MOSCOW - A little-known transport official from Vladimir Putin’s hometown will replace a demoted ally of the president as the head of Russian Railways, completing a rare shakeup in the Kremlin circle of political and economic power. Deputy Transport Minister Oleg Belozerov was named on Thursday as the new boss of one of Russia’s biggest and most important companies, three days after the shock departure of Putin confidant Vladimir Yakunin. Employing almost one million people and managing over 85,000 km (53,000 miles) of tracks, Russian Railways is the third largest network in the world. The state behemoth turned over $27 billion last year and accounts for 40 percent of Russia’s total freight traffic, giving it a stranglehold over the powerful oil, gas and mining industries. But it has been plagued with problems on Yakunin’s 10-year watch, including chronic mismanagement and over-spending at a time when Russia’s economy is being battered by a recession fuelled by Western sanctions over Moscow’s actions in Ukraine and a collapse in global oil prices. The boss’s sudden exit has prompted speculation that other powerful heads might roll. “It could be that Yakunin’s departure is a signal to the Russian elite - in a crisis, no one is untouchable,” said one government source. RIA news agency quoted Prime Minister Dmitry Medvedev as drawing Belozerov’s attention to the company’s budget and investments. “There are many complaints. People are not happy that journeys are being cancelled. But on the other hand, the railway should be making money and not be posting losses,” he told the new man in reference to Yakunin’s performance - a rare public criticism of a key Putin ally. Russian Railways returned a net loss of 99.32 billion roubles ($1.49 billion) in 2014, against earnings before interest, taxation, depreciation and amortisation (EBITDA) of 352.6 billion roubles. It will need 460 billion roubles in government subsidies to ensure net profit up to 2020, Vedomosti newspaper reported in March, citing a company letter. FALL FROM GRACE? Belozerov, 45, studied economics in St Petersburg, where Putin served as deputy mayor in the 1990s. He worked for Putin indirectly from 2000-2001 when he managed finances for the presidential envoy in Russia’s north-western federal district. From 2004 to 2009, Belozerov ran the state highways agency, a Herculean task given the abysmal quality of the country’s roads, where over 25,000 people die every year. “Together with the government and Russian Railways team, (we plan) to focus on continued efficiency improvements,” he was quoted by news agency Interfax as telling Medvedev. Yakunin’s departure to a largely ceremonial role as a regional senator wrong-footed Kremlin watchers and sparked rumours of a possible fall from grace after a lifetime in Putin’s service. The U.S. Treasury named him as Putin’s “close confidant” when it imposed personal sanctions on him after Russia’s annexation of Crimea last year. Indeed, Putin’s ability to manage a stand-off with the West over the Ukraine crisis, massing troops and heavy weapons on Russia’s southern border at a moment’s notice, has been underpinned by Yakunin’s control of the railways. “Just think about the amount of work that Yakunin has done for the army over the past year - relocating troops, tanks, weapons,” said a government source. “That gives you a totally different dimension and flavour of the job.” However, a failure to modernise the company, major network disruptions and allegations of widespread corruption may have lost Yakunin favour with his masters. An ill-fated attempt to overhaul local commuter trains late last year led to mass outages and a public outcry from angry Russians unable to get to work. A Reuters investigation found that under Yakunin, Russian Railways had paid billions of dollars to private contractors with shady owners and little or no presence at their registered headquarters. One federal government official said that Yakunin was not consulted about his resignation or replacement. “Both the resignation and (Belozerov’s) appointment happened quickly, in the best Soviet traditions,” the official said.