PPP Insights: The Affermage-Lease Contract in Water Supply and Sanitation (World Bank)

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This paper explores the recent trends of the performance-based affermage and lease models for structuring water supply and sanitation concessions.

Description

World Bank, 2012.

Delegated management contracts today have more of a mixed, hybrid nature than in the past. They take selected elements from different contractual models to create a new, tailored model. The result is that many delegated management contracts can no longer be easily classified into a single category on the public-private partnership (PPP) spectrum.

One innovative version of the affermage contract that is gaining in popularity has a more equitable distribution of efficiency gains for all contracting parties. This paper explores the recent trends of the performance-based affermage and lease models; and analyzes the characteristics and benefits of a particular innovative affermage model, which includes a more equitable model of revenue distribution between partners.