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PANAMA CITY (Reuters) - Colombia and Panama on Friday agreed to resurrect a stalled electricity transmission line project between the two countries that would also supply power to the rest of Central America.

"We hope that by the beginning of 2018, we could have connected Panama and Colombia with this project," Colombian President Juan Manuel Santos said after meeting his Panamanian counterpart, Juan Carlos Varela, during a state visit to the Central American country.

The proposed transmission line had been shelved for two years after first being proposed during the administration of Varela's predecessor, Ricardo Martinelli.

Martinelli balked at the estimated $500 million price tag, placing the project on ice.

Varela said the transmission line "would give energy security to Panama," adding that the energy Colombia produced would also be passed on to other countries in Central America.

(Reporting by Elida Morena; Editing by Ken Wills)

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