Belo Monte Dam Engineers Released by Brazil Tribal Leaders (Paulo Winterstein)

Centrais Eletricas Brasileiras SA : Belo Monte Dam Engineers Released by Brazil Tribal Leaders

-Dam workers being held by indigenous groups released Friday morning

-Norte Energia says tribal leaders violated agreement made earlier this month

-Indigenous leaders say dam construction has impeded river access

(Adds Norte Energia comments beginning in third paragraph, and prosecutor comments in fifth and sixth paragraphs.)

By Paulo Winterstein

SAO PAULO--Indigenous leaders in Brazil released on Friday the last of the three engineers working on the controversial $13 billion Belo Monte dam in Brazil's north who had been held hostage since Tuesday, Brazil's national indigenous institute Funai said.

The engineers working for Norte Energia, a consortium of Brazilian companies and pension funds, had been held in a village close to where the 11,233-megawatt dam is being built on the Xingu River. One employee was released Thursday night, and the other two were released Friday morning and were on their way to the nearby city of Altamira, a spokesman for Funai said.

Norte Energia confirmed the release of all three workers, one of whom works directly for Norte Energia and two working for companies contracted by Norte Energia to provide services.

The engineers had been visiting tribal leaders Tuesday to explain measures the company was taking to address problems with navigating the Xingu River. According to Norte Energia, the system that allows boats to circumvent the construction site is set to begin operating in November.

Federal prosecutors in the state of Para, where the dam is being built, met with Funai and company and indigenous leaders on Friday, as part of the agreement by tribal leaders to release the dam employees.

The prosecutors, who said in a statement that progress on required measures to alleviate the dam's impact on the local tribes had "serious deficiencies," asked Funai and environmental agency Ibama to evaluate Norte Energia's plan for the system to circumvent the construction site.

Leaders of the Juruna and Arara tribes have said construction of the dam, which has been opposed by environmental and indigenous-rights groups, is preventing them from traveling freely along the Xingu. At the end of June, tribal leaders occupied the dam's construction site and made similar demands, accusing Norte Energia of failing to carry out mitigation measures which the company is required to implement as part of its license to build the dam.

In a Friday statement, Norte Energia said it reached an agreement earlier this month with those tribal leaders, when they agreed to leave the construction site, that laid out measures that would be taken to resolve the problem.

"Norte Energia repudiates this kidnapping because all the accords will be met that were agreed to at the July 10 meeting," the company said.

The dam would be the world's third biggest, after China's Three Gorges and Brazil's Itaipu dam, and environmentalists and indigenous rights activists see its construction as another step toward increased development of the Amazon Basin.

Unhappy with the company's efforts so far, the leaders Wednesday said the engineers wouldn't be allowed to leave their village until a more-adequate solution to freeing up river travel was provided by Norte Energia.

Norte Energia is composed of government-controlled utility Centrais Eletricas Brasileiras, or Eletrobras; the pension funds of state-run oil company Petroleo Brasileiro; government lender Caixa Economica; utilities Neoenergia and Cemig; and mining company Vale. Eletrobras is the biggest shareholder, with a 49.98% stake.

The company is required to invest about $1.6 billion in social programs such as building sanitation networks and relocating houses that occupy land to be flooded by the dam. In the past, the company has said that it will carry out those investments, but that the investments will be completed as dam construction progresses.

Write to Paulo Winterstein at paulo.winterstein@dowjones.com