Affermage

Affermage contracts are generally public-private sector arrangements under which the private operator is responsible for operating and maintaining the utility but not for financing the investment. The operator retains the operator fee out of the receipts (prix du fermier) and pays to the awarding authority an additional surcharge from customers to go towards investments that the awarding authority makes/ has made in the infrastructure.  The operator (usually selected through a bidding process) tends to bear greater operating risk and tends to employ the staff directly. In the case of affermage the operator is assured of its fee (assuming that the receipts are sufficient to cover it) and it is the authority that takes the risk on the rest of the receipts collected from customers covering its investment commitments.  The awarding authority in each case remains responsible for financing and managing investment in the assets – which is supposed to come, at least in part, from the rental payment/ surcharge. Some affermage arrangements the operator designs and manages the investment program.  In France and some other civil law countries the key provisions establishing the affermage are set out in the law and so a typical French affermage contract will be relatively short in comparison to an equivalent document in a common law jurisdiction. There is generally a review process every 4 to 5 years to review performance, costs, and tariff levels.  (Source:  http://ppp.worldbank.org/public-private-partnership/ )