Document of
                 The World Bank


                                        Report No: 73998-TP



            RESTRUCTURING PAPER


                     ON A


       PROPOSED PROJECT RESTRUCTURING


                    OF THE

TIMOR LESTE -- SECOND CHANCE EDUCATION PROJECT


                GRANT H633-TP


               FEBRUARY 18, 2011


                    TO THE


     DEMOCRATIC REPUBLIC OF TIMOR-LESTE




                December 17, 2012
             ABBREVIATIONS AND ACRONYMS



FA      Financing Agreement
PDO     Project Development Objectives




      Regional Vice President:        Pamela Cox
      Acting Country Director:        Ulrich Zachau
              Sector Manager:         Luis Benveniste
           Task Team Leader:          Susiana Iskandar

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                          DEMOCRATIC REPUBLIC OF TIMOR-LESTE
                        TIMORE-LESTE SECOND CHANCE EDUCATION

                                                        CONTENTS

                                                                                                                                   Page
A.   SUMMARY ........................................................................................................................... 1
B.   PROJECT STATUS .............................................................................................................. 1
C.   PROPOSED CHANGES ...................................................................................................... 1




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                     DEMOCRATIC REPUBLIC OF TIMOR-LESTE
                TIMORE-LESTE SECOND CHANCE EDUCATION PROJECT

                                       Restructuring Paper

A. SUMMARY

1. The purpose of this restructuring is to amend Schedule 2 of the Financing Agreement (FA) to
adjust the yearly percentage at which expenditures become eligible under Category 2. This
category finances salaries of contract teachers, teacher trainers and field coordinators on a
declining basis over three years, starting in 2011. However, this activity, which is critical for
achieving the project’s objectives, has been delayed and requires an amendment to the FA to be
aligned with the new timeline for hiring these educational staff.

B. PROJECT STATUS

2. The Project Development Objectives (PDO) are: (a) to increase the number of out-of-school
youth and young adults who complete recognized equivalency programs; and (b) to decrease the
number and/or rate of leavers from each program and level, thus increasing internal efficiency of
the program. The project became effective in April 6, 2011 and has been progressing well albeit
encountering some initial delays.

3. Implementation progress includes: (i) the development of key documents to help plan for
recurrent education curriculum development (with a particular focus on Equivalency Levels I and
II); (ii) drafting of terms of reference and initiating the hiring of additional teachers and teacher
trainers to teach the proposed equivalency programs; (iii) the hiring of national and international
Planning & Management Advisors; and (iv) near completion of installation of new computers,
printers, and internet equipment (currently awaiting final configuration of computers and
network). Progress towards meeting the PDO is rated satisfactory, while implementation progress
is rated moderately satisfactory. However, delays in hiring additional teachers, teacher trainers and
field coordinators impact the percentage at which the project can finance their salaries, hence
requiring an amendment of the FA.

C. PROPOSED CHANGES

4. The proposed changes are: The percentage of expenditures to be financed for Category 2 will
need to be amended to accommodate the two-year contract teachers, teacher trainers and field
coordinators hiring delay, as follows: (i) 100 percent of expenditures incurred in 2013 instead of
2011; (ii) 75 percent of expenditures incurred in 2014 instead of 2012; and (iii) 50 percent of
expenditures incurred in 2015 instead of 2013.




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5. The disbursement table under Section IV A.2 of Schedule 2 of the FA would be amended
accordingly:

              Category                 Amount of the Grant    Percentage of Expenditures to be
                                       Allocated (expressed               Financed
                                             in SDR)                (inclusive of Taxes)
 (1) Goods, consultants’
 services, training and                                       100 % of Grant amount disbursed
                                            1,675,000
 Incremental Operating
 Costs for the Project
                                                                   On a declining basis:
                                                              100% of expenditures incurred in
 (2) Salaries for Contract Teachers,                                      2013
 Teacher Trainers, and                       600,000
                                                              75% of expenditures incurred in
 Field Coordinators                                                       2014
                                                              50% of expenditures incurred in
                                                                          2015
 (3) Community Learning Center               925,000                      100%
 Total                                      3,200,000

6. No changes are proposed to the Project’s Development Objective, components, safeguards
classification, institutional arrangements, financial management, procurement or closing date.




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