village by the Union Cabinet in September 2003 itself.
Thus, it defies logic why it did not initiate action in this regard in early 2004 and decided to adopt PPP mode
when there was no precedent in the real estate sector and wherein DDA had no expertise.
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An Artists impression of the Residential Towers in Commonwealth Games Village, Delhi
Bidding Process for selection of the Project Developer
3.11 The selection of the Project Developer (PD) under the PPP model was based on a two-stage
tendering process.
(1) Short-listing of the qualified developers through inviting expression of interest from
interested parties
(2) Inviting detailed proposal from shortlisted developers
3.12 The timelines for the bidding process and selection of the project developer is set out below:
Particulars Date Comments
Request for Qualification (RFQ) 4th Dec., 2006 During the process a pre-bid meeting was
conducted by DDA to clarify any doubts of
developers and invite suggestions Over 30
developers participated.
Last Date for submission of RFQ 12th January,
2007
15 bidders submitted their response by the
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Particulars Date Comments
last date and time.
Short listing of Bidders 19th January,
2007
After evaluation by the committee formed
for this purpose, 11 parties were qualified
and notified by DDA.
Request for Proposal (RFP)
24th April, 2007 RFP issued. A Copy of the RFP is at Relevant
Document 15.
Pre Bid Meeting 15th May, 2007 Pre Bid meeting with Qualified Parties.
Last Date for receiving Bids 25th May, 2007 No bid was submitted by the submission date. Last date extended to 15th June, 2007
Relaxation of terms of RFP 7th June, 2007 Relaxation of some of the terms of the RFP by the High Powered Committee
Addendum to RFP document 8th June, 2007 Addendum to RFP document issued by DDA incorporating the relaxations agreed to in the meeting of HPC on 7th June.
Revised Last Date for submission
of Bids
15th June, 2007 Two bids submitted post the relaxation M/s DLF Ltd. And M/s Emaar MGF Construction Pvt. Ltd.;
Opening of Bids & Report of
Technical Evaluation Committee
15th June, 2007 Bid of M/s DLF Ltd. Bid was found non-responsive and hence disqualified. Only ONE developer qualified Consortium of Emaar MGF
Issue of LOI 5th July, 2007 DDA issued LOI to Emaar MGF.
Signing of PDA 14th September,
2007
DDA signed the PDA with Emaar MGF
The above stated sequence of events highlights the poor response to the proposed project by
experienced Developers and, finally, there was only a single valid bid for the project.
3.13 During the Pre Bid Meeting held on 15th May, 2007, several queries were raised by the
prospective Bidders and the clarifications issued by DDA on the same during the Pre-Bid Meeting along
with concessions announced in the Addendum are represented in the Table below and in Para 3.13:
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S.No. Question Raised Clarifications
provided
Subsequent changes
incorporated in
Addendum to RFP/
concession provided to
Emaar MGF
1 Compensation for delay in
milestone completion should
be based on fair assessment
of delay & causes &
Developer alone should not
be held liable
Specific reference
made to Annexure - 3
Compensation for delay
was lowered and was
refundable to the PD after
completion of the
milestone.
2 Suggestion to lower the
penalty amounts as per
suggestions
No specific reply given
by DDA, only
reference is made to
the concerned
Annexure & Clauses
Lowered thereafter vide
Addendum to RFP issued
by DDA on 8.6.2007.
3 Request to extend the first
milestone considering the
extensive work involved &
the delay that could occur
due to the monsoon season.
Further the request clearly
laid out that such extension
may not delay any further
milestones.
DDA extended the
time for completion of
first milestone from
D+120 days to D+150
days.
Timelines were extended
further after starting the
construction of the
Project.
4 Request for extension of
time limit of the milestone
for construction &
completion of the Mock-up
Unit.
DDA extended the
time for completion of
first milestone from
D+120 days to D+150
days.
The level of achievement
of first 2 Milestones was
relaxed by the Addendum
to RFP.
5 Clarifications regarding
layout and construction work
w.r.t filling of earth &
conceptual clarity
DDA specified no
earth filling is required
& referred to
structural drawings
and other
architectural material.
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S.No. Question Raised Clarifications
provided
Subsequent changes
incorporated in
Addendum to RFP/
concession provided to
Emaar MGF
6 Number of returning
performance security
payments may be increased
in terms of achieving every 2
milestones, so that it reduces
the burden on the PD in
terms of paying interest to
the banks.
Please refer to Section
II, Instructions to
Bidders, Clause E
Approved thereafter vide
Addendum to RFP issued
by DDA.
It will be noticed from the Table above that several critical suggestions made at the time of the Pre-Bid
meeting with 11 selected / qualified bidders were later relaxed and the Addendum was issued on 8th
June, 2007, which was just seven days prior to the revised last date for submission of bid. The period
provided for submission of bids, after the Addendum had been issued, appears to be inadequate.
Changes in Request for Proposal (RFP)
3.14 In its meeting dated 7 thJune, 2007, following important relaxations were made
by the High Powered Committee (HPC) and major modifications were made in the RFP
document, which are as under :
Percentage share of DDA in the total number of apartments was reduced from 50% to
33.3%
Sharing methodology block by block
Bank guarantee for performance security reduced to 400 crore from 500 crore
Upfront amount remained at minimum of 300 crore but payment schedule relaxed.
First two Milestones relaxed.
Penalty for delay in achievement of Milestones was relaxed from 25 lakh to 20 lakh
per day after first 15 days of delay.
Deletion of third penalty slab of 50 lakh per day after 30 days of delay
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A copy of the minutes of the HPC is set out as Annexure 3.
3.15 It may be noted that even the modified provisions in the RFP did not lead to active participation
and only two bids were received. One of the two bids received from M/s DLF Ltd. (DLF) was found to
be non-responsive on grounds of it being conditional and, hence, rejected by the Evaluation
committee. A copy of the bid (letter) submitted by DLF is set out as Annexure 4. It is pertinent to note
that against the reserve price of 300 crore for the land in the RFP, the amount quoted by the single
bidder was only 321 crore. It is very likely that in case competitive bidding had taken place, this
amount would have been substantially higher. To that extent, DDA has been a loser.
3.16 At this stage there was no serious deliberation in the DDA for evaluating the capability of the
project developer to deliver on the contractual obligations considering the fact that Emaar MGF had no
past record to demonstrate the delivery of any successful residential project in India. Based on the
Draft Red Herring prospectus issued by Emaar MGF Land Pvt. Ltd. (Parent company) on 30th
September, 20109, the company was at that time yet to complete any residential project in India.
3.17 A due diligence exercise based on common sense and financial prudence was of prime
importance as the timely completion of this project was critical to the organization of the
Commonwealth Games. The HLC was informed by the Finance Member, DDA that most developers
having extensive experience in the Indian market were of the opinion that the timelines were very
tight and the financial terms were not attractive, the penalty clauses were very severe and not in line
with market practice.
3.18 Given the circumstances described above, it was imperative that DDA should have put in place
a contingency plan to mitigate the risk of the developer failing to deliver on the Agreement.
3.19 The HLC, based on the sequence of events, finds that while the entire competitive bidding
process evoked poor response, no other option for the development of Games Village was seriously
explored before 2006. Even within the selected solution, further options to attract a larger base of
experienced developers were not explored. The HLC also finds it intriguing that DDA did not deliberate
9 Extracts are at Relevant Document 16.
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or seriously consider the option of developing the Games village by itself, one of the two options
recommended by its consultants.
3.20 If the objective was not to take on the financial burden or financial risk of the project, then DDA
failed to achieve its objectives as they ended up doing both infusing funds to complete the project
and carrying the financial risks of the project as explained in subsequent chapters.
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Chapter 4: Project Development Agreement and Execution Public Private Partnership (PPP)
4.1 The Report of the PPP Sub-Group on Social Sector by Planning Commission states that a Public-
Private-Partnership (PPP) provides an opportunity for private sector participation in financing,
designing, construction and operation & maintenance of public sector programmes and projects.
4.2 Public-Private-Partnership or PPP is a mode of implementing government programmes /
schemes in partnership with the private sector. The term private in PPP encompasses all non-
government agencies such as the corporate sector, voluntary organizations, self-help groups,
partnership firms, individuals and community based organizations. PPP, moreover, subsumes all the
objectives of the service being provided earlier by the Government, and is not intended to compromise
on them10.
4.3 PPP is an approach, under which services are delivered by the private sector (non-profit / for-
profit organizations) while the responsibility for providing the service rests with the Government11.
4.4 To sum up, for this project the defining element of a PPP model is that the private party would
bring in technical, financial and project management skills and the public agency would monitor,
ensure accountability and timely completion of the project. The financial risk was to be carried by the
private party.
Project Development Agreement (PDA)
4.5 The PDA, which was said to have been modeled on the approved PPP concession agreement,
was signed on 14th September, 200712 between DDA and M/s Emaar MGF Construction Private
Limited.
10 Report of the PPP Sub-Group on Social Sector by Planning Commission, GoI; published in 2004 11 Report of the PPP Sub-Group on Social Sector by Planning Commission, GoI; published in 2004
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4.6 The HLCs review of the PDA showed that several key clauses related to accountability of the
private developer and subsequent monitoring mechanisms were not included in the PDA. Such clauses
form a part of the standard Model Concession Agreement as prescribed by the Planning Commission
and are extensively used in most infrastructure projects (port, railways etc.) executed on the PPP
model. Considering the fact that this project was the first of its kind in the real estate sector and
especially for DDA, prudence demanded inclusion of risk mitigation norms in the Agreement. The
exclusion of such clauses provided little or no recourse to DDA to detect early signals of problems in
the development of Games Village. Ironically, the PDA included a non-intrusion clause that prevented
the DDA from effectively monitoring this critical project for the Commonwealth Games 2010.
Deviations from Model Concession Agreement
4.7 The key clauses in accordance with the Model Concession Agreement which were not included
in the PDA and its implications are set out below:
Escrow account The clause for maintaining an Escrow account is understood to be
critical for all PPP agreements. An escrow account plays a critical role to ring fence the
funds for the project. This was particularly important in this project as the PDA allowed
the sale of apartments during the period of construction, the proceeds of which were to
be used to fund the project. Therefore, a sound monitoring system should have been
provided to ensure that all revenues accruing from the sale of apartments were
available for completion of the project.
Absence of an escrow account effectively restricted the ability of the DDA to monitor
financial parameters and periodic transfers of funds by PD to Emaar MGF Land, the
parent company.
Audit and Accounts - The importance of the Audit and Accounts clause is that it enables
the public party to have access to the books of accounts of the project and if required to
12 A copy of PDA is at Relevant Document 17
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audit the accounts of the project. This is a tool used for effective monitoring and control
over the project executed under the PPP model. Also, in the CGV project this would
have enabled DDA to get the actual cost of construction when fixing the price for
purchase of apartments.
A copy of the Model Concession Agreement recommended by the Planning Commission with respect
to the two clauses is at Relevant Document 18.
Risk Assessment & Mitigation
4.8 Risk assessment and mitigation measures are standard pre-requisites in Project Management
especially where outputs have to be delivered within a prescribed time frame.
4.9 DDA failed to undertake risk assessment exercise at several stages of decision making related to
the development of the Games Village including evaluation of options, selection of a credible
Developer and ensuring accountability of the Developer.
4.10 The execution of a PPP contract does not reduce the responsibility and accountability of the
public agency and public servants concerned. On the other hand, it places substantial responsibility on
them to see that the arrangement succeeds in safeguarding public interest by managing the PPP
economically, efficiently and effectively. The absence of the monitoring provisions in the PDA reflects
Box: 5 Public Private Partnership in Commonwealth Games Village Project?
DDA decided to develop the Commonwealth Games Village Project in the PPP mode. The Project
Development Agreement was signed with the selected Project Developer, Emaar MGF on 14th
September, 2007.
The way this PDA was executed by DDA accorded a new meaning to Public Private Partnership
altogether. Here, finally
all risk was borne by DDA;
all comforts, legal and financial, were provided to Project Developer by DDA;
the Developer was able to recoup his investment even before completion of the project;
defects had to be rectified by the DDA;
DDA had to bear the cost of blocked capital.
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the lack of understanding of the risks involved as evidenced by inadequate risk management process
on the part of DDA. It may be noted that the occurrence of certain future events, primarily the Bailout
package to the PD, could have been anticipated and pre-empted. To illustrate, the Project
Development Agreement could have included the clause regarding escrow account. Such an account
normally requires maintaining of a defined average fund over a period of time. Absence of this
account resulted in DDA not detecting early signs of possible financial crisis faced by the PD and
thereby afforded inadequate time for a more deliberated option under the situation. Further, the
escrow account would have ensured transparency in the project financing as all project related
revenue and expenditures could have been properly monitored.
4.11 In the absence of risk assessment and mitigation strategy, DDA could not take remedial steps
for any potential or actual failure of the developer. Instead, at every instance, the Developer stage
managed situations exerting pressure on DDA to take decisions that eventually turned out to be
weighed in favor of the PD.
Execution of the PDA
4.12 The PDA recognized 9 milestones in the execution of the Project. Various committees were
constituted to monitor the progress and provide constant quality assurance with regards to the
project. Three major committees were constituted by DDA namely:
Monitoring Committee
Stadia Committee
High Powered Committee
Third Party Quality Assurance by CBRI, Roorkee was also put in place.
Monitoring Committee
4.13 The Monitoring Committee formed by DDA included representatives of Emaar MGF and DDA as
members and was chaired by an Independent Engineer who was unanimously elected by the two
members.
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4.14 The committee held 32 meetings over a span of 29 months from its inception on 30th January,
2008 till the last meeting held on 31st July 2010. The committee was mandated to meet every month to
review the progress of the project, resolve any issues, and facilitate work on the project and record
completion of milestones.
Stadia Committee
4.15 The mandate prescribed for the Stadia Committee was to conduct regular meetings to address
all issues relating to the development of the Games Village site. The meetings were held weekly to
assess the progress of the project and to resolve issues relating to the project site and flyover,
residential facility, temporary overlays, practice venues etc.
4.16 These meetings were held on a weekly basis till August 2010, after which daily meetings were
held in view of the directive given by DDA.
High Powered Committee
4.17 The committee was constituted by the VC, DDA and was empowered to find and ensure rapid
resolution of all issues relating to the Commonwealth Games.
Third Party Quality Assurance by CBRI, Roorkee
4.18 The PDA also prescribed regular inspection and supervision of the project by a Third Party
Quality Assurer (QA) to verify the quality of construction and carry out regular supervision of
construction work carried out by the PD independently of both parties to the Agreement. The PDA
required that such appointment be within 6 months of entering into the Agreement, and accordingly
CBRI, Roorkee were appointed.
4.19 As per contract, the QA was required to inspect the site on a monthly basis and thereafter
provide Monthly Quality Assurance Reports to DDA and the PD. These reports served as a benchmark
for DDA engineers and were forwarded to the PD, who was required to comply with the specific issues
raised therein. In response, the PD was required to furnish Action-Taken reports on such issues and
to rectify the structural & quality lapses. The reports were supported by photographs & other
technical data.
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Ineffective Monitoring
4.20 Based on the documentation available it has been noted that there was a delay of 2 months
from the date of signing of PDA and the actual date of appointment of the QA. Further, the frequency
of the reports was reduced from monthly to quarterly effective January 2009 without any formal
communication to this effect from DDA.
4.21 Review of the Minutes of the Meetings held reveal that the issues and concerns regarding the
development of the Games Village were documented in a perfunctory manner. The first meeting of the
Monitoring Committee took place on 5th April 2008, after the Project Developer had missed his first
milestone and sought revisions13.
4.22 The oversight and monitoring functions by the committees set up by DDA were ineffective as
several defects and quality issues relating to the construction of the residential zone by the Project
Developer continued to persist.
Milestones
4.23 The Project Milestones were laid down in the RFP issued for the project. It was stipulated that
these timelines need to be adhered to and severe liability/ penalty shall be levied in case of default or
deviation from such dates. However, as the project execution progressed, the project timelines were
regularly revised at the behest of the PD and these were approved by DDA without documentary
support or evidentiary proof necessitating such revisions.
Non Levy of Liquidated Damages
4.24 Although PDA did not provide for extension of milestones, DDA extended timelines for
achievement of milestones and did not impose penalty as per the PDA. On account of such decisions,
DDA has foregone 81.45 crore in favor of Emaar MGF. Details are set out in the Table below:
13 See Minutes of the First Meeting of Monitoring Committee placed at Relevant Document 19.
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S.No. Milestone Original Date
of
completion
Actual Date of
completion
Delay
(Number
of days)
Liquidated
damages
foregone ( in
crore)
1 Foundation work (including
Plinth Level) up to Plinth
level for 33% of blocks
11th Feb,
2008
11th May,
2008
90 17.25
2 Structure work up to G+2
level
11th May,
2008
10th Aug,2008 91 17.40
3 Structure work up to terrace
level, with associated
electrical works & B.W. up to
G+4 level
07th Nov,
2008
29th Jan.,
2009
83 15.85
4 Completion of brick work up
to terrace level & internal
plaster, flooring, etc. for 5
levels, with associated
electrical works
06th May,
2009
15th Sept,
2009
132 25.65
5 Completion of flooring &
furnishing, with associated
electrical works of all blocks
all levels upto terrace level
02nd Nov,
2009
02nd Dec, 2009 30 5.25
6 External finish of all blocks &
all levels
01st Jan,
2010
01st Jan, 2010 0 0
7 Completion of all electric
work including lifts, ESS etc.
& completion of UGR/ Pump
Rooms/ Lifts/ Pump sets etc.
31st Jan, 2010 31st Jan, 2010 0 0
8 Completion of all
development work including
landscaping
02nd Mar,
2010
13th Dec, 2010 286 DDA has filed
for recovery as
the extension
was not
approved
9 Project Completion Date 01st April,
2010
13th Dec 2010 254 DDA has filed
for recovery as
the extension
was not
approved
TOTAL 81.45
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4.25 It is evident from above that nearly all achievement dates were delayed barring Milestones 6 &
7. It is pertinent to note that all delays, except Milestones 8 & 9, were permitted by DDA without
levying liquidated damages as provided in the PDA. DDA has issued a claim letter to Emaar MGF in
October 2010 setting out the recovery of liquidated damages on account of delays related to
milestones 8 and 9 alone as per the PDA14.
Construction of excess FAR
4.26 The site selected for the CWG Village had an approved FAR of 1.67 initially, which was increased
to an FAR of 2.00 by the Delhi City Master Plan 2021 which came into force effective 07th February,
2007. The Project was thus approved with a built up FAR of 2,05,140 square meters by the Building
Section of DDA on 18th March, 200815.
4.27 However, an actual FAR of 2,30,689.33 square meters was built as per the plan submitted by
Emaar MGF for obtaining Completion certificate from DDA. The Developer, therefore, constructed an
FAR of 25,549.33 square meters in excess of the approved plans. This was almost 12.5% more than the
approved FAR. This was in the knowledge of the Monitoring Committee of DDA at least from January
2009 (See item 3 in Table above) and also the top officers of DDA including Vice Chairman and LG
from April, 2009 when the Bailout Package was being finalized.
4.28 Again, belatedly DDA took a stand on this matter by issuing a Sealing - cum- Demolition notice
only on 20th August, 2010 in respect of the excess constructed area. Reacting to this notice, the PD had
filed a case with the Appellate Tribunal of MCD (Order dated 26th October, 2010 of Appeal No. 549 &
550/ATMCD/2010) which ruled in favour of the PD and advised them to file for a new completion
certificate. The Tribunal also stated that such lapse is compoundable by DDA within a limit of 5% of the
permissible FAR on payment of prescribed charges by the PD. A copy of the judgment is at Relevant
14 See Annexure 5. 15 See Relevant Document 20.
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Document 21. DDA has filed an appeal against the Order of the Tribunal in the Court of LG and the case
is still pending.
4.29 The issue of delayed milestones, approvals to waive liquidated damages without justification on
record and construction of excess FAR point to the ineffectiveness of the monitoring regime set up by
the DDA and complicity of DDA officials. These issues incidentally were NEVER placed on the agenda of
any of the meetings of the Monitoring Committee by any of the several officers specifically stationed at
the project site by DDA.
Box: 6 Actual Ground Coverage & Floor Area of Commonwealth Games Village
(in sq. m.)
A. Total (Residential Towers + Club /Community Centre
i. Permitted Ground Coverage (as per PDA) = 36,663.89
ii. Sanctioned Ground Coverage (27,664.19 + 1438.13) = 29,102.32
iii. Sanctioned Floor Area (203087.25 + 2052.75) = 2,05,140.00
iv. Existing Ground Coverage (225900.70 + 3032.06) = 2,28,932.76
v. Extra Floor Area constructed beyond sanction limit = 23,792.76
B. Residential Towers:
i. Existing Floor Area (considered in FAR calculation) at site = 2,25,900.70
ii. Sanctioned Floor Area (FAR) = 2,03,087.25
iii. Constructed Floor Area (FAR) under DDAs possession = 1,34,819.48
Constructed FAR in respect of 11 Towers (1/3rd ) as per PDA = 73,771.90
Constructed FAR in respect of 333 flats purchased by DDA subsequently =61,047.53
iv. Total Floor Area in possession of Developer:
Balance sanctioned FAR under Developers possession (ii iii) = 68,267.77
v. Extra Floor Area = 22,813.45
C. Club / Community Area
i. Existing Floor Area of the Club = 3032.06
ii. Sanctioned Floor Area = 2052.75
iii. Extra Floor Area = 979.31
(Source: Data provided by DDA)
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Box: 7 Salient Features of the Games Village at a Glance
No. of residential towers - 34
No. of 2/3/4/5 bedroom apartments 1168
Date of signing Project Development Agreement 14.09.2007
Scheduled Date for Completion 31st March, 2010
Actual Date of Completion 13th December, 2010
No. of residential apartments to be shared between DDA and Emaar
MGF as per PDA in the ratio 1:2
Ratio of flats to be shared between DDA & Emaar MGF after Bailout
Package 1:0.63
No. of apartments finally allocated to DDA after Bailout Package 715
No. of apartments finally remained with Emaar MGF 453
Total cash infusion by DDA in Games Village Project 728.89 crore
Total cash infusion by Emaar MGF in Games Village Project 595
crore
No. of apartments sold by Emaar MGF till 28th December, 2010 - 426
Money raised through sale of 426 apartments by Emaar MGF 1354
crore
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Chapter 5: Bailout Package and Release of Funds Background
5.1 The PDA did not provide for any financial assistance to the PD. However, on the persistent pleas
of the PD and in order to ensure that the Games Village project could be completed within the planned
timeframe, DDA entered into a separate Agreement with Emaar MGF to provide financial assistance.
Brewing Trouble
5.2 The signs of inability of Emaar MGF to complete the Games Village surfaced as early as January
2008. These included:
a. According to the PDA the lead partner of the consortium (Emaar PJSC) was required to
bring in the equity (26%) within six months from the date of issue of Letter of Intent
(LOI); while the LOI is dated 4th July 200716, the equity was brought in only on 8th
February 2008, a delay of 31 days from the agreed deadline date.
b. According to the PDA, the date for achievement of first milestone was 11th February
2008. Emaar MGF sought extension till 11th May, 08 and the same was granted by the
HPC on 21st April 2008. The first milestone was achieved on 11th May 2008. This
situation was more worrisome considering DDA had extended a relaxation to the
Developer in the form of permission to begin the construction work at the site while the
PDA was not executed. Even though the PDA was signed only on 14.09.2007, DDA
handed over the site to Emaar MGF on 20th August 2007. A copy of the minutes of HPC
meeting dated 21st April, 2008 is set out as Annexure 6.
16 See Relevant Document 22.
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c. In April 2008, Emaar MGF indicated financial problems to DDA and requested pre-
ponement of allocation of flats. The key premise of Emaar MGF for assistance at this
stage was its inability to raise funds via advances from the sale of apartments to
customers, due to non-allotment of the flats. It may be highlighted that the allotment of
apartments between DDA and Emaar MGF based on the apportionment formula as per
the PDA was scheduled for 14th June 2008 and such a demand for early allotment was
therefore not warranted.
Chronology of Events leading to Bailout Package
5.3 A chronology of events leading to the signing of the Bailout Agreement between DDA and the
Project Developer, Emaar MGF, is as under:
S. No. Date Event
1 3 r d November, 2008 Decision of Delhi High Court 17
2 5 th December, 2008 Letter of Emaar MGF to DDA seeking f inancial
assistance 18
3 8 th December, 2008 Meeting of Emaar MGF with Secretary, MoUD
4 9 th December, 2008 Shri Sanjay Malhotra, on behalf of Emaar MGF addressed a letter 19 to Secretary, MoUD wherein they, inter alia, mentioned that due to the recent directions given by the Honble High Court of Delhi in the matter of the CGV project, there has been an adverse fallout on the project in terms of banks/lenders to the projects and the customers (present and potential) raising concerns on the further development of the project. DDA was requested to assist the project by provid ing funding support, which is most crit ical for further
17 See extracts at Annexure 7 18 See Annexure 8 19 See Annexure 9
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progress.
4 10 th December, 2008
Shri Sanjay Malhotra, on behalf of Emaar MGF addressed another letter 20 to Secretary, MoUD enclosing requests made to DDA as requested by your office
5 10 th December, 2008
Secretary, MoUD forwarded details of assistance sought by Emaar MGF group to Shri Arun Ramanathan, Finance Secretary, GoI for appropriate facil itation. 21
6 11 th December, 2008
Director (DD), MoUD sought comments of DDA on issues raised in letters of Sanjay Malhotra, Chief Operating Officer, Emaar MGF. 22
7 18 th December, 2008
Pr. Comm.(CWG) informed COO, Emaar MGF that in the l ight of Clause 8.8 of the Project Development Agreement, their request for f inancial assistance cannot be accepted.23
8 10 th February, 2009 Emaar MGF in its letter to DDA sought return of 321 crore as loan
at nominal rate of interest or suggested that DDA buy 250
apartments keeping in view the requirement of funds at that
stage24.
9 17 th February, 2009 Issue discussed in Meeting of COS.
10 12 th March, 2009 LG provided in principle approval for 25
Outright purchase of apartments by DDA from PD
Constitution of Committee with experts from NBCC, CPWD,
SBI Capital and DDA to determine the total funding
requirement and the purchase price of the apartments.
In response to the PDs request, vide letter dated February 27,
20 See Annexure 10 21 See Annexure 11 22 See Annexure 12 23 See Annexure 13 24 See Relevant Document 30 25 See Annexure 14
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2009 of advance of Rs.150 crore, a part payment of Rs.100
crore may be made under a MoU, which would be adjusted at
a later stage once the cost of the apartments to be bought as
determined.
11 16 th March, 2009 PC (CWG) wrote a letter to Secretary, MoUD on the issue of f inancial assistance to the Project Developer. 26 Reference is made to economic slowdown.
12 18 th March, 2009 Constitution of Valuation Committee
13 19 th March, 2009 Valuation Committee briefed by PC (CWG), DDA
14 25 th March, 2009 LG ordered that in providing the advance of Rs.100 crore, f inancial interest of DDA should be fully secured
15 26 th March, 2009 DDA asked the PD to provide a Bank Guarantee of Rs.100 crore valid t i l l the date of f inal ization of the purchase agreement, in addit ion to providing an unconditional corporate guarantee, encumberance certif icate from ROC for 75 apartments proposed to be kept at the disposal of DDA and action plan for util iz ing the advance amount.
16 26 th March, 2009 PD expressed its inabil ity to provide a BG of Rs.100 crore and offer unconditional corporate guarantee to DDA
17 30 th March, 2009 Shri Mukesh Dham, wrote to Secretary, MoUD wherein he referred to their previous discussions and the funding challenges being faced by the CGV Project due to the l it igation on the project as well as economic slowdown. He also complained thatA committee was formed on 21 s t March 2009 to submit its report within 7 days. We have been providing al l the information required by them, but to date report has not been submitted by the Committee. 27
26 See Annexure 15 27 See Annexure 16
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18 30 th March 2009 Note sent by Secretary, MoUD to VC, DDA seeking details of resolution worked out so that t imely implementation of project does not suffer. 28
19 6 th April , 2009 VC, DDA sent a detai led Note to Secretary, MoUD. 29
20 9 th April , 2009 Recommendation of Valuation Committee received.
21 15 th April , 2009 Constitution of Negotiation Committee
22 22n d Apri l , 2009 Emaar MGF wrote to LG 30
23 23 r d Apri l , 2009 Meeting held in chamber of VC where Financial experts were cal led and asked to provide for 15% Developers margin on total Project Cost and 10% as cost of capital towards the funds invested by Emaar MGF and finally arrived at a rate of Rs.11,055.64/ - per sft .31
24 24 th April , 2009 Meeting held under chairmanship of LG which is attended by Secretary and Joint Secretary, MoUD and VC, Finance Member & Engineer Member, DDA which decided the purchase price of f lats under Bailout Package.
25 5 th May, 2009 Bai lout Agreement signed.
No CWG Village Bogey
5.4 In November - December 2008 and January February 2009, Emaar MGF made repeated
requests to DDA as well as Ministry of Urban Development to provide financial assistance for
completion of the project. Such requests were rejected by DDA as the PDA did not provide for financial
assistance. However, in February 2009 Emaar MGF exerted pressure on DDA and cited consequence of
non-completion of the Games Village within the stipulated time period i.e. 31st March 2010. This led to
28 See Annexure 17 29 See Annexure 18 30 See Annexure 19 31 See Detailed Background Note at Annexure 20
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a situation termed by DDA as critical which, according to the LG and Cabinet Secretary, required an
out of box solution.
5.5 In its submission to DDA and MoUD in December 2008, Emaar MGF referred to the PIL filed in
the court against the location of the Games Village stating that the litigation had caused negative
impact on the project and thereby affected its ability to raise funds for the project.
5.6 A PIL had been filed and the High Court had issued a notice on 17th July, 2007. The case came
up for hearing in the High Court only on 9th June, 2008. The High Court passed its judgment on
3.11.2008. The Court observed that any construction made or third party rights created are at the
peril and risk of the organizers / Government. DDA filed a SLP in the Supreme Court against this order.
The interim stay of the Supreme Court was dated 5th December, 2008 which was finally disposed off on
30th July, 2009. However, at no stage did the High Court or the Supreme Court order suspension of
the work at the project site.
5.7 While HLC took note of this submission, it is of the opinion that the entire risk of execution of
the project was on the Developer and transferring the onus to DDA merely exhibited its inability to
manage the project.
5.8 In February 2009, DDA finally took serious note of the developers financial situation and its
inability to complete the project within the stipulated time. At this stage DDA, in consultation with LG
and COS, agreed to explore the possibility of financing the project. The COS in its meeting on 17th
February, 2009 agreed that DDA could explore the option of purchase of flats with due approvals from
the competent authority.
Box: 8 Meeting of COS held on 17.02.2009
At the COS meeting held on 17th February, 2009 to review arrangements related to CWG 2010, it was noted by the
COS that the LG, Delhi had already given approval to DDA for making purchase of flats out of its own funds. Cabinet
Secretary observed that an out of box solution may have to be resorted to. It was inter alia decided that
Option of purchase of flats in the Games Village by DDA may be explored with due approvals duly obtained
from competent authorities, to help the private developer in overcoming working capital shortfall, as the
ongoing economic slowdown warrants unconventional options to be given consideration on merits. However,
proper valuation of flats should be arranged through an independent agency in a transparent manner.
It is worthwhile noting that the COS considered a decision already taken by the LG and correctly pointed out that in
such a transaction the proper valuation of flats in a transparent manner would be extremely important.
Unfortunately, this operational portion of COS decision was not ensured by DDA.
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5.9 Based on the decision taken by LG on 12th March, 2009, a Valuation Committee comprising of
representatives from HUDCO, NBCC, CPWD and DDA was formed on 18th March, 200932 to recommend
within 7 days the rate at which the flats could be purchased and the funding requirement of the
project. The Valuation Committee, in turn, engaged a Technical consultant (M/s Garg & Associates) and
a Financial consultant (M/s K N Goyal & Asso